Tuesday, August 31, 2010

All the ways to Kill an Economy

Our Macroeconomic Fetish - Forbes.com:

One of they liberal problems is that they never know "when to say when". Everything they want calls for more, more, more ... more stimulus, more taxes, more entitlements, more regulation, but they have zero concept of "enough". They are addicted to government in the same way as a heroin addict is addicted to their drug of choice.

Now the semi-thoughtful liberal will say "conservatives are just the same with money, they want more, more, more money for the rich, and there is never such a thing as enough".

To which I'd reply, spending and making are NOT the same thing! Bill Gates is fabulously wealthy because he was the best at putting personal computers on everyone's desk. Warren Buffett is fabulously wealthy because he is the best allocator or scarce economic resources in the world. Putting limits on either of these guys limits us all -- not just them. Taking both their fortunes and spending them buying votes from unions doesn't grow a thing (other than more government bureaucracy when the same crooks get elected).

Great article, read it. A sample on the lack of limits:

"The situation is only worse because while our Keynesian disciplines preach the need for more stimulus now, they offer no explanation as to how much stimulus is too much. The law of diminishing returns applies to every known human activity, including government decisions to prime the pump. Yet both Tyson and Krugman give us no hint about when to quit or why."
Basically, there is more than one way to kill an economy, and BO and company are coming close to finding them all.
It is possible to tell a similar tale of woe in virtually any other sector that comes to mind: health care, energy, environment, banking and money, securities regulation, corporate policy, intellectual property. At every stage we see a populist frenzy to support new layers of regulation, each of which in its own way kills jobs and chokes off economic growth.

In sum, there is more than one way to kill an economy. Ours is dying a death of a thousand cuts, which no stimulus program can cure.

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