Being able to count on a person or company thereof having
sufficient motivation to provide a self-defense is no feat, for self-interest
is a staple—perhaps the staple—in
human nature. It should be no surprise,
therefore, that after raking in $102 billion in subsidies, including lower
lending costs due to the general perception that the government would bail them
out, and repaying the TARP money, the biggest American banks were sufficiently
re-energized (i.e., self-motivated) to go on the offensive to protect their places on the perches under fire. Specifically, they planned
a lobbying campaign to fend off increasing Congressional calls to break up the
banks to solve the too big to fail problem (which includes the subsidy problem
that exacerbates the wider problem). There are problems with the lobbying
itself—problems caught in America’s blind-spot even as they subtly undermine
the body politic.
The full essay is at Institutional Conflicts of Interest, available in print and as an ebook at Amazon.
Thursday, May 9, 2013
Monday, May 6, 2013
Does Austerity Work?
Does raising taxes and cutting government spending reduce a
government’s deficits and thus debt? Confine consideration to more tax revenue
and less spent and the theoretical answer is yes; it being a simple matter of
mathematics. Include the impacts of raising taxes and cutting spending and the
answer become far less straightforward. More paid in tax means less disposable
income, which means less consumption and thus less produced (i.e., GNP). A
government spending less also means less consumption in the economy, and
therefore even less to be produced to meet demand. In short, austerity is
recessionary. Whether the ratios of deficit and debt to GDP increase depends on
how much the numerators drop relative to the decrease in GDP. We can look at
the E.U. for some empirical evidence.
The full essay is at "Essays on the E.U. Political Economy," available at Amazon.