Potpourri
==> On the latest episode of Contra Krugman, Tom and I are a bunch of softies and mostly agree with Krugman about the tough spot Republicans are in, vis-a-vis ObamaCare.
==> A long interview I did with Scott Horton on all kinds of stuff.
==> Dan Mitchell of CATO discusses new research showing that “fiscal austerity” via spending cuts is much better for the economy than via tax hikes. (It’s almost like, giving resources to politicians is worse than letting people in the private sector keep them.)
==> Don Boudreaux has been spilling ink on the issue of trade deficits, pointing out that a current account deficit is the flip side of a capital account surplus. As such, if a foreign company invests in the US (even to build a factory here), then by itself that action would increase the US trade deficit. So is Trump for or against? This post is nice because it shows the technicalities of these arguments and also that Don is willing to admit when he oversteps.
==> I realize that super-low interest rates have something to do with it, but FYI right now the Shiller CAPE PE Ratio is at a level only seen before in 1929, 2000, and 2008.
==> The only thing more shocking than Michael Malice’s 6-pack abs is that his article about them is very interesting.
==> Don’t worry, James Hansen now tells us we have a little more wiggle room before “it’s too late” to stop climate change.
==> I feel really bad that I’m doing this to him, but a while ago Josiah Neeley sent me this post on the “anarchist case for climate action.” I had been waiting to “do it justice” but I’m still swamped through Christmas. I’d better just post it here and hope to come back to this stuff next semester in a journal article.
Re: Spilling ink on trade: I really liked your post back in October, Dr. Murphy, prompted by posts by Drs. Sumner and Boudreaux, where you pointed out some possible downsides to capital account surpluses and their flip-side trade deficits. http://consultingbyrpm.com/blog/2016/10/defenses-of-trade-deficits-that-could-mask-danger.html Well, not long ago Greg Mankiw had an op ed in the NY Times
http://www.nytimes.com/2016/12/02/upshot/want-to-rev-up-the-economy-dont-worry-about-the-trade-deficit.html
(continuing from above) where he (Dr Mankind) makes similar points to those of Drs Sumner and Boudreaux, about trade deficits might simply be offset by foreign investment in additional productive capacity here in the US and never address the possibility trade deficits may mean we are selling off our capital endowment to finance today’s consumption. (Dare I say government consumption?)
Thing is foreign purchase of Treasuries gets counted as if that was a capital investment, and yet the US government just takes the money and distributes it to client groups, mostly for consumption. The bulk of foreign Treasury purchase is by foreign governments, meaning that at no stage is there a genuine business evaluation as to the cost/benefit of this particular expenditure.
If we had private foreign individuals buying share issues from private US business, this would go through two stages of checking. The foreigner would be thinking, “Hmmm, do I trust my money with this business, let me check their history, their prospectus, their business plan, products, market, etc.” at the same time the US business is thinking, “Hmmm, we need to ensure this money gets spent in the most effective way, to ensure growth in the business.”
That’s not to say the foreign purchase of US business is entirely neutral — people tend to have incentives related to their own identity group such as their own nationality, etc. Ignoring that question though, at least the private investment is more likely to get spent on something genuinely productive.
On Josiah’s posted article, the commenter said:
“All it takes is one group to develop a process or product that enables industry to do the SAME task, but cheaper and cleaner and the industry will buy it.”
Yes, indeed. That is all it takes.
I await with interest Bob Murphy’s response to the article. My view is that as with many “tragedy of the commons” type situations, much could be resolved if the resource were not “the commons”, but were owned by someone. If the atmosphere were owned by someone I do not expect they would allow dumping into the resource for free. Especially when there was a good chance that said dumping might cause damage down the line. I suggest that the owner would make a charge for said dumping to offset any future damage claims. Just picking a number out of the air, maybe they would charge $30 a tonne of CO2.
Hey, I just listened to Contra-Krugman, and I get what you are saying that there’s no particular reason to have a plan for legislation if you are campaigning for an executive position. That said, Trump DID put forward a bunch of legislative changes related to healthcare, one of them being that Trump wants to facilitate insurance crossing state lines.
It’s something you don’t cover in your Primal Prescription book (at least I can’t find where you covered it) and you didn’t cover it on the podcast either. I was thinking that if you want people to be able to keep their coverage when they move around, you will have to be able to move across states. Otherwise, it’s pretty much useless. Job offers can quite often come from another state, and people are pretty much forced to move.
When I looked it up, people were saying that some insurance companies do provide coverage across multiple states, but generally not many states, it comes down to licensing restraints. So the company needs to handle compliance again for each state, also there’s questions of pricing and cost of living. There’s actually some pretty good points here…
https://www.quora.com/Why-cant-Americans-buy-health-insurance-across-state-lines-today-if-true
I’d like to hear the libertarian view on this. Part of the problem is just too much regulation, but also part of the problem is that each state just goes and does their own thing. But if you want to have competitive federalism (the only known way to put any sort of constraint on government power) then you are stuck with the fact that each state needs to do their own thing.