Now that the Left has achieved its long-sought goal of nearly complete control over the delivery of medical services in the United States, it looks for the nonce like a spent force. Evidence of this comes today from the electronic pen of the Yale economist Robert Shiller. In an op-ed for the New York Times titled The Survival of the Safest, he goes into a tiresome and partly inaccurate discussion of labor markets being inflexible re wages, wanders around with some irrelevant anecdotes, and then demonstrates that he has no real ideas anymore by suddenly saying only at the very end of the piece:
Sometimes the private sector needs help from the government, and this is one of those times. We need to break the cycle of protracted unemployment and sagging morale through big government programs to create millions of jobs.
I read the article looking for insights and facts. When I came to that end, I gave a mental "Huh?". I was disappointed. I want icons such as Shiller to come up with brilliant ideas that challenge my (different) philosophy. That's how societies improve themselves, with the honest exchange of ideas on how to improve matters.
One of FDR's accomplishments was that his team came up with specific projects that benefited the country, whether it be post office (re)construction, electrification projects, and whatever else. There was not a lot of non-welfare payment to people to just sit there, complaints of payments to wasteful leaf-rakers by critics notwithstanding.
Dr. Shiller echoes the Obama "stimulus" lead by vaguely proposing that big(ger) government will help save our economy. But where are the specifics, Dr. Shiller? Do more roads urgently need repaving? Should government put more unemployed auto factor workers back to work making more autos that American buyers are too tapped out to afford? He does not say. If he had some great ideas, such as inventing the Internet or creating an Interstate Highway System, he would say so. He doesn't, and thus we conclude that he is bereft of any ideas other than that the "aggregates" would sure look better if big government got even bigger.
Dr. Shiller co-authored the book Animal Spirits last year with George Akerlof (Janet Yellen's husband), who is a Nobel Prize winner in Economics. I reviewed this popularized collection of Keynesian thinking for Naked Capitalism. Among many other liberal tropes, the book repeats the idea that workers are still in the habit of falling for the "money illusion"- that they are happier with, say, 4% raises (taxable) and 3-4% inflation than no raises and no inflation. Haven't economists realized that we're wise to that game? It only works when people expect prices to revert to normal (flat to down due to productivity gains), as was common under a gold standard. I Emailed Dr. Shiller for the evidence that this money illusion actually is valid; unsurprisingly I have not heard back from him.
In 1994 and for a few years thereafter, Republicans seized the Perot mantle and delivered balanced budgets and welfare reform. They then ran out of ideas, proved that their term limit cause was a sham, and joined with the Clinton-Rubin axis to begin looting the country. The Democrats swept to Congressional power in 2006 in good measure by pointing out Republican corruption. Since coming to power they have also proven themselves feckless. Now they are reduced to stalwarts such as Dr. Shiller fooling no one but the Party faithful by hiding his key policy point till the last sentence of an op-ed in the liberal party's #1 newspaper of record. Somehow I don't think many votes were swayed by this piece.
The current political woes of the Dems are compounded by the publication of "Obama's War" by Bob Woodward. As this blog has been pointing out for many months, the Pak-ghanistan War is going badly for the U. S. Unlike the Viet Nam War to which it has so many parallels, it is being ramped up in difficult economic times with the warring country (us) in a deteriorating fiscal position. The time-honored way to pay for wars even in good economic times such as the 1960s is with inflation; in worse times, it's a no-brainer.
So we look to a have an LBJ-type president, though without either his outsized persona and knowledge of Washington. We have both big social changes and a deteriorating surge in Asia. And now we look to have the other party getting close to being able to demand a bigger piece of the spoils. Both parties want to point to greater employment, and absent another major economic downturn, they want the private sector to accomplish this. Thus both parties want a weaker dollar, and will swallow higher inflation, which they will blame on OPEC, hot Russian summers, the gods, and anyone but themselves and their order-takers at the Fed.
I'm therefore looking for stagflation within the setting of a chronic mild depression for the middle class. In other words, back to the 1940s (without WW II) and the 1970s. Not that the markets haven't moved in that direction already. From an interest-rate standpoint, we're in the late 1930s or 1940s; rates are low and have yet to trend upward on a long-term chart.
On this reasoning, I have expanded my weak-dollar-themed investment purchases to include oil. Given that growth is strong in many parts of the world, I purchased two long-favored stocks, Apache (APA) and Helmerich & Payne (HP). These companies' charts are relatively trendless. Time will tell.
The ancien regime in Washington has lots of life left. It controls the press (the media) and more importantly the printing press and the enablers of said press, namely Big Finance. My speculation is that the era of Big Government is peaking for a while, but the era of big spending and big-time money printing will continue until the foreign military adventure(s) cease and the neo-Perot balanced budget movement gains traction, which is quite a big "maybe".
Individual investors who simply want to secure a reasonable financial future have been reduced to speculators by the influence of inflationists such as Dr. Shiller and his Krugmanite cohorts, who appear never to have encountered an economy that does not call for bigger government, with increasing cumulative deficits as far as the eye can see, and far beyond. As Ralph Kramden might have said, Ad astra, Alice; we're leaving the moon behind!
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