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August 22, 2011

DOOM: Trouble In Mind


SSDI is very nearly tits-up. But don’t worry! All is well! All we have to do is squeeze those rich bastards a bit more and everything will be fine!

The trustees who oversee Social Security are urging Congress to shore up the disability system by reallocating money from the retirement program, just as lawmakers did in 1994. That, however, would provide only short-term relief at the expense of weakening the retirement program.

Note to tenured professors: you might want to brush up the old resume. I’m just sayin’.

The “let’s pretend” game goes on.

Yeah, Portugal is boned right along with Greece. Spain isn’t far behind, and Italy may be following along shortly.

Feeding the masses on unicorn ribs. In the Harry Potter books, someone who feasts on Unicorn blood is doomed to live in a half-dead/half-alive state for all eternity. Sounds about right. Which leads us to....

Life after debt.

“The markets have highlighted a fundamental shortcoming in Keynes's ideas: He assumed that governments would always be able to borrow. If they cannot, then Keynesian economics is dead in the water.”
And Keynesians, as always, assume that the government will spend the money they borrowed wisely, which has not been the case.
This is a fact -- the Age of Debt is drawing to a close. Deleveraging is the only answer to our problems, and it’s going to be a long and painful process.

The “dismal science” brings some pretty dismal news.

CalSTRS is about $56 Billion short. Just tax those rich bastards for the difference! Unless they leave the state or fail to pony up. Then...well, I guess we’ll have to make chumps out of the average working man. Again. For the children!

Software runs the world. I guess this should make me happy, since I make my living by writing software. But software is written by humans, who make mistakes and fail to appreciate the complex nature of the beast they’re creating. Our software infrastructure is terribly frail, riddled with security holes, and performs poorly at boundary conditions. The more we rely on it, the more danger we expose ourselves to when it fails. Emergent behavior in software systems confounds even people who write the code: financial trading algorithms, industrial control systems, mathematical and physics simulations, and so on.

Unemployment hitting the young the hardest.

When your own ideas fail, the “tu quoque” is always a handy rhetorical dodge. Keynesianism has been pretty conclusively proved to be a dud, but the liberal statists always have another player who’ll come in and give it the old college try.

Those “gains” from QE2? Bye, bye, baby. You can only prime the pump for so long before you have to accept that your well is dry. The only solution to the problem is to drill a new well -- a hard, expensive, time-consuming process.

Gold now at $1880. $2000/oz or bust!

The good news? Only stupid people will be surprised when the student-loan bubble bursts. The bad news? There are a lot of stupid people out there.

The business of money. There is truth to this: we have a lot of talented people who, instead of working in fields with more value-add, have chosen to make their living by moving fiat money around from place to place. The problem in part is that fiat currency, as a manufactured good, behaves in the short term as any other scarce good; but in reality it is not scarce (being fiat, and thus creatable on demand), and this creates asymmetries in the supply/demand dynamic. Natural scarcity is where real economies flourish; artificial “scarcity” is doomed to fail at some point because the urge to create more of the scarce good (fiat money) is irresistible -- and far too easy.

There ain’t no such thing as “retirement” any more. If you have enough money, you can quit working and relax. If not.... Age-mandated retirement was an unsustainable idea right from the start, really -- a dream based on a mistaken assumption of how the economy and demographics would work over the long term.

Productivity is shrinking. In some ways, America’s economic trajectory is like that of a ballistic missile -- as it reaches the apex, it either rolls over and begins to fall, or it reaches escape velocity and leaves the atmosphere. If we have too much drag, we fall. If the engine cuts out too soon, we fall. If we enounter too much turbulence, we go out of control and then we fall. Achieving escape velocity requires good engineering, good weather, and good luck.

Productivity does not rise without limit. We may have reached the upper bound of what we are able to do with current technology. A plateau cannot be held indefinitely; we either rise, or we fall. Thus, to grow, we need to add more power to the economy -- but it’s not clear to anyone right now how we can do that. Debt-driven consumerism may be tapped out as a motive force, which means we need to look for something else.

The "eurobond" idea still seems like wishful thinking. There’s nothing in it for Germany, which will have to backstop everyone else’s debts.

A federal employment subsidy? There are a few problems with this:

  • The federal government is broke.
  • The subsidy would almost certainly go to cronies, pet causes (the “green” debacle) and Donk fellow-travelers.
  • The subsidy would have to be extracted from either taxpayers (which would slow growth and offset any gains from the subsidy) or from issuance of new debt (which would add new layers of debt onto the mountain we've already built).

This stupid article also assumes that companies can hire new workers “just because” -- that old canard that businesses exist to provide employment and not to produce things that generate a profit for their owners and investors. Employment is a side effect of a business, not the purpose of it. Regulatory and tax reform would do a lot more to stimulate hiring than some redistributionist cash subsidy.

You will have a hard time finding anything written about capitalism more stupid and meretricious than this. And I’m sure you’ll be as shocked as I am to find that it was written by an academic. From Haaaaavahd, no less.

Alexander Keyssar is the Stirling professor of history and social policy at Harvard’s Kennedy School and the author of “The Right to Vote: the Contested History of Democracy in the United States."
History and social policy, baby. Deep into the fever-swamps of leftist ideology. What are the odds that this dude has ever held a private-sector job?

Note: stupid decisions in the past have consequences in the future. Reality doesn't give us many do-overs. This is why carpenters formulated the "measure twice, cut once" rule.

Strike FAIL.

Georgia chopsticks.

Yeah, okay, I'm too fat to jump over the window. Ha ha ha. We all had a big laugh. Now get me down!

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posted by Monty at 08:20 AM

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