Sources of Wealth

One needs to read this article, though One does not need to agree with it. I have a problem with it, as I suspicion that it will take a Recession as curative of many of the structural problems in the American economy. Here is the Problem: Many new structural financial mechanisms have been introduced within the last decade, and a great share of them are proving to be unmanageable and unsustainable. The trouble comes from the banking industry attempting to maintain their operation, even though they have been a proven failure. It is exactly this refusal to bankrupt and shell these mechanisms out that threatens the American economy. The Fed actions, and the Congressional Stimulus Package, may simply be building on shifting Sands. It might take a Recession to blow out these faulty mechanisms, and reach bedrock again. This article may help explain the creation of the muddle which has to be resolved.

Morris Altman, thanks to Tyler Cowen for the link, has published this Paper (PDF) carrying this Abstract:

The hypothesis that economic freedom and related variables are significant determinants of
real per capita income and growth is critically evaluated. Economic freedom is found
necessary for higher levels of per capita income and growth largely in terms of threshold
effects as opposed to persistent marginal effects. More economic freedom does not appear to
yield higher levels of per capita income. And securing particular levels of economic freedom
does not guarantee higher levels of per capita income or growth. Secure private property
rights is found to be a most significant positive causal variable as is sound money, whereas
moderate amounts of labor regulation and big government are not found to be bad for the
economy. Also, good corporate governance, in addition to economic freedom, is of
considerable import. Unlike most studies, traditional statistical methods are supplemented by
graphical analysis in an effort to determine threshold values for economic freedom and its
components.

This generally conforms with my own beliefs, but I have as yet not found the time to research the Paper throughly; I am getting lazy and behind Schedule.

Paul Krugman agrees with the Financial Times which finds that growing up in Poverty stunts development, later forestalling the successful struggle from Poverty. I could agree with that assessment generally, but also suggest that it is the lack of Parental Example of cheating the system that could be at fault. Much of later-day wealth has been consistently earned through the Cheating of trusting Investors. Again and again, the high flyers are found to be deviant in behavior mechanisms of social structure, to the detriment of their Peers. Is it lack of opportunity, or too great an addiction to honesty which impedes the Poor’s success? lgl