January 2, 2011

"Take care of the ____ run and the ____ run will take care of itself."

Full in the blanks with the words “long” and “short.” A test originally proposed to distinguish conservative and liberal economists. I wonder if it more generally distinguishes conservatives and liberals.

59 comments:

mesquito said...

Desire for someone else's stuff: legitimate.

Desire to keep one's own stuff: illegitimate.

Seriously, how do you deal with such people?

mesquito said...

...you’ll need to get inside the heads of the opposition.

For the most insular and self-satisfied person to every hold the Presidency, this is simply not possible.

Synova said...

So which answer was supposed to be which?

Jason (the commenter) said...

"Conservative" and "liberal" economists? What a weird place to attach these labels.

rhhardin said...

Take care of the short run and the short run will take care of itself.

1jpb said...

"...you’ll need to get inside the heads of the opposition.

For the most insular and self-satisfied person to every hold the Presidency, this is simply not possible."

So, it's impossible to get in his head. You know this because you say that you have a perfect read on what's in his head (i.e. self-satisfaction). And, for the purpose of comparisons, you also know, and can rank what was in the heads of the other forty three dudes.

All w/o any (self-realized) irony.

Sayyid said...

Trick question. "Take care of neither and the long run will take care of us all." [See what I did there?]

Though that does prompt the question: is that the same statement as "take care of the long run and the short run will take care of itself"?

dont tread 2012 said...

@mesquito

"Desire for someone else's stuff: legitimate."

I have long boiled down the left's MO as this, exactly. The left promotes and sanctions this
covetous worldview, which creates tension and challenges the concept of property rights.

@1jpb

"So, it's impossible to get in his head. You know this because you say that you have a perfect read on what's in his head (i.e. self-satisfaction). And, for the purpose of comparisons, you also know, and can rank what was in the heads of the other forty three dudes.

All w/o any (self-realized) irony."

I'm not sure what you were trying to say. Are defending COITUS?

Ron said...

Take care of the beer run and the chicken run will take care of itself...

not quite true...but the keg will stay colder longer than the fried chicken will stay hot and crispy.

Problems solved!

Rumpletweezer said...

Hmmm. I'm thinking "dog."

edutcher said...

Synova, if you said, long, then short, you're Conservative; the other way, you're a Lefty.

Good luck to Professor Mankiw. The Zero, having blown his chance to turn the US into Rhodesia by playing philosopher king while Pelosi Galore and Dingy Harry made the legislation and created an excellent case to throw out those uber-majorities that should have ensured American squalor, is now going the regulatory route. The Republicans will still be hostage-takers and the Lefties that don't like how he's handling the Glorious Socialist Workers Revolution will still be sanctimonious.

And he will keep taking golf junkets and vacations instead of taking care of business.

1jpb said...

"...you’ll need to get inside the heads of the opposition.

For the most insular and self-satisfied person to every hold the Presidency, this is simply not possible."


So, it's impossible to get in his head. You know this because you say that you have a perfect read on what's in his head (i.e. self-satisfaction).


Actually, every time he opens his mouth, it gets a little easier. He's really not that deep.

Dense, maybe...

Bruce Hayden said...

Interesting article, but I don't see that many Democrats listening to one of Bush(43)'s people.

We have had 4 years of wishful thinking economics, and that is now, I think, going to come to a halt. The problem is that the Republicans are not going to have a decent chance to retake the Senate until 2012, nor, of course, the Presidency. So, their sole power base is going to be the House. So, they will have the power to cut off spending, but likely not to repeal the most onerous and destructive legislation of the last 2-4 years.

EDH said...

The long run is a misleading guide to current affairs.

In the long run we are all dead.

Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is past the ocean is flat again.

- John Maynard Keynes
A Tract on Monetary Reform (1923) Ch. 3

"Many have thought this meant Keynes supported short terms gains against long term economic performance, but he was actually criticizing the belief that inflation would acceptably control itself without government intervention."

Pogo said...

The really cool thing about leftist economics is that the fact of repeated failures for their theories only means that it needs one more try.

The people suffering under their mistakes would be horrified, if ever this fact were taught in US schools.

Which it isn't.

dont tread 2012 said...

@pogo

"The really cool thing about leftist economics is that the fact of repeated failures for their theories only means that it needs one more try.

The people suffering under their mistakes would be horrified, if ever this fact were taught in US schools.

Which it isn't."

Yes, for our statist persecutors, this is a feature, not a bug.

Kirby Olson said...

Maintain the structure: Republicans.

Grease the palms of individuals so they'll vote for you: Democrats.

somefeller said...

Pogo says:The really cool thing about leftist economics is that the fact of repeated failures for their theories only means that it needs one more try.

Were the economic policies of Franklin Roosevelt, Harry Truman, JFK/LBJ and Bill Clinton examples of leftist economics? If so, it looks like in the US, what passes for leftist economics has a pretty good track record in terms of prosperity and economic growth. If not, then you really don't have much to talk or complain about because leftist economics hasn't been and isn't really on the table in US political life, including within the mainstream of the Democratic Party. (I'd go more for the latter contention, but that's because I know the difference between liberalism and leftism and I don't spend my life quivering about the Reds under the bed.)

MadisonMan said...

I'm thinking Bobsled and toboggan. If you don't take care of the bobsled run, then the bobsledders will use the toboggan run and ruin it.

Pogo said...

FDR had a shitty track record, extending the Depression by several years, and setting the stage for a demographic failure, but several generations later (i.e., now) ...and he admitted the pyramid scheme would fail in the future. Didn't give a shit.

Kennedy was no leftist. Cut taxes. The economy surged.

Nixon practice the worst command and control economics possible, Ford kept them in, as did Carter. What followed was stagnation and decline for 10 years, severe inflation, then a severe recession.

Reagan upended it, and we began to recover.

But decades of corrupt enlargement of the state, increasing welfare/Medicare/Medicaid transfer payments, intrusive regulations, selling homes to the insolvent, and now under Democrats a takeover of car companies, banks, and health care has stabbed the economy too many times.

Yes, it's your fault.

PaulV said...

Somefellow, FDR prolonged Depression with tax increases in 1937, JFK revived economy with massive tax cuts, LBJ & Carter, guns & butter and stagflation. WJC was lucky to inherit economy that had been recovering for 18 months, peace dividend and get to a Republican Congress which led to welfare reform and slower growth in GOVCO spending. Why ignore facts?

PaulV said...

Well said Pogo

edutcher said...

somefeller said...

Pogo says:The really cool thing about leftist economics is that the fact of repeated failures for their theories only means that it needs one more try.

Were the economic policies of Franklin Roosevelt, Harry Truman, JFK/LBJ and Bill Clinton examples of leftist economics? If so, it looks like in the US, what passes for leftist economics has a pretty good track record in terms of prosperity and economic growth. If not, then you really don't have much to talk or complain about because leftist economics hasn't been and isn't really on the table in US political life, including within the mainstream of the Democratic Party. (I'd go more for the latter contention, but that's because I know the difference between liberalism and leftism and I don't spend my life quivering about the Reds under the bed.)


What blathering nonsense. FDR attenuated the Depression, LBJ spent billions on the pipe dreams of the Great Society and the War On Poverty racking up huge debt in the process to the point Social Security had to be raided, and Willie swept all his problems under the rug for the next Administration. Except for being forced into a balanced budget and welfare reform being forced on him by a veto-proof Republican Congress, Willie made things demonstrably worse than better. HST kept the country in the doldrums with his policies and it wasn't until the Republicans started hacking away at the New Deal in the 50s - and really in the 80s - that the country began to see sustained prosperity over long periods.

As for JFK, he cut taxes, hardly the stuff of Lefty wet dreams. Some phony folksy trots out the new Lefty dodge, "I'm actually an independent, so the Left doesn't scare me", but, like PB&J, his basic argument is always based on a lie. The fact is liberalism died with Hubert Humphrey and it's a measure of how much even they realize how their ideas are failing that the Lefties have to try take up the guise of something else to pull the same old snow job.

somefeller said...

FDR had a shitty track record, extending the Depression by several years, and setting the stage for a demographic failure, but several generations later (i.e., now) ...and he admitted the pyramid scheme would fail in the future. Didn't give a shit.

Nice Liberty League propaganda. Last time I checked, the US economy boomed and America bestrode the world like a colossus after FDR and Truman. While part of that was due to the devastation of other economic powers, the US must have done something right. And the "demographic failure" is the same line of bullshit we've heard since 1935 about the New Deal, none of which has or will come to pass.

Kennedy was no leftist.

Exactly my point. No US President has been. Liberal, yes. Leftist, no. There's a difference, and the latter isn't particularly relevant in US politics, despite what the bedwetter wing of the right says over and over again. And Johnson kept JFK's policies going, with the US doing quite well economically until the Nixon/Ford years. Which party did they belong to again?

Reagan did great things, and he didn't do much to really pull back the government's role in the US economy. I also notice you ignored the Clinton boom. Or were you too busy reading the Starr Report to notice?

Face it - the US is a mixed economy, like all Western democracies, and has been successful as such. The state has a role in economic policy, but it isn't a Soviet-style or even Swedish-style system, and that form of capitalism has led to the most prosperous society in the history of the world. Anti-American malcontents of the right and left may dislike that, but those are the facts on the ground.

somefeller said...

Gee, edutcher, with all that ignorance on display, it's no wonder you're unemployed. By the way, I saw on another thread you mentioned you used your unemployment benefits until they maxed out. What a great libertarian capitalist! I guess you have something to thank FDR and LBJ for, huh?

Pogo said...

" Last time I checked, the US economy boomed and America bestrode the world like a colossus after FDR and Truman

key word:"after", that is, not until they left office and their methods were undone, albeit briefly.


FDR deepened the Depression, lengthened it, made millions suffer. And he started the big Social Security ponzi scheme that he knew at the time was going to crash in just a few generations, but he didn't care.

Pogo said...

"No US President has been. Liberal, yes. Leftist, no.

Obama is a leftist.

Pogo said...

"...unemployment benefits until they maxed out. What a great libertarian capitalist!

So the leftists crush the economy and then mock people who need help. Goddamn pricks, every one.

Like FDR, you don't give a shit how many lives you destroy with your incessant meddling and thievery. Then you mock the very people you pretend to be helping.

Disgusting amoral bastards.

dont tread 2012 said...

@somefeller

"While part of that was due to the devastation of other economic powers, the US must have done something right."

MUST have done something right?

Do you mean your beloved politicians, or the citizens of the United States?

Really, your tome smacks of policy worship and union groupthink.

Despite your best effort to muddy the waters, millions of Americans work their tails off amidst the roadblocks and ridiculous regulation dreamed up by the eggheads in DC. Americans are great at finding 'workarounds'. The only reason this country succeeds is because there are people willing to take risks, not simply comply with pinhead politicians.

So forget your stupid belief that somehow this country is as successful as it is because of a given policy. On the contrary, policies have unintended consequences that are exploited for the good of individual citizens, not politicians.

somefeller said...

Pogo:Then you mock the very people you pretend to be helping.

No, I mock people who love to dish it out nastily (by calling people Nazis/National Socialists, small-c communists, etc.) but who can't take it, as well as those who benefit from the very policies they deride, without acknowledging the benefits of such policies to many (including themselves). And I also like to mock dipshits as well. That's a guilty pleasure.

dont tread 2012 says: The only reason this country succeeds is because there are people willing to take risks, not simply comply with pinhead politicians.

No kidding. However, politicians and public policy professionals who set up the policy infrastructure that helps encourage prosperity do deserve some credit. Or do you think public policy is irrelevant to economic prosperity? And, yes, I do think America did something right during and after WWII, both its citizens and political leadership. And I'm grateful for that.

Pogo said...

"the policy infrastructure that helps encourage prosperity do deserve some credit."

What part of "FDR deepened and lengthened the Depression" don't you understand?

The prosperity you cite does not occur because of, but in spite of, those policies. Do you not see what is occurring in the EU due to those selfsame errors?

And the only policy that has been demonstrated to help, beyond roads and the military, is ensuring the security of private property and enforcing contracts, but the Democrats have done their damned best to destroy that in the past 75 years.

1jpb said...

Was Ike a lib?

Wasn't it his 91% that JFK dropped to 70%?

Also, is it too early to judge the W economy?

Supposedly, Mankiw et al were taking care of the long run. Are we to expect a W boom in 2030? How long will it take for the W/Mankiw policies to pay off?

Thankfully Bush got rid of Donaldson at SEC, Cox was a great help there. Also, moving from O'Neill, to Snow and Paulson was a good way to help the economy (for some of us). Then those evil doers, Donaldson and O'Neill, became BHO advisors. Too bad BHO couldn't get the winners to support him, I guess Cox or Snow or Paulson were not short run enough to advise a lib.

BTW, would cons prefer the economy of Reagan, or the economy of Bubba? After looking at everything (e.g. jobs created, tax rates for most folks, tax cuts for rich folks, GDP, unemployment rate, medium income increases, ultra rich income increases, inflation, number of folks in poverty, and anything other economic statistic that can be measured) which was a better economy.

The Crack Emcee said...

I started reading everyone's answers, and getting upset no one was playing the game, until I got to Ron's "Take care of the beer run and the chicken run will take care of itself..." and then I started laughing and didn't care.

Thanks, Ron.

somefeller said...

And the only policy that has been demonstrated to help, beyond roads and the military, is ensuring the security of private property and enforcing contracts, but the Democrats have done their damned best to destroy that in the past 75 years.

Wrong. While the things you mention are all good parts of a stable modern economy, so is the regulatory and public infrastructure state created by the progressives and the New Dealers. Do you think we'd have a prosperous financial system without a Federal Reserve, the SEC, the FDIC and such? Similarly, the government actions to guarantee the civil rights (and by extension, economic opportunities) of women and minorities has done a lot to improve economic conditions in this country. You can thank the post-WWII liberals (in both parties) for that.

By the way, the past 75 years have for the most part been pretty damn good ones for the US of A. If you think otherwise, that says more about your malcontent nature than it does about the economy or political structure of this nation.

dont tread 2012 said...

@somefeller

"No kidding. However, politicians and public policy professionals who set up the policy infrastructure that helps encourage prosperity..."

Really???

Policy this, policy that???

If you've ever worked for a company or corporation, then you know there are people that are paid to do something, whether they are actually needed, OR NOT (not so much these days I might add).

Politicians largely fall under this category. Hence, much legislation that exists is either never enforced, or unnecessary. Which is why many Americans cherish GRIDLOCK and PARTISANSHIP.

I reject your usage of 'public policy' and its importance to 'economic prosperity'. Whose prosperity? Public policy is code for control.

Pogo said...

"Do you think we'd have a prosperous financial system without a Federal Reserve, the SEC, the FDIC and such?

No, we'd have been more prosperous without them.

edutcher said...

somefeller said...

FDR had a shitty track record, extending the Depression by several years, and setting the stage for a demographic failure, but several generations later (i.e., now) ...and he admitted the pyramid scheme would fail in the future. Didn't give a shit.

Nice Liberty League propaganda. Last time I checked, the US economy boomed and America bestrode the world like a colossus after FDR and Truman. While part of that was due to the devastation of other economic powers, the US must have done something right. And the "demographic failure" is the same line of bullshit we've heard since 1935 about the New Deal, none of which has or will come to pass.


Try again. Every economic history of the Depression in the last couple of decades shows FDR made things worse instead of better. The propaganda here is from the Democrat Party.

Wrong. While the things you mention are all good parts of a stable modern economy, so is the regulatory and public infrastructure state created by the progressives and the New Dealers.

Also nonsense. The most important part of the Reagan Revolution was getting rid of the rats' nest of regulations set up by FDR. Roosevelt believed the US economy incapable of any greater growth and set up the regulations to maintain the status quo.

Gee, edutcher, with all that ignorance on display, it's no wonder you're unemployed. By the way, I saw on another thread you mentioned you used your unemployment benefits until they maxed out. What a great libertarian capitalist! I guess you have something to thank FDR and LBJ for, huh?

Try once more, smartass. What I stated is fact, well-documented and easily verified, but you knew that; Uncle Saul always told you when in doubt, deny.

I was laid off and 60 year old programmers are not in high demand, so getting another job is tough in an economy wrecked by the "politicians and public policy professionals who set up the policy infrastructure ". For somebody who claims to be so successful, you use capitalist like it's a dirty word, but I'm guessing it's easy to sit in Mom's basement and pass judgment.

1jpb said...

Was Ike a lib?

Pretty much.

edutcher said...

somefeller said...

FDR had a shitty track record, extending the Depression by several years, and setting the stage for a demographic failure, but several generations later (i.e., now) ...and he admitted the pyramid scheme would fail in the future. Didn't give a shit.

Nice Liberty League propaganda. Last time I checked, the US economy boomed and America bestrode the world like a colossus after FDR and Truman. While part of that was due to the devastation of other economic powers, the US must have done something right. And the "demographic failure" is the same line of bullshit we've heard since 1935 about the New Deal, none of which has or will come to pass.


Try again. Every economic history of the Depression in the last couple of decades shows FDR made things worse instead of better. The propaganda here is from the Democrat Party.

Wrong. While the things you mention are all good parts of a stable modern economy, so is the regulatory and public infrastructure state created by the progressives and the New Dealers.

Also nonsense. the most important part of the Reagan Revolution was getting rid of the rats' nest of regulations set up by FDR. Roosevelt believed the US economy incapable of any greater growth and set up the regulations to maintain the status quo.

Gee, edutcher, with all that ignorance on display, it's no wonder you're unemployed. By the way, I saw on another thread you mentioned you used your unemployment benefits until they maxed out. What a great libertarian capitalist! I guess you have something to thank FDR and LBJ for, huh?

Try once more, smartass. I was laid off and 60 year old programmers are not in high demand, so getting another job is tough in an economy wrecked by the "politicians and public policy professionals who set up the policy infrastructure ". For somebody who claims to be so successful, you use capitalist like it's a dirty word, but I'm guessing it's easy to sit in Mom's basement and pass judgment.

1jpb said...

Was Ike a lib?

Pretty much.

Pogo said...

In fact, I'd like to see you cite some proof that those organizations produced any prosperity at all.

somefeller said...

Pogo says:In fact, I'd like to see you cite some proof that those organizations produced any prosperity at all.

As I mentioned, the economic history of the US over the past 75 years is pretty good evidence that the underlying economic system works. In terms of specifics, the fact that small investors and savers returned to the financial markets and banks after the Great Depression, and the lack of bank runs since that Depression, would tend to support the idea that the SEC and FDIC have done a decent enough job in encouraging confidence in the financial system. And the fact that the US Dollar has been a stable currency for generations says something good about the Federal Reserve, not to mention its recent actions in providing liquidity to keep the economy from falling into a complete abyss. It's easy to sit on the sidelines watching a winning team and say "things could have been even better if we'd done things my way". It's harder to prove that.

edutcher says:Try once more, smartass. I was laid off and 60 year old programmers are not in high demand, so getting another job is tough in an economy wrecked by the "politicians and public policy professionals who set up the policy infrastructure ". For somebody who claims to be so successful, you use capitalist like it's a dirty word, but I'm guessing it's easy to sit in Mom's basement and pass judgment.

I never used "capitalist" as a dirty word. In fact, I used it to describe the engine of prosperity the US economy has been for decades. Reading comprehension fail. And I don't claim to be "so successful", just someone who can easily spot those who are motivated by seething class and cultural resentment and the need to blame others for their own shortcomings. Which is to say, I got you and the average Sarah Palin supporter pegged. Last, I'm writing this from a room in my house, not my mother's basement. But you are welcome to crash in that basement, unless you'd prefer sleeping under the bridge with the other trolls.

Pogo said...

"As I mentioned, the economic history of the US over the past 75 years is pretty good evidence that the underlying economic system works."

Taking credit for a business cycle is easy enough after a massive downturn. But it means you also have to take blame for the current downturn as well.

What is it exactly you did wrong to incur it?
What exactly did you do to fuck things up, and why?
Why aren't you doing a better job recovering?

somefeller said...

I'm still waiting to hear some convincing evidence regarding how the US economy would have been so much better off without a Federal Reserve, SEC or FDIC, Pogo. I'm going to bed, but you can write something up tonight I'm sure, while you're looking for Reds under the bed. Good night.

Pogo said...

Geez, somefeller, not willing to share how the Fed screwed things up so bad as to land us in 10% unemployment for years now?

Yet you seemed so confident they gave us 75 (75!!!!1!!) years of Growth.

What the hell happened? How'd you screw up so bad? And why? Some bad fish? A migraine? What was it?

Bruce Hayden said...

I'm still waiting to hear some convincing evidence regarding how the US economy would have been so much better off without a Federal Reserve, SEC or FDIC, Pogo.

Or, maybe the onus should be on you to show that the economy is better with them, than without. After all, you are the one claiming that intervention into the economy helps it.

As for the Federal Reserve, I would suggest that its report card has been mixed over the year. They started off a bit badly, by forcing the money supply into deflation at the worst possible time, through the Bank Holiday. It may be obvious now, but permanently shutting down all those banks was guaranteed (in retrospect) to decrease the money supply.

And, during the LBJ/Nixon/Ford/Carter era, the Fed kept focusing on interest rates, when they are a symptom, and not the underlying problem. So, the more interest rates would rise, the more money they would print to bring them down, and the more inflation would result, which would result in further interest rate increases. And, hence, Carter's stagflation. It was only when the Fed started watching the money supply, and not concentrating on interest rates, that it was possible to get inflation under control.

Of course, they may have to relearn this lesson, as they have played with the money supply over the last couple of years to keep interest rates low, in order to support the housing industry, after the bubble there had burst. It should be interesting to see if they can suck the excess money out of the money supply fast enough to prevent inflation when monetary velocity recovers.

I think that there are a lot out there who think that maybe having stayed on a gold standard may have been better over the last 70-80 years, instead of allowing the Fed to play games trying to compensate for business cycles with badly implemented monetary policy.

Pogo said...

Or maybe Obama should do what FDR did and just set the price for gold every morning, according to what he felt that morning while still in his jammies.

That worked out real well, only extending the Depression another 5 years or so.

Pogo said...

One Friday in November 1933, Roosevelt told Treasury Secretary Henry Morgenthau that he thought the gold price ought to be raised 21 cents.

Why that amount, Morgenthau asked. “It is a lucky number, because it’s three times seven,” FDR replied.

Morgenthau later wrote: “If anybody knew how we set the gold price, through a combination of lucky numbers, etc., I think they would be frightened.

Pogo said...

Source: *

Bruce Hayden said...

I am somewhat torn when it comes to whether the FDIC was good or bad. Bad was definitely (along with the Fed) preventing the banks that were "too big to fail" from failing. The reality seems to be that bailing them out was more political payback to Obama Administration supporters than having actually been based on sound economics. And, now, we see billions being made by some of those who were supported at the expense of U.S. tax payers.

The theory of the FDIC is not all that bad. But the amount that is guaranteed has moved up considerably over the years, and worse, is essentially meaningless in many cases. The big depositors, who should have been burned by bank failures, weren't.

So, essentially, these banks were able to borrow money at a negligible risk premium, knowing that the FDIC would bail out depositors, most often without any regard to the amount of money they risked. And, yes, this was one of the root causes of the S&L crash of the 1980s (though most of the S&L deposits were actually insured by another federal insurance program).

So, again, we have a situation where it is not clear whether or not the federal program was more damaging than helpful.

And, note that the programs picked here were cherry-picked as supposedly being beyond question. What about the dozens that are more problematic?

Bruce Hayden said...

Let me go on a bit about what happened with the S&L failures of the 1980s or so.

During that time, we witnessed a number of S&Ls grow rapidly. Some doubled in deposits in a year or two, and then doubled again.

How did they do it? They bid for CDs in a new national market. But because the deposits were federally insured, they didn't have to pay much of a risk premium for that money.

So, they then lent out the money at a higher interest rate. Unfortunately, they couldn't do that in their typical market - residential home loans, because those loans didn't pay enough to cover the cost of their borrowing (i.e. the CDs). They thus got further and further afield into areas where they had little, if any, expertise. And, their borrowing got more and more risky, in order to cover the increasing costs of their borrowing. And, every time one of those loans went bad, they had to move to even riskier loans to cover those losses. At some point, the bubble was sure to burst, which it ultimately did.

But keep in mind that the bubble wouldn't have worked without federally insured deposits, since otherwise, they would not have been competitive in their source of funds.

I should add that pretty much everyone in the industry knew what was happening, except, apparently, the regulators. My father was on the board of an S&L in Denver for 40 years, and they used to wonder how long before the S&Ls there playing this game, like Silverado (remember Neil Bush?), would fail. This was apparently a constant topic of conversation with the officers and board members during this period of time.

The whole Ponzi scheme was based on the use of OPM (other people's (taxpayer's) money). And who was left holding the bag? It sure wasn't the investors buying the CDs from the S&Ls playing this game - they were mostly covered, regardless of how much above the insurance limits they were.

Bruce Hayden said...

Changing tact a bit, I would suggest that another difference is that for liberals, what is important are good intentions, while good results are what are important for conservatives, when it comes to economics.

Thus, many liberals still support LBJ's War on Poverty, despite the fact that it was instrumental in breaking up the family structure of the underclass (esp. Blacks), and introduced a multi-generational dependency class.

But what makes Obamanomics worse than the economics of Carter, Johnson, and FDR, is that they really didn't believe in what they were saying that they were doing. I don't think that very many really believed that the "stimulus" bill would actually do anything to keep unemployment below 8%, etc., but rather, just figured that it would do so on its own, and in the meantime, they wouldn't let this crisis go to waste, and instead used it as an excuse to make massive payoffs to their political constituents.

You almost can't take them seriously there. Who could expect that the Cash for Clunkers program would have done anything except what it did do, which was to drive used car prices up, in the midst of a recession, while pushing new car purchases forward in time a couple of months? Indeed, it is difficult to find much of anything in that almost trillion dollars of spending that could reasonably be expected to have helped the economy.

The most humorous aspect may have been the bidding war that the Democratic leadership seemed to have gotten themselves into, predicting ever increasing Keynesian multipliers for all this misspent money. You knew it was a hoax, when the shovel ready infrastructure programs extended a decade into the future, with little of that money (which was a small part of the whole anyway) being spent the first year. And, how could it, with federal procurement requirements that the projects had to comply with? And, of course, anyone hired for those projects, as well as all the green stuff thrown in for the environmentalists, had to be done at union wages, none of which FDR had to contend with. Like I said, a hoax.

Ralph L said...

S&L failures of the 1980s
The initial damage was done in the inflationary 70's. Their old mortgages weren't keeping up with inflation, much less making them money.

Pogo said...

@Bruce Hayden

Well said. However, much as the S&L crisis is used by the left as an example of the failures of capitalism, they'll never admit the scandal was anything other than a classic example typical capitalist greed.

And since greed is by definition absent under leftist policies, its presence indicates that even more regulation and market control is needed than ever before.

Once all of the market is controlled, all greed and capitalist evils are gone.

And you have either the USSR or Zimbabwe.

Bruce Hayden said...

S&L failures of the 1980s
The initial damage was done in the inflationary 70's. Their old mortgages weren't keeping up with inflation, much less making them money
.

Maybe. One of the basic problems with mortgage lending up until mortgage loans were securitized, was that the lenders borrowed short and lent long. While the deposits that supported the loans were longer term than those of commercial banks, they weren't all that long term. Packaging and reselling of those loans allowed the lenders to finally get around this problem by better matching the term of the loans with the source of the funds.

Unfortunately, this ultimately caused other problems, that came home to roost in late 2008.

If the government hadn't continued to meddle where they shouldn't have, the packaging of loans would have been a good thing. But unbeknownst to many, a number of community activists, along with compliant members of Congress, notably on the Democratic side of the isle, and most notably Dodds and Franks (the same duo who gave us the recent "reform" of this mess), agreed with each other that owning a home was somehow now a right. And, so, the banks were placed under extreme pressure to loan money to people who most likely would not be able to repay it. Every time that a major bank would attempt to do much of anything, and, in particular, when it would attempt to purchase another bank, it would face a cabal of community activists and regulators who would push it for further commitments to doing more of this lending to uncreditworthy borrowers.

Of course, most of this feckless lending was covered by the housing bubble of the 1990s and 2000s. With constantly rising housing prices (fueled by low cost loans to uncreditworthy borrowers) the defaults were not all that bad - if a borrower did default, the lenders could easily get their money back by reselling the house for more than the loan. But, as with all bubbles, it had to burst. Which, it did.

Meanwhile though, Dodd's and Franks' little scheme to democratize home ownership had other unfortunate results. One was that all these potentially bad loans were tainting the mortgage loan packages, reducing what the lenders could get for the paper that they were passing down the line. And, to the rescue came some smart guys at the big investment banks that discovered that they could chop up packages of loans by risk, and sell the pieces (or tranches) of risk at different prices. Theoretically, this was a great idea. However, many of the buyers of the riskier portions of these bundles often were unaware of how risky their purchases were, and, shouldn't have been in that market in the first place (e.g. pension plans that were having to get ever higher returns to pay ever more generous pension promises, etc.) We all know how that turned out.

Bruce Hayden said...

Then, of course, you have to throw in Fannie and Freddie, which were turned into the lenders of last resort for these potentially (and ultimately) bad loans. It didn't help that by the mid-2000s, their management looked like Clinton Administration alumni parties, who invariably shared the Democrats' belief in home ownership for everyone, regardless of ability to pay for such.

What should be obvious by now, is that one hair-brained scheme by the Democrats after another to rearrange the economy, regardless of economic realities, to accomplish some social goal of theirs or another, has backfired disastrously. The reasons behind the failures invariably point to too much regulation and government intervention, not too little.

And, this is inevitable when we talk about government regulation and intervention. Why? Because the government has innumerable stake holders, and so many of them see personal advantage from bending the regulatory system to their personal advantage. So, for example, instead of a regulatory system that just protects the banks from themselves, that regulatory system now has to also support democratization of home ownership, regardless of financial ability, among its many, often conflicting, goals.

Bruce Hayden said...

And since greed is by definition absent under leftist policies, its presence indicates that even more regulation and market control is needed than ever before.

Once all of the market is controlled, all greed and capitalist evils are gone
.

Another difference between the right and the left, and between capitalism and socialization is the acceptance that greed is an innately human condition.

Socialism is based on the fallacy that humans are either not greedy, or that greed can be trained out of us. And, if we take too long, then the state will enforce that at the point of a gun. And, hence, totalitarianism is the natural and inevitable result of socialism, and, hence the name of Friedrich von Hayek's most famous book.

But it isn't just the ruled who are greedy, but also the rulers, and socialism, in all its guises, provides the rulers of such an economic state a new avenue to satisfy their greed, as evidenced by the special department stores and dachas of the rulers of the Soviet Union, and the sweetheart deals that enriched Dodd and Rangel. We may all be equal, but some are more equal, and those more equal inevitably benefit from their heightened equality.

Thrown in on top of that is the rent seeking that is an inevitable part of government power. The regulated often can do better with the regulatory system by enriching the regulators, or, at least ensuring their maintenance of power.

Dust Bunny Queen said...

I picked the long/short option.

In our family we have a saying about people's tendency to focus on the short term issues and ignore the Big Picture. Looking at the immediate instead of long term.

We say: "He's stepping over dollars to pick up dimes".

If you don't have long term goals and a game plan to reach those goals you are just floundering around and will never get anywhere.

As a business owner you know that you have to sacrifice in the short term to achieve the long term goal.

Marshal said...

"The state has a role in economic policy, but it isn't a Soviet-style or even Swedish-style system, and that form of capitalism has led to the most prosperous society in the history of the world."

It's really quite pathetic to read pretentious liberals whose analysis is limited to 'everything good in the economy is a result of what I support'.

The truth is that America grew from nothing into the most powerful economy in the world in a relatively short period specifically because of the freedom to act our country offered. Unfortunately our success allowed a political class to prosper, and ever since this political class has been reducing that freedom. As a result we see our economic success regressing to the mean. That's the effect of liberal economics.

Marshal said...

"And I don't claim to be "so successful", just someone who can easily spot those who are motivated by seething class and cultural resentment and the need to blame others for their own shortcomings. Which is to say, I got you and the average Sarah Palin supporter pegged. Last, I'm writing this from a room in my house, not my mother's basement. But you are welcome to crash in that basement, unless you'd prefer sleeping under the bridge with the other trolls."

Apparently he's less good at spotting his own need to feel superior.

27183 said...

I immediately thought "booty" and "dog"

Roger Snowden said...

I'm guessing Jason (the commenter) is a liberal. Objecting to being labeled seems a very liberal reaction. :-)

Personally, I tend to see the bigger picture as most critical-- the long view. But, to be sure, you must take care of the short term as well.

From a military perspective, you build strategy (long term) based on tactical (short term) capabilities.