|GlobLog - January 2009
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12:39 - KEYNES VS KEYNESIANISM:
After a meeting with other economists in 1944, John Maynard Keynes said "I was the only non-Keynesian at that meeting". I wonder what he would say today when so many politicans and economists discover their inner Keynesian and decide to spend billions and billions on infrastructure to stimulate the economy.
This is what Keynes said about that in 1942:
"Organized public works, at home and abroad, may be the right cure for a chronic tendency to a deficiency of effective demand. But they are not capable of sufficiently rapid organisation (and above all cannot be reversed or undone at a later date), to be the most serviceable instrument for the prevention of the trade cycle."
- Keynes, Collected Writings, vol. XXVII, p.122 (via Mario Rizzo).
15:31 - BREAKING THE CONSENSUS:
I criticised the consensus on the stimulus. But in fact there is no consensus about it, as you can see from a full-page Cato ad in New York Times, Washington Post and other major newspapers all over the US. Read the critical statement, signed by economists (some of them Nobel laurates) here.
10:26 - CALVINOMICS:
After having read my last post, Fraser sent me the best summary of our current world predicament. Of course, we find the most insightful analysis in a Calvin & Hobbes cartoon.
09:57 - DON´T STIMULATE ME, PLEASE:
I have now finished the first draft of my financial crisis book, so at last I can keep up more with the debate.
Meanwhile an impressive consensus has evolved, a consensus about the importance of fiscal stimulus plans - like the one the US House of Representatives just voted for - and that the only problem is that they are too small. Even respected free market economists and magazines like The Economist are on the side of the angels this time.
Well, count me out. As the Austrian economic school taught us, the recession is not the problem, the boom was the problem and all the mistaken investments that happened then because of cheap money. We won´t be able to start again and see new companies start expanding and hiring until bad investments are terminated and capital is transferred from the unsustainable to the sustainable.
Doing everything to save old businesses and jobs going will temporarily soften the blow - just like the Fed´s interest rate cuts in 2001-2003 did, but just like that it keeps bad investments in place and delays the recovery. It´s a way of wasting resources America does not have on things that it didn´t think it needed until now. Yes, many of the infrastructure programs are ready to go, but they are "ready to go because they were drawn up, reviewed and rejected" by the government, as Douglas Holtz-Eakin has pointed out.
And there is also a lot of evidence that a fiscal stimulus rarely work, it just wastes resources and protects bad investments without helping the economy. When the deficits grow, people understand that they will be forced to pay for it later, so they stop consuming and start saving now. The stimulus from big spending programs sometimes come too soon, in which case it doesn´t help the recovery, and it often comes too late, in which case it only creates another boom and bust-situation.
As Berkeley economist David Auerbach concluded in an analysis of the American experience,
"There is little evidence that discretionary fiscal policy has played an important stabilization role during recent decades, both because of the potential weakness of its effects and because some of its effects (with respect to investment) have been poorly timed ... Taken together, the evidence suggests that discretionary fiscal policy has effects but leaves us with little evidence that these effects have provided a significant contribution to economic stabilization, if in fact they have worked in the right direction at all."
This was the consensus among economists just a few months ago. Social democrats like Sweden´s former finance minister Kjell-Olof Feldt understood the problem well. I can´t believe how eager economists and politicians are to throw decades of accumulated knowledge out the window if they think it can add a few hundredths of a percentage point to the growth rate right now.
And people say that the market is obsessed with short term gains.
(At least there is some resistance.)
09:43 - MEMBELA KAPITALISME GLOBAL:
Now my In Defense of Global Capitalism is available in an Indonesian translation.
10:51 - MY COUNTRY RIGHT -BUT NOT IF IT´S WRONG:
People are less nationalistic than we often assume. In 19 of 21 countries the most common answer is that their nation´s foreign policy is about average or below average, according to a poll from WorldPublicOpinion.org. At least it surprises me that no more than 19 percent of the French and 27 percent of the Russians think that their country´s foreign policy is above average.
Only in Jordan and India a plurality think that their country´s policy is superior - and who knows, it might be because they compare themselves to their neighbours - countries like Syria, Saudi Arabia, Iran, Pakistan, China...
10:39 - FÖRÄNDRARE OCH FÖRMYNDARE:
Det liberala magasinet Neo utser för andra året i rad årets förändrare och aktivist. Men det riskerar naturligtvis att bli en lite för gladlynt sammanfattning av året för en av Neos medarbetare, Mattias Svensson, så han genomför samtidigt sin obetalbara omröstning om årets förmyndare, en årlig genomtröskning av den absurda paternalistiska undervegetation där folkhälsoister på fullt allvar vill att studentfirande ska göras alkoholfritt och glassbilstrudelutten ska förbjudas.
13:33 - DO YOU HAVE SOMETHING FOR SUDDEN HEADACHE?:
One problem with a rush for bailouts and the taxpayers´ money is that it is self-reinforcing, since the group that does not demand more will suffer when others get it and force it to pay for it. So you will see some unlikely groups demanding special treatment. But now I have seen everything:
Alex Singleton reveals that the free-market group Stockholm Network demands more government funding and subsidised energy prices for the pharmaceutical industry, so that they can cope with the financial crisis. What´s next? Will free-marketeers demand nationalisation of the drug companies in return for preferred shares?
13:55 - SOMETHING HAS ALREADY CHANGED:
69 percent of African-Americans believe Martin Luther King´s vision for race relations has been fulfilled, according to a CNN/Opinion Research Corporation poll.
11:09 - ATHEISTS - NOW CITIZENS AND PATRIOTS AS WELL:
By the way, was this the first inaugural speech that expressly mentioned non-believers as citizens with the same value as believers? Every president has not thought so highly of atheists, like George W H Bush, who allegedly said this in 1987:
"I don´t know that atheists should be regarded as citizens, nor should they be regarded as patriotic. This is one nation under God."
19:01 - THE BEST OF THE INAUGURATION:
Barack Obama has just been sworn in as the 44th President of the United States, and it was an impressive inaugural adress. There were some predictable and ominous signals about regulation and stimulus plans, but at least there were no stupidities about protectionism. Here are the three best paragraphs from the speech:
No 3. How the entrepreneurial built America:
"Our journey has never been one of short-cuts or settling for less. It has not been the path for the faint-hearted - for those who prefer leisure over work, or seek only the pleasures of riches and fame. Rather, it has been the risk-takers, the doers, the makers of things - some celebrated but more often men and women obscure in their labor, who have carried us up the long, rugged path towards prosperity and freedom."
No 2. How Bush betrayed the founders:
"As for our common defense, we reject as false the choice between our safety and our ideals. Our Founding Fathers, faced with perils we can scarcely imagine, drafted a charter to assure the rule of law and the rights of man, a charter expanded by the blood of generations. Those ideals still light the world, and we will not give them up for expedience’s sake."
No 1. Why this was indeed a historic day:
"This is the meaning of our liberty and our creed - why men and women and children of every race and every faith can join in celebration across this magnificent mall, and why a man whose father less than sixty years ago might not have been served at a local restaurant can now stand before you to take a most sacred oath."
12:29 - WHY LABOUR STANDARDS HURT THE POOR:
Fredrik sends me a must-read for everybody who has ever hesitated to buy something because it was produced in Asian sweatshops. It´s a NYT column by Nicholas Kristof, who has lived in East Asia for years:
"Before Barack Obama and his team act on their talk about ´labor standards,´ I’d like to offer them a tour of the vast garbage dump here in Phnom Penh. ...
Talk to these families in the dump, and a job in a sweatshop is a cherished dream, an escalator out of poverty, the kind of gauzy if probably unrealistic ambition that parents everywhere often have for their children.
Cambodia has, in fact, pursued an interesting experiment by working with factories to establish decent labor standards and wages. It’s a worthwhile idea, but one result of paying above-market wages is that those in charge of hiring often demand bribes — sometimes a month’s salary — in exchange for a job. In addition, these standards add to production costs, so some factories have closed because of the global economic crisis and the difficulty of competing internationally.
The best way to help people in the poorest countries isn’t to campaign against sweatshops but to promote manufacturing there."
Read the whole thing.
16:18 - MEDIERNA OCH MAKTEN:
Jag bara var tvungen att ta en paus i skrivandet och gå på Neos seminarium om sanningen bakom Gömda och andra av Liza Marklunds
böcker. Det gjorde jag rätt i. Det blev ett skakande möte med individer som Marklund har krossat i vad som allt mer ser ut som en härva av lögner som bara uppmärksammades av offren själva och därefter bloggosfären.
På seminariet fanns emellertid representanter från tunga medier som idkade självkritik över att de inte granskat ikonen tidigare. Sydsvenskan var först av de gamla medierna att ta upp storyn. Är det bara ett sammanträffande att de också huserar en bit bort från Stockholms täta mediala kompisgäng och nätverk?
Referat och video online.
10:22 - AYN RAND I URVAL:
För den som tycker att det är fasligt tomt här medan jag skriver klart min bok kan jag i stället varmt rekommendera den här - om någon nu har intrycket att det inte direkt finns ett överskott på förnuft, kapitalism, egoism och romantisk livskänsla i den svenska debatten. Det är en kulturgärning av Mattias Svensson och Timbro att ge ut den och Mattias bidrar dessutom med tio särskilt intressanta saker att slå upp.
16:31 - ISOLATION:
If you are wondering why I am not blogging and am not answering my email (and even try to avoid the phone), it´s because my book on the financial crisis must be finished next Friday, and my son has chickenpox. That and a few hours of sleep is more than enough to cover 24 hours a day.
So please be patient when I need some isolation another ten days. I assure you that the book will be interesting and will cover a lot of things that have not really made the news about the cause of the crisis. So I hope you will think it´s worth it.
(It will be published in Swedish in March and some time after that in English as well.)
15:46 - UPPLÖS FOLKET OCH VÄLJ ETT NYTT:
Om någon undrar varför det finns politiker- och EU-förakt MÅSTE ni se eller läsa denna intervju, via HAX, med EU-kommissionären Margot Wallström, som får frågan om det finns något väljarna kan göra för att stoppa Lissabonfördraget, och inte kommer på någonting.
15:08 - DAGENS RECENSION:
"I långa stycken är Ankarloos bok ett slags nutida Anti-Dühring (titeln på Friedrich Engels blixtrande avhyvling av en politisk motståndare). Men Dühring heter här Johan Norberg. Ankarloo har både teoretiska invändningar mot denne kapitalismens apologet men går också in djupt i hans siffermaterial och visar att han valt bort det som inte passar när kapitalismen ska besjungas."
- Göran Greider recenserar Daniel Ankarloos bok Marknadsmyter i Aftonbladet, men det stora porträttet på mig gör att han inte får utrymme att ge ett enda exempel på de blixtrande teoretiska invändningarna mot mig eller avslöjanden om vad jag har valt bort.
(Jag har fått ett fint signerat exemplar av Ankarloos bok, men har inte hunnit läsa den ännu. Jag återkommer förstås när jag har gjort det. Jacob Lundberg var däremot tidigt ute och granskade hans påståenden.)
03:12 - EN TYP AV ÅRSSAMMANFATTNING:
Och Bloggen Bent har presenterat 2008 års politiska blogg. Särskilt kul att de som på allvar tog FRA-striden återfinns i toppen. Heja er!
(Och tack till alla som röstade fram mig till en hedrande sjätteplats.)
02:57 - A GOOD WAY TO START 2009:
Read Radley Balko´s list of good news from a bad year. Things are still getting better all the time.