Daily Archives: October 31, 2008


When Consumers Capitulate

Ok, so maybe you thought I didn’t know what I was talking about in my essay about Why We Have Government.

If you didn’t like my explanation, then you can read the explanation by Paul Krugman, the most recent winner of the Nobel Prize for Econimcs.

I suppose I really shouldn’t use worn out phrase, “Nobel Prize winning economist”.  After all Mitlon Friedman was a “Nobel Prize winning economist”.  He couldn’t figure out when to stop touting his own award winning research as the answer to ever possible question.

Well, Krugman is just giving some basic economic lessons in his column.  He explains “the paradox of thrift”. He also explains “a liquidity trap”. His conclusion on what needs to be done comes in the following paragraph:

No, what the economy needs now is something to take the place of retrenching consumers. That means a major fiscal stimulus. And this time the stimulus should take the form of actual government spending rather than rebate checks that consumers probably wouldn’t spend.

Sounds remarkably similar to what I wrote.  Perhaps he learned his introductory economics from the same book that I did.


Why Do We Have Government 3

There was a letter to the editor in the Worcester Telegram & Gazette that stated

What Sen. Barack Obama is advocating, “spreading the wealth around,” is simply socialism at its core.

Juan, who commented on this letter, decried Obama’s use of Juan’s tax money for non-free market spending by the government.  I wrote the following response to Juan.

Juan,

Do you pay more taxes than Barack Obama? He probably has more skin in this game than you do.

We the people of the United States have banded together to have a government do the things that we cannot do as individuals.

In these troublesome financial times, most of the wise individuals are slowing spending and trying to increase savings to try to protect themselves from unknowable possible future events. When everyone slows spending, this has very bad consequences for employment and the future of the economy. However, each individual is acting in his or her own best interest. Few people have the wherewithal to take the chance that their assets can withstand any possible future debacle.

However, acting together through our federal government, we do have enough wherewithal to be fairly sure we can weather this storm. The rest of the world seems to think so too as money flows to the safe haven of the United States Treasury bonds and notes.

Acting as a group, we can afford to offset the financial pull back that most individuals must undertake. Increased spending on infrastructure by the federal government will be one of the things that pulls the economy out of the slump.

That is, unless John McCain gets elected. He is promising to cut government spending in the middle of a recession. The last time this was tried we ended up in the great depression.


Reagan Chief Of Staff Endorses Obama

Follow this link to the Huffington Post item on Kenneth Duberstein, Reagan Administration Chief of Staff, endorsing Barack Obama. This item actually has a link to the CNN web site’s story about Duberstein’s appearance on the Fareed Zakaria’s show this Sunday.

The following interview is what Duberstein had to say about choosing a Vice Presidential nominee before either side had picked one.

Kenneth Duberstein on Choosing A VP March 31, 2008