I read Tyler Cowen’s column and would basically consider it a typical conservative rant against the extension of public policy; except, I agreed with the entire article. The real problem is the barter system established by Congress with Special Interests, and especially now that We have a beginning Senator as President; One who has not the experience to realize the limitations of the barter system in Congress, along with insufficient time in D.C. to have wide acquaintance with the bureaucracy and its politics. The later idiocy consists of sheer protection of territory, with avoidance of any assignment of responsibility for the irresponsibilities of office expressed. Can the new President eventually learn to handle lack of concern for the Public Good? Yes, but it is a learning process the Country can hardly afford. We will have to give Obama a second term solely to avoid the hazards of training a new President all over again, which is a damned poor rationale for choice of leadership.
Arnold Kling takes a long trip through Mark Thoma as initial source. It seems that economists outside the Beltway has much different opinion of the financial crisis, than do the bureaucracy economists in Washington. The major trouble I perceive with federal policy will be long-term instability in the finance sector, as Government sanction and underwriting becomes a mandatory convention to get financial instruments sold. Everyone but the current Regulators are beginning to be frightened by this tendency to obviate Risk in this manner. The indications reflect that these aberrant activities are scheduled to worsen.
My only real worry must be the health care issue will combine with the financial mismanagement, and bring Us to a loss of Credit, both Internationally and domestic. I seriously believe that We are approaching a Point where the Treasury will not even be able to handle Debt service alone, without increasing the Debt levels. The adage that all Saturated Economies are suffering from the same Government overhang and debt, so the whole system cannot fail is about as satisfying as stating that the Great Depression would not have happened if the Fed had adopted a loose Money policy. Government must eventually draw financial resources from a Tax base, else there will be nothing but Inflation. I think We are getting to the levels where the term ‘To Big to Fail’ will become the sad lament of old men watching their World disintegrate. lgl