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Opening Arguments

Heads in the sand

Socialism got a "dead cat bounce" with the recent elections in Europe:

The Social Welfare State is dying. Like the Berlin Wall and the Iron Curtain, the cradle-to-grave social welfare experiment must eventually collapse. A system of taxing work and profits, while subsidizing leisure, sloth, and retirement, must eventually fail.

The end of the Social Welfare State is painful for many, and it will not end quickly or quietly as the elections of this past weekend prove. Francois Hollande, a Socialist, was elected president of France, while Greece saw a surge in votes for “anti-bailout” political parties in parliament.

[. . .]

So, in reality, French and Greek rejection of austerity does not mean policies that would enhance long term economic growth. Instead, it means they want to temporarily pull the wool over their own eyes, resist the obvious need to reduce government spending, and just hope for the best.

This point is not grasped by everyone. It especially seems to elude Washington Post columnist E.J. Dionne, who may have written the single dumbest reaction to Richard Mourdock's trouncing of Richard Lugar (and belive me, there was some stiff competition):

Being a good tea party Republican, Mourdock is all about slashing government spending without regard to the impact of the cuts on the economy or on those who need government help. He cast his campaign as a battle against “the nightmare of ever-growing government” that would turn the United States into a “Western European-style nation.”

This gets us to the irony: Right now, it’s conservatives who want to follow the Western European path of austerity that voters in France and Greece rejected last weekend. The Obama administration, by contrast, has chosen a distinctly American path that kept austerity at bay.

[. . .]

Obama’s thoroughly moderate economic policies are an excellent example of a practical American exceptionalism. Europeans are moving toward the center-left not because they are doctrinaire but precisely because they are sick of the rigid approaches the advocates of austerity have imposed upon them. Why would we now want to imitate Europe’s failures?

"Moderate economic policies." Lord, lord.



Fri, 05/11/2012 - 3:02pm

Conclusions from data reported IMF's World Economic Outlook Data Base, April 2012:  The more a government spent (% GNP) prior to the crisis the worse the country did during the recession and recovery.

The more a government cut spending prior to the crisis, the better the economy did during the recession and recovery.

The more that government spending grew during the recession (relative to GNP) , the worse the economy did worse during recession and recovery.

The countries that fared best since 2007- Israel, South Korea, Taiwan, Singapore and Hong Kong- all cut government spending relative to GNP in the 2007-2011 time period.

Based on these  empirical IMF data, Paul Krugman and the Keynesians have some explaining to do.

Sat, 05/12/2012 - 12:34am

The elephant in the room is our military spending. We're so far into first place that it hardly makes sense to discuss who's in second or third. We have 11 aircraft carriers with 12th under construction and a 13th in the planning stage. Any one carrier group could single-handedly defeat virtually any nation on Earth. Conservatives could keep their low taxes and liberals could keep their entitlements if we simply slashed defense spending - with no danger to our own security. The demise of the Soviet Union was due in large part to its attempt to remain a military superpower.