Growth Key for Euro-Zone Deal - WSJ.com
Governments talk growth but they don't do what long-term growth requires - instead, it's borrow now for an extra trip to the discount store selling imported goods.
Why not talk about rationalizing the cost of labor? Of course, we know why not. The unions feel they're entitled to certain types of jobs and therefore those are the jobs there should be. But clearly the economic models that bring together all of the forces that make economies thrive or crash are ignored.
(As an example, Cain is supporting the idea of enterprise zones in depressed areas that forego minimum wage laws.)
Also, nothing is said about supporting long-term plans (tax, regulatory, etc.) to support growth. It's all short-term support that again is nothing more than one more shopping trip on the country's credit card.
When one reads that 6% interest is 'unsustainable' for Italy long term, the US should think back at what rates were like in the 1980's - let alone the 1970's.
Monday, October 31, 2011
Saturday, October 29, 2011
BEYOND DEBTOR'S PRISON: Animal Spirits Rising - Barrons.com
Animal Spirits Rising - Barrons.com
Somehow, it would seem as though the US has pioneered the solution to the obloquy of debtor's prison.
But, the Europeans seem averse to the idea of moving on and a fresh start.
Some comments this weekend on the perfidious nature of Greek social benefits was, sad-to-say, even more of an eye opener to the nexus of the Greek's problems.
But, bankruptcy, no other credit and time to reflect and restart would seem and suggest itself as preferential to what is happening now.
Oh yes, the world should take note that socialist policies with expanded government benefits doesn't pencil out in the end. But, then again, who should be lending to the US government either?
Somehow, it would seem as though the US has pioneered the solution to the obloquy of debtor's prison.
But, the Europeans seem averse to the idea of moving on and a fresh start.
Some comments this weekend on the perfidious nature of Greek social benefits was, sad-to-say, even more of an eye opener to the nexus of the Greek's problems.
But, bankruptcy, no other credit and time to reflect and restart would seem and suggest itself as preferential to what is happening now.
Oh yes, the world should take note that socialist policies with expanded government benefits doesn't pencil out in the end. But, then again, who should be lending to the US government either?
The Democrat-Union Succubus: This Week: Greek Deal, Gupta Charges, H-P Turnabout - WSJ.com
This Week: Greek Deal, Gupta Charges, H-P Turnabout - WSJ.com
Another Take on Jobs and Incomes
If one thinks about jobs in the economy in a broader sense, there is an easy analogy to ordinary personal behavior - i.e. if something goes up in price (labor costs), one looks to make substitutions (capital goods).
As unions and liberals define labor as needing this benefit and that, the cost of labor goes up (both in terms of real costs and net costs or benefits to the employed).
As a result, producers that want to stay in business have to pay attention to global competition.
As recently reported, Obama's Administration has put in more and more expensive regulations that cost American businesses real money. Thus, less money left to pay labor.
In a poor African country, a farmer won't own machinery, he'll find it cheaper to hire low-paid laborers. In the US, it's just the opposite.
But, to have the skills to handle sophisticated capital goods (equipment) or to run a highly sophisticated business (advanced information technologies) takes skills. These get paid commensurately higher salaries.
Thus, as the liberal part of society tries to equalize outcomes, it marginalizes the incentive to develop skills. As a result, there is high unemployment (due to wage distortion and substitution) and large numbers of unfilled jobs where particular skill sets are needed.
The solution to the unemployment problem begins by recognizing the need to remove artificial inhibitors to demand (labor) meeting supply (job openings and job opportunities).
Occupy Wall-Streeters have succumbed to the Democratic-Union succubus that they are 'entitled' so they should get - rather than the need to remove restraints to opportunity.
Another Take on Jobs and Incomes
If one thinks about jobs in the economy in a broader sense, there is an easy analogy to ordinary personal behavior - i.e. if something goes up in price (labor costs), one looks to make substitutions (capital goods).
As unions and liberals define labor as needing this benefit and that, the cost of labor goes up (both in terms of real costs and net costs or benefits to the employed).
As a result, producers that want to stay in business have to pay attention to global competition.
As recently reported, Obama's Administration has put in more and more expensive regulations that cost American businesses real money. Thus, less money left to pay labor.
In a poor African country, a farmer won't own machinery, he'll find it cheaper to hire low-paid laborers. In the US, it's just the opposite.
But, to have the skills to handle sophisticated capital goods (equipment) or to run a highly sophisticated business (advanced information technologies) takes skills. These get paid commensurately higher salaries.
Thus, as the liberal part of society tries to equalize outcomes, it marginalizes the incentive to develop skills. As a result, there is high unemployment (due to wage distortion and substitution) and large numbers of unfilled jobs where particular skill sets are needed.
The solution to the unemployment problem begins by recognizing the need to remove artificial inhibitors to demand (labor) meeting supply (job openings and job opportunities).
Occupy Wall-Streeters have succumbed to the Democratic-Union succubus that they are 'entitled' so they should get - rather than the need to remove restraints to opportunity.
CRYING BABIES: Doubts Rise on EU Deal - WSJ.com
Doubts Rise on EU Deal - WSJ.com
Sadly, the culpable parties are the unions and socialists who create and sustain unrealistic expectations of a free lunch with no consequences.
Now that the lunch bill is coming do, people are looking everywhere to find someone to blame who is perhaps not quite faced with such a large bill and such meager resources.
The US is doing the same and the Occupy Wall Street Crowd is even more emblematic of blaming the wrong people.
It's the old look in the mirror first issue.
People want more than what their neighbors and the rest of society want to give them; they don't want to work as hard as they should or take the risks that bring rewards.
Socialism thinks the 'other guy' can always give up something for the socialists to have more.
Eventually the game ends. It just seems to have ended sooner in Greece than elsewhere. Socialists are like little children. They want something so they think they should have it. Whether the parents can afford it is immaterial. How many crying babies have we all heard?
Sadly, the culpable parties are the unions and socialists who create and sustain unrealistic expectations of a free lunch with no consequences.
Now that the lunch bill is coming do, people are looking everywhere to find someone to blame who is perhaps not quite faced with such a large bill and such meager resources.
The US is doing the same and the Occupy Wall Street Crowd is even more emblematic of blaming the wrong people.
It's the old look in the mirror first issue.
People want more than what their neighbors and the rest of society want to give them; they don't want to work as hard as they should or take the risks that bring rewards.
Socialism thinks the 'other guy' can always give up something for the socialists to have more.
Eventually the game ends. It just seems to have ended sooner in Greece than elsewhere. Socialists are like little children. They want something so they think they should have it. Whether the parents can afford it is immaterial. How many crying babies have we all heard?
Friday, October 28, 2011
Regulatory shut-down of small business and entrepreneur lending: Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong - WSJ.com
Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong - WSJ.com
From my own conversations with people, a key stumbling block that needs removal is the regulations and regulatory environment that has effectively neutered the banking system.
Sure there are low rates, but no one except those who fit within the definitions of acceptable risk from Washington politicians and regulators can qualify.
Thus, the powerful job creating engine of small entrepreneurs and businesses has effectively been shut down.
From my own conversations with people, a key stumbling block that needs removal is the regulations and regulatory environment that has effectively neutered the banking system.
Sure there are low rates, but no one except those who fit within the definitions of acceptable risk from Washington politicians and regulators can qualify.
Thus, the powerful job creating engine of small entrepreneurs and businesses has effectively been shut down.
THE 'YES' AND 'NO' OF PARENTING: EU Pact Does Little to Lift Greek Spirits - WSJ.com
EU Pact Does Little to Lift Greek Spirits - WSJ.com
People don't want to see what they don't want to see.
(I think of a little kid who wants candy. One parent says 'no, it isn't good for you' etc.
The other parent doesn't want to say no.
Who does the kid go to?
And, to make the joke even funnier; when the kid is obese, has early diabetes and rotted teeth, who does the 'yes' parent blame? Of course not his or herself. The government must be to blame - or, society!)
People don't want to see what they don't want to see.
(I think of a little kid who wants candy. One parent says 'no, it isn't good for you' etc.
The other parent doesn't want to say no.
Who does the kid go to?
And, to make the joke even funnier; when the kid is obese, has early diabetes and rotted teeth, who does the 'yes' parent blame? Of course not his or herself. The government must be to blame - or, society!)
GROWTH AND JOB CONSEQUENCES: The Irony of the EU Deal - WSJ.com
The Irony of the EU Deal - WSJ.com
You may not have much of an economics background - but, think who is setting interest rates? In the US, it is clearly the Fed. And, both those with money (including retirees) and those who would borrow (other than government and super-sized corporations) are facing government engineered and dictated regulatory obstacles.
So, put the blame where it belongs - and, that is 'government' and regulators.
Market prices should reflect the value to you or me of deferring consumption and saving for a rainy day; and, the value to people with new ideas for a business or investment of borrowing money. That would be the clearing price for different types of saving and investment and borrowing and equity instruments.
All is distorted.
My favorite example to think of is the UK one with a 50% tax rate. Suppose an entrepreneur wanted to borrow 5 million pounds. The bank would lend it for 5 years.
To pay the bank back the principal, the investor would have to earn 10 million pre-tax to get 5 after-tax.
Add to this some additional risk factors for the need for a higher investment return, etc. and you can see what happens to growth.
I'd say blame government and those who think social spending doesn't have growth and job consequences.
You may not have much of an economics background - but, think who is setting interest rates? In the US, it is clearly the Fed. And, both those with money (including retirees) and those who would borrow (other than government and super-sized corporations) are facing government engineered and dictated regulatory obstacles.
So, put the blame where it belongs - and, that is 'government' and regulators.
Market prices should reflect the value to you or me of deferring consumption and saving for a rainy day; and, the value to people with new ideas for a business or investment of borrowing money. That would be the clearing price for different types of saving and investment and borrowing and equity instruments.
All is distorted.
My favorite example to think of is the UK one with a 50% tax rate. Suppose an entrepreneur wanted to borrow 5 million pounds. The bank would lend it for 5 years.
To pay the bank back the principal, the investor would have to earn 10 million pre-tax to get 5 after-tax.
Add to this some additional risk factors for the need for a higher investment return, etc. and you can see what happens to growth.
I'd say blame government and those who think social spending doesn't have growth and job consequences.
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