24 January 2011
Milton, You Left Your Pétard Behind
When I was an undergraduate majoring in economics at the University of Michigan, our economics faculty was in full academic combat with the faculty at the University of Chicago. We were Keynsians; they were Monetarists. Milton Friedman was in his academic prime in Chicago preaching the errors of FDR's fiscal reforms of the New Deal.
Of course, it did not help matters that my macro lecture was at 1:00, right after lunch. The long gone Waterman Gym had been converted to classroom use for the Economics Department. The heating system was steam, so the inside humidity was quite high and, typically Midwestern, so were the thermostat settings. In winter, wearing galoshes, long underwear, parkas and scarves kept me from freezing to death walking to and from campus and between classes. Poor macro-economics could not stimulate me sufficiently to overcome the enveloping warmth of the room, my clothes and my full stomach.
All of these elements conspired to provide me with some very good sleep during class. You know it's a losing battle when you fall asleep while the professor is answering your question. Well, he wanted to be back in Washington anyway as the President's economic advisor, his prior job, and he could have cared less about teaching macro-economics to undergraduates.
I think the academic, macro-economists should confine themselves to theoretical issues and not try to invent and impose an applied field of macro-economics. Unfortunately, it seems that the Federal Reserve Board and its staff, plus members of the Treasury Department are infected with monetary theory and have been trying for the last three decades to apply macro-economic assumptions and theory to policy options of federal fiscal actions that direct our domestic economy.
Macro-economics, which considers national financial debits and credits, never appealed much to me. It was too theoretical, much like the state of political science academics was and remains. To my spongy mind, discussions and theories about the economy's demand graph versus the supply side of the national equation were about the wrong things.
For me, micro-economics deals with the elements of budgeting, measuring and commercial effects on our society from the bottom up. I think that good fiscal policy comes from micro-economic forces that look to macro-economic factors for assistance and trend analysis, but macro-economist conclusions are inappropriate for setting the limits of national fiscal policy.
"Supply Side" economics under President Reagan had its roots in Friedman's ideology and his fertilizer that produced the neo-conservative financial policies of the 1980s until today. Let me just say at this point that I still fail to comprehend global economic forces, especially in contemporary debates about reserve currencies, current accounts and short-term infusions of cash by the IMF. Congress seems to view our economic situation as either fodder for intervention or as fields better left fallow.
The Treasury Department and the Fed Chairman are talking about the options and determinants for legislation and governance using macro-economic theories and Congress has the perspective of the other economic theories that are more relevant to micro-economics. Same terms, words used in testimony and proposals for action, yet very different meanings that vary according to where one sits. No wonder Congress becomes impatient or defiant when the Treasury or the Fed takes actions that make little sense or have little timely effect on the day-to-day issues of our economy and the needs it entails for individuals.
For those of you who want to explore these topics, keep in mind the importance of "Bretton Woods," currency value tied to sterling or gold, and the contentious topic of a establishing an SRC, Single Reserve Currency, derived from the U.S. dollar, the euro, the British pound, and the Chinese yuan. These issues were discussed at the recent G20 meeting in Seoul, without resolution. Small wonder.
I find the Kindle to be very handy when taking my car in for service or for waiting room reading at the doctor's office. It is so convenient, especially with a case that has a stand in its cover. It's great for reading at Denny's or another restaurant if eating by myself. It is less noticeable than having a laptop beside your salad plate and it allows me to use both hands for eating. I'm not able to use the iPad to its full advantage plus I hope that its price will come down to an affordable one.
My first book (on Kindle) is a newly published biography of Theodore Roosevelt's life after office: Colonel Roosevelt by Edmund Morris. William Howard Taft is President (1910-1914). In 1912, Roosevelt travels through Central Africa then down the Nile through Sudan and Egypt to Cairo. Animal lovers may want to skip that section of the book. Roosevelt was famous for his hunting expertise. From Cairo he travels to Italy with his wife and daughters. This portion is a very interesting glimpse into the high society and politics just prior to the outbreak of World War I. The rest of the book is about Roosevelt, the Republican Party Progressives and his break with the Republican Party for the 1914 Presidential election. This biography, so far, is a reminder that if we forget or do not learn from history, we are bound to repeat it.
The second book is a mystery/thriller by Dan Fesperman, The Arms Maker of Berlin. I have just started it, so no review as yet. It reads well.
The internet technology brings several sources of news and commentary of a myriad of subjects. One, in particular, "the Eurozine" is great for learning what is being written in Europe, from the perspectives of several journals. It has links to full articles of interest, plus it may include a longer article separate from the abstracts. It's free, too.
In its December 20, 2010, edition, there is an excellent treatise on migration, immigration, past sins and memories that affect European countries today: "Seven Circles of European History", an excerpt from the Introduction to Ein Schlachtfeld wird besichtigt. Der Kampf um die europäische Erinnerung [A Battlefield is Surveyed. The Struggle over European Memory], to be published in 2011, by C. H. Beck, Munich.
Mr. Beck's writing is devoid of American perspective, although our country's role is interwoven among his descriptions and analyses of European history. I am not sure why he uses the paradigm of Dante's seven circles of Hell. I think the historians among you will enjoy it as well.
Beck omits one part of European history that we in America experienced with great effect on our nation's development. There is no mention of the millions of Europeans who emigrated to America in the 19th and 20th Centuries. The reduced populations in European countries must have fared very differently than had this huge migration not occurred. The Irish were starving and the English government could not feed them; poverty in other countries caused many to emigrate; and the religious minorities and persecuted religious communities such as German and Russian Anabaptists [Amish, Mennonite, Brethren], separatist sects from major Protestant religions, and those who were persecuted or suffered from not belonging to the state religions in Europe. America and American democracy evolved from including immigrants into the whole of society.
It seems to me that the European democracies are just learning the demographic and political imperative to learn the difference between statehood as cultural and historical, social homogeneity and statehood as inclusive, political and cultural community. This article explains some major hurdles European Union and individual states now face.
12 January 2011
For equal consideration, I thought it might be interesting to you to see two video clips one of which you may have seen, but most likely not both.
Video of Sarah Palin's statement on the Tucson killings:
Sarah Palin: "America's Enduring Strength" from Sarah Palin on Vimeo.
What is your reaction to Palin's statement? Now, compare it to Jon Stewart's statement on Monday, January 10, 2011:
|The Daily Show With Jon Stewart||Mon - Thurs 11p / 10c|
|Arizona Shootings Reaction|
I wish more people would listen to Jon Stewart's comments. His eloquent words on action and verbiage is remarkable, in my opinion. There is a theme going through the business leader education forums and other venues encouraging initiative and action. Observe-React-Learn or Think-Act-Redesign and so forth. These mottos intend to break through "groupthink" and killing of ideas by committees and bureaucracy. If such an approach empowers individuals to think creatively within an organization or empowers an individual to take common sense action in an emergency, I say "Great!" I would hope that there is more substance to such promotional programs that provides the skills needed in action and reflection. Some people seem to begin talking before engaging their brain's gears. Others think out loud regardless of time, place or appropriateness. I and those reading this post have the luxury of being able to see, to think about and to learn from such tragedies.
For those who pray or meditate, consider using the front page or screen of a daily newspaper or source as a basis for directing your thoughts. For instance, as a result of the assassination attempt in Tucson, the family of the would-be assassin have lost a son, a cousin, a brother, too. Imaging having to bear that loss with having to live in public as related to the murderer--however motivated. Think about everyone, not just the victims, during your reflections. I believe we can learn from this approach, too.