Left-wing Think Tank Acknowledges Failures of TARP, But Advocates Wrong Ammendments

The Center for Economic and Policy Research, a “progressive” (liberal) economic advocacy group’s director, Dean Baker, criticizes TARP, but for the wrong reasons[1]. Instead of criticizing the practice of malinvesting taxpayer money in failing companies, the testimony focuses on advocating restrictions on the few aspects of the banking industry not controlled by government. However, such restrictions would only cripple the financial market further.

The CEPR suggests a rule that would force banks to allow people to live in foreclosed homes as “renters”. Presumably, the way this would work is that the homeowners would have their houses foreclosed but they would have a right to continue living in the same house, and so the banks would not be able to auction off the real estate. Besides the fact that this would drive up home values due to a decreased supply of cheap foreclosed housing, such a regulation would limit a bank’s ability to pursue profit, and banks would experience more losses. And bank losses began the financial crisis.

Another suggested regulation on the financial industry was a cap on executive pay. Because such a cap would only apply to our country and because executives can afford to move, it is likely that this would cause the best of the executives to seek working in foreign markets. Because this regulation, as currently proposed, would only affect the financial sector, the best executives would leave the financial sector in search for higher pay elsewhere. The CEPR does not understand that there is a competitive market for effective executives, in the interest of company profit.

The CEPR also mistakenly asserts that bank executives decide their own pay. This is absurd. If the bank is a corporation, then a board of trustees decides executive pay. If the bank is owned by the executive, then executive pay is determined entirely by the profit of the bank. Else, the executive is an employee whose way is determined by his/her employer. The wages of an executive are not a drain on the company, but a necessary investment. to ensure the efficiency of a company.

The CEPR also mistakenly asserts that regulations are not interference with the market. Any regultion is an interference with the market if it has any effect at all.

The CEPR is correct in asserting that banks are not forced or pressured into making loans it would otherwise make, because such loans would constitute a loss. However, when we cross apply this premise to some of the policies they advocate, such as expansionary monetary policy, the contradiciton is certain. Expansionary monetary policy necessarily encourages banks to give out loans because the Federal Reserve interest rate decreases and more loans become profitable. The bubble is then formed which the CEPR next criticises as the cause of the recession. If this bubble was most certainly the cause of recession, and it was, and this bubble was caused by expansionary monetary policy, and it was, shouldn’t the CEPR change their advocacies?

The CEPR will not change their advocacies because they are dedicated neokeynesians who believe that individuals are incapable of effectively and efficiently controlling their own actions in the pursuit of their own welfare. This is absurd, for the only thing that keeps individuals from doing this is the hand of government.

This article refers to http://www.cepr.net/index.php/publications/testimony/the-failures-of-tarp/.

On the Utility of Economic Liberty

Economic liberty means the ability of the individual to choose the use of his property, whether this means production, consumption, modification, or exchange. The motivation for this use is to improve one’s welfare, physical, mental, or emotional, either in the present or in the future. The result of this liberty is a society in which property is manipulated in a way that most benefits each user.

Movivation is not necessarily outcome, but this motivation can be demonstrated significant in this manner. In the process of making decisions, the individual can, and often does, obtain information necessary to reach a desired result. This itself reduces the tendency for random error in the market; however, even more truths confirm the market’s efficiency in maintaining utility, as will be shown below.

An exchange occurs because multiple individuals find it in their best interest to trade property. Again, the motivation for making an exchange does not necessarily mean that both parties will benefit; however, in the interest of benefitting, both parties of the exchange will release information significant ot guarantee confidence to ensure that the other party will agree to the exchange.

Production occurs in a market because individuals wish to implement their person and property in a manner that will allow a return (through exchange of the produced goods and services). This return is necessarily greater when the goods exchanged meet the most urgent and significant wants of the consumer; therefore, the individual will seek to produce goods and services that the potential purchasers will desire most.

As with exchange, the intents of satisfying the population with production are not necessarily the results; however, the burden of absense of individual demand is significant enough to reallocate goods and services other percieved demands of the consumer. Production is always tending towards meeting the demands of the consumer.

The result of this individualist liberty is naturally a greater utility for society, a general welfare out of chaos. Violence, or coercion, on the other hand, necessarily forces a change in the above criteria and necessarily lower the utility and welfare of society. This economic violence must cease to the highest degree possible if true prosperity is to be witnessed.

Predicting the Effects of Expansionary Monetary Policy on an Economy in Recession

The Obama Administration has enacted both of Keyne’s creeds: Expansionary Monetary Policy and Deficit Spending. This article will focus on the former.

Expansionary monetary policy is enacted to lower interest rates in times of deflation. This encourages investment, and ideally improves the economy and brings it out of recession. However, this Keynesian analysis is limited. After the economy recovers due to a particularly large session of EMP, hyperinflation occurs. Hyperinflaiton is inflation to the point where interest rates rise as if deflation were occuring. This is due to the fact that interest rates must necessarily be above that of the inflation rate, or banks face immediate deficits.

This increased interest rate necessarily passes the inflationary burden onto businesses. This pushes them into deficits of their own, and many businesses have to lay off workers in order to restore their profits. This is the harmful effect of hyperinflation, which can occur if enough EMP is enacted at once.

Though hyperinflation is destined to occur to this recession, there are other harmful effects of EMP that happen every time expansionary monetary policy is implemented. Any time interest rates are artificially lowered, more loans are taken out and less money is saved. This often leads to a “boom”, like the one of 2002 to 2006. However, when the market over invests poorly as a result of this policy, the result is always the same: the economy lurches into recession. Savings have been consumed and most people have spent and invested themselves into large loans. The recession then ensues.

What then, occurs when, as we are now, we implement EMP during a recession? Such an event causes a double-dip recession. The economy spends itself even more up to a point, and then the economy collapses in debt again. This has happened more than once since it happened in the Great Depression.

Expansionary monetary policy is necessarily a harmful policy to implement on society in mass quantities at any time. The proper solution is to let the market painfully recover from its government-stimulated overinvestment. Haste makes waste.

Obama avoids blaim for new unemployment

According to the Bureau of Labor Statistics, unemployment has risen to 9.8%, despite Obama’s entire team “working every single day… to accomplish” lower unemployment.

In a speech today, Obama avoided taking blaim or apologizing for the continuously rising unemployment, simply claiming that he’s still working to find new options and giving a little sentiment for those unemployed. Barack Obama attributes the fact that the unemployment rate has  gotten to only 9.8 because of his Keynesian initiatives.

I’m sure that after over eight months in office, the president with all the Congressional majority he needs should have been infinitely capable of saving the economy from the 10 percent figure, which is double what unemployment was just 9 short months ago. The president  needs to be capable of admitting that he made mistakes and that blame must be assessed.

Obama’s great stimulus, originally glorified as quick and effective recovery, is turning out to not be as such. The Real Gross Domestic Product has fallen and there have been no signs of recovery. The Keynesian belief that saving is inherently a flaw in the free market is crumbling, and it is growing evermore evident that the glorified Keynesian deficit spending cannot effectively be managed by government.

Dignity, honor, and respect are generally good qualities in a president, and not admitting failure shows one’s pride, but to not even apologize for a slow recovery seems heartless. If America is to have an honorable president, he shouldn’t be afraid to say he’s sorry.

Analyzing the effects of a single-payer system

A single payer healthcare system is one in which all of the healthcare payments in an area come through a single entity. Many supporters of the single-payer option take for granted that a single-payer plan will cut healthcare costs more than any alternative. Especially ignorant writers claim that the single-payer system is the “only way to control healthcare costs”.  Some more intelligent ones have actually laid out why such a system would be effective.

First, some terminology. A monopsony is a market situation in which one buyer purchases something from multiple sellers. A monopoly is a market situation in which one seller sells something to multiple buyers. In both situations, the market advantage usually lies with the united, single entity. In an ordinary market situation, creating a monopsony would benefit those united under it, the consumers, at the expense of those running the hospital. Most inquiry usually stops here.  However, the situation is more complicated than that. Due to strict occupational licensure, the American Medical Association has obtained a monopoly in the healthcare labor industry.  This monopoly benefits the doctors at the cost of those running the hospital . The hospital has been passing this cost onto the consumer through high medical costs. A single-payer system, therefore, would not be able to truly negotiate costs lower because it isn’t getting at the problem.

The Physicians for a National Health Program claim further benefits of a single-payer plan. They claim that the government would decide a sum to pay the hospital for its entire funding. This would lead to rationing and inflexibility in the hospital.  The individual would have to pay out of pocket for preventive care.  People would be required to pay out of pocket for treatment and medication under any unexpected overload of the budget, such as an epidemic.

Even further, because the source of the problem is not being treated, healthcare costs will not decrease, but increase. The budget given to these hospitals will become less and less relative to the costs of healthcare without cutting the budget periodically; however, the budget will be further cut. The “rationing” will be dealt by the hospitals to a higher degree every year.

This bill is a wreck, and the more we look at it, the worse it appears.

The March on Washington

It appears that my proposal to the teaparty movement was successful. Tens of thousands of protesters, according to Fox News, marched on Washington to protest government expansion. It is officially the largest fiscally-conservative protest that has ever been brought to Washington DC. If not the most beautiful thing I’ve seen in a long time, it is the most promising. Activism always leaves a mark, and hopefully this time it will be enough.

Unfortunately, and perhaps intentionally, Obama wasn’t in town for the event, according to the LA Times. Barack Obama was rallying support in Minneapolis for his healthcare overhaul and the government health insurance program while the TEA Party’s rally was under way. Humorously enough, more protesters came to Washington than supporters to Minneapolis.

Given this and the fact that polls have been overwhelmingly against the bill, Congress may not have the guts to pass Obama’s healthcare overhaul. Things are brightening up.

Using Ted Kennedy to Pass Healthcare Overhaul

Democrats, including Chris Dodd and John Kerry, have been calling for bipartisanship following the death of Ted Kennedy, according to CNN.

Why they expect Congressmen to drop all of their principles and support such a destructive and unread bill, not anyone would dare guess. When Karl Marx, one of the greatest historical advocates of communism, died, not anyone expected us to change our capitalist ways. The question remains: How is this any different?

It is fair to consider Marx intelligent and well-meaning, as we can consider Kennedy. Their both being lifelong advocates of sweeping reform of which most of the population opposes on ideological premises stands as another striking similarity between these cases. Both individuals worked on getting their reform passed, for decades even, and all in vain.

So, while we honor the dedication and contributions of Ted Kennedy, we shall continue to disagree with him posthumously, contrary to the wishes of the Democratic Party.

Obama can no longer claim to be non-partisan

Obama’s efforts at reform were never really non-partisan. While unification behind Obama as a man was once bipartisan, the revelation of his policies ended this trend.

First, he revealed his plans at economic stimulus. From the very beginning, there was a great opposition to this package. Economists debated the potential effectiveness of the bill, and many believed it would do more harm than good. Nontheless, Obama pushed it through, and the only criticism of the bill was that it wasn’t read.

Then came talk of another stimulus, which still appeared in the public eye as non-partisan despite its support and opposition being down party lines.

More recently, on the new healthcare reform proposal: According to CNN, Democrats are considering a loophole that would only require a 50% vote for this bill to pass, because they can’t even get all of their own party to support it. The Dems are officially unwilling to negotiate their bills and are trying to abuse their temporary majority by ramming tyranny down our throats.

The good news, though, is that the Democrats might not take this option, and may drop their public option initiative in order to pass their healthcare reform. Says Obama, “[the] public option… is not the entirety of healthcare reform”. So, even should this healthcare overhaul pass, we may be able to undo it given time.

Nontheless, anyone that even mentions that Obama or his policies are bipartisan are either not watching the news or entirely incompetant.