Unpresidential Remarks

I agree with all of your statements, save for the notion that state and local governments should renegotiate obligations to state or local workers. Most of your principles derive from the assumption that a contract is a contract, and therefore must be honored. Governments ought to avoid crafting such foolish agreements again, but must still fulfill the obligations it promised to people who accepted their jobs with the understanding that such agreements would be honored.

Well said!

Adina:
The problem with that line of reasoning is that there’s no way to make “government” pay the promised benefits. We, as taxpayers, are the ones who get stuck paying for it. I was not a party to those agreements, and I see no reason why I should pay for the irresponsibility of a government I never voted for.

If cutting back on benefits causes some financial hardship for retired members of government employee unions, then let that be a lesson to those who would deal with the devil.

I agree with most of your list…

The NYT should have asked for your advice rather than Tyler’s, Mankiw’s, etc.

Brandon Berg,

“I see no reason why I should pay for the irresponsibility of a government I never voted for.”

Alternatively, why shouldn’t you be excluded from the benefits of the fortuitous decisions governments make if you have not voted for them?

adina,

I agree with your sentiment, but it does pose an interesting question. What is the right thing when it becomes impossible to keep a promise? I do not mean inconvenient to keep it, or difficult to keep it, or straining to keep it, or any other lesser degree: I mean plainly that it cannot be kept.

Some of these state and local governments are approaching that possibility. They have a choice, pay their retired police as promised, but no longer pay current police officers. Pay their retired school teachers, but pay nothing to the current ones. Pay the retired state officials, but no longer fix the roads.

Are these reasonable? I pose this as a real question, not a conclusion. Is it better to keep the obligations to retired workers even if it means abandoning all the services that state was supposed to be performing? (For the moment I am skipping whether the state should even be involved with things like education, as that isn’t directly to the question.)

mjh,

That being said, I suspect that we’d get significantly better policies if only those who wanted them were funding them.

If only that was practical.

“Once the various excesses have been eliminated from the system and markets are back in balance–especially housing–we’ll be fine.”

But this long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean is flat again. — John Maynard Keynes

And ditto for politicians. I totally agreed with McCain that most of the jobs in Detroit were toast. Ditto his comments in Iowa (!) on ethanol. But I think his failure to posit a creative spin (“… and we’re gonna create BETTER jobs than ever before!”) and full response were alone enough to justify electing almost anybody else. If we bother to elect a President, why not one who we think will guide the Republic through tempestuous times?

When unions want to negotiate benefits for their members, it should be up to the unions to provide those benefits — the state should pay it as a fixed cost. Let the unions fail their members so the state isn’t put in that position.

Lordan:

If only life were like an economics textbook and we got rid of government distorting all our pretty supply and demand graphs, life would be perfect and we’d all be rich. Unfortunately, life is not like a textbook. (If it were, we’d have no government and live in an anarchic paradise.)

Markets are not only imperfect, they are dangerous to nations and individuals, and, being an individual and not a corporation and not an economics graph, I do mind if their volatile fluctuations destroy my life. So I will support monetary policy I believe is wise and mitigates volatility and object to bad policy, which tends, more often than not, to involve government letting the market do its own thing–and I think we can have that conversation without the snark about who gets economics and who doesn’t.

– bad dog

El Presidente:

I’ll concede the point on conscription. Not because I agree but because it’s not that important.

What I do want to talk about is this:

I said:
That being said, I suspect that we’d get significantly better policies if only those who wanted them were funding them.

You responded:
If only that was practical.

I agree that it’s politically impossible to make this happen. But what it looks like is not terribly complicated. It looks exactly like private markets.

For more details see David Friedman

Based on that platform, i´d definitely vote for Mr. Kling. Not that you would actually be able to get any of that done. Implementation of such policies is subject to “political willpower” and, though charismatic, I doubt there would be any motion in favor of such a platform. Albeit, as a thought experiment, it is pretty interesting to imagine how things would turn out.

I believe that many policy makers drift from their academic framework while in positions of actually implementing such policies not only because of the reason cited above but for fear of what may go wrong (on a personal and national level). Such great responsibility could cause, therefore, a certain inertia in the realm of economic progression.

I agree that it’s politically impossible to make this happen. But what it looks like is not terribly complicated. It looks exactly like private markets.

I would be in favor of user fees for the vast majority of government services if you would be in favor of highly progressive taxation and a negative income tax bringing everybody up to 50% of median income. Deal?

Hi, Lourdan.

I was looking to you to do better for your case to bad dog.

When you said

(please don’t mention XIX century America because 1. depressions were milder in XIX than in XX century,…)

you’ve gotten your point 1 entirely backwards.

Recessions and depressions were in fact routinely more drastic, extreme, and horrific in the 18th, 19th, and early 20th century than they were in the last half of the 20th century. One of the most important consensus observations by economists since the 1970s has been that business cycles in the last half of the 20th century have become more mild and of shorter duration than they were in the previous hundred years.

Why is this current financial situation more extreme? That’s the big question after so many years of economists’ noting that business cycles have diminished in magnitude and duration.

Ruling out discussion of the last two centuries when there have only been a few dozen business cycles, much less only a few extreme business cycle conditions mostly dating to the 1800s, is not helpful or conducive to productive discussion. You might as well say that no one should look at medical or physics facts from before the 1900s. Ruling out the factual and analytical discussions by economics analysts such as Friedman and Schwartz and others who looked at the extreme situations in the early 20th and late 19th centuries, is not conducive to productive debate about the current extreme situation.

An important fact has been that every economist who has noted that diminishment in the duration and extremity of recent business cycles has been very clear that there is no satisfactory explanation about why that might be the case. All serious economists have wondered at why the amplitude and duration of business cycles appear to have diminished since the end of WWII. We have only a few dozen instances to study. This recent instance is amazing in its extremity–though maybe it is too soon to tell, because extreme behavior in the stock market has not been perfectly correlated with extreme behavior of the business cycle. Is it something entirely new? Does it fit into other models that have not been seen since the government interventions of the early 1930s or 1970s? Is it a resurgence of previous extremity in business cycles? What caused the Great Depression and previous extreme recessions and depressions, which were common till the end of that event and maybe even until the 1970s?

To cut off conversation about the empirical facts of the 1800s and 1900s in the midst of the recent hypotheses finally being violated is not reasonable. It hurts your case if you say to a challenger that he might not address you on an important point by dipping into whatever sparse history is available. It further hurts your case when you invert or mis-represent facts that are well-known. When facts are scarce, don’t tell people to not talk about them.