Arnold Kling makes the analogy. A few weeks ago, Instapundit either quoted an email, or linked to someone who said that the government stimulus package was like an ugly, clumsy person performing a lewd dance. The intent is to stimulate, but the effect is the opposite.
Category Archives: Economics
“No One Is Going To Bail Out America”
Some sobering thoughts on the financial future. We have to get spending (particularly entitlements) under control. And socialized health care is one of the worst things we could do in that regard.
[Update a few minutes later]
Some thoughts on the disaster that was the New Deal:
The New Deal tripled taxes, which meant consumers had less money to spend and employers had less money for hiring; a number of New Deal laws made it more expensive for employers to hire people, which also meant less hiring; New Deal soak-the-rich taxes discouraged investment, and it’s almost impossible to create private-sector jobs without investment.
Other policies hurt Americans in other ways. Several New Deal laws banned discounting, when desperate people needed bargains; the New Deal authorized the destruction of food when people were hungry; the New Deal established hundreds of cartels and monopolies; the New Deal centralized the power of the Federal Reserve, and the Fed’s first major policy decision was a blunder that brought on a crisis within a crisis (the depression of 1938); the New Deal broke up the strongest banks and did nothing about laws that prevented thousands of banks from diversifying their depositor bases and their loan portfolios (Canada didn’t have these laws, and it went through the Great Depression without a bank failure).
Unfortunately, we just put a lot of people in power who want to (or at least claim to want to) do it over again.
Is The Economy Bottoming?
Larry Kudlow (ever the optimist) has some thoughts, and advice for Republicans.
My biggest concern is that there’s still a big housing overhang, with adjustables coming due over the next year, which will continue to exacerbate the real-estate market and finance.
“A Nanny State On Steroids”
(Doctor) Paul Hsieh explains why lovers of freedom should fear “universal health care”:
Government attempts to regulate individual lifestyles are based on the claim that they must limit medical costs that would otherwise be a burden on “society.” But this issue can arise only in “universal healthcare” systems where taxpayers must pay for everyone’s medical expenses.
Although American healthcare is only under partial government control in the form of programs such as Medicaid and Medicare, American nanny state regulations have exploded in recent years.
Many American cities ban restaurants from selling foods with trans fats. Los Angeles has imposed a moratorium on new fast food restaurants in South L.A. Other California cities ban smoking in some private residences. California has outlawed after-school bake sales as part of a “zero tolerance” ban on selling sugar products on campus. New York Gov. David Paterson has proposed an 18 percent tax on sugary sodas and juice drinks, and state officials have not ruled out additional taxes on cheeseburgers and other foods deemed unhealthy.
These ominous trends will only accelerate if the US adopts universal healthcare.
But how could it be a nanny state on steroids? That’s probably one of the first things that will be banned…
Good Riddance To 2008
Iain Murray says that he won’t miss this year. It was pretty amazing in the vastness of its suckitude.
Bailout Rage
Arnold Kling vents:
De Rugy and the others also mention my other frustrations. First, that the Republican Party betrayed libertarians so badly on this issue. Second, that the media portrayed opponents of the bailout as unserious and ideological. Bernanke, Geithner, and Paulson were hailed as saviors, even though they could just have easily been portrayed as bumblers. The whole thing was portrayed as government having no choice but to come in and clean up the private sector’s mess, rather than an ill-conceived attempt to stop markets from adjusting to a mess that was created by a combination of market failure and government failure. Third, that even though much of the public instinctively and correctly opposed the bailout, it sailed through without costing Congressmen their seats.
The one upbeat commentator is Len Gilroy. He thinks that the high level of indebtedness of government will force politicians to scale back spending and to privatize. I’m sorry, but he comes off sounding like Mary Poppins on laughing gas.
As a commenter notes, the only hope is that a lot of non-libertarians are outraged, too. I hope it doesn’t end in riots, but I hope it ends.
Atlas Is Shrugging
Rich Karlgaard says that capital is on strike. He has some good policy recommendations that the Obama administration is unlikely to follow.
You Know The Auto Biz Is In Dire Straits
…when Toyota is losing money:
Battered by falling demand from consumers around the world and a surging yen, Toyota and other Japanese automakers have been reducing earnings outlooks and cutting workers.
“The change that has hit the world economy is of a critical scale that comes once in a hundred years,” President Katsuaki Watanabe said at the company’s Nagoya office. The drop in vehicle sales over the last month was “far faster, wider and deeper than expected.”
Toyota forecast an operating loss of 150 billion yen ($1.66 billion) for the fiscal year ending March 2009. Toyota has never reported an operating loss since it began disclosing such figures in 1941. But it did have an operating loss in unofficial, internal calculations for the year ending March 1938 a year after the company was founded.
And they think that pouring billions down the Detroit rathole can save them in such an environment? Particularly when the union refused to give on work rules? Mickey Kaus has more, here and here.
What a disaster this administration has turned out to be at the end.
More Bad News For My Home Town
GM was planning to build a new plant in Flint to build engines for the Volt. But apparently those plans have been put on hold.
I’d be interested to understand more about the numbers, though:
General Motors is suspending work on the $370 million factory slated to build engines for the Chevrolet Volt, but says the plug-in hybrid will appear in showrooms by the end of 2010 as promised.
The decision comes as GM frantically slashes costs in a desperate bid to survive while the White House dithers on a bailout. GM and Chrysler have said they could be out of money by the end of the year, but Congress failed to approve $14 billion in short-term loans to the Big Three and the Bush administration appears to be in no hurry to act.
With cash dwindling fast, GM says it has no choice but to postpone work on the the factory in Flint, Michigan, where 300 people would build the 1.4-liter turbocharged engines slated for the Volt hybrid and Chevrolet Cruze compact.
So, they’re spending almost half a billion on a factory that employs only three hundred people? That sounds like pretty good productivity (though it’s not going to do a lot for Flint’s continuing economic decline). How many engines will it produce per annum?
And where does all that money go? Tooling, purchased from other places? How much does that investment in building the plant itself help the Flint economy? Not a lot, I’d imagine, other than the construction itself. I’m guessing that most of those hundreds of millions are going to automated equipment and robots shipped in from somewhere else. So while it’s not great news for the city to delay or lose it, it’s not like it was going to save it economically.
[Update a few minutes later]
Here’s the original announcement from last summer, in the Flint Journal. I was wondering if the plant was going in where the old AC plant had been demolished, but it looks like it is/was planned to go on Van Slyke, over by the airport, and next to the truck plant.
It’s The Productivity, Stupid
I have some thoughts today on the real problem with the UAW, over at PJM.
[Update a few minutes later]
More thoughts from Mickey Kaus — from Taylorism To Wagnerism.
[Update a little after 9 Eastern]
Here’s an excellent piece on the same subject by Michael Barone.
[Afternoon update]
Jim Manzi has more thoughts on Wagnerism versus Taylorism:
…there appears to be a cyclical nature to these things. More-or-less the same, basically sensible, method for business operational improvement — carefully observe current work practices, think of them holistically and in light of the goals of the business, and then redesign work practices — keeps getting reinvented. Taylorism, “Goals and Methods”, factory statistical process control (SPC), Total Quality Management (TQM), reengineering, and so on are all just manifestations of this approach. Each is typically pioneered by innovators who have a fairly supple understanding of the often unarticulated complexity of the task. It drives clear profit gains, and many other people want to apply it. A group of experts are trained by the pioneers, who are also quite effective. There is an inevitable desire to scale up the activity and apply it as widely as possible. It becomes codified into some kind of a cookbook process that can be replicated. This process becomes a caricature of the original work, and the method is discredited by failure and ridicule. (Seeing this phase of reengineering at several companies in the 1990s, a close friend of mine once described it as “like the Planet of the Apes, but the monkeys have taken over from the humans”.) Within a few years, some new pioneers develop some new manifestation of the approach, and the cycle begins again.
Just before I left Rockwell in the early nineties, they had caught on to the latest TQM management fad. We all went to courses on it, as well as taking classes based on the management philosophy of Stephen Covey
Much of it was absurd. There is no sensible way to apply statistical management process control to research and development, but they attempted to do so, having us set out the processes by which we did trade studies, etc. This senseless training was, of course, charged to overhead (i.e., it was included as part of the burden on our Air Force and NASA cost-plus contracts). Just in case you were looking for more reasons that space stuff costs so much.