Economic Policy

Life of Julius

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My first job was doing dishes, scrubbing pots and pans and scrubbing floors at a country club in my hometown.

I was paid less than minimum wage at the time, the princely sum of $1.55 per hour.  I loved the job.  I held it all through high school.  When work was slack I was allowed to do homework and the management fed me a free meal each night I worked, whatever I liked.  I saved the sum of $3,000 for college, a not inconsiderable sum at the time.  The most important part of the job was what it taught me:  showing up on time, working hard and learning to work with other people.  I learned more on that first job of value to me in my future life, than any of the classes I took in college or law school.  Too many kids are denied this opportunity today because of government polices like the minimum wage that act as a deterrent to employers hiring employees, especially green kids with no employment track history.  If we wished to design a system that would handicap young people from becoming productive workers building a future for themselves, I think we would be hard pressed to “improve” on current policies: →']);" class="more-link">Continue reading

German Economist: America Is Becoming Too European

I found this piece from the English-language edition of Der Spiegel by University of Hamburg economics professor Thomas Straughaar very interest, in part because it reads very much as written by someone who is looking at American history and culture from the outside, yet trying to understand it for what it is. A key passage from the second page:

This raises a crucial question: Is the US economy perhaps suffering less from an economic downturn and more from a serious structural problem? It seems plausible that the American economy has lost its belief in American principles. People no longer have confidence in the self-healing forces of the private sector, and the reliance on self-help and self-regulation to solve problems no longer exists.

The opposite strategy, one that seeks to treat the American patient with more government, is risky — because it does not fit in with America’s image of itself.

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Re-evaluating American Health Policy: A Catholic Democrat’s Perspective (Part II)

Dr. Peter Pronovost is a distinguished physician known for his efforts to decrease the frequency of deadly hospital-borne infections. His remedy to the problem is surprisingly simple: a checklist of ICU protocols that directs physician sanitary practices (e.g. hand-washing). Hospitals that have put Pronovost’s checklist into practice have had immediate success, reducing hospital-infection rates somewhere between (estimates vary) well over a third to a whopping two-thirds within the first few months of its adoption. Yet as the story goes, many physicians have rejected this solution and Pronovost has struggled to persuade hospitals to adopt his reform.

The Centers for Disease Control and Prevention estimates that nearly 100,000 American deaths are caused or contributed to by hospital-borne infections. Blood clots following surgery or illness are the leading cause of avertable hospital deaths in the U.S., which by the most liberal estimates might contribute t o the death of almost 200,000 patients annually. Given such a hideous fact, why exactly does a doctor need to travel about and emphatically seek to persuade other medical institutions to adopt, in effect, a cost-free idea that could save so many lives?

How is that an industry which stridently decries the high cost of liability insurance or the absolute injustice of our tort system(which does need reform) need such petitioning to embrace such a simple technique to save thousands of lives? Moreover, in the United States it is not unheard of for a whole business to shut down due a single illness from some suspicious food—yet, we tolerate the killing-via-negligence on such a grand scale in our hospitals? Medical mistakes and institutional carelessness do not qualify as some must-be-accepted inevitability.

This reality has been almost entirely been neglected in the discourse on health care reform. Beyond the structure and financing troubles of our medical system, the institutional practice and governance of hospitals are in need of severe criticism. For example, in what alternate dimension does the peculiar scheduling of hospital work shifts in any way benefit the patient? A few weeks at the hospitals virtually guarantees a never-ending string of new personnel assigned to one patient’s care. If this can be avoided, should it not? It seems quite reasonable to presume that passing patients off from doctor to doctor, or nurse to nurse, might increase the chance of someone making a mistake? The effect of changing such a seemingly small problem could be huge. Or, take for example, the “sanitary” environment of hospitals in general, which contribute to the nearly 100,000 annual American deaths. Anyone who has ever worked in “corporate America” or in a large building in general might note that the trash is picked up once daily. Is it any different in a hospital? It takes some sort intellectual schizophrenia to insist on ICU sterility in a building if one has not the slightest care over how many times trash (never mind what is in it) is picked up in a day.

Any array of complaints about institutional malpractice must lead to the inevitable question: how is it that the most technologically advanced medical institutions in the industrialized world miss out on a just as modern, just as recent, revolution of quality control and customer-service that has pervaded every other consumer-based industry?  The answer to this question is telling. →']);" class="more-link">Continue reading

"Federal Budget on an Unsustainable Path"

Federal Debt Projections

As regular readers of this blog know, I have been sounding the tocsin regarding government spending since the Bailout Swindle of 2008.  Here is one of my posts in which I list other posts I have written on the subject.

Yesterday the Director of the Congressional Budget Office had a chilling post on his blog which you may view here.  He states in part:

“Under current law, the federal budget is on an unsustainable path, because federal debt will continue to grow much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the population will cause federal spending to increase rapidly under any plausible scenario for current law. Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States. Over time, accumulating debt would cause substantial harm to the economy. The following chart shows our projection of federal debt relative to GDP under the two scenarios we modeled.” 

His chart is at the top of this post.

Keeping deficits and debt from reaching these levels would require increasing revenues significantly as a share of GDP, decreasing projected spending sharply, or some combination of the two.

He concludes on this somber note:

The current recession and policy responses have little effect on long-term projections of noninterest spending and revenues. But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. This higher debt results in permanently higher spending to pay interest on that debt. Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.

This is fiscal madness.  We have the wealth and the ability to solve this problem by spending cuts, and minor tax increases if, and only if, combined with meaningful and deep spending cuts.  What we lack is the political will.  We are destroying the future prosperity of our kids because of current political cowardice, folly and inertia.

You Mean Running Up Trillions in New Debt May Not Be Good Politics?

Obama Broke

The Washington Post reported Sunday here, hattip to Instapundit, that the White House is getting nervous about the political fallout from the unprecedented spend-and-borrow binge upon which  Obama has placed the country.

“Results from a Gallup survey released last week show that although more than six in 10 Americans approve of Obama’s overall job performance, fewer than half say they approve of how he is handling the deficit and controlling federal spending. The poll also shows a decline from the previous month in the percentage of Americans who approve of Obama’s handling of the economy, although a majority still does.”

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Stagflation or Hyperinflation?

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Hattip to Ed Morrissey at Hot Air .  Economist Arthur Laffer, he of the Laffer Curve, sounds the tocsin regarding the incredible expanision of the money supply.

“But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

About eight months ago, starting in early September 2008, the Bernanke Fed did an abrupt about-face and radically increased the monetary base — which is comprised of currency in circulation, member bank reserves held at the Fed, and vault cash — by a little less than $1 trillion. The Fed controls the monetary base 100% and does so by purchasing and selling assets in the open market. By such a radical move, the Fed signaled a 180-degree shift in its focus from an anti-inflation position to an anti-deflation position.

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Debt Sun

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Hattip to Instapundit.  The Heritage Foundation supplied the above graphic which compares Obama budget “cuts” of $100,000,000.00 to the appropriations bill for fiscal 2009 of $410,000,000,000.00, the Bankrupt the Nation Act of 2009, sometimes erronously called the “stimulus” bill, which has a price tag of $787,000,000,000.00 and the estimated bill for fiscal year 2010 of $3,600,000,000,000.00.  How ludicrous is all this?  Ludicrous enough that the Obama supportive Associated Press makes fun of it.  Ludicrous enough that even Paul Krugman is chuckling.

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Deadly Greenbacks!

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From the only reliable source of news on the net, the Onion.  You know, the truly sad thing is that after the past year I could almost imagine this type of scam being pulled by the government.

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