I'm in shock after seeing Secretary Paulson bemoaning the fact that he had to take a stake in many banks. He's not nearly so sad to be handing out cash with both hands, but he's offended by government taking a stake in private enterprise.
This is weird to me. I'd think a free market guy would be moaning about having to get involved in the market, but if he's going to do it, then to avoid any moral hazard, by God that company is going to lose equity. This reminds me of something I saw on PBS about the National Institute of Health. Why is it that taxpayer dollars pay for a sizeable fraction of the research in this country, but the government does not get a sizeable fraction of the royalties from the drugs developed from that research? To me, this is the same principle. I have no problem with government sponsored research, particularly in areas where commercialization does not appear imminent, but why government should do the investment and not share in the reward is beyond idiocy.
Tuesday, October 14, 2008
Monday, October 13, 2008
Why act against economic self-interest?
I've been puzzled for some time now about the appeal that the Republican platform of low taxes has for the lower middle class. The line that "you know how to spend your money better than the government" really resonates.
But there's a disconnect between people who want the streets paved, and lots of services, these are not Libertarians on the whole, and the notion that they aren't getting their money's worth.
Yes, government will always be inefficient. But it will be just as inefficient with less money, it will simply do less for you. The incremental cost of popular government services is cheap for people making $50,000 a year, because more of those costs are borne by people higher up the economic ladder.
I've been particularly impressed by the analysis by Alan S. Blinder in the New York Times about the economics of Republican vs. Democratic administration.
http://www.nytimes.com/2008/08/31/business/31view.html?_r=1&em&oref=slogin
It makes sense to me. When we don't invest in unsexy things like infrastructure, the economy doesn't grow as fast. It's insidious because it's easy to measure taxes, which you pay, and not so easy to estimate the monetary benefits of government programs, which are complex.
But there's a disconnect between people who want the streets paved, and lots of services, these are not Libertarians on the whole, and the notion that they aren't getting their money's worth.
Yes, government will always be inefficient. But it will be just as inefficient with less money, it will simply do less for you. The incremental cost of popular government services is cheap for people making $50,000 a year, because more of those costs are borne by people higher up the economic ladder.
I've been particularly impressed by the analysis by Alan S. Blinder in the New York Times about the economics of Republican vs. Democratic administration.
http://www.nytimes.com/2008/08/31/business/31view.html?_r=1&em&oref=slogin
It makes sense to me. When we don't invest in unsexy things like infrastructure, the economy doesn't grow as fast. It's insidious because it's easy to measure taxes, which you pay, and not so easy to estimate the monetary benefits of government programs, which are complex.
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