It's About Reality, Not Austerity
It's About Reality, Not Austerity
By J.T. Young
A state cannot run an economy and a state-run economy cannot sustain its state.
Today's European debate isn't about governmental austerity, it's about governmental reality. Ultimately, the argument is not whether governments can keep trying to stimulate their economies, but when their creditors will quit financing it. Somehow, Europe's governments, teetering on tilting economies, have missed this point; we can only hope that Washington hasn't.
We are witnessing a prolonged domino-effect among the world's economically intrusive states. It began over two decades ago with the fall of the USSR and communism across Eastern Europe. Now the dominoes are falling into Western Europe -- Greece, Portugal, Spain, and Italy, all are threatened with economic collapse.
By now, the obvious should be axiom: A state cannot run an economy and a state-run economy cannot sustain its state. The more of its economy a government consumes, the less productive its economy becomes. And the more dependent its subpar economy then becomes on its government.
This vicious cycle creates a widening gap between what the government promises and what its economy can deliver. The government resorts to spending more, while its economy responds by producing increasingly less of the revenue needed to finance the government's increasing spending.
The only reconciliation possible between the over-demanding government and its under-producing economy is borrowing. Once this pattern becomes firmly and deeply established, the conclusion becomes inevitable. Political oppression -- as in both former and current communist countries -- can temporarily extend the contradiction, but it cannot extinguish it.
Of course, there are liberals who dispute this scenario -- just as they dispute anything that questions the state's efficacy. They claim that governments can and should do more -- that government spending actually stimulates the economy.
There is no more than a limited truth to this: Simply because of the way that GDP is calculated, government spending can make the official numbers look better… temporarily.
However, over a sustained period, this amounts to merely cooking the books. The problem remains that nagging gap between governmental demand and economic production: someone has to finance what the economy cannot.
Nor are the government's demands static either. Once political promises of increased economic benefits are made, voters demand that they not only be met, but expanded.
Equally important, as crisis looms, the economically interventionist government finds itself less able to address it -- precisely because of its now routine expanded intervention.
In 1930, the year after the Great Depression began, federal spending was 3.4 percent of GDP. By 1936, as FDR and the New Deal faced reelection, federal spending was 10.5 percent -- a threefold increase -- insufficient to end the Depression but still a sizable proportional increase. According to the Congressional Budget Office, over the last 40 years, federal spending has averaged 21 percent of GDP. To proportionally match the New Deal boost, federal spending would need to be over 63 percent of GDP -- a politically and economically impossible figure.
We therefore find ourselves dealing with quantitative, not qualitative differences when it comes to economically intrusive governments. All else being equal, the more intrusive will fall first, yet even in the case of the less intrusive, it is not a question of "if," but "when."
The gap is remorseless and must be financed. Capital is mobile, while the government's clientele is stationary -- if not expanding. The "demand" stays and increases, while the "means" flees to where it is most rewarded and it takes ever increasing borrowing costs to bribe it back.
Over the last four decades, the federal government has averaged spending roughly one-fifth of everything America produces. Over the last three years, it has averaged almost one-quarter -- spending an equivalent of 24.5 percent of America's GDP.
America is approaching a point where it must ask what road it wants to follow.
One is the politically easy, but economically impossible, route of attempted government-induced prosperity. If this is the one chosen, then Washington needs to start arranging its lines of credit quickly. Which should be relatively simple at the moment, since so many lenders now are fleeing Europe's collapsing economies.
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Interesting Pics 2012
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The religion of Climate Science
Climate-Catastrophe Skeptics - If You Can't Beat 'Em, Shrink 'Em!
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Jer's Photo of the Day
Photos and Photo Art by Sebastianjer
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NOT EXACTLY FRONT PAGE NEWS
Romney Edges Obama in Battle for Middle-Income Voters
Obama has wide lead among lower-income voters
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CONSTITUTION 101
History in Pictures
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TODAY'S QUOTE
"[W]e should not view leftists today as a wolf which makes us afraid -- but rather as parrot which make us laugh."
Bruce Walker
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First they came for the Big Gulp...
On the heels of Mayor Michael Bloomberg's call for a ban on jumbo-sized sodas and other sugary drinks, city officials are now considering restrictions on treats ranging from popcorn to milkshakes.
At a meeting Tuesday, members of the New York City Board of Health expressed support for Bloomberg's proposal. They then started brainstorming other ways to cut the fat, according to MyFoxNY.com.
Member Bruce Vladeck proposed limiting movie-theater popcorn containers.
"The popcorn isn't a whole lot better than the soda," he said.
Another member suggested limits for milkshakes and "milk-coffee beverages."
Link
..I'm about 5 pounds overweight
I wonder if I'll be denied Obama care
I wonder if I'll be denied Obama care"
So, if they want carbon credits, why can't we have fat credits?
Not wanting to loose a voter pool, Barry may want to compensate the overweight for their additional health expenses.
I'm 15 lbs overweight. If you'll sell me your 5 lbs of fat on a fat credit, then I'll split your increase in my fat credit by 50% with you.
Good trade???
:)))
Junk Science Week: Climate models fail reality test
Jun 13, 2012
Computer models utterly fail to predict climate changes in regions
A few years ago a biologist I know looked at how climate change might affect the spread of a particular invasive insect species. He obtained climate-model projections for North America under standard greenhouse-gas scenarios from two modelling labs, and then tried to characterize how the insect habitat might change. To his surprise, he found very different results depending on which model was used. Even though both models were using the same input data, they made opposite predictions about regional climate patterns in North America.
This reminded me of a presentation I’d seen years earlier about predicted changes in U.S. rainfall patterns under global warming. The two models being used for a government report again made diametrically opposite predictions. In region after region, if one model predicted a tendency toward more flooding, the other tended to predict drying.
Just how good are climate models at predicting regional patterns of climate change? I had occasion to survey this literature as part of a recently completed research project on the subject. The simple summary is that, with few exceptions,
...........climate models not only fail to do better than random numbers, in some cases they are actually worse.
Link
Money In, Garbage Out
Carefully groomed climate models do faceplant on runway:
A 2011 study in the Journal of Forecasting took the same data set and compared model predictions against a “random walk*” alternative, consisting simply of using the last period’s value in each location as the forecast for the next period’s value in that location. The test measures the sum of errors relative to the random walk. A perfect model gets a score of zero, meaning it made no errors. A model that does no better than a random walk gets a score of 1. A model receiving a score above 1 did worse than uninformed guesses. Simple statistical forecast models that have no climatology or physics in them typically got scores between 0.8 and 1, indicating slight improvements on the random walk, though in some cases their scores went as high as 1.8.
The climate models, by contrast, got scores ranging from 2.4 to 3.7, indicating a total failure to provide valid forecast information at the regional level, even on long time scales. The authors commented: “This implies that the current [climate] models are ill-suited to localized decadal predictions, even though they are used as inputs for policymaking.”
Link
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