“Our desire to artificially maintain our standard of living through massive public- and private-sector debt (currently 348% of GDP, not including our unfunded liabilities of Medicare, Social Security, prescription-drug program, et al.). We’ve seen dramatic monetary-based expansions…

…an overleveraged and almost out-of-credit consumer, devastating annual budget deficits and perennial current account deficits that are enabled by our reserve-currency status and provide us with many of the consumer goods that we no longer make ourselves…… This has predictably occurred in part because of extremely high corporate and personal income taxes, excessive regulations which discourage investment, an unpredictable and incomprehensible tort system in which everyone’s assets are at risk of confiscation. Then there is our declining educational system which is incapable of providing qualified workers for industry, an over-sized government whose motto has become “Give me your votes and I will give you free stuff”…”, Frank R. Berlage

“Missing from this two-sided debate, however, is a growing viewpoint that questions the ability of the government to “control” the economy. Perhaps man’s intrusion into the economic environment leads to potentially horrific long-term consequences. The self-correcting and self-immunizing benefits of market cycles have been stifled by the human temptation to manipulate and control free markets and economic growth.”, John Sirianni

Letters

If Macroeconomics Is So Great, Why Don’t We Prosper?

The economy is weak for a number of simple and obvious reasons, and we don’t need multivariate regressions to see them.

Regarding John H. Cochrane’s excellent “The Failure of Macroeconomics” (op-ed, July 3): The economy is weak for a number of simple and obvious reasons, and we don’t need multivariate regressions to see them.

First, a great deal of business activity that used to be conducted in the U.S. has left the country for China, Mexico and large parts of Asia. This has predictably occurred in part because of extremely high corporate and personal income taxes, excessive regulations which discourage investment, an unpredictable and incomprehensible tort system in which everyone’s assets are at risk of confiscation. Then there is our declining educational system which is incapable of providing qualified workers for industry, an over-sized government whose motto has become “Give me your votes and I will give you free stuff,” a redistributionist psychology which badly allocates capital, and advanced robotics, which are beneficial for productivity in the long term but replace highly paid workers in the short term.

Our desire to artificially maintain our standard of living through massive public- and private-sector debt (currently 348% of GDP, not including our unfunded liabilities of Medicare, Social Security, prescription-drug program, et al.). We’ve seen dramatic monetary-based expansions, an overleveraged and almost out-of-credit consumer, devastating annual budget deficits and perennial current account deficits that are enabled by our reserve-currency status and provide us with many of the consumer goods that we no longer make ourselves.

While we will have strong and weak economic periods within this broad context, we still have time left to change but we must act quickly. As Herbert Stein correctly noted: If something cannot go on forever, it won’t.

Frank R. Berlage

La Jolla, Calif.

Prof. Cochrane queues up the debate between supply-side and demand-side clearly and persuasively. Missing from this two-sided debate, however, is a growing viewpoint that questions the ability of the government to “control” the economy.

Perhaps man’s intrusion into the economic environment leads to potentially horrific long-term consequences (a foregone conclusion concerning man’s intrusion into the ecological world). The self-correcting and self-immunizing benefits of market cycles have been stifled by the human temptation to manipulate and control free markets and economic growth. If Prof. Cochrane is attempting to set the terms of an economic growth debate, it seems disingenuous to omit smaller government (less central policy) from the solution set.

John Sirianni

Eau Claire, Wis.

Mr. Cochrane’s excessive scientism is on display when he pooh-poohs Paul Krugman’s critique regarding the “haze of equations” that has become standard in this field. Apparently Mr. Cochrane is worried that economics might become “ephemeral” like philosophy. I would welcome the ephemerality of Plato, Aristotle, Aquinas, Hume, Kant, Wittgenstein and so on.

Prof. Mario J. Rizzo

New York University

New York

 

Posted on July 15, 2014, in Postings. Bookmark the permalink. Leave a comment.

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