Krugman on Madoff

Paul Krugman, incessant partizan and Nobel Prize winner in an economic specialization he seldom comments on, is wrong. Well, except when he’s right. In this article discussing the essential similarities between Bernie Madoff’s business model and that of much of the high-flying financial sector of recent years he is dead-on.

Consider this pretty straight-forward discussion of the investment techniques of a modern broker-

Consider the hypothetical example of a money manager who leverages up his clients’ money with lots of debt, then invests the bulked-up total in high-yielding but risky assets, such as dubious mortgage-backed securities. For a while — say, as long as a housing bubble continues to inflate — he (it’s almost always a he) will make big profits and receive big bonuses. Then, when the bubble bursts and his investments turn into toxic waste, his investors will lose big — but he’ll keep those bonuses.
O.K., maybe my example wasn’t hypothetical after all..

The fact of the matter is we've been hearing about this sort of thing in a variety of guises for a number of years. Krugman's assessment is not really wrong in any serious way. This kind of leveraging of risk is simply a way of putting the smell of theft at a great enough distance that the morally ambiguous need not be troubled by it.

In the grand scheme of things what, we should ask ourselves, is the real function of the financial industry in the world of production and consumption? It is to stand in the broad gray overlapping area between the boundaries of overwhelming risk and insignificant reward and make sober judgements about where the risk is not too much and the reward not too small. In that gray space these allegedly sober minds are supposed to help us allocate our resources so that the overall economy produces and consumes efficiently. If it is done well such service is worthy of reward befitting valuable advisors. It is not, and never has been worthy of the kind of excesses of wealth the industry has become famous for in recent years.

As a people we must come to grips with money. Those who husband capital well, and utilize it to make the value of labor ever greater so that we all can benefit by it should be provided a reward that permits an increase of that advance of productive efficiency. That is why the capitalist system rewards the owners of efficient and effective productive capital.

The financial services industry is a poor repository for such riches precisely because they don't operate factories, farms, transportation services, and retail goods markets. It is important that they have resources to do research into those things that will make their decision making processes better and move resources to where they are needed. That process, however, is not so important that we should starve other sectors of the domestic economy of capital. In the human body that part of the brain that does the same sort of stuff for us, largely the midbrain and brainstem, represent less than a third of our three pounds of brain matter. That pound of flesh gets more blood per pound that the rest of us on average, to be sure, but not by the margins we have seen in this industry. Instead, we have fattened our nation's midbrain up and let it become stupid. We now are paying with bad national metabolism.

What Krugman notes that is of further interest to me is that Madoff and others were considered brilliant largely because they were rich. That is a social disease we, particularly in America, have to disabuse ourselves of. It is a key to understanding why we have boom and bust debacles like the one just past, or like the dot.com boom, etc., etc. People fail to understand that wealth is created in production and transaction, they just follow the money wherever it goes, and when it evaporates because there is no "stuff" there they are all confused.

That is bad education. Since he's been right a few times lately, let's hope Krugman can recognize the limited profitability of bashing Republicans in the new order of things and figure out how to teach otherwise smart people about the real meat and potatoes of economics.

That would probably lose him his column at the Times.

Posted by Lee Emmerich Jamison at December 20, 2008 5:21 PM
Comments
Comment #272501

>That would probably lose him his column at the Times.
Posted by Lee Emmerich Jamison at December 20, 2008 05:21 PM

Lee,

As well it should…how dare he make sense when he is well aware he’s a member of the Main Stream Medea…!?!?!?

Posted by: Marysdude at December 20, 2008 5:53 PM
Comment #272503

Marysdude,

You get more interesting all the time.

Posted by: Lee Jamison at December 20, 2008 5:59 PM
Comment #272524

Lee,

It would all be laughable…if it wasn’t so damned serious…

Posted by: Marysdude at December 20, 2008 9:45 PM
Comment #272528

Wouldn’t it be nice if one of us was right about the majority of things? I can be right about Social Security, you can be right about the pronunciation of you name, and Krugman can be right about the economy…see…it all balances out in the end.

Posted by: Marysdude at December 20, 2008 10:38 PM
Comment #272532

Lee
Nicely turned phrases.
“..the smell of theft at agreat enough distance…”

I think you are wrong about Krugman’s partisanship. An intelligent and vocal opposition to the boneheaded Bush Republican economic policies that have wrecked the economy and whose effects will linger like a bad cold,making the recovery difficult and prolonged, is not an indication of partisanship, only informed intelligence. If Bushco had been making wise,not idealogically driven and stupid,decisions economically Krugman would likely have applauded him. We will find out soon enough when BHO starts effecting his economic plan. No doubt out of all the thousands of decisions him and his advisors will have to make, there will be some that Krugman will disagree with. I hope not too many as Krugman is a smart guy. I am pleased you have chosen to read him actually. There is still hope for you.

Posted by: bills at December 20, 2008 11:48 PM
Comment #272557

Lee >Paul Krugman, incessant partizan

No, not really except in the way that partisans on the other side of the aisle such as Faux news and Limbaugh see it. In general, most non-partisans find him to be fairly non-partisan. The people who scream the loudest about Krugman being partisan are those who think the Bush/Cheney agenda of capitalist neglect and incompetence is exactly the recipe for a global economic paradise, the brainwashed 28% who even now believe they didn’t de-regulate enough.

Lee >and Nobel Prize winner

Yes, definitely true. And he earned them.

Lee >in an economic specialization he seldom comments on, is wrong.

OK, now I’m confused. You say he’s wrong but never in any substantive way offer proof or example of what he has written or said that is wrong. In fact, the closest I see you approach that task is to say:

Lee >Krugman’s assessment is not really wrong in any serious way.

I’m forced to conclude that if a) “he’s not really wrong” and b) you never offer any proof or example of him being wrong, you must have just been kidding around in the first sentence, correct?

Lee >That is why the capitalist system rewards the owners of efficient and effective productive
Lee >capital.

That is the theory, all right, yes. In practice, as we have seen recently and for practically the entire history of capitalism, it does not work out so nicely as in theory. In general practice, capitalism barely works better than communism.

Lee >Since he’s been right a few times lately,

Well more than a few. Again, I challenge you to provide an example of him being wrong and proof of him being wrong in that case. Or, failing that, I challenge you to be an adult about it and admit you’ve made unfounded statements with no example and no proof.

Lee >let’s hope Krugman can recognize the limited profitability of bashing Republicans in the new
Lee >order of things

Again, give an example. Put up or shut up. Krugman does, I’ll grant you, bash IDEAS that Republicans have about crazy things like industries policing themselves or that the answer to every economic problem is de-regulation and tax-cutting. So do I. But I’m not familiar with Krugman EVER bashing Republicans on a pure personal partisan basis. I bet you can’t find an example.

Lee >and figure out how to teach otherwise smart people about the real meat and potatoes of
Lee >economics.

Unfortunately, the people he could teach are people who believe in things like industries policing themselves and tax-cutting and de-regulation as the only rational economic policies. These are faith-based economists and you cannot teach them anything which does not match their pre-conceived beliefs.

Posted by: Varsity at December 21, 2008 2:37 PM
Comment #272619

Lee
I read some recent Krugman today and he again makes sense. He sites a satirical piece in the ONION werein the headline reads,”Americans Demand Another Bubble”, The question is what happens after the downturn? His recommendation is that our prosperty,to be sustainable, should not be bubble dependant but instead rely on reducing the trade imbalance by increasing investment in manufacturing. You remember,actually making stuff and selling it.Not too leftist a concept. We should be but are not, thanks to Bushco,the world leader in enviornmental tech. Catch up is hard but we can do it.

Posted by: bills at December 22, 2008 6:17 AM
Comment #272634

“In the grand scheme of things what, we should ask ourselves, is the real function of the financial industry in the world of production and consumption?”

Lee wouldn’t we ask that question only if we were in an industrial based economy? It seems to me we are in a financial based economy now and are now reaping the rewards of this mistake.

As far as Krugman is concerned what has he done wrong other than be right in his predictions? I guess we could still follow ideological driven economist like Laffer despite his being wrong so often but look where that has gotten us.

Posted by: j2t2 at December 22, 2008 10:27 AM
Comment #272635

Varsity,

I’ll grant you, (Krugman does)bash IDEAS that Republicans have about crazy things like industries policing themselves or that the answer to every economic problem is de-regulation and tax-cutting.
But Krugman does not seem to have nearly as much trouble with the folly of greedy, self-interested human beings policing themselves when they have occupied the holy temples of government. In this respect he is a foolish as the people who believe markets are fuuly self-policing in real time.
In this regard, Varsity, you mistake conservatism for libertarianism. Hence your argument is a mischaracterization of our positions. Conservatives do not believe in no regulation. We believe in regulations that create market transparency. For example, the Madoff catastrophe was made possible because the particular form of service he pretended to offer, essentially a company built around managing it’s own assets, but designed to allow a form of unregulated partnership from outside, was not specifically addresses by any law. This didn’t bother the partner/investors because they perceived that they were being paid well though they knew nothing about how money was allocated within the company. Look at each of the major collapses in this market, in Enron, and in Tyco. You will find at its core some device that rendered a portion of the business or the market in general opaque.

That has to stop.

In the Madoff case, in Enron, at World Com, In Tyco, in the millions of investments in derivatives designed to operate under a calculus only a physicist could comprehend, and in numerous other schemes what you see operating is a primitive, fundamentally religious human psychology.

Humans want to believe, no matter how smart they think themselves to be, that there are hidden mysteries to which some leader or set of charismatic leaders hold a key. Some people will attach this reverence to a Madoff. Some will attach to a John Osteen. Some others will embrace a Jim Jones. Some others will set their allegience to a Barak Obama. They will defend their allegiences against the dangers of exposure by maintaining a resistance to efforts to make their targeted allegience transparent. Like aficionados of perpetual motion machines they prefer that the casing housing the works hide the suspect machinery.

The trouble with today’s swing of the pendulum is that it does not replace opacity with transparency. It simply says that the opacity liberals love, that of government, is better than the opacity they think conservatives love, that of industry. To the extent that either side gains the opacity of their particular religious-like affiliation, however, we all lose.

I fear the opacity of government far, far more than the opacity of industry. The current situation reveals how the opacity of private industry is self-destructive. There is a real market place in which industrial superstition eventually plays itself into folly and only portions of the economy collapse. No such thing applies in government.

A government can sustain the superstitious blathering of its mindless followers right up to the point where the whole society collapses.

Posted by: Lee Jamison at December 22, 2008 10:29 AM
Comment #272639

The only thing I have to say about Madoff and his fiasco is that it hammered a bunch of liberal democrats who hate america for being so prosperous and yet lost everything while being lied to by another liberal democrat (Madoff) who was tewlling them how much money they were making.

There is a God.

Posted by: Oldguy at December 22, 2008 10:53 AM
Comment #272640

Lee >But Krugman does not seem to have nearly as much trouble with the folly of greedy,
Lee >self-interested human beings policing themselves when they have occupied the holy temples
Lee >of government.

For the third time, I ask you to give an example of this. You are a prolific accuser of Krugman doing things you claim are wrong, with absolutely no evidence or support for it than your word that he does such things. Put up or shut up.

Lee >In this regard, Varsity, you mistake conservatism for libertarianism.

No, I know the difference between the two. It is Bush, his minions, followers and supporters including the entire Republican party and Faux news that do not understand the difference. From day one of his presidency, Bush has been all about destroying or emasculating every level of regulatory structure relating to the financial industry. Just look at his incomprehensible choice of Cox for the SEC chair , which by his own admission was asleep at the switch during the entirety of the the present financial crisis, especially regarding Madoff. That’s by Cox’s own admission.

Cox is the financial crisis’s equivalent to Katrina’s Mike Brown, both men with little or no experience in their field who intentionally and purposely watched things turn to crap and did nothing. And Bush of course, has said not a da-n thing against Cox, proverbially giving him the “Heckuva job” he gave to Brownie.

You tell me - is Bush a conservative or not? I say he is, or at least that most conservatives think he is. I think Bush and his 8 year reign of error is a perfect example of just what conservatism would like to see, which is the rich getting richer while the poor get poorer and die slow lingering painful deaths because they can’t compete in the rigged economic environment we have in this country.

Or is Bush a libertarian? No way, I say. A libertarian would never institute such things as faith-based charity or allowing (for example) pharmacists to deny legal, legitimate prescriptions based on their personal moral code.

So, no, it is not I who have confused libertarianism. It is Bush and all his supporters who have confused him with someone who gives a crap about anything but enriching himself and his supporters at the public trough. That includes you, Lee.

Posted by: Varsity at December 22, 2008 11:00 AM
Comment #272645

j2t2,

My point is that when you say our “industry” is financial services you are essentially speaking nonsense. It is not far different from saying our industry is gambling, or that we have no real functionality at all.

There is a certin extent to which, as a more education-oriented economy, we will inherently be more administratively focused. But if we are managing that well we will be owners and operators of PRODUCTIVE capital worldwide. Financial services should be a subset of such administration. Traditionally its percentage of an American economy that really was an owner of capital worldwide has been in the five percent range, as Krugman points out. For it to have ballooned to eight percent was a good sign that it was in an unsustainable bubble.

America can’t survive as just a brain for the rest of the world, and certainly not as only a subset of that. Our greater educational prowess (to the extent that is not just a farsical assertion) should make us more adaptable, better able to adjust the productive foundations of our economy so that we always have things to sell both we and the world need.

Where I disagree with Krugman is that he represents a swing of the pendulum of economic thought back toward a Keynsian sort of thought in which government has primacy as the engine of economic advance. In essence this is saying exactly the same thing as the markets were fooling themselves in saying with the financial services sector.

It is replacing one self-serving quasi-religious fantasy with the same fantasy cast in a different color of the same material. Government is just fanancial services wearing a different mask, like the sort of ancient theatrical character defined in a Greek persona. It does not make stuff. It just moves stuff around, all the while more easily hiding what it does.

Posted by: Lee Jamison at December 22, 2008 11:27 AM
Comment #272646

Too many people spend too much time playing with money in order to make money, instead of producing real value, benefits, savings, and increased efficiency.

Too many people dream of making enough money to simply live off of the interest and capital gains from that money.

And inflation helps to fuel that process, by providing the motivation for many people to run all about like chickens with their heads cut-off, looking for someplace to protect their money and savings from the erosion of their money by incessant inflation. We’ve had 52 consecutive years of positive inflation and federal deficit spending, and the $54 nation-wide debt ($67 Trillion including $12.8 Trillion borrowed from Social Security) may now be untenable (equivalent to $177K-to-$220K of debt per person for 305 Million U.S. population, which represents $590-to-$733 per month of Interest alone at only a 4.0% Interest Rate).

The irony of our pursuit to live off of our money is that the nation is now deeper in debt than ever before, in which the $54-to-$67 Trillion of nation-wide debt has grown from 100% of GDP in year 1956 to 390%-to-483% of the $13.86 Trillion GDP of year 2007.

Bernard Madoff (who made-off with $50 Billion on a giant Ponzi scheme) is reported to have created the biggest Ponzi scheme in history.
Bernard Madoff had a good teacher, and many willing victims deluded by greed.
However, the biggest Ponzi-scheme ever in the U.S. is the U.S. monetary system, which creates incessant inflation, and grows the debt pyramid ever larger, by creating debt-to-reserves at a ratio of 9-to-1 (i.e. 90% of new money is created as debt from only 10% (or less) in reserves; 95% of all U.S. money in existence is debt, and today, a lot of money is being created without the 10% in reserves).
Bernard Madoff’s Ponzi-scheme finally collapsed, as all pyramid schemes eventually do.
The U.S. government and Federal Reserve had one thing that Bernard Madoff didn’t have: the abiliity to create new money out of thin air.
However, many other nations have tried that, and that does not work either, since new money devalues existing money.
So, why do so many people (even many economists) now believe that we can borrow, create new money, and spend our way to prosperity?

New money won’t accomplish much unless it is also supported by real and sustainable production, and not more playing-with-money to make money, corruption, lawlessness, and growing government ever larger beyond current nightmare proportions. And that may not help much either, with so much existing, crushing debt.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 22, 2008 11:53 AM
Comment #272647

Varsity,

Bush a conservative? Hell no! Bush is a BIG GOVERNMENT eastern Republican. He has used every conceivable crisis to grow the size of government. He is also a big-organization corporate type, heavily favoring large corporations over small business interests, particularly in international affairs. I strongly oppose both strains of statism and gargantuanism.

Liberals love to paint him as a conservative because it plays well with their loud constituency just as loudmouth conservatives loved to paint the Clintons as uber-liberals because it played well with their loud constituency. In truth, there is not a lot of air between the two except in judicial matters. Both were terribly lax in oversight of large corporations, with Bush doing a little better at first in exposing Enron, Tyco, and Worldcom, then falling to the same temptations to favor large concentrations of money that bedevil politics of the dominant party whomever they may be.

Real conservatism does not favor grand concentrations of power, no matter who’s in charge. It, if it is intellecually honest, does not favor corporations big enough to overthrow governments, either. You can pollute the perception people have of conservatism by gluing a non-conservative like Bush to it, but that just resists debating real ideas like people’s freedom to pursue their own path economically and benefit by it or their freedom to choose their own belief structures and act on those.

Right now the debate is between corporatists of the government type versus corporatists of the massive international corporation type. There is no conservatism in either position. Krugman is wrong, in my opinion, because he casts no light beyond the media’s current stupid adherance to this narrow conception of the possible paradigms.

Posted by: Lee Jamison at December 22, 2008 12:02 PM
Comment #272650

Lee >Bush a conservative? Hell no!

OK, I guess I’ve been misreading practically everything you’ve ever written on this site. Most people who call themselves conservatives that I know of, including Faux news and the entire Republican party, call him a conservative for good reason I think.

Lee >I strongly oppose both strains of statism and gargantuanism.

Alright, you do. But in fact political conservatives favor the same policies as Bush because by so doing they can try to hold off what they perceive as gradual erosion of all that they hold dear from sexual morality to the Christian church to the old ways of doing things - stability for the power-entrenched in other words.

The conservatism you describe died as a political force around the time of the ascent of Gingrich, DeLay and the other post-Reagan legislators.

Prior to them, you’re correct that statism and gargantuanism was abhorrent to conservatives. But Gingrich et al figured out that they were never going to win with that strategy and sold out the nation and the world in pursuit of wins.

The conservatism you’re talking about is economic conservatism, something that was never enough on its own for the Republicans to really accomplish much. All economic conservatism ever promised as far as government was preventing bad things from being done rather than making good things happen.

Gingrich et al sold out to the cultural conservatives and now conservatism is less about small government than it is about government pushing powerless (i.e. relatively less wealthy, say $500,000 in wealth or less) citizens around. And that has been easily extrapolated by conservatives into doing things like stealing social security to waste on unneeded defense acquisitions, then telling those who think SS should be fixed that it is and always has been a Ponzi scheme, the money’s all gone and should be done away with. Sound familiar? Or are you denying that’s not a basic conservative gambit?

I guess what I’m saying is that if you want to be honest and be conservative, you need to make clear all the way up front whether you’re purely an economic conservative, purely a social conservative or a mongrel. My sense is you’re trying to claim the economic conservative high ground but, again, your previous writings bely that claim.

Bush is clearly of the social conservative ilk in spite of your pronouncement that he is not a conservative. And, in the areas in which he did not expand government, such as financial regulation, he behaved like a classic economic conservative as well, preferring to cut taxes and de-regulate. In the areas where he DID expand government, he behaved as a post-Reagan conservative in terms of pushing citizens around.

So I’ll take your word for your being a conservative, but not for “Krugman is wrong”.

I’m still waiting for one specific example of where the Krugmeister was wrong and proof of him being wrong.

Posted by: Varsity at December 22, 2008 12:38 PM
Comment #272656

“Where I disagree with Krugman is that he represents a swing of the pendulum of economic thought back toward a Keynsian sort of thought in which government has primacy as the engine of economic advance.”

Lee globalization has changed things since it has reared it’s head once again. We cannot allow corporations to make decisions that affect our Country. Corporations have certain and specific tasks, to make money for it’s shareholders. For us to continue to believe that corporations should or will watch out for the best interest of our country is wrong. We have seen this in action for the past 30 years and it has served to benefit only the multi-national corporations not our country. We must learn to distinguish between the two. Multi-national corporations are not patriotic nor are they charged with looking out for our best interests. We the people must, via the government, decide what is best for this country, not corporations.

Posted by: j2t2 at December 22, 2008 2:34 PM
Comment #272665

>Humans want to believe, no matter how smart they think themselves to be, that there are hidden mysteries to which some leader or set of charismatic leaders hold a key. Some people will attach this reverence to a Madoff. Some will attach to a John Osteen. Some others will embrace a Jim Jones. Some others will set their allegience to a Barak Obama. They will defend their allegiences against the dangers of exposure by maintaining a resistance to efforts to make their targeted allegience transparent. Like aficionados of perpetual motion machines they prefer that the casing housing the works hide the suspect machinery.
The church can sustain the superstitious blathering to its mindless followers right up to the point where the whole society collapses.
Posted by: Lee Jamison at December 22, 2008 10:29 AM

Lee,

I changed a word or two (bold print), but I’m glad it was YOU who said it the way you did.

Posted by: Marysdude at December 22, 2008 3:38 PM
Comment #272691

Varsity,

Your assessment of when and how conservatism, a sustainable conservatism founded not in big money and polling data but in what we hold to be values of representative government, was shoved from the stage is probably pretty close to correct. It died the moment Republicans in office stood up to the constituency of term limits (1995), essentially saying they had promised that to gain office so they could now ignore it.

Marysdude,

Fine, yes, that is a cost of the innate religious sensibility of the human animal. My own theological training is a key to recognizing the difference between the superstitious desire to believe in strings suspending and directing me from some unknown in the sky, or on Wall Street, or in Washington,D.C., and a desire founded in Wonder to read into the mysteries of the existential reality beyond my own.

This is not the place to have a deep discussion on theological matters per se, but it is a great one for pointing out someone can deny the supernatural from now till Hell freezes over and still be in the unshakeable grip of the same sort of religious-like thought that would once have burned your wife at the stake because she didn’t drown when tossed in a well. People defend themselves against the idols they perceive and recognize, while still falling prey to the internal mechanisms that create idols in the first place.

Posted by: Lee Jamison at December 22, 2008 5:30 PM
Comment #272694

OK, Lee, that’s what I was expecting.

Also, since you have as yet failed to cite a single example where Krug is wrong (in fact not even a single example where he may not be wrong but you disagree with him), I’m forced to conclude that all you statements attacking him were nothing but a lot of hot air.

Apology to Krugman accepted.

Posted by: Varsity at December 22, 2008 5:41 PM
Comment #272695

j2t2,

Didn’t I just go though the better part of a post saying I didn’t want corporations being able to run the world? I don’t care if they are so-called for-profits like Exxon or so-called non-profits like the United States Federal Government. There shouldn’t be any corporation (let alone a world government) that can run, and thus ruin the world. Don’t let anything get so big you can’t put checks and balances on it.

Where do you think I disagree with what you were saying?

Posted by: Lee Jamison at December 22, 2008 5:41 PM
Comment #272696


There were people who knew what Madoff was doing and did nothing to stop him.

Some people warned that others were trying to instigate a huge inflation in housing and a bubble, they were ignored. Others warned for years about what was going to happen and they were ignored.

The evidence suggests that what has happened was deliberately done for profit and other motivating factors. Did all the money that was lost wind up in some people’s pockets or did it just vanish into the other dimension where we get our new money from?

Obama’s government is going to try to help stimulate an economic recovery with spending on infrastructure. This has had success in the past because for every dollar invested on infrastructure by the government, three dollars are invested by the private sector. The government builds new roads, bridges and intersections. The private sector invests in new business, more urban sprall and then large shopping areas. That may not be the case this time.

Posted by: jlw at December 22, 2008 5:44 PM
Comment #272697

Lee >Don’t let anything get so big you can’t put checks and balances on it.

I thought you said you were an economic/fiscal conservative….

“Don’t let anything get so big you can’t put checks and balances on it” smacks of governmental regulation, intervention and intrusion into the all-knowing markets.

Posted by: Varsity at December 22, 2008 5:48 PM
Comment #272721

Lee yes we are nearing agreement on this whether it be a either a liberal or conservative viewpoint or neither.

My point in my last comment is either these global corporations will be the engine of economic advance or governments will. The void will be filled. Perhaps oh John Maynard wasn’t so bad after all. Until something better comes along we need to get away from supply side economics as it hasn’t worked for all of us.

Posted by: j2t2 at December 22, 2008 8:19 PM
Comment #272736

Lee
Looks to me that large industry and government have usually been sybiotic. This is not always a bad thing. Much depends on the balance in the relationship and quality of the government.
Krugman speaks of what policies should be after the downturn. He believes we need to address the balance of trade by investment in manufacturing and ,this is important, generally keep free trade as a hope to billions around the world. In order to do this he proposes softening the ravages from global competition by strengthening the US social safety net. Healthcare is great example. If ones family has healthcare access its easier to accept somewhat lower saleries and not panic and insist on protectionist measures. To arrive at that kind of sustainable economy government has to work with industry and provide this safety net. The private sector has shown repeatedly it is just no capable of it nor should it be.

Posted by: bills at December 23, 2008 6:35 AM
Comment #272799

I’ve said repeatedly I actually like the French system of social provision of medicine. It centralizes funding and greatly reduces tort burdens but does not punish private providers for not being a part of some mandated system, and is does not, to my knowledge, criminalize private pay provision of services, something that is clearly a part of some emerging Democrat plans.

Much of the dabate here is over whether we think private industry big-wigs should be masters of the economy or government big-wigs should be. I say neither. Great concentrations of economic decision-making power (as in so much of the REST of the French economy) in either the top brass of the private or public sectors guarantee failure.

No one can control outcomes, period.

But, for the time being, we are in an intellectually vapid tennis match between mavens of the poles of incompetence.

Posted by: Lee Jamison at December 24, 2008 1:45 PM
Comment #272826

Yeah, Welles-Fargo was just today authorized to buy out Wachovia…didn’t we just travel down this ‘Road to Perdition’…???

Posted by: Marysdude at December 24, 2008 8:30 PM
Comment #272834

“Much of the dabate here is over whether we think private industry big-wigs should be masters of the economy or government big-wigs should be.”

Lets see a democratically elected President and Congress with a Constitution and Bill of Rights or a dictatorship with his cronies on the Board of Directors? Hhhmmm… This would be a no brainer for most people except we have suffered the undue influence of the dictators and their lobbyist this past 30 years and such inept leadership this past 8 years.

A merry Christmas to all.

Posted by: j2t2 at December 25, 2008 9:26 AM
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