2010-05-13

What, Me Worry?

Export Development Canada's Peter Hall, in his latest Weekly Commentary, regurgitates the predominant world view. While he makes a number of fuzzy points, he sums it up quite well in his trademark "bottom line:" (Emphasis added.)
The bottom line? Ongoing bailouts are a key sign that we are not yet through the economic downturn. Paying for the bailouts will signal recovery, and remind us of this downturn for a long time to come.
You have to feel a little sorry for these guys. They're trapped. To suggest that monopoly money is not a viable solution to a global recession will get you ostracized right out of the profession. As Hall puts it, "we all became Keynesians again." So in a sense, he's trapped; even if he had a free market head on his shoulders, the economics profession is such that speaking the pure and simple truth gets you labelled an extremist.

This is dangerous. I truly believe that, deep down, everyone knows that free markets are the only way to fly. But these people in the economics profession have been sucked into a technical muck so deep that they no longer understand what their own equations are supposed to mean anymore. They can't demonstrate free market superiority using equations, so they can't make a "credible" argument against Keynesianism.

This is what the socialists wanted all along. Socialists will always try to dazzle you with unintelligible linguistic non-sequitur debates. After a while they just become exhausting. You have to give up on the debate because you inevitably lose sight of how each subsequent polylogistic non sequitur relates to your original point. Socialists have been engaged in this kind of "debate" since the days of Marx. It's a game to them - they don't really believe it, because there's nothing to believe. The game is only to prove the folly of the free market. They never wanted to replace liberal philosophy with anything viable, they just wanted to exhaust the competition and take control of everything.

Now even free marketeers like Peter Hall can't even keep up. He sadly tries to follow along with the mishmash of senselessness that is Keynesian socialism. Here's an example:
The truth is now clearer: overnight, small surpluses and single-digit deficits became whopping, double-digit monoliths in the US, Japan and the UK, and both France and Germany strayed well away from the 3% Maastricht deficit target for the Eurozone.
Note the alarming phrase "single-digit deficits." A single-digit deficit is a budget shortfall of between 0 and 9 dollars. But that's not what Hall means. Hall means "single-digit-as-a-percentage-of-something." Every socialist economic statistic is expressed as a percentage of something. For example, sales taxes are considered regressive because they are regressive as a percentage of disposable income. Single-digit deficits probably mean single-digit annual deficit growth. In other words, our problems were always getting worse every year, but only by a compounding factor of 9%. What does that even mean? It is socialist nonsense. Compounding budget deficits are a serious problem! We know that now because we just watched Greece's monetary system virtually collapse into the sludge of "stimulus bailout packages."

But as the above quote points out, this very real, simple, tangible point is muddled by Keynesian terminology. We now no longer have the linguistic tools to criticize the underlying problem, which is deficit spending. Instead, we have to accept some "safe" level of deficit spending. In Hall's case, I suppose that "safe" level is anything less than 10% annually, i.e. "single-digit deficits."

Hall's proposed solutions also tow the party line:
IMF projections have debt as a share of GDP escalating in most G-7 nations beyond the critical 90% level by 2013, with the US nudging above 100% and Japan at an unthinkable 240%. Talk of ratings downgrades is circulating, adding to the growing unease. Worry is warranted, but only to a point. In contrast with emerging markets in the same straits, these economies have much greater ability to raise taxes, far deeper domestic capital markets, and significantly lower levels of political risk, among other factors that greatly increase their capacity to manage higher debt levels.
Even as the industrialized world's ability to produce anything collapses in our faces, our best economists are prescribing higher taxes, an expansion of government welfare services, and higher levels of debt!

We need to start asking ourselves some fundamental questions. Why are some of us convinced that a larger, more expensive government is the solution to an economic crisis? What is behind this line of thinking? So many of us feel this way that they can't simply be dismissed as power-hungry people who want to control our lives. So what is this idea based on?

How can printing money and expanding the government be taken seriously as a viable measure toward stabilizing our economies? Seriously? Is this where we're headed?