How to structure public spending so it actually does some good

I have an article up at the American Institute for Economic Research explaining how idiotic a “stimulus” at this time is: A Classical Economic Response to the Coronavirus Recession. It takes as read that we are going to have a massive amount of public spending, and given that as the certainty, how to do it with minimal economic damage. That we are even having a lock-down is also taken as read since others have already made that decision. This is the central point made in the article.

Let me take you back to the economics before Keynes, to when economists understood the nature of the cycle.

Recessions in those days were rightly understood as due to structural faults in the economy. A recession occurred when the bits did not properly mesh. Some parts of the economy were no longer able to run at a profit because of structural changes in the economy, sometimes on the demand side but more often on the supply side. There, therefore, needed to be some shifts in the entire apparatus of production. What turned the adjustment process into a recession occurred when the adjustment process required was too large to occur as in normal times when as one business would close down another would open.

During recessions, for whatever the reason might be, the number of businesses closing would exceed the number opening, and along with the slowing of production in total, there would be a rise in unemployment. If ever there has been a downturn that cannot in any way be explained as a fall in demand it is the forced closures that have followed the coronavirus panic. The downturn is entirely structural in nature. That is why when I hear discussions of the need for a stimulus I am even more than usual amazed at how beyond sense economic policy has become. What is needed, and what is largely being done, are measures to hold both capital and labour in place until the closures are brought to an end.

The last thing we need now is a Keynesian-type “stimulus” where government spending on wasteful junk takes over from actual productive firms.

But the policy everywhere is never let a crisis go to waste. It is not you and me the political class are thinking about, but themselves in how they can use the crisis to benefit themselves. You just have to hope against all likelihood that the damage done is kept to a minimum.

A sampler of the politics of The Atlantic

If you are interested in the politics of The Atlantic, let me present you with the final paras of this long and astonishingly inane article which I have just received: How the Pandemic Will End.

One could easily conceive of a world in which most of the nation believes that America defeated COVID-19. Despite his many lapses, Trump’s approval rating has surged. Imagine that he succeeds in diverting blame for the crisis to China, casting it as the villain and America as the resilient hero. During the second term of his presidency, the U.S. turns further inward and pulls out of NATO and other international alliances, builds actual and figurative walls, and disinvests in other nations. As Gen C grows up, foreign plagues replace communists and terrorists as the new generational threat.

One could also envisage a future in which America learns a different lesson. A communal spirit, ironically born through social distancing, causes people to turn outward, to neighbors both foreign and domestic. The election of November 2020 becomes a repudiation of “America first” politics. The nation pivots, as it did after World War II, from isolationism to international cooperation. Buoyed by steady investments and an influx of the brightest minds, the health-care workforce surges. Gen C kids write school essays about growing up to be epidemiologists. Public health becomes the centerpiece of foreign policy. The U.S. leads a new global partnership focused on solving challenges like pandemics and climate change.

In 2030, SARS-CoV-3 emerges from nowhere, and is brought to heel within a month.

It’s all politics on the left. Saving lives is the last thing on their minds.

A test of common sense, civility and courage

The harm to our economies and our way of life because of the over-reaction to the Corona Virus is discussed today by Henry Ergas in The Australian: Coronavirus: It will be unhealthy to ignore the cost of all this.

While the response of federal and state governments to the spread of COVID-19 is understandable, there must be a danger of going too far.

To say that is certainly not to recommend an attitude of benign neglect. Nor is it to ignore the fact these are decisions being taken in the depths of uncertainty, where risks are hard to measure and errors could lead to disaster.

But it is no less a fact that some 430 people die in this country every day, so that since the beginning of the year there have been almost 37,000 deaths, of which 12 are due to the coronavirus.

And it is also a fact that, every day, decision-makers around Australia take decisions that balance life and death: not merely by determining how much we should spend on public health but also by assessing whether to spend taxpayers’ funds on making roads safer, reducing the risk of fires or strengthening the emergency services.

Inevitably, those decisions involve trade-offs: they require us to assess how much we are willing to give up so as to prevent a person dying sooner than they otherwise would.

He puts his finger right on the problem, that every life matters and if we can save but one life, etc etc etc.

It is undoubtedly true that decisions that involve balancing lives and costs are far easier to take when the life at issue is not likely to be your own. It is one thing to think in terms of trade-offs when those who will be affected are anonymous draws from a large population and quite another when it is a matter of family and friends.

But that is precisely why we so often delegate these decisions to others, from the physicians who assess whether it is worth undertaking a procedure on a grievously ill patient to the institutions that select, out of the many who desperately need them, the few who will receive donated organs.

These are tragic choices, and we know that they will be better taken at a distance, dispassionately weighing the consequences.

He finishes with this:

This crisis is … a test of common sense, civility and courage: the common sense to avoid taking decisions that we may regret for decades to come; the civility, in the term’s old meaning of “civil righteousness”, to be mindful of what we owe each other and prudent before inflicting costs on people who will struggle to bear them; and most of all, the courage to calmly confront, and ultimately defeat, an enemy who, as the Treasurer put it, flies no flag and has no face.

That enemy is deadly enough. It would be a disgrace if we made the harm it wreaks even greater than it needs to be.

Whenever this panic comes to an end and we return to something like normal, this will be remembered as a very odd episode in our history, along the lines, I believe, with the Salem Witch Trials from the supposed Dark Ages of our past.

Woody Allen is the best director of comedy in our time

From Cut&Paste in The Oz: A truly great director could make a great film of all this but he wouldn’t, Woody. More slagging of the greatest comic movie director of our era.

Woody Allen has been consistently funny since I first came across him on late night television and I still remember fondly his What’s Up, Tiger Lily?. To go back a year, I saw his What’s New, Pussycat first when it came out, and then in German in Germany around 1972, as Was ist neues, Pussykatzen?, which made it even more hilarious. There was also a time when I would say that my favourite movie of all time was Crimes and Misdemeanors which is described at the link as “a 1989 American existential comedy-drama film“. Whether I would still think it as good as I once did half a life-time ago I’d have to watch it again to find out. Here is part of one of the reviews made when it came out:

The wonder of Crimes and Misdemeanors is the facility with which Mr. Allen deals with so many interlocking stories of so many differing tones and voices. The film cuts back and forth between parallel incidents and between present and past with the effortlessness of a hip, contemporary Aesop. The movie’s secret strength – its structure, really – comes from the truth of the dozens and dozens of particular details through which it arrives at its own very hesitant, not especially comforting, very moving generality.

And if that doesn’t interest you, try this:

The chief strength of the movie is its courage in confronting grave and painful questions of the kind the American cinema has been doing its damnedest to avoid.

Whenever his movies would come to play, I would see it in the very first week since very few of his films would last for even two. It may take a special view of the world to enjoy his films but I definitely have whatever that is. And if I filtered out movies based on the politics of the producers and actors, I would hardly have made it to a single film over the past thirty years.

On the left though he may be, he is no longer in because of the claims made by his former wife. Once again, if I chose my films based on the morality of the actors and producers who made them, I would have seen hardly a film over the past thirty years. In any case, I have followed this story from the start and believe Woody’s side sounds infinitely more plausible. On this, I am on the same side as his son: Woody Allen’s son Moses Farrow defends father over sexual assault claims.

Sadly for Allen, he has fallen on the wrong side of the thought police. This comes at the very end of the C&P.

The Boston Globe, July 19, 2016:

Whether or not he’s the devil incarnate off screen I simply don’t feel I can say. But I can say this: He’s likely the most overrated film director working … I truly believe that in 50 years audiences will look at most of these ­movies and wonder what in hell we were thinking.

He says “in 50 years” because he knows that if you watched any of Allen’s best films today, you would enjoy them and see how much fun they are. So he punts for half a century, but in my view, come back in fifty years and Woody Allen will be among the very few directors from our era who is still remembered.

Trying to grow a flower by watering its petals instead of its roots

This is the best article on Keynesian economics I have ever come across, by David Weinberg and published in The Federalist: Why Economic ‘Stimulus’ Only Makes The Economy Worse. His summary statement captures his point perfectly:

While it remains a favorite policy prescription for politicians eager to appear as salvific heroes in times of need, it is untenable as a serious idea to stimulate anything except our national debt.

I could not recommend any article more. You should read it all, every word. There is a lot in it, but this was my favourite part:

The reality is that Keynesian policy fails for the simple reason that it targets the wrong problem. Production drives economic growth and creates an equal flow of demand. Demand is thus the consequence of production, not the other way around.

Successfully growing an economy, then, requires targeting production, not aggregate demand. Indeed, trying to grow the economy by targeting demand rather than production is like trying to grow a flower by watering its petals instead of its roots.

Here’s how his article relates to current policy.

In light of these numerous historical blunders, it is a wonder anyone takes Keynesian fiscal policy seriously anymore. Yet policymakers and politicians remain wedded to the model, as the current fury to rush through spending packages attests.

Now, lest the message here be misconstrued, this is not necessarily an argument against relief as a humanitarian measure in the midst of an economic meltdown resulting from governments around the world forcing businesses, communities, cities, states, and even entire countries to close down. This is a government-created economic disruption to deal with a public health concern.

Under these unique circumstances, there is certainly a case for providing targeted assistance. But we must not be fooled into believing that relief serves as economic “stimulus,” and nor can we ignore the fact that, beyond humanitarianism, there is no shortage of advocates calling for plain old demand-side fiscal stimulus. In that regard, there is little doubt that any Keynesian bill will blunt its drill on the same hard economic truth that stymied past demand-side exercises.

I can only hope the message spreads wider and deeper. It ought by now be obvious given the universal failures of public sector spending in the past.

Latin for Oxford classical scholarettes

Perhaps this is what they have in mind: Greek and Latin are hard: Oxford classics faculty proposes dropping Homer and Virgil from required curriculum so female students will do better on the tests. As it says:

I don’t know how Oxford plans to pull off teaching classics without, um, teaching any classical literature–but maybe, so as to close those “attainment gaps” for female students, the dons can devote a few units to Helen of Troy’s body-positivity issues.

You could make it a pre-requisite for Engineering for Girls

It’s all a matter of perspective

This is all there is at Instapundit, one item lost in the pack.

QUESTION ASKED: Is He Crazy? Mike Bloomberg Considering Hillary Clinton as His Running Mate.

And this is what you get at Sludge.

Sources close to Bloomberg campaign tell DRUDGE REPORT that candidate is considering Hillary Clinton as running mate, after their polling found the Bloomberg-Clinton combination would be formidable force... MORE

DRUDGE has learned that Bloomberg himself would go as far as to change his official residence from New York to homes he owns in Colorado or Florida, since the electoral college makes it hard for a POTUS and VPOTUS from the same state... Developing..


With this now added on.

MADAM VP: ‘I never say never because I do believe in serving my country’…
Clinton could get her revenge against Trump…
The implausible ticket?

As for who will eventually get the nomination, no one has a clue since actual policy has almost nothing to do with it. The only bit in common they seem to have is that they would each be a disaster, both domestically and across the world.

And with the soft porn they showed a game of football

UPDATE:Jennifer Lopez reaches for the stars during halftime at Monday’s Super Bowl. Picture: USA Today

This is the story and the actual headline with the above picture in the paper today: It’s Super showtime as girl power raises the roof. This is Girl Power meets #MeToo.

And for just a bit of additional politics of the left to add to the mix, there was this:

The most political moment came towards the end for a nation wrestling with difficult questions over immigration and race. Children appeared in illuminated cages as Lopez and her daughter, Emme, sang Born in the USA. As she sang, Lopez was wearing an American flag that she reversed to show the colours of Puerto Rico.

____________________________ Below is the original post

Once a year I watch a professional football game from the US. Poisoned for me, as for many others, by the kneeling during the American national anthem by people who have more freedom and wealth than 99.9% of the world’s population and commenced by someone who had been the quarterback for San Francisco, one of the two teams playing today. It was a remarkable game, and as is typical with more variety than you will find in any other sporting event I know, since the possibilities for the unusual and unexpected exists in North American football (reminder: the game was invented in Canada) in ways that are truly unique. The game today was no different. And like cricket, unless you grow  up with it, you might never catch on to its fascination.

Let me however look at the halftime show a bit more closely. Most of the time, I was doing my sudoku while it was on. Soft porn. This is from Drudge so you can see I am not alone in seeing things this way:

J-Lo Rubs Crotch, Dances on Stripper Pole...

However, right in the middle there was suddenly found a cross, just as you might find it outside some Christian Church which made me sit right up and take notice. But then I realised what I was actually looking at.

The symbol of the Roman goddess Venus is commonly used to represent the female sex. It also stands for the planet Venus and is the alchemical symbol for copper.

The half-time show, amazingly enough, was about girl power. American politics on the left cannot get more absurd.

As for the game, you can watch the replay below. And in watching, it may help you to remember that the team in white is from Nancy Pelosi’s home district in California, not that anyone should mix politics with sport.

AND I JUST CAME ACROSS THIS: My exact sentiments.