Stable Genius Liberal

Ray Dalio calls for more stimulus

We will also need fiscal stimulation by the government, which of course, is very classic. Governments have to spend more when sales and tax revenue go down and as unemployment and other social benefits kick in and there is a redistribution of wealth. That’s why there is going to be more taxation on the wealthy and more social tension. A deleveraging is not an easy time. But when you are approaching balance again, that’s a good thing.

Dalio leaves Team Friedman and joins Team Keynes.

The Real Source of Corruption in Congress: Members’ Good-Faith Efforts To Help People

But why does Rogers care so much about Phoenix Products that he wants to send all this business his way?
What Phoenix Products has is something unique. It’s based in Kentucky, just like Harold Rogers. Its employees live in Harold Rogers’ district, they shop in stores that are in Harold Rogers’ district, their spouses and siblings live in Harold Rogers’ district, their incomes bolster the tax base for municipalities in Harold Rogers’ district. So if Harold Rogers wants to do the right thing for Harold Rogers’ constituents, he needs to do the right thing for Phoenix Products.

Hayek differentiated between an welfare state of Law versus one of administration. The former would function based on a set of rules in openness and transparency. The latter would be run by bureaucrats who distributed favors for their own political gain. The former would be compatible with a free democratic society, the later would subvert it.

I think we need to start looking at the defense industry as favor distributing patronage system that no longer serves its defined public purpose.

Nouriel Roubini: Greece will leave the eurozone sooner or later. Sooner is better.

The first option, a sharp weakening of the euro, is unlikely, as Germany is strong and the ECB is not aggressively easing monetary policy. A rapid reduction in unit labor costs, through structural reforms that increased productivity growth in excess of wages, is just as unlikely. It took Germany 10 years to restore its competitiveness this way; Greece cannot remain in a depression for a decade. Likewise, a rapid deflation in prices and wages, known as an “internal devaluation,” would lead to five years of ever-deepening depression.
If none of those three options is feasible, the only path left is to leave the eurozone. A return to a national currency and a sharp depreciation would quickly restore competitiveness and growth.

This is a must read. Nouriel Roubini on why Greece must leave the Eurozone.

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In 47 of America’s fine states, if you want to accept people’s money in order to give them advice on decorating and other people want to pay you to give advice on decorating, then congratulations—you’re an interior decorator. In the other three states, and the District of Columbia, you need undergo 2,190 hours of training… Continue reading Untitled

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Japan, which is spending heavily for post-tsunami reconstruction, is growing quite fast, while Italy, which is imposing austerity measures, is shrinking almost equally fast. There seems to be some kind of lesson here about macroeconomics, but I can’t quite put my finger on it If austerity worked, the bars for the UK and Italy would… Continue reading Untitled

The Economics of For-Profit Prisons

If the inmate count dips, sheriffs bleed money. Their constituents lose jobs. The prison lobby ensures this does not happen by thwarting nearly every reform that could result in fewer people behind bars.

The idea that privatization increases the freedom in society is naive. It might, in some cases. Not there and not now.

Paul Ryan Claims His Budget ‘Preempts Austerity’

House Budget Commitee chairman Paul Ryan (R-WI) says that his plan to slash government spending on programs for the poor while increasing defense spending and giving tax cuts to the wealthy would actually “prevent austerity.”

We must pass austerity to prevent austerity? Not from the onion. Ryan is a smooth talking confidence man. Nothing more.