For John, BLUF: Economists? They are floundering. Nothing to see here; just move along.
We are not the only place where the economy is in question. Here is a review of the situation within the European Union by The Financial Times.
The debate gripping financial markets and European capitals since the Italian elections over whether the eurozone crisis is back contains a troubling supposition: that it ever went away.Then the longish article goes off to talk about Greece. And then Italy. Then this item:The existential threat of euro implosion may be gone. But the self-congratulatory mood that has coursed through European officialdom over the past six months coincided with deepening contractions in many economies, unemployment rising to double digits across the region, and sovereign debt levels setting new records.
We avoided the end of the world, EU leaders seem to be saying, rejoice that we only have the worst recession since the second world war.
After Olli Rehn, the EU’s economic chief, argued last month that countries should not falter over fiscal reform, Nobel prize-winning economist Paul Krugman declared a “Rehn of Terror”, prompting an online war of words between Princeton and Brussels.I think this is the interesting part. Nobel Prize winner and New York Times Columnist, Professor (Princeton) Paul Krugman and the European Unions Economic Chief, Finn Ollie Rehn, have squared off on the question of if Keynesian Economics works. This is not just an academic debate. Millions of people are counting on their nations to pick the correct answers. It is worth reading the whole Financial Times item on the "online war of words".
But, it isn't all that straight forward. Someone out there on the Internet suggested that it isn't just about government spending to stimulate the economy. It is also about the structure of the economy itself:
In many economies the burden imposed by high degrees of state participation in the economy dulls incentives and diminishes resources for more dynamic private sector activity.A friend of ours from our time in Naples, Italy, who now lives in Louisiana, is up visiting us from his Fellowship at a Westchester, NY, hospital. It is about complicated cases, where different medical problems in a single patient compound the overall problem of diagnosis and treatment. It isn't just Doctor Greg House finding the hidden answer. It is Doctor House dealing with a patient with several deadly and interacting hidden problems.In France, government spending is 52.8 percent of the economy. In Italy, 48.8 percent. In Greece, 46.8 percent. In Spain, 41.1 percent. Lest we become smug, in the US it is 38.9 percent. Data are from a 2011 index compiled by The Heritage Foundation and WSJ.
When Greece and France and Italy begin privatizing more economic assets and reducing excessive regulations, then we'll know they're serious about improving their conditions. Unfortunately, these countries toyed with socialist and communist economic ideas far too long in their postwar experience, weakening intellectual foundations and popular support for market economics and private ownership of critical economic infrastructure. This and dismaying levels of corruption stifle prospects for reform.
Europe is facing an economic downturn, economies that have lost the entrepreneurial spirit within the legal (White Market) economy, perhaps unsustainable levels of Government spending, an economy working more on the black market, and general corruption.
It is a complicated soup of problems.
Regards — Cliff
I strongly agree. The critical illnesses infecting our nation and its society have presented a Gordian knot of symptoms, the cure for which may kill the patient. However, unlike House's patients who are irrevocably dead when given the "wrong" cure, a nation and its society CAN have a new birth.
ReplyDeleteThe problem is that a "new birth" is wholly dependent on a toughness of the spirit, aka, a "pioneer" spirit.....the very absence of which is the root cause of our problems today. I say "the root cause" because, far from a panacea, it is an attitude about one's life and who is ultimately responsible for its comfort and longevity. From that spirit comes the strength and will to conquer all the other ills.......a long and at times onerous and painful process.
We have progressed in our disease far beyond repair via legislation or other simplistic prescriptions.In fact, the frenzy to "legislate" is quite reflective of the gut level panic that drives us to try to plug holes in a rapidly expanding number of leaks in the dike.
That we are where we are because of a primary schism that has developed is undeniable. Our society is divided along two lines, those who want the power to regulate their own lives and those who want the government to perform that role in toto. In between are a vast number of folks who, understanding neither worldview in its entirety, vacillate back and forth providing energy and motivation to the "leadership" of the extreme elements of those zeitgeists.
Sadly, and I believe somewhat prophetically, we are on the threshold of having to accept that "there isn't room for both of us in this town." America is perhaps the most shining example in human history of what is good, and our United States have provided a strong, if not occasionally battered framework to support that dream. We have weathered some bad diseases and that which hasn't killed us has made us stronger, but I would offer that today, we are threatened by multi-organ cancer and to save the patient, may require radical surgery.
Maybe subdivision is a good thing....a healthy thing. That is, if we are truly interested in living life according to our social and individual wants and desires. Or is the real issue more about imposition of one world view on an opposition. I think it is the latter.......which will ultimately require that subdivision of our great land and society.
Nothing can last forever except through compromise and compromise always is shortlived as it leaves so many unsatisfied.