Government – Page 127 – artdiamondblog.com

“The Vast Inefficiencies of Public Sector Airports”

“One aviation expert said the Midway deal was a way to overcome inefficiencies of public airports.” Source of caption and photo: online version of the NYT article quoted and cited.

(p. A16) CHICAGO — Midway Airport is poised to become the first large privately run hub airport in the country, officials said Tuesday, after an investment group bid $2.52 billion to win rights to a long-term lease.
. . .
An aviation expert at the Brookings Institution, Clifford Winston, said he saw the deal’s attractiveness as helping to overcome “the vast inefficiencies of public sector airports.”
“The Midway experiment is important,” Mr. Winston said, “but it’s only a tiny step.”

For the full story, see:
SUSAN SAULNY. “In Chicago, Private Firm Is to Run Midway Airport.” The New York Times (Weds., October 1, 2008): A16.
(Note: ellipsis added.)

No Fooling: Government Plants Dead Trees

(p. A25) Years ago, when I was a reporter, I remember getting a call from a woman in the Bronx who was screaming: “They’re over on Moshulu Parkway planting dead trees!”

A city work crew was, sure enough, digging holes along the side of the street and carefully sticking in brown and dried-up pieces of foliage. The men claimed the trees had simply lost their leaves for the winter — an explanation somewhat undermined by the fact that they were evergreens.
I’m telling you this because on Tuesday I was talking with a high-ranking Obama administration official about the stimulus plan. “There will be a dead tree planted, figuratively speaking,” he said somberly. “That will happen.”

For the full commentary, see:
GAIL COLLINS. “The Dead Tree Theory.” The New York Times (Thurs., February 25, 2009): A25.
(Note: the online version is dated Feb. 26, and has some substantial differences from the midwest print edition version I have, though there are only minor differences in the brief passages quoted above, which agree with my print copy.)

Vaclav Klaus: The Czech Republic’s Free Market Crusader

“President Vaclav Klaus of the Czech Republic is known for his economic liberalism.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A6) To supporters, Mr. Klaus is a brave, lone crusader, a defender of liberty, the only European leader in the mold of the formidable Margaret Thatcher. (Aides say Mr. Klaus has a photo of the former British prime minister in his office near his desk.)
. . .
As a former finance minister and prime minister, he is credited with presiding over the peaceful 1993 split of Czechoslovakia into two states and helping to transform the Czech Republic into one of the former Soviet bloc’s most successful economies.
But his ideas about governance are out of step with many of the European Union nations that his country will lead starting Jan. 1.
While even many of the world’s most ardent free marketeers acknowledged the need for the recent coordinated bailout of European banks, Mr. Klaus lambasted it as irresponsible protectionism. He blamed too much — rather than too little — regulation for the crisis.
A fervent critic of the environmental movement, he has called global warming a dangerous “myth,” arguing that the fight against climate change threatens economic growth.
. . .
Those who know Mr. Klaus say his economic liberalism is an outgrowth of his upbringing. Born in 1941, he obtained an economics degree in 1963 and was deeply influenced by free market economists like Milton Friedman.
Mr. Klaus’s son and namesake, Vaclav, recalled in an interview that when he was 13, his father told him to read Aleksandr Solzhenitsyn to better understand Communism’s oppressiveness.
“If you lived under communism, then you are very sensitive to forces that try to control or limit human liberty,” he said in an interview.

For the full story, see:
DAN BILEFSKY. “A Fiery Czech Is Poised to Be the Face of Europe.” The New York Times (Tues., November 25, 2008): A6.
(Note: ellipses added.)

“Government Interventions Only Prolonged the Crisis”

The comments of Maart Laar, former prime minister of Estonia, are worth considering:

(p.A13) It is said that the only thing that people learn from history is that people learn nothing from history. Looking at how the world is handling the current economic crisis, this aphorism appears sadly true.

World leaders have forgotten how the collapse of Wall Street in 1929 developed into a world-wide depression. It happened not thanks to market failures but as a result of mistakes made by governments which tried to protect their national economies and markets. The market was not allowed to make its corrections. Government interventions only prolonged the crisis.
We may hope that, even as we see several bad signs of neo-interventionist attitude, all the mistakes of the 1930s will not be repeated. But it is clear that the tide has turned again. Capitalism has been declared dead, Marx is honored, and the invisible hand of the market is blamed for all failures. This is not fair. Actually it is not markets that have failed but governments, which did not fulfill their role of the “visible hand” — creating and guaranteeing market rules. Weak regulation of the banking sector and extensive lending, encouraged by governments, are examples of this failure.

For the full commentary, see:
MART LAAR. “Economic Freedom Is Still the Best Policy.” Wall Street Journal (Fri., FEBRUARY 13, 2009): A13.

High Progressive Income Taxes Result in “Demoralization of Entrepreneurs”

(p. 127) High progressive and unnegotiable gouges like those in Sweden and England drive people altogether out of the country into offshore tax havens, out of income-generating activities into perks and leisure pursuits, out of money and savings into collectibles and gold, and, most important, out of small business ventures into the cosseting arms of large established corporations and government bureaucracies. The result is the demoralization of entrepreneurs and the stultification of capital. The experimental knowledge that informs and refines the process of economic growth is stifled, and the metaphysical capital in the system collapses, even while all the indices of capital formation rise.

Source:
Gilder, George. The Spirit of Enterprise. 1 ed. New York: Simon and Schuster, 1984.

Steuben Saw “The Genius of this Nation”

“German soldier of fortune and American ally Baron von Steuben (1730-94)” Source of caption and photo: online version of the WSJ review quoted and cited below.

(p. W9) The essence of Steuben’s achievement was his modification of the brutal, robotic precision of the Prussian system to fit American conditions. He was able to do this because he was one of the first foreign observers, military or civilian, to grasp an essential strain of the American character. “The genius of this nation,” he wrote a European friend, “is not in the least to be compared with that of the Prussians, Austrians or French. You say to your soldier, ‘Do this,’ and he doeth it. I am obliged to say, ‘This is the reason why you ought to do that,’ and then he does it.”
. . .
While Mr. Lockhart tends to soft-pedal some of Steuben’s more dubious deeds — ignoring, for instance, his attempt to interest Prince Henry of Prussia, Frederick the Great’s younger brother, in becoming king of the independent colonies before the adoption of the Constitution — the author generally treats his subject with balance, understanding and great good humor, aptly concluding that, “although he blurred a few details of the past in order to seek preferment in the United States, somewhere between his arrival and the achievement of American independence, the Baron became something very much like the man he had pretended to be.”

For the full review, see:
ARAM BAKSHIAN JR. “BOOKS; Revolutionary Scamp.” The Wall Street Journal (Sat., NOVEMBER 8, 2008): W9.
The reference to the book under review is:
Lockhart, Paul. The Drillmaster of Valley Forge. New York: HarperCollins Publishers, 2008.

Source of book image: http://robertos-book-picks.blogspot.com/2008/11/drillmaster-of-valley-forge-baron-de.html

FDR’s 1935 Revival Prediction Proved False

(p. C1) Despite the reputation of the New Deal, deep government interventions are unpredictable and sometimes harmful, reminds Amity Shlaes, who wrote a popular history of the Depression, “The Forgotten Man.”

Ms. Shlaes points to the period of 1936 and 1937, when the Federal Reserve used New Deal laws to tighten reserve requirements on the nation’s banks. The goal was to make the banks stronger, but the result was that banks tightened still further. That cut off credit to the economy at a sensitive period. The Dow Jones Industrial Average fell by more than a third between August 1937 and January 1938. Unemployment surged. It was the “depression within the Depression.”
It wasn’t the revival that FDR had predicted back in 1935, when he boasted: “Never since my inauguration in March 1933, have I felt so unmistakably the atmosphere of recovery.”
. . .
“When you’re in the expert business, after a while you realize there are no experts,” says Richard Sylla, New York University’s Henry Kaufman Professor of The History of Financial Institutions and Markets.
The important thing to know, it seems, is how little we know.

For the full commentary, see:
DENNIS K. BERMAN. “THE GAME; Tomorrow’s Recession Recovery Is Today’s History Lesson.” Wall Street Journal (Tues., MARCH 3, 2009): C1.
(Note: ellipsis added.)

The reference to the excellent Shlaes book, is:
Shlaes, Amity. The Forgotten Man: A New History of the Great Depression. New York: HarperCollins, 2007.

Pro-Obama Economist Krugman Predicts Higher Taxes on Middle Class

(p. A23) . . . even if fundamental health care reform brings costs under control, I at least find it hard to see how the federal government can meet its long-term obligations without some tax increases on the middle class. Whatever politicians may say now, there’s probably a value-added tax in our future.

For the full commentary, see:
PAUL KRUGMAN. “Climate of Change.” The New York Times (Fri., February 27, 2009): A23.

The Bailouts Are Like Giving Bottles of Scotch to Drunkards

Printing press for $20 bills. Source of photo: online version of the NYT article quoted and cited below.

(p. 4) “We got into this mess to a considerable extent by overborrowing,” said Martin N. Baily, a chairman of the Council of Economic Advisers under President Clinton and now a fellow at the Brookings Institution. “Now, we’re saying, ‘Well, O.K., let’s just borrow a bunch more, and that will help us get out of this mess.’ It’s like a drunk who says, ‘Give me a bottle of Scotch, and then I’ll be O.K. and I won’t have to drink anymore.’ Eventually, we have to get off this binge of borrowing.”

“This is a dangerous situation,” says Mr. Baily, essentially arguing that the drunk must be kept in Scotch a while longer, lest he burn down the neighborhood in the midst of a crisis. “The risks of things actually getting worse and us going into a really severe recession are high. We need to get more money out there now.”
. . .
The most frequently voiced worry about the bailouts is that the Fed, by sending so much money sloshing through the system, risks generating a bad case of rising prices later on. That puts the onus on the Fed to reverse course and crimp economic activity by lifting interest rates and selling assets back to banks once growth resumes.
But finding the appropriate point to act tends to be more art than science. The Fed might move too early and send the economy back into a tailspin. It might wait too long and let too much money generate inflation.
“It’s a tricky business,” says Allan H. Meltzer, an economist at Carnegie Mellon University, and a former economic adviser to President Reagan. “There’s no math model that tells us when to do it or how.”

For the full story, see:
PETER S. GOODMAN. “Debt Sweat; Printing Money and Its Price.” The New York Times, Week in Review Section (Sun., December 28, 2008): 1 & 4.
(Note: ellipsis added.)

80% of Officials Base Infrastructure Decisions on Politics

Source of graph: online version of the NYT commentary quoted and cited below.

(p. B1) It’s hard to exaggerate how scattershot the current system is. Government agencies usually don’t even have to do a rigorous analysis of a project or how it would affect traffic and the environment, relative to its cost and to the alternatives — before deciding whether to proceed. In one recent survey of local officials, almost 80 percent said they had based their decisions largely on politics, while fewer than 20 percent cited a project’s potential (p. B6) benefits.

There are monuments to the resulting waste all over the country: the little-traveled Bud Shuster Highway in western Pennsylvania; new highways in suburban St. Louis and suburban Maryland that won’t alleviate traffic; all the fancy government-subsidized sports stadiums that have replaced perfectly good existing stadiums. These are the Bridges to (Almost) Nowhere that actually got built.

For the full commentary, see:
DAVID LEONHARDT. “Economic Scene; Piling Up Monuments of Waste.” The New York Times (Weds., November 18, 2008): B1 & B6.

“Firms that Made Wrong Decisions Should Fail”

Anna J. Schwartz.

Source of image: online version of the WSJ article quoted and cited below.

(p. A11) Most people now living have never seen a credit crunch like the one we are currently enduring. Ms. Schwartz, 92 years old, is one of the exceptions. She’s not only old enough to remember the period from 1929 to 1933, she may know more about monetary history and banking than anyone alive. She co-authored, with Milton Friedman, “A Monetary History of the United States” (1963). It’s the definitive account of how misguided monetary policy turned the stock-market crash of 1929 into the Great Depression.
. . .
These are not, Ms. Schwartz argues, the same thing. In fact, by keeping otherwise insolvent banks afloat, the Federal Reserve and the Treasury have actually prolonged the crisis. “They should not be recapitalizing firms that should be shut down.”
Rather, “firms that made wrong decisions should fail,” she says bluntly. “You shouldn’t rescue them. And once that’s established as a principle, I think the market recognizes that it makes sense. Everything works much better when wrong decisions are punished and good decisions make you rich.” The trouble is, “that’s not the way the world has been going in recent years.”
Instead, we’ve been hearing for most of the past year about “systemic risk” — the notion that allowing one firm to fail will cause a cascade that will take down otherwise healthy companies in its wake.
Ms. Schwartz doesn’t buy it. “It’s very easy when you’re a market participant,” she notes with a smile, “to claim that you shouldn’t shut down a firm that’s in really bad straits because everybody else who has lent to it will be injured. Well, if they lent to a firm that they knew was pretty rocky, that’s their responsibility. And if they have to be denied repayment of their loans, well, they wished it on themselves. The [government] doesn’t have to save them, just as it didn’t save the stockholders and the employees of Bear Stearns. Why should they be worried about the creditors? Creditors are no more worthy of being rescued than ordinary people, who are really innocent of what’s been going on.”

For the full story, see:
BRIAN M. CARNEY. “OPINION: THE WEEKEND INTERVIEW with Anna Schwartz; Bernanke Is Fighting the Last War.” The Wall Street Journal (Weds., OCTOBER 18, 2008): A10.
(Note: ellipsis added.)