Conservatives are their own worst enemy

All liberals (or socialists) have to do is sit back and wait for conservatives (European liberals) to screw up.

In the 1920s conservatives had produced a very dynamic low-tax free market regime.  But they were obsessed with “sound money’ and when the value of gold started rising sharply they refused to devalue—producing a deflationary depression.  The statists took over and blamed capitalism.

In the 1990s neoliberals in Argentina produced fast growth with free market policy reforms.  For a brief period they seemed to be following in the footsteps of Chile. But they were obsessed with sound money, and refused to devalue when the dollar soared in value during the late 1990s. Another deflationary depression, another promising government replaced by statists who blamed it all on “neoliberalism.”

Socialists have no better ally than hard money nuts like my commenter “Geoff.”

Fortunately Sweden is a more sensible country than the US or Argentina, so the stakes are nowhere near as high.  But the center-right government of Sweden that did so many good things is about to be tossed out of power because of their obsession with tight money.  They got off to a promising start in 2008-09 with a sharp devaluation, and recovered faster than other European countries.  But then they started tightening policy even though they were falling well short of their legal mandate in terms of both inflation and employment.  (Sound familiar?)  Vague fears of “bubbles”.  (Sound familiar?) In a very good post on Sweden, Marcus Nunes explains what caused Lars Svensson to quit the Riksbank in disgust.  And The Economist presents the political consequences of the tight money:

With just a year to go until the next election, most polls show Mr Reinfeldt’s four-party centre-right coalition, which has been in power since 2006, trailing far behind the opposition. A July poll by Demoskop, a pollster, found only 37.1% backing the coalition, against 50.4% for the Social Democrats, the Greens and the Left Party combined. Two of Mr Reinfeldt’s coalition allies, the Centre Party and the Christian Democrats, may not even get over the 4% parliamentary threshold.

What has gone wrong? Compared with most of Europe, Sweden has done well. But unemployment is a running sore. It was a big reason for the Social Democrats’ defeat in 2006, when the rate stood at only 6% and Mr Reinfeldt promised to boost jobs by cutting income tax and welfare benefits. Today unemployment is above 8%, and youth unemployment is higher than in any other Nordic country. The Social Democrats’ leader, Stefan Lofven, sees this as his ticket to power, and is making employment his priority.

When Mr Reinfeldt was re-elected in 2010, the economy was booming. In that year GDP grew by 6.6% and Anders Borg, the finance minister, was toasted around Europe for his fiscal discipline. This time the economy will be less helpful. Lower demand and a strong krona have hit exports. After a narrow escape from recession in 2012, most analysts see growth of only 1-1.5% this year.

When will they ever learn?


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95 Responses to “Conservatives are their own worst enemy”

  1. Gravatar of Mark A. Sadowski Mark A. Sadowski
    14. September 2013 at 07:37

    Scott,
    I’m loathe to do this to you but I’m putting an off topic comment here because I’d rather not put it where it probably belongs.

    Yesterday you said the following:

    “As the role of cash has increased, bank deposits have become steadily less important with both DDs and TDs shrinking as a share of GDP.”

    I have a FRED graph displaying commercial bank demand and time deposits (blue) with the monetary base (red) as a percent of GNP/GDP going back to 1919:

    http://research.stlouisfed.org/fred2/graph/?graph_id=137162&category_id=0

    As you can see commercial bank deposits as a percent of GDP followed a long downward trend from the end of WW II to 1995 but have turned sharply upwards since. They were 52.4% of GDP in 2013Q2 which is higher than at any point except during the latter half of 1932 when they reached 54.7% of GNP.

    Of course there are both broader and narrower measures than “commercial banks” but this is the only data series That I can find that can be consistently defined for such an extensive period of time.

    I was wondering if you had a comment.

    P.S. I had a back and forth with Cullen Roche yesterday that was interesting. It was like pulling teeth but he finally admitted that if I take out a loan in currency and put it in my personal safe it reduces reserves balances by the exact amount of the loan.

  2. Gravatar of Benoit Essiambre Benoit Essiambre
    14. September 2013 at 08:03

    I feel this hits both the left and the right. Whoever was in power when the central bank was too tight gets blamed. On the flip side, whoever was in power when monetary policy was right will get praises even when they didn’t do much good to the economy.

  3. Gravatar of Greg Ransom Greg Ransom
    14. September 2013 at 08:10

    Nixon and Arthur Burns saw it your way, Scott, leading to the massive Nixon landslide of 1972 — and the massive inflation of the 1970s and the election of Jimmy Carter.

    The Weimar neoliberalism of the 1920s saw it your way, Scott, leading to electoral success in the 1920s — and then to hyperinflation and the takeover by Adolf Hitler.

    Patholigical deflation is a risk, so is pathological inflation.

    Note that both Nixon and Weimar used fiscal spending beyond the means of the country as well as easy money to boost their popularity, as well as the short term economy.

    What can’t go on forever, won’t.

  4. Gravatar of Morgan Warstler Morgan Warstler
    14. September 2013 at 08:13

    Sadowski, good for you! Getting Roche to bend on GI / CYB vs. MP was similarly painful.

    Scott, this is what you are on this earth to accomplish.

    It isn’t enough to dream up MP that works best, you actually have to SELL IT to the deciders. You and I both know, it ain’t the bankers, it’s the conservatives.

    As efforts to sell NGDPLT this is like a C minus.

    Let’s get real:

    Your target is Rand Paul. And he’s totally convinceable. He’s running for President, he’s the LAST guy anyone on the right would expect this from.

    But NGDPLT offers him a very interesting compromise, to the BIGGEST fear the money guys will have about him.

    If you think about it, everyone on the right loves his small govt. stuff, they are moving towards his non-military stuff, but the MARKET, the Fortune 1000 crowd, they know he’s not there for them.

    NGDPLT is a very Rockefeller Repub bone to toss them. Sure he’ll tear down the crony capitalist stuff and he’ll rip up the subsidies, BUT he’s not a goldbug like his dad!

    You got King Dollar, Larry Kudlow. Rand Paul is gettable, he is afterall a pragmatic libertarian, and of all the GOP candidates, he gets the most from MM.

    Everything you write, remember the audience is Rand Paul.

  5. Gravatar of ssumner ssumner
    14. September 2013 at 08:28

    Mark, Yes, I erred. The data series I used did not have all types of bank deposits. But surely bank deposits have a long downward trend, as you show, and the recent surge reflects near zero rates.

    Currency is much more indicative of the modern economy than bank deposits.

    Greg, History is not your strong suit. Hitler was going nowhere in 1929. Then a massive deflation (not hyperinflation) in the early 1930s put him in power. Tight money killed tens of millions of Europeans.

    Morgan, The audience is my fellow macroeconomists. They decide what sort of monetary policy we’ll have, not the junior senator from Kentucky.

  6. Gravatar of benjamin cole benjamin cole
    14. September 2013 at 08:59

    Scott Sumner, you don’t understand. Some things are more important than prosperity. A stable and strong dollar is one of those things. It is worth postponing prosperity, even if permanently, to preserve the value of the dollar.

  7. Gravatar of Mike Sax Mike Sax
    14. September 2013 at 09:12

    Mark do you have a link for you and Cullen? Which post was it?

  8. Gravatar of Waffles Waffles
    14. September 2013 at 09:35

    One institution to fault might be the very idea of a gradient between free-market organization and socialist/command-and-control organization. The idea has a long history and is the (American) conventional wisdom outside of political science, but I think there are few reasons to prefer it over the “varieties of capitalism” approach developed by political economists in the 1970s and beyond. I’m all for conceptualizing politics as a single axis when talking about the specific initiatives of a two-party system. But when you’re taking an international perspective and start talking about major changes to the orientation of national state-market systems in a region, there are many problems inherent in categorizing the world into states that are more or less “free market oriented”. The fact that there is no such thing as a “free market” monetary policy contra the beliefs of sound money people is one example of many of flaws in the marketer-statist dichotomy. By leading your readers to also think in that dichotomy, you’re perpetuating the very institution that allows the sound money people to ride the coattails of what you would consider the “good Right”.

  9. Gravatar of TravisV TravisV
    14. September 2013 at 09:42

    Conservatives also don’t grasp yet that tight money resulted in Obamacare, government stimulus and bailouts of GM and banks.

    They need to pay more attention to Ramesh Ponnuru and Jim Pethokoukis.

  10. Gravatar of TravisV TravisV
    14. September 2013 at 09:44

    Morgan,

    No Republican candidate is stupid enough to endorse Market Monetarism (which advocates easier money) in the Republican primary.

    The better candidates will avoid bringing the issue up and stay very non-specific. Wasn’t that Romney’s approach in 2012? I really really doubt that Romney’s approach to monetary policy would be any worse than Obama’s.

  11. Gravatar of Mike Sproul Mike Sproul
    14. September 2013 at 09:53

    Scott:

    History provides a long list of examples of conservatives shooting themselves in the foot with “hard money” policies. Early American colonial legislatures argued about it endlessly. The same arguments came up during the American and French revolutions, and in the American debates over greenbacks and free silver, to name a few.

  12. Gravatar of Mike Sax Mike Sax
    14. September 2013 at 09:58

    “Conservatives also don’t grasp yet that tight money resulted in Obamacare, government stimulus and bailouts of GM and banks.”

    They also don’t grasp that Obamacare is RomeyCare, ie, was a Republican alternative to universal government healthcare in the first place. Romney’s campaign remains a highwater mark in dissonance as he would both take credit for ACA and vow to ‘end it on day one’ in the same sentence.

    “I really really doubt that Romney’s approach to monetary policy would be any worse than Obama’s.”

    We know on healthcare their approach was literally the same.

  13. Gravatar of TravisV TravisV
    14. September 2013 at 09:58

    Morgan,

    The more I think about it, I’m really really hoping and praying that Paul Ryan will suddenly see the light and stop advocating tight money. He has a lot more influence among elites than Rand Paul does, and that’s what really matters.

    If Ponnuru and Pethokoukis get through to him, then maybe Paul Ryan will avoid bringing the issue up and stay very non-specific, like Romney did in 2012.

    I think even Prof. Sumner agrees that that would be very helpful.

  14. Gravatar of Mike Sax Mike Sax
    14. September 2013 at 10:00

    I also predict within a few years-around 2018 and 2020, the GOP will give up trying to abolish Obamacare and run o ‘saving it’ just as they now do regarding Medicare.

    By then they may even like Obama-after all, they hated Clinton every bit as much in the 90s and have since become his biggest fans.

  15. Gravatar of Mark A. Sadowski Mark A. Sadowski
    14. September 2013 at 10:19

    Mike Sax,
    You can find the exchange between Cullen Roche and myself here:

    http://pragcap.com/interest-rates-and-monetary-aggregates-during-the-lesser-depression-part-1

  16. Gravatar of jknarr jknarr
    14. September 2013 at 10:53

    Tight money centralizes political power, as only the strongest balance sheets are left standing. When only the Feds have the cash, states, individuals, and corporations all bend the knee.

    Look away from DC and Wall street if you want to promote easier money. Your money capitols aren’t interested in listening.

  17. Gravatar of TravisV TravisV
    14. September 2013 at 11:15

    jknarr,

    Your theory is dubious. For example, why in the world did Washington enthusiastically jack up NGDP growth and inflation to super-high levels in the 1970′s?

    Macroeconomics is not a zero-sum game. Almost everyone is worse-off as a result of tight money, including Wall Street and Washington, D.C.

  18. Gravatar of jknarr jknarr
    14. September 2013 at 11:30

    Wow, Cullen Roche looks like a colossal jerk ( and more than a bit thick).

    Trav, low NGDP means low incomes and state tax revenue. Low income and revenue leads to borrowing ( at low ngdp inspired interest rates).

    Because incomes are suppressed, you go to wall street and dc for the cash. Not surprisingly, there are strings attached. Banks grow ginormous and to-big-to-prosecute, and states become handmaidens of the federal government.

    Federal and wall street power eminates from tight money. If ngdp were higher, states and households could tell these guys to go pound sand.

  19. Gravatar of Morgan Warstler Morgan Warstler
    14. September 2013 at 11:30

    TravisV,

    You know why Monetarism exists today?

    Milton Friedman.

    You know why Milton Friedman exists today?

    Because he was elegant and consistent about government being a cancer.

    He didn’t say “do MP and the economy will said” he said “shrink govt. and the economy will soar”

    AND THEN, to shrink govt. he was a monetarist.

    Do you get the same feeling from Scott?

    No.

    BUT, we all know Scot actually feels the same way about govt.

    The only thing I’m asking Scott to do, is say HE INVENTED NGDPLT bc in his estimation, it is the best way to shrink govt.

    You don’t get to sell monetarism, which is AT ITS CORE an anti-government (anti-fiscal) strategy, without meeting the anti-government crowd and kissing their ring.

    Milton Friedman ONLY exists bc he woke up everyday, found a Paul Krugman, and abused him in public, and he didn’t abuse him for being dumb about MP, he abused them for believing in govt.

  20. Gravatar of Tom Brown Tom Brown
    14. September 2013 at 11:55

    Mike Sax, check your comments. I gave you a link there.

  21. Gravatar of happyjuggler0 happyjuggler0
    14. September 2013 at 12:18

    Re: Yellen vs Summers

    Speaking of influencing monetary policy, has anyone tried calling out Obama on why he is intent on nominating yet another white male for Fed chairman, continuing a 100% history of white males running that institution? Yellen is a fabulous choice completely on the merits.

    How about some change Obama? Or do you think only white males are of merit?

  22. Gravatar of happyjuggler0 happyjuggler0
    14. September 2013 at 12:21

    Or should I say she is no less fabulous than Summers? (different framing matters)

  23. Gravatar of ssumner ssumner
    14. September 2013 at 12:25

    Waffles, I don’t follow that.

    Mike Sproul, Good point.

    Mike Sax, That’s funny, I’ve never met a conservative that didn’t know that Obamacare was Romneycare.

    Mark, I corrected my post.

    Happyjuggler, Insiders claim he wants someone with “gravitas.”

  24. Gravatar of Mark A. Sadowski Mark A. Sadowski
    14. September 2013 at 12:36

    Scott,
    “Happyjuggler, Insiders claim he wants someone with “gravitas.””

    Isn’t “gravitas” Latin for “testicles”? ;)

  25. Gravatar of Mike Sax Mike Sax
    14. September 2013 at 12:39

    Well then you didn’t talk to all the Republican voters in 2012 that made Romney have to both run on it and against it at the same time.

  26. Gravatar of Mike Sax Mike Sax
    14. September 2013 at 12:41

    Why did Romney’s entire campaign have to operate under such dissonance? It was a trully Orwellian moment-which is saying something that we can hit new watershed momments in doublespeak even today.

  27. Gravatar of Chun Chun
    14. September 2013 at 13:46

    “Socialists have no better ally than hard money nuts.”

    I have a little bit of different opinion. I think hyper inflation feeds socialists and deflation feeds fascists. In Germany 1919-1923 was not only the period of hyperinflation but also the period of communist uprisings. Between 1930 and 1933, the Bruning government had deflationary policy and it led to Hitler’s rise to power. Well, both extremists are equivalently terrible though.

  28. Gravatar of いつも自滅する保守派 — 経済学101 いつも自滅する保守派 — 経済学101
    14. September 2013 at 15:28

    [...] Sumner, “Conservatives are their own worst enemy“, The Money Illusion, September 14, [...]

  29. Gravatar of Lorenzo from Oz Lorenzo from Oz
    14. September 2013 at 16:23

    Conservatives are attached to social order and they see stable money as a basic constituent of stable order. Which it is. Alas, they do not see the difference between stable money and tight money, which is not the same thing at all. Tight money can, in fact, be highly de-stabilising. But the concept of “stable dynamism” can be hard to get your head around.

  30. Gravatar of Lorenzo from Oz Lorenzo from Oz
    14. September 2013 at 16:29

    Which goes to the fundamental dilemma of being a Western conservative. The most distinctive thing about Western civilisation is its dynamism. So, if you are a conservative upholder of Western civilisation, what is it exactly that you aim to conserve? That’s why a prudential liberal such as Edmund Burke ends up a great conservative icon–because he is all about managed change.

    The ironies abound. Such as conservatives being so attached to the notion of the importance of family, when Western civilisation is the least-family oriented of civilisations. Only it came up with the notion of nepotism as a sin; elsewhere, it’s a premise. Amoral familialism is, in fact, quite a curse where it gets entrenched. (Which is why queers invented human culture–so other people’s children would look after them in return for cultural services.)

  31. Gravatar of Geoff Geoff
    14. September 2013 at 16:31

    “Socialists have no better ally than hard money nuts like my commenter “Geoff.””

    This will probably fall on deaf ears, but I’m not pro-”hard money”.

    I’m pro-”free market” money.

    I welcome criticisms, but I expect my interlocutors to at least understand my ideas and arguments, which have been stated repeatedly here.

    ——————–

    Regarding the subject matter of this blog-post, Dr. Sumner confuses one of the consequences and fall-out of previously loose money, which frequently is “tight money” from central bankers that want to maintain control over the money supply, with “tight money” being sort of primal or originary cause the problems of which could have otherwise been avoided if…you guessed it, the central bank continued to loosen and delay the day of reckoning.

    But the reality is that the problems of tight money are really a cure for the problems of previous loose money. It takes a more mature mind that can differentiate between pleasure that reflects something actually bad, and pain that reflects something that is actually good. For example, the pleasure felt by drug addicts reflects something bad, and the pain felt by athletes as they train reflects something good.

    Dr. Sumner is your typical utilitarian who believes that if it feels good it must be healthy, and if it feels bad it must be unhealthy.

    In the economy, during inflationary booms (that don’t necessarily have to consist of rapidly rising prices, or “spending”), the pleasure felt by many actually reflects something is wrong in the economy. Farmers could feel very good eating their own seedcorn unintentionally. But when the errors are revealed, and tough choices are made, and pain is felt, it is actually part of a healing process that ceases the eating of the seedcorn. Yes, it feels bad to make drastic changes that turn your activity into profligate unsustainability, to sustainability.

    Austrians are the only economists who seem to be intellectually mature enough to not get duped into believing that all pain is bad pain, or that all pleasure is good pleasure.

    Socialists actually have no better ally than fake free market economists like Dr. Sumner, who refuse to fight for a free market top to bottom, and grant the socialists the one thing they need for their poison to spread: Advocacy of coercion and violence.

    Dr. Sumner advocates for coercion when he advocates for central banking, progressive taxation, and welfare. That is exactly what socialism is grounded on.

    But I’m actually very contented to be accused of being an ally of the socialists, from the socialist Dr. Sumner.

  32. Gravatar of Geoff Geoff
    14. September 2013 at 16:32

    jknarr:

    “Tight money centralizes political power”

    No, loose money centralizes power, since it is central power that prints money. The power to print money consolidates even more power.

  33. Gravatar of Kurt Schuler Kurt Schuler
    14. September 2013 at 17:34

    Soctt, you are better off not mentioning Argentina rather than getting it as consistently wrong as you do in your posts. Argentina’s currency crisis of 2001 occurred under a left-wing coalition elected in late 1999. It attempted a small implied devaluation, but market reaction backfired on it. And the killer for Argentina was not the exchange rate, as you imply–goods exports in nominal dollars were the highest yet recorded in 2001–but very high real interest rates incorporating a premium for devaluation risk. Argentina could have dollarized, as Ecuador did in January 2000, and eliminated the devaluation premium. (I should acknowledge my interest here, since Steve Hanke and I in fact proposed a specific plan for dollarizing in a memo to Argentina’s “neoliberal” president in early 1999 after he had publicly brought up the subject.)

  34. Gravatar of Morgan Warstler Morgan Warstler
    14. September 2013 at 17:51

    Lorenzo,

    That’s why cons should be told NGDPLT in real life will be relentless taskmaster.

    Tell conservatives that for sure GDP will be exactly $22.561T in Nov. 2021, and the only question is whether that is mostly Real growth or Inflation….

    And they can understand RIGHT AWAY that suddenly the entire political debate will change.

    Inflation becomes the PENALTY for what Democrats do to America.

    No inflation becomes the REWARD for Republicans do to America.

    And then, oh by the way, this system will keep another FDR or Barrack Obama from ever happening to America again.

    Right now is sort of a prisoner’s dilemma

    Dems demand we do things that harm Real Growth.

    Cons demand we don’t have inflation (nothing to forgive Dems failures)

    But once the NGDPLT is locked in EVERYONE focuses on – did the 4.5% come from growth or printing?

    And we’ll literally get measurements that say, this tax increase will reduce growth AND THAT MEANS increase inflation….

    Say it with me folks, NGDPLT, makes it easier to blame Democrats for BOTH lack of growth AND inflation – and it will be true!

  35. Gravatar of benjamin cole benjamin cole
    14. September 2013 at 17:52

    Lorenzo from Oz—
    You are correct. Ironically free markets Western capitalism is corrosive to extended families and even culture. No traditions csn survive unless compatible with free markets…two-week long grieving ceremonies for family deaths, once part of Navajo culture are going by wayside to cite an clear example…still I am a libertarian. ..every culture eventually dissapates

  36. Gravatar of Geoff Geoff
    14. September 2013 at 18:17

    Benjamin Cole:

    “Ironically free markets Western capitalism is corrosive to extended families and even culture. No traditions csn survive unless compatible with free markets.”

    What a ridiculously insulting (and false) comment. The only traditions that “can’t survive” free markets are traditions that consist of initiating violence against person or property.

    For example, the “tradition” of forced marriages of 8 year old girls, the “tradition” of theocratic dictatorships, the “tradition” of husbands beating their wives, the “tradition” of gang members “representin”, and on and on.

    Free markets do not prevent nor discourage extended families. In a context of private property rights, family members can extend as far as they want, as long as they don’t violate other individuals and their families.

    “two-week long grieving ceremonies for family deaths, once part of Navajo culture are going by wayside to cite an clear example”

    There is NOTHING inherent in free market activity that would prevent or discourage this practise. What are you talking about? Does grieving for one’s family mean you have to go out and steal?

    “still I am a libertarian”

    Oh ya, that must be so tough for you. Withstanding such an onslought of non-existent cultural degradation.

  37. Gravatar of ssumner ssumner
    14. September 2013 at 18:23

    Lorenzo, As usual, a very interesting comment.

    Kurt, I’m afraid I don’t agree with those comments. The election of 1999 did produce a different government, but not particularly left wing. They continued the currency board policies, which were already pushing Argentina into a deflationary depression. The real shift came a few years later under Kirchner, and then his wife. They moved Argentina sharply to the left.

    A policy of fixed exchange rates is very unwise for Argentina, as when the dollar strengthens in real terms it will tend to push them toward deflation and falling NGDP. Much better to have a flexible currency and target NGDP, or perhaps inflation, as Chile has done successfully. That’s not to say Argentina didn’t make many other mistakes, and I defer to your expertise in that area. But tight money was the overwhelmingly dominant policy error, and a flexible exchange rate would have allowed them to avoid that error.

    One reason we know that tight money was the key error is that Argentina grew very fast in the years after devaluing, despite really bad statist policies in other areas. This is, of course, exactly what happened in the US after 1933.

    The high real interest rates was just one more side effect from the fixed exchange rates. Investors know that voters have the final say, and hence no currency board is impregnable. So when there is a loss of confidence the central bank needs to jack up interest rates sharply, to compensate investors for the risk of devaluation. The US did the same in 1931. Britain and Sweden had to do the same thing in 1992. There is no need to do that with a flexible exchange rate, which is why Britain and Sweden did better after they left the fixed exchange rate regime.

  38. Gravatar of Geoff Geoff
    14. September 2013 at 18:25

    Lorenzo from Oz:

    “Such as conservatives being so attached to the notion of the importance of family, when Western civilisation is the least-family oriented of civilisations.”

    This is nonsense. You have no right to define what family relations mean to other people.

    What, do you mean the nation where wives are least likely to stay with an abusive husband? Where individuals are most able to make it out on their own earlier such that they don’t stay with their parents as long? Where patriarchal and matriarchal intimidation and control are least likely to “keep the family together”? Where children are least likely to be guilt ridden into interacting with rude or insulting family members?

    Family in western society is highly individually self-serving, and least sacrificial. That may appear to you as “least family oriented”, but then I wonder what kind of warped definition you are referring to for “family oriented”.

  39. Gravatar of jknarr jknarr
    14. September 2013 at 19:11

    You’re talking traditional versus modern. Trust in traditional societies is usually clan based. Modernity demands a lot of trusting strangers, and clans are diminished by comparison.

    The real question is what’s the cause and what’s the effect. Is modernity the result economic growth or the cause? Is hight trust simply the result of energy abundance and growth? Zero sum outcomes tend to promote tribalism.

    The Fed came on the scene just as oil use was beginning to take off, and society became much, much more modern. It just could be all about cheap energy, and fiat feeds fast growth.

    Geoff, it’s about debt. Tight money lowers yields and crushes incomes, and so produces debt.

    “There are two ways to conquer and enslave a country. One is by the sword. The other is by debt.”
    - John Adams

  40. Gravatar of Edward Edward
    14. September 2013 at 19:30

    Geoff,

    Again with the foolish and tired ‘druggie’ analogy in regards to tight money vs hard money. Loose money isn’t like a cocaine shot, it’s more like… Glucose.

    I recently started hard sprinting after several days of no exercise. I was weak and out of breath I felt dizzy. But as soon as I drank potassium laden coconut water I felt better.

    If I had worried about being “addicted” to coconut water, and ingesting too much potassium, I might have gone to the hospital instead.

    You would recommend to a patient that urgently needs epinephrine and atropine some Xanax, which would be a killer to someone with a weak heartbeat and low blood pressure.

    There is a difference between ‘good’ pain after exercise, and bad pain from getting your finger cut off, like they do in the yakuza with yubizumë

    Worse, you don’t provide a mechanism to distinguish between good and bad pain, and in reality bad pain isn’t even necessary.

    You say you’re pro free market money, and imagine that as meaning that the market will probably choose a commodity standard like gold. This shows a profound lack of imagination and we have no reason to think this.

    You’re not in favor of free market money, you’re in favor of tight money, and pain for pains sake.

  41. Gravatar of Edward Edward
    14. September 2013 at 19:32

    And that’s why you anger so many people here

  42. Gravatar of Tom Tom
    14. September 2013 at 20:51

    Wow what a partisan hack Morgan is. Is he the same clown who bet that the President would lose to Rmoney? Must have been a sad night for him when Obama became the first president since Eisenhower to win with 51 percent plus.

    This might be news to you Moran, but FDR was BELOVED by the American people. If you came to the irish bronx in the 50′s or 60′s and said one negative thing about him, you would’ve been knocked on your ass.

  43. Gravatar of Essayist-Lawyer Essayist-Lawyer
    14. September 2013 at 21:23

    Why do you insist on treating a Roosevelt or a Kirchner or a Swedish Social Democrat (or for that matter an Obama) as a worst case scenario. For all their flaw (which I recognize) Roosevelt, Kirchner, etc. mostly respected democratic norms, could be challenged and contested in a democratic system, and ultimately were reelected, not because they crushed their opponents by brute force, but because they brought about rapid economic recovery that made them popular.

    Much worse people have come to power as a result of economic depression. They have been rising in much of Europe. Increasingly nasty xenophobic parties in country after country are treating immigrants and scapegoats. LePen’s party is growing stronger in France. Syriza and Golden Dawn are claiming an increasing share of the vote in Greece. Hungary is sliding toward a right-wing dictatorship and Romania toward a left wing dictatorship. And that’s not to mention the various dictatorships that came to power in Europe in the 1930′s, including you-know-who.

    Why do you treat it as the worst thing possible when a democratic leader comes to power by democratic means and enacts policies you dislike, but can oppose within the rules of a democratic system?

  44. Gravatar of Mattias Mattias
    15. September 2013 at 01:07

    What is also interesting is that Sweden has fiscal policy framework that says that the budget should have a surplus of 1% of GDP on average. The framework has come under heavy criticism the last couple of years since the economy is still not that healthy, the interest rates are low, the debt ratio is low and falling and there are many investments that could be made in infrastructure etc. But all the major parties are supporting it and has an almost religious attachment to it (including the social democrats).

    See http://www.government.se/sb/d/2106/a/163966

  45. Gravatar of Benjamin Cole Benjamin Cole
    15. September 2013 at 02:20

    Geoff:

    How does one stay in a grieving ceremony for two weeks and hold down a job or keep the store open? It is simply not practical anymore.

    For many, even having children is not practical anymore, which is one reason birth rates are below replacement levels, even in the USA.

    BTW, if you go to places where there is wide-open free markets, what you see is prostitution, drugs, pornography. If we had real freedom and free markets, you would see hookers behind plate-glass windows at every major airport in the world. Bars with strippers for sale. Gay casinos etc. Movie houses where the liquor flowered freely and drugs sold like candy. In the USA, you would see lots of sex on TV. This is all outlawed now, we do not have free markets now.

    Even so, what binds people together in a free market capitalistic society is money. Many people feel closer to their employers and colleagues than to extended family members. For good reason too. You spend more hours at work, they are nicer and help you make money.

    What good are members of the extended family? They show up when they need money, not to help you make money.

    Generally, cultures try to impose the powers of the state to preserve some semblance of culture or traditions.

    If we ever move to real libertarianism, we will have a largely debased and coarse culture. But, it will be more free, and it will be what consumers really want.

    You don’t think money changes everything?

    Imagine the GOP convention 2016. They ask benediction from a priest to start things off. The priest quotes Jesus, “It is harder to get a rich man into heaven than a camel through the eye of the needle.”

    Oh, wait. That is not what GOP religion is about anymore…money has changed things.

  46. Gravatar of Saturos Saturos
    15. September 2013 at 04:50

    A good summary of how the public thinks of the Fed: http://www.businessinsider.com.au/what-does-the-federal-reserve-do-2013-9

  47. Gravatar of Geoff Geoff
    15. September 2013 at 05:28

    I’m not going to call anyone a “socialist” as it reminds me of when foolish young bloggers call conservatives “racists,”

    Where’s good ol’ Ben J with another tortured defense?

  48. Gravatar of Ben J Ben J
    15. September 2013 at 05:56

    Geoff,

    I’m honoured!

  49. Gravatar of Geoff Geoff
    15. September 2013 at 06:23

    Edward:

    “Again with the foolish and tired ‘druggie’ analogy in regards to tight money vs hard money. Loose money isn’t like a cocaine shot, it’s more like… Glucose.”

    Actually the drug addict analogy is very apt, and hard drugs like cocaine is the better analogy, because it drives home the fact that inflation,while making it appear that the economy is healthy, is actually doing great harm.

    Glucose doesn’t cut it.

    “I recently started hard sprinting after several days of no exercise. I was weak and out of breath I felt dizzy. But as soon as I drank potassium laden coconut water I felt better.”

    “If I had worried about being “addicted” to coconut water, and ingesting too much potassium, I might have gone to the hospital instead.”

    “You would recommend to a patient that urgently needs epinephrine and atropine some Xanax, which would be a killer to someone with a weak heartbeat and low blood pressure.”

    No, I would recommend not to inject destructive drugs like heroin or meth into people, despite how “good” you believe it makes them feel.

    “There is a difference between ‘good’ pain after exercise, and bad pain from getting your finger cut off, like they do in the yakuza with yubizumë”

    Except monetarists (nor Keynesians) don’t want any pain, not even in the short run. They believe pain is a signal that something is wrong, e.g. growing unemployment, decreased spending from X to X + x, etc, that MUST be “cured” by…the very same thing that caused the malady in the first place.

    “Worse, you don’t provide a mechanism to distinguish between good and bad pain, and in reality bad pain isn’t even necessary.”

    Actually, it is because of people like you that we can’t see the counter-factual world where market actors are NOT misled by non-market money manipulation. It because you want to keep the patient drugged up on destructive narcotics like heroin. Just because I can’t point your eyes to an economy of non-drugged up people, it doesn’t mean I have nothing truthful to say about how stopping the drug injections, and letting individuals ingest what they want in a context of a market process, will increase individual standards of living and minimize violent exploitation.

    “You say you’re pro free market money, and imagine that as meaning that the market will probably choose a commodity standard like gold. This shows a profound lack of imagination and we have no reason to think this.”

    How many times do you want me to say I am pro free market in money before you stop attributing a gold standard to me? Three times? Four times?

    Whatever “imagination” you say I have or lack, my argument is to let the market process be used to decide what money will be used.

    If you’re frightened that gold MIGHT become the money of choice, then I really don’t give a damn. Your fears are not a blank check on the lives of other human beings.

    “You’re not in favor of free market money, you’re in favor of tight money, and pain for pains sake.”

    No, I’m in favor of free market money.

    You’re in favor of non-market money, and pleasure for a bad sake.

    “And that’s why you anger so many people here”

    Do you honestly believe that your anger has any relevance to my knowledge of what is true and false? Or that if I anger you, that my arguments are somehow false?

    You’re only angry at me because I am pointing out to you on a more or less frequent basis the blatant contradictions in your worldview (Violence is bad when A does it, but violence is good when G does it).

    In fact, you’re so mad that you will accuse me of not being pro free market in money, despite my repeated statements that yes I am pro free market in money. You’re so angry you won’t even recognize my own advocacy. And I think I know why. It’s because you have nothing on me, and you oh so desperately want to make me as duty bound to the state as you are, so that you feel better about yourself. So you want to make it seem like I support destructive activities like you do. Sorry, won’t work.

    ———————-

    Benjamin Cole:

    “How does one stay in a grieving ceremony for two weeks and hold down a job or keep the store open? It is simply not practical anymore.”

    The store owner can close the store down for two weeks.

    The free market does not prevent a store owner from doing this.

    If he will lose paying customers, then that isn’t the free market’s fault. It’s the fault of the individual customers who CHOOSE to shop elsewhere.

    What kind of activity would be required to prevent the customers from shopping elsewhere, so that once the store re-opens, there is a drastic spike in purchasing activity that is the sum of what the previous two weeks would have otherwise generated, such that the store owner is in the longer run not much worse off, if at all?

    Tax holiday? That’s a movement towards a free market.

    Or how about the following:

    Government grant? That requires coercion.

    Threatening customers with violence if they shop elsewhere?

    These last two are not tradition-making. They are tradition destroying, because the coercion prevents individuals from creating their own traditions.

    “For many, even having children is not practical anymore, which is one reason birth rates are below replacement levels, even in the USA.”

    This is not the fault of the free market.

    This is the fault of the central bank, the high tax rates, and increased regulations, which have succeeded in making it very difficult for a single income earner to support a family anymore.

    Look at real wages over the last 40 years. You’ll see they have stagnated, despite prices having gone up. Prices have gone up because of the central bank. Wages have stagnated because inflation does not affect all incomes equally, and because of labor market regulation. This by the way is exactly what the banking-congressional elite wanted. They wanted more individuals in the workforce, so that taxation and lending to the Treasury “risk free” could increase.

    A free market all along would have made individual real incomes so high that only one income earner would be needed per household for most people. But because of activities you and others on this blog have supported, we don’t have that.

    “BTW, if you go to places where there is wide-open free markets, what you see is prostitution, drugs, pornography.”

    You’re actually comparing these activities to theft, kidnapping and murder, which are required to maintain the state that you need to maintain the central bank? Seriously? This is incredible. Here you are denegrating the free market because it includes voluntary behavior such as what you described above, and yet, you turn around and support an institution founded on theft, kidnapping and murder.

    Did you know that the central bank in the US, the Fed, from 2003-2008 sent $40 billion to finance black ops war in Iraq (secretly at the time)? Over 100,000 Iraqis, children included, were slaughtered.

    Why don’t you mention this? Why don’t you stand on the rooftops shouting how morally contemptible the whole central banking system is at its core?

    Why are you denegrating consensual adult behavior instead?

    I think you need to do some serious soul searching buddy. You need to take a long look in the mirror, and ask yourself if you’d rather live in a world of voluntary consensual activities some of which you wouldn’t personally engage in, or a world of bloodshed.

    “If we had real freedom and free markets, you would see hookers behind plate-glass windows at every major airport in the world. Bars with strippers for sale. Gay casinos etc. Movie houses where the liquor flowered freely and drugs sold like candy. In the USA, you would see lots of sex on TV. This is all outlawed now, we do not have free markets now.”

    Am I supposed to feel violated because of this? Am I supposed to feel so angry at these people that I would support them getting kidnapped, and/or robbed?

    “Even so, what binds people together in a free market capitalistic society is money.”

    This is so wrong that it proves to me you haven’t educated yourself on free markets from original source material. You have the typical Marxoid “the free market is all about money.”

    The free market is all about voluntary interactions. If individuals choose to deal in money, that isn’t the fault of the free market.

    If you don’t want people trading in money, if you try to reduce what money others want to trade, then you’ll end up with a society of trading in dead bodies.

    “Many people feel closer to their employers and colleagues than to extended family members. For good reason too. You spend more hours at work, they are nicer and help you make money.”

    Employers are nicer than extended family members?

    “What good are members of the extended family? They show up when they need money, not to help you make money.”

    “Generally, cultures try to impose the powers of the state to preserve some semblance of culture or traditions.”

    Employment isn’t a culture? It isn’t a tradition?

    You make it sound like voluntary activity generated culture and tradition isn’t “real” culture and tradition because it isn’t founded on intimidation or coercion.

    Yes, human history is full of instances of coercion and intimidation, and whole “cultures” and “traditions” have grown around that fact.

    But please don’t mistake the elimination of violent culture and tradition, and creation of voluntary culture and tradition, to be an elimination of culture and tradition.

    “If we ever move to real libertarianism, we will have a largely debased and coarse culture. But, it will be more free, and it will be what consumers really want.”

    We are living in a debased and coarse culture now, because of violence. I look at what our culture has “produced”. Our culture has “produced” a state that has no qualms with torturing and slaughtering innocent people. That to me is a culture of debasement and coarsity, and I think if most people paused and thought about it, they’d believe the same thing.

    But even if most didn’t, even if most preferred death and destruction to consensual sex and victimless food or drug ingestion, that only reinforces to me the existence of moral debasement in our culture.

    “You don’t think money changes everything?”

    I think money allows individuals to change their lives for the better in a more efficient manner than through bartering.

    You don’t think introducing and practising continuous coercion and violence in order to monopolize money changes everything?

    Why should I welcome threatening people with violence to force them to stop engaging in indirect exchange?

    You want to make your own value judgments that overrule other individual value judgments by force.

    “Imagine the GOP convention 2016. They ask benediction from a priest to start things off. The priest quotes Jesus, “It is harder to get a rich man into heaven than a camel through the eye of the needle.””

    “Oh, wait. That is not what GOP religion is about anymore…money has changed things.”"

    Money hasn’t changed people. People have changed and that has led to a changed money usage.

    The money commodity is, economically speaking, forceless. It just sits there if you don’t do anything, that is, if you don’t change, money won’t change.

    Money is a tool of man. Man is not a tool of money.

    Money is controlled by man. Man is not controlled by money.

  50. Gravatar of ssumner ssumner
    15. September 2013 at 06:36

    Tom, You said;

    “Must have been a sad night for him when Obama became the first president since Eisenhower to win with 51 percent plus.”

    I’m speechless. Are you 14 years old?

    Essayist-Lawyer, You said:

    “Why do you insist on treating a Roosevelt or a Kirchner or a Swedish Social Democrat (or for that matter an Obama) as a worst case scenario.”

    I presume this is not directed at me. I did no such thing. Indeed I recently argued that the German deflation led to Hitler. I also recently said that Obama was an average President.

    Mattias, I think their fiscal policy is good, it’s the monetary policy that is causing the slow recovery.

    Thanks Saturos.

  51. Gravatar of Hard Money Is Hard | Handle's Haus Hard Money Is Hard | Handle's Haus
    15. September 2013 at 06:39

    [...] you think about the wisdom, prudence, or benefits of hard money, I think he makes a convincing, if obvious, case that hard-money policies are political losers in democracies, since the left can always argue that [...]

  52. Gravatar of Morgan Warstler Morgan Warstler
    15. September 2013 at 07:01

    Tom,

    Yes that’s why I now so strongly support NGDPLT, bc I lost my bet with Sumner:

    http://www.morganwarstler.com/post/35294985965/fiscal-crisis-giant-central-state

    It was a life changing bet. Previously I waved away any deficit spending by the GOP as necessary to ensure Dems didn’t get to reward their voters for voting.

    It was a Reagan strategy, and it beat Clinton. In order to get term #2, Clinton became a deficit cutter. Why wouldn’t I expect it to work with Bush 2, Obama?

    I was sure once Obama refused to be deficit cutter, he’d lose. It was a doozy of a wake up call.

    Note, the absolute structural difference between my first world view and my new one:

    In one I accepted deficits as long as the spending flowed back the GOP, now the absolute goal is cutting government spending outright.

    And NGDPLT is the monetary system that makes cutting government spending EASIEST.

    ——

    Tom, I’m not a partisan hack.

    But I am taking the time to mechanistically describe the real world game play under NGDPLT.

    As far as I know, I’m the only guy who thinks in terms of how NGDPLT effects the sport and game of politics.

    Scott ONLY likes to say “avoid the crisis in capitalism” – and I think thats a great thing.

    But Tom please tell me why this is logic is wrong:

    1. Conservatives BELIEVE that low tax / low spending small government = higher REAL growth.

    2. NGDPLT creates a 100% known pie – month after month for eternity, we know exactly what the size of GDP will be.

    3. #2 means our future pie is made up get Real Growth (good) or Inflation (bad)

    4. So conservative will BELIEVE that the electorate will come to view GOP economic policies as preferable under NGDPLT.

    But pls Lorenzo, Scott, benjamin, et al

    tell me why this isn’t how cons will construct the assumption in their mind?

    In cons WORST possible scenario, imagine the US has 4 years with 0% real growth, so for all 4 years, we have inflation of 4.5%.

    How do conservatives IMAGINE their political prospects look?

    There hasn’t been a crisis in capitalism, things are just really sucky, somehow America has no growth!

    Do you think Conservative imagine this and think it could ever happen under a Repub president?

    Seriously, do any of you ever venture down this road when you are trying to sell MM to the public?

    if not why?

  53. Gravatar of Bill Ellis Bill Ellis
    15. September 2013 at 07:18

    Scott says…”I’ve never met a conservative that didn’t know that Obamacare was Romneycare.”

    This makes you sound like a head in the clouds academic. I hang out with my fellow commoners and to a person the conservative ones refuse to believe that Obamacare is Romneycare.

  54. Gravatar of Bill Ellis Bill Ellis
    15. September 2013 at 07:30

    Benjamin… I think you post made good points… I don’t think a lot of libertarians realize that their Libertarian utopia would necessarily end up a Libertine utopian. (A lot do though) …

    But “Gay casinos” ? Lumped in with vices like prostitution, and drugs ? Dude.

  55. Gravatar of Morgan Warstler Morgan Warstler
    15. September 2013 at 08:12

    “Obamacare is Romneycare”

    This is incredibly dumb.

    Obamacare is the 16th Amendment.

    The WHOLE point is to let states all offer up different ways of doing things. And letting competition figure it out.

    If a state like MA, with or without a GOP governor wants to offer that system of healthcare, then if it is great idea, other states will follow. I never heard about swarms of sick people moving to MA to establish citizenship, get guaranteed coverage, so I assume amongst the sick, it isn’t a life changing demand.

    I don’t like conservatives calling others RINOs bc in every state what being a Republican means should change, except for ONE and ONLY ONE thing: that states have to figure their own shit out.

    That’s the brand dna of the conservative party. We are a Republic(an).

  56. Gravatar of Bill Woolsey Bill Woolsey
    15. September 2013 at 09:18

    I support sound money.

    Nominal GDP level targeting provides sound money.

    Adjusting the quantity of money to the demand to hold it isn’t “loose money” or “tight money.” It is sound money.

  57. Gravatar of Steve Steve
    15. September 2013 at 10:00

    Amazingly I agree with Morgan Warstler!

    Why do you need ObamaCare, when you could have had 50 RomneyCares?

    And if ObamaCare is so great, and ObamaCare = RomneyCare, why did only 2% of states adopt it?

  58. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:06

    Steve and Morgan. This was the same argument against the Emancipation Proclamation. I mean why have a Federal Law against child abuse, when each state can choose in kind if it wants to? Isn’t that what the ‘laboratory of democracy’ is all about?

    More generally Morgan, let me preface this by saying I love you. Really, you’re my favorite conservative. But you’re total lack of any humility or self-examination is refreshing.

    Weren’t you the guy who was so sure that there was just no way Obama could be reelected after he had shafted the ‘deciders’-your top 20%-supposedly by passing Obamacare?

    So excuse me if I don’t buy this idea that the only way liberals can win is to kiss Rand Paul’s ring.

  59. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:08

    Morgan the abolitionist were’t ‘dumb’ enough as you put it to fall for this states rights shibboleth in the 1850s-thankfully and we have your own Republican party to truly thank for that one-and it’s not going to con liberals today.

    I’m no more impressed by the ‘junior Senator from Kentucky’ than Scott.

  60. Gravatar of Steve Steve
    15. September 2013 at 10:19

    Mike Sax,

    Good point, although I don’t think gov’t subsidized health care and emancipation from slavery are moral equivalents.

    There also could have been a middle ground, where the states are free to experiment on coverage levels and penalty amounts.

  61. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:29

    I wouldn’t say they’re moral equivalents although many people do look at it as a moral imperative that such a large and wealthy nation of ours provide healthcare for those who can’t afford it.

    Now some will agree and some disagree with this. My point though is that there is no reason why we can only pursue important policy changes through the states.

    As I see it, this argument has mostly been used as a way to slow down changes that conservatives don’t want. Much of U.S. history has been a struggle between a minority of states-initially the Old South and the rest of the country. The doctrine of ‘states rights’ was a clever philosophical argument to allw the minority to dominate the country.

    Today it continues. While the majority agree with Obama and the Dems on most policy issues, the minority in the Red states continue to be able to put a spoke in the wheels of progress via the filibuster in the Senate and the gerrymander in the House.

    So I see no reason to play the game according to the rules of State’s rights-and for that reason I think a case can be made to ending or seriously reforming-yes, ie, weakening-the filibuster which goes back to the Old South of Dxie and ’3/5 of a man.’

    If you believe-as I do-that there is a moral imperative to make sure no Americans go without healthcare, why should I submit to State’s Rights? The whole point of it is to slow progress on this front to a crawl.

    If you establish it in one state than you have a ‘race to the bottom’ where businesses that don’t like it rush to other states. My feeling is that whether you prefer a state or federal remedy is a matter of pragmatism-what’s more effective?-it’s not a moral issue in itself as the States Rights advocates are eager to con us into feeling.

  62. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:34

    Also, though Morgan may not want to admit it to himself, we have long since established Federal superiority in this country.

    If the Feds have a low the States can’t disregard it. The Civil War established this once and for all though it was reconfirmed during the Civil Rights Era.

  63. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:38

    The irony is it was orignally the great Republicans of Lincoln and Thaddeus Stevens who once and for all established what both Hamilton and James Madison had desired back in the late 1780s-Federal supremacy and yet today’s decadent GOP has long since sold out all the finer parts of its own legacy.

  64. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 10:39

    Even in the Presidential elections in the 20s you had Coolidge running on ‘Free Soil’ against old style Southern Democrats.

  65. Gravatar of Tom Tom
    15. September 2013 at 10:52

    Morgan,

    There is nothing wrong with your logic but your premise is nonsense.

    Small government = big plutocracy. ALWAYS. EVERYWHERE.

    As the BELOVED FDR proved by winning 4 landslide elections, people would rather have an activist government that ensures a man can support his wife and children on one income in relative comfort. Big Government can deliver that. Big Plutocracy never will.

  66. Gravatar of Steve Steve
    15. September 2013 at 10:55

    Mike Sax,

    You say you aren’t trying to make a moral equivalence between slavery and no federal health insurance, but all the examples you draw on are Lincoln, 1850s, 3/5 compromise, civil rights.

    States rights was also about preventing the rise of an imperial foreign power, which is now called Washington DC.

    Anyway these polemics are worn and cliched on both sides, so I’d rather not get into a back and forth.

    Instead, imagine if states had a range of options for ObamaCare. A purple state might choose a high deductible, and high penalty option. That would all but guarantee universal participation, while reducing costs, improving the budget and increasing business competitiveness. That state might outperform, and then be emulated.

  67. Gravatar of Tom Tom
    15. September 2013 at 11:07

    States rights are such a right wing canard. Name me one Republican who would allow a state to implement single payer with Canadian drug re-importation for example?

  68. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 11:16

    YOu’re missing the point Steve. You haven’t given me any reason to only do legislation at the state level. In fact Obamacare does provide a range of options for states-like the Medicare expansion. Vermont has already used it to get closer to single payer.

    True the law takes away the abliity of a state allow some of its citizens to be left with nothing. However, I don’t ave a problem with that anymore than no states are free to restablish slavery or segregation.

    I don’t think the problem is an ‘imperial power called Washington DC’, I see that as just Right wing buzzwords

  69. Gravatar of Morgan Warstler Morgan Warstler
    15. September 2013 at 11:20

    Tom,

    Me and every other Republican not in California would LOVE to let California set up that exact system.

    Saxie, I cover all that stuff above.

    On the State’s Rights argument tho… the Internet solves. Last week saw Pax Dickinson get let go by BI, exactly the way Rand Paul suggests… private decision by employer IN A WORLD OF RADICAL SOCIAL PRESSURE.

    Sen Rand Paul won’t fire the shock jock. He makes the call, he decides.

    Both examples are the fluid decision making of individuals under the eye of the everyone.

    This Internet thing here – the one that made Scott Sumner and MM an actual THING…

    Well for each notch of “wow, this thing is powerful for the little guy”

    That’s a notch for “we don’t need the government as much”

    If the Internet was around in 1945, by the mid 1960′s the civil-rights movement wouldn’t have need a the Voting Rights Act.

    Gay Marriages PROVES in the age of Internet we should let the states decide. basically everything.

    This isn’t just me, this is Bader Ginsburg talking about how Roe should have been left to the states.

    Progressive need to learn to dance with the one who brung ya, and that isn’t the govt. it’s the Internet.

  70. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 11:34

    I look at it this way. There’s no reason to relegate my agenda to the state level. In any case, state remedies on a number of issues are going to be ineffective whihc is the whole point of States Rights arguments. This goes back to Madison and Hamiltion. Read it. These arguemnts have all been done.

    http://www.amazon.com/Federalist-Papers-Signet-Classics/dp/0451528816/ref=sr_1_1?s=books&ie=UTF8&qid=1379273411&sr=1-1&keywords=the+federalist+papers

    Anytime I accept States Rights I tie my own hands. Lets think of any issue you consider important. Take child labor laws. Now most people think they are compelling ethical reasons to have them. Not everyone it’s true. There are still some conservatives-many hailing from Chicago-that will tell us we don’t need them that the market can sort this out by itself-I’m not putting words in his mouth but Scott may believe that for all I know.

    However, asuming you believe in morality of child labor laws then you won’t waste time only at the state level. I mean you get the srongest child labor laws in the world. The states surrounding you are all going to be tempted to offer lax laws and let the kiddies work their fingers to the bone in a ‘race to the bottom.’

    This was more or less the experience until FDR’s Wagner Laws in the 30s

  71. Gravatar of Mike Sax Mike Sax
    15. September 2013 at 11:40

    Ok so the Internet changes everything, Morgan. Don’t get me wrong. I love the Internet. Basically you’re argument implies I am right in the pre-Internet era but now everything has changed. I doubt it.

    Assuming the Interenet can fix everything on its own-hopefully it will figure out the Voting Rights Act soon after the Right wing Supremes have gutted it-there’s no need for debate. The Interneet will be so successful nobody will look to government including me. We’re not there yet.

    When I see no problems that the Net can’t fix I’ll let it go.

  72. Gravatar of Steve Steve
    15. September 2013 at 11:44

    “I don’t think the problem is an ‘imperial power called Washington DC’, I see that as just Right wing buzzwords”

    Hmmm,

    EDITORIAL OBSERVER
    Just What the Founders Feared: An Imperial President Goes to War
    http://www.nytimes.com/2007/07/23/opinion/23mon4.html

  73. Gravatar of Steve Steve
    15. September 2013 at 11:45

    Google “Bush imperialism” and see how many left-wing political rags pop up. Like the NY Times.

    Its “imperialism” if the right does it, but its “moral imperative” when the left does it.

  74. Gravatar of Tom Tom
    15. September 2013 at 12:02

    Morgan,

    And you wonder why I think you are a partisan hack? You know as well as I do that a Republican president would never allow California to set up single payer with Canadian drug prices. Because deep down you know it, you are being dishonest in your shilling for the plutocracy.

    There are two types of Republicans. The vast majority are the rubes who will believe whatever Fox news tells them to believe. The other is the smart wonkish type who are scared to death of Obamacare precisely because they know its success is an existential threat to the plutocracy. I think you are the latter. Luckily for America, you are losing.

  75. Gravatar of Tom Tom
    15. September 2013 at 12:19

    By the way, the pro-plutocracy types can’t just give up. I predict that we’ll soon be hearing from Republicans that the ACA(they’ll no longer refer to it as Obamacare)was REALLY a republican idea all along.

  76. Gravatar of Negation of Ideology Negation of Ideology
    15. September 2013 at 12:47

    Tom -

    “Must have been a sad night for him when Obama became the first president since Eisenhower to win with 51 percent plus.”

    From Wikipedia:

    1964 – Johnson 61.1%
    1976 – Nixon 60.7%
    1984 – Reagan 58.8%
    1988 – Bush 53.4%

    All four were after Eisenhower, who got 57.4% in 1956.

    By the way, Bush was close at 50.7% in 2004, and Clinton would have certainly exceeded that if not for Ross Perot, and Reagan got 50.8% in 1980 even with John Anderson as a third party.

  77. Gravatar of Tom Tom
    15. September 2013 at 12:57

    Negation,

    Yes I wrote that wrong. President Obama is actually the first since Eisenhower to win TWO terms with 51 percent plus. Thanks for the correction.

  78. Gravatar of Negation of Ideology Negation of Ideology
    15. September 2013 at 13:08

    Tom – Fair enough.

    Scott – This post would be an excellent topic for a book. Or has someone already written one?

  79. Gravatar of Morgan Warstler Morgan Warstler
    15. September 2013 at 15:06

    Tom,

    You are woefully mistaken. And what you ought to do is read Saxie above:

    “There’s no reason to relegate my agenda to the state level.”

    Of course there is. A ton actually.

    Taleb will say anti-fragile. I will say distributed network theory. And people of all walks shapes and sizes all have various disagreements with Saxies agenda.

    If you view it as a utilitarian, you’d recognize that 50 flavors is superior to chocolate or vanilla.

    There can be pro-labor rust belt social conservatives. And all other types.

    Personally, I’m keeping my eye on Colorado in case in a decade it decides to compete head to head with Texas.

    But the point of states rights is EXACTLY the same reason for a common monetary union.

    America has the advantage of having incredible mobile workforce. We were born as and have always been a nation of movers.

    Not taking that and leveraging it to our advantage, is just as dumb as not recognizing the Internet REDUCES the generally nightmare risk of a return to Jim Crow (where the law was racist) that Saxie is peddling.

    And that’s the point Saxie, Gay Marriage is PROOF there’s very little promised upside to growing Federal law.

    You’d think with your whole hippy vibe, you’d understand the value of social conservatives knowing their OWN state’s people chose to allow gay marriage. Go read Bader on the subject.

    But Tom, the only Republican candidate I know who would fight the California thing is Santorum, and I’d never vote for him.

    The problem is you can’t think like your opponents.

    I know you think conservatives would be afraid single payer would work… and the reality is we’d LOVE to see California do it, so that Austin would take over Silicon Valley as Apple high tailed it for good. My point is, we’d love to watch California commit economic suicide.

    And if you look real closely, thats EXACTLY why Saxie doesn’t want state’s rights – bc he knows I’m right.

    He gives away the goat: there are parts of his agenda will die if those ideas have to compete.

  80. Gravatar of Tom Tom
    15. September 2013 at 16:01

    I’m not buying it Morgan. OBAMAcare is the perfect example of why you are wrong. If it was really going to be the train wreck that Republicans are “predicting”, they would let it take effect and run against it in 2014 and 2016.

    Why aren’t they doing that? Because they KNOW that it will be successful and are scared to death that some of their God n Guns rubes will learn the truth. With demographics being what they are, they simply can’t afford to lose the “Wall-Mart whites” that are keeping them semi-competitive in national elections. Any bleed from that demographic will end their existence as a national party. But you already know that.

  81. Gravatar of Morgan Warstler Morgan Warstler
    15. September 2013 at 16:45

    Tom,

    You aren’t a student of politics are you?

    There’s a core group of about 40 Senators and Congressman (whoI support BTW), that are holding the establishment GOP feet to the fire.

    Boehner / Canter put forward the plan to let the funding go thru, and just made Dem Senators vote to fund it…

    It was the GOP leadership plan…

    So, no you are wrong, there are a TON of GOP that want to let it happen and explode.

    I personally want to do the fund the government, but not Obamacare, bc I want to see it play out.

    That’s just who I am, I would like to have a good old government shut down every couple years, I view it as a healthy reminder that IT CAN BE shut down.

    More so, I was confident how sequestration would work out, and it’s been another great lesson.

    So MAYBE just maybe, we shut it down, and Obama and the Senate Dems, have to insist on keeping it closed even tho 60%+ don’t want Obamacare.

    This is 1994. Clinton was preaching the small govt. line, cutting programs, the GOP didn’t handle it right.

    Maybe a couple Senate dems facing re-election they say “well maybe we should push the indiv mandate back a year”

    Again, it’s not about total repeal, it’s about making Obama give up piece and parts that effect my peeps – the SMB self-employed that earn a good living, ya know the heroes!

  82. Gravatar of Tom Tom
    15. September 2013 at 17:08

    Agree with you on hoping for the shutdown. I don’t know about you, but I know a number of people who rely on various government programs who claim to be conservative/want smaller government(I’m in Arizona). I know this isn’t nice, but I’m really looking forward to the conversations I’m going to have when the checks stop coming in:)

  83. Gravatar of ThomasH ThomasH
    15. September 2013 at 19:18

    Conservatives in the US are smarter. They favor sound money, balanced budgets, etc. only when the other party is in power and can take the blame for their policies; it came close to working in 2009-2012.

  84. Gravatar of Greg Ransom Greg Ransom
    15. September 2013 at 22:16

    “Greg, History is not your strong suit.” — Scott Sumner

    Unethical, and a shmuck to boot. I just finished re-reading the Kershaw biography of Hitler and I certainky don’t need any history lessons from you.

    The key point is that history isn’t as simple as you pretend in your comment, and it’s moronic for you to pretend otherwise. And you in no way countered my point — you’ve a only shown once again you’ve got nothing.

  85. Gravatar of Greg Ransom Greg Ransom
    15. September 2013 at 22:20

    “I welcome criticisms, but I expect my interlocutors to at least understand my ideas and arguments, which have been stated repeatedly here.”

    Scott’s strategy is to misrepresent his explanatory rivals, setting them up as straw men to ‘support’ his own agenda.

    It’s pathetic, but there it is.

  86. Gravatar of Greg Ransom Greg Ransom
    15. September 2013 at 22:58

    Germany’s problems of the late 1920s and early 1930s were consequences of what came before and also what was happening elsewhere — exponentially expanded fiscal spending was a key cause of Germany’s dependence on American loans, a source of resources which collapsed after 1929. And the British devaluation put Germany in a futhrr fiscal bind, with international agreements preventing it from conducting competitive devaluations, and with it’s balance of payments turned deeply pathological.

    Germany’s problems of the late 1920s and early 1930s didn’t come from no-where, though in typical Scott Sumner fashion — all complexity is assumed away and a radically false simple minded story is substituted for and replaces reality.

  87. Gravatar of ssumner ssumner
    16. September 2013 at 06:56

    Negation, I’m not sure

    Greg, So you agree it was the deflation after all. I think Hayek called it “secondary deflation.”

  88. Gravatar of Greg Ransom Greg Ransom
    16. September 2013 at 08:26

    Scott, history is a complex of multiple causes, inter-colliding.

    I don’t see Hitler happening without the monetary and fiscal policies of the German government, and their connection to the policies of Britain, France and the U.S.

    Germany, Britain and France were bad shape in terms of money, finance, and productive capacity after the war — and they all had tried to pretend as much possible that there were no costs to WWI and no pathologies in money and finance produced by the war. The way to do that was to make up for wealth and money and finance disasters via financial and monetary manipulations, manipulations that in part tried to exploit the wealth and money and finance of the United States. They all tried to manipulate their money and finance and economies to live off of finance and money and wealth from the United States.

    You don’t have Hitler without the monetary and fiscal pathologies of Germany in the 1920s, which wiped out large segments of the middle class, and destroyed their relationship with the post-Imperial government and system.

    And you don’t have the German deflation without the prior pathologies in the monetary and fiscal policy in Germany — and in Britain and the United States.

    Deflationary pathologies don’t happen in a vacuum — there is always an economic and institutional lead up, that is then compounded by further errors and policy inadequacies.

    The bottom line is that you can’t tell me that Hitler would have happened without the pathological money and fiscal policies of German before the deflation — and you can’t even tell me the deflation would have happened without the prior monetary and fiscal pathologies of Germany, Britain, France and the United States, which set the table for Germany’s deflationary disaster.

  89. Gravatar of Greg Ransom Greg Ransom
    16. September 2013 at 08:28

    I don’t see Hitler happening without the monetary and fiscal policies of the German government in the 1920s — policies taking place prior to the deflation — and their connection to the policies of Britain, France and the U.S.

  90. Gravatar of Greg Ransom Greg Ransom
    16. September 2013 at 08:29

    Scott, have you read Niall Ferguson’s The Pity of War?

  91. Gravatar of W. Peden W. Peden
    16. September 2013 at 08:35

    Greg Ransom,

    I agree only insofar as the hyperinflation in the 1920s led to the linking up of the German and the American economy, thus increasing German exposure to the deflationary policies of the Fed and the Insane Bank of France. For all the hyperinflation and erosion of the middle-class, Nazism was still very much on the fringe as late as 1928 (less than 3% of the vote in the federal election of that year).

    It was the deflation what done it for the Weimar Republic.

  92. Gravatar of Greg Ransom Greg Ransom
    16. September 2013 at 19:31

    But belief in liberalism and the rule of law was largely dead — that’s the key. And the people and the ruling class had moved in significant ways to a belief in strong-man government & expedient, utilitarian, pragmatism unchecked by the rule of law or even morality.

    Peden “For all the hyperinflation and erosion of the middle-class, Nazism was still very much on the fringe as late as 1928″

    And make no mistake, in 1929 no one could know specifically what lay ahead .. ugly anti-semitism and imperial ambition, yes .. but even Hitler hadn’t conceived and planned out what evolved by steps into the holocaust, the bloodlands of Eastern Europe, and eventually most all of Europe in world war.

    Hitler & his gang were pragmatists and opportunists all the way, opportunistically “working toward the Fuhrer” and opportunistically free-lancing their way to world war.

  93. Gravatar of Greg Ransom Greg Ransom
    16. September 2013 at 19:33

    The “deflation” + nothing = holocaust + world war equation is bollocks.

  94. Gravatar of ssumner ssumner
    17. September 2013 at 05:30

    Greg, The US didn’t have a hyperinflation, but did have a deflation as bad as Germany. QED.

  95. Gravatar of Greg Ransom Greg Ransom
    18. September 2013 at 11:17

    Right. QED.

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