Temporary Economics

EU Commissioner for Competition Neelie Kroes on temporary government aid to struggeling industries (quoted from memory from this event):

Giving temporary aid is like pregnancy. You think it is only for nine months, but there are decades of consequences.

Lead, dammit!

The Economist’s assesment of Barack Obama’s first two months in office. Kudos for good efforts on the global scale, but domestic policy is stumbling:

There are two main reasons for this. The first is Mr Obama’s failure to grapple as fast and as single-mindedly with the economy as he should have done. His stimulus package, though huge, was subcontracted to Congress, which did a mediocre job: too much of the money will arrive too late to be of help in the current crisis. His budget, though in some ways more honest than his predecessor’s, is wildly optimistic. And he has taken too long to produce his plan for dealing with the trillions of dollars of toxic assets which fester on banks’ balance-sheets.

The failure to staff the Treasury is a shocking illustration of administrative drift. There are 23 slots at the department that need confirmation by the Senate, and only two have been filled. This is not the Senate’s fault. Mr Obama has made a series of bad picks of people who have chosen or been forced to withdraw; and it was only this week that he announced his candidates for two of the department’s four most senior posts. Filling such jobs is always a tortuous business in America, but Mr Obama has made it harder by insisting on a level of scrutiny far beyond anything previously attempted. Getting the Treasury team in place ought to have been his first priority.


If Mr Obama cannot work with the Republicans, he needs to be certain that he controls his own party. Unfortunately, he seems unable to. Put bluntly, the Democrats are messing him around. They are pushing pro-trade-union legislation (notably a measure to get rid of secret ballots) even though he doesn’t want them to do so; they have been roughing up the bankers even though it makes his task of fixing the economy much harder; they have stuffed his stimulus package and his appropriations bill with pork, even though this damages him and his party in the eyes of the electorate. Worst of all, he is letting them get away with it.

Best sentence I read today

Again, from Charles Murray’s Happiness of the People lecture:

The twentieth century was a very strange century, riddled from beginning to end with toxic political movements and nutty ideas. For some years a metaphor has been stuck in my mind: the twentieth century was the adolescence of Homo sapiens. Nineteenth-century science, from Darwin to Freud, offered a series of body blows to ways of thinking about human beings and human lives that had prevailed since the dawn of civilization. Humans, just like adolescents, were deprived of some of the comforting simplicities of childhood and exposed to more complex knowledge about the world. And twentieth-century intellectuals reacted precisely the way that adolescents react when they think they have discovered Mom and Dad are hopelessly out of date. They think that the grown-ups are wrong about everything. In the case of twentieth-century intellectuals, it was as if they thought that if Darwin was right about evolution, then Aquinas is no longer worth reading; that if Freud was right about the unconscious mind, the Nicomachean Ethics had nothing to teach us.

Economic links

A song for Paul Krugman (vs. Timothy Geitner).

Geithner’s own words on his plan for a solution for the toxic assets. Grand plans, costly for taxpayers. But it is basically the same political solution to any societal problem that hits a lot of people at the same time: just spread the cost to everybody through taxation and redestribution. If a sufficiently large (or influential) number of people make wrong and irresponsible decisions at the same time, the normal laws of responsibility are not applicable. Rinse and repeat.

More on the plan here (with links).

On the same note: Why isn’t the Obama economical advisory board meeting in public? Private meetings, private conference calls – what became of openness and honesty in discussing the nation’s greatest challenge?

Hypocritical republicans

The Republicans are all about “Small Government” these days, but doesn’t their new-found chasity feel kind of hollow? Considering the Bush-year’s gigantic budgets and expansion of executive power, it sees a little late to find your libertarian roots.

Here’s a historian who thinks so, Julian E. Zelizer:

After the past eight years in American politics, it is impossible to reconcile current promises by conservatives for small government with the historical record of President Bush’s administration. Most experts on the left and right can find one issue upon which to agree: The federal government expanded significantly after 2001 when George W. Bush was in the White House.

The growth did not just take place with national security spending but with domestic programs as well. Even as the administration fought to reduce the cost of certain programs by preventing cost-of-living increases in benefits, in many other areas of policy — such as Medicare prescription drug benefits, federal education standards and agricultural subsidies — the federal government expanded by leaps and bounds. And then there are the costs of Afghanistan and Iraq.


There were some areas where Bush backed off government cuts because programs were too popular, like Social Security. In other areas, like federal education policy and prescription drug benefits, the president seemed enthusiastic about bigger government.

Bush and Cheney also embraced a vision of presidential power that revolved around a largely unregulated and centralized executive branch with massive authority over the citizenry. This was a far cry from the days of Ohio Sen. Robert Taft, a Republican who constantly warned about the dangers of presidential power to America’s liberties.

The same goes for presidents like Eisenhower, Nixon, Bush Sr. and even Ronald Reagan. Is the on-march of government just impossible to stop – does it have it’s own inertia – or don’t politicians really mean it when they say they want lesser government?

Recommendation of the Day

I was an ambivalent socialist before I read this; now, I’m a rabid Austrian. Get this book, and prepare to have your mind blown.

Librarything-user in a review of Henry Hazlitt’s Economics In One Lesson. An amazing book. Scary thing: Present politicians are repeating all the same fallacies that Hazlitt uncovered 60 years ago (and Bastiat a hundred years before Hazlitt) over and over again.

The A.I.G. bonuses outrage…

is really just another reason why we shouldn’t nationalize banks. If you can’t stand they way they do business – including the way they make their contracts – don’t give them any money!

That may strike many people as a bit of convenient legalese, but maybe there is something to it. If you think this economy is a mess now, imagine what it would look like if the business community started to worry that the government would start abrogating contracts left and right.

As much as we might want to void those A.I.G. pay contracts, Pearl Meyer, a compensation consultant at Steven Hall & Partners, says it would put American business on a worse slippery slope than it already is. Business agreements of other companies that have taken taxpayer money might fall into question. Even companies that have not turned to Washington might seize the opportunity to break inconvenient contracts.

Obama and Iran

What policy will the Obama administration pursue towards Iran? Will they support freedom or will they try negotiations to get a deal on the nuclear issue? Excellent piece by Mariam Memarsadeghi and Akbar Atri, who I am lucky to call my real-life friends, in The Washington Post. Bottom line: Obama has shown what democracy can do. He should use his immense popularity to boost freedom aborad – let’s bring real change to Teheran as well.

Obama’s popularity gives him the power and credibility to press the Iranian regime, not to mention dictatorships in Russia, Zimbabwe, Saudi Arabia, North Korea and elsewhere, to respect human rights and democratize. Yet some in Washington have urged Obama to abandon talk and programs in support of the Iranian people in exchange for piecemeal progress on the nuclear issue. With Tehran continuing to make progress on a weapon, it is tempting to look past the Iranian people’s hopes for freedom and instead focus on the seemingly more imperative issue. But this would be a mistake. In fact, the regime would want nothing different.


Those in power in Iran are responsible for terrorist attacks throughout the Middle East, not to mention in Buenos Aires, Paris, Vienna and Berlin. They are fundamentally opposed to liberal democracy and its ensuing individual rights. They still imprison the young for having parties and listening to music and stone women to death for extramarital sex. In the name of God, they persecute religious minorities and imprison mullahs who speak of freedom. They still chant “death to America” at the official sermon every Friday and force children to do the same as part of the school curriculum. Drug addiction is common among large swaths of society. The regime’s oil-rich apparatus is rotted by extremes of corruption and unaccountability. Like communist totalitarian regimes of the past, it seeks to maintain a facade of revolutionary idealism for the outside — particularly for the liberation-hungry Arab world — while its people endure the bitter realities of life under an ideological state.

Moz @ Warner Theathre

Saturday we went to see the always amazing Steven Patrick Morrissey at the Warner Theatre in Central DC. A beautiful venue, like a cinema of yore.

Moz has recently released the excellent Years of Refusal, and he played 4 or 5 tracks from that album and a smattering of classics from his long career – starting with “This Charming Man”. Set-list and opinions here. Encore was “First of the Gang to Die”, a neo-classic from You Are The Quarry. You can watch it here.

We had a great night. Moz was in top form, both campy and muscular, and his voice is simply unique. He tore of his shirt several times and threw it to the audience that was mainly filled with Moz-fans of our age or older, many of them Europeans. At last half of the audience knew the words to at least half the songs. The boy next to us – quite young – knew all the words to all the songs, and knew how to make expressive air-guitar moves as well. Personally, I could have used a few more of the newer songs and a version of “How Soon Is Now” without the lyrics changed. “Death of a Disco Dancer” has never been one of my favorites, but “Something Is Squeezing My Skull”, “Ask”, “Seasick” and “Crashing Bores” really stood out.

A great night in Squashington. “Warner Theatre, you have been warned”…

(Only downside: A much to aggressive security team, they really cracked down on ppl taking pictures or trying to shake hands with Moz. Seemed excessive from where I was standing).