Silber on Stiglitz

Sigmund “Sig” Silber is a New Mexico writer and economist who makes it a habit to report on economics, water, water law and government.  He is recognized as an expert on New Mexico water issues and he has a great sense of humor … sometimes with a dark cutting edge.

He has given me permission to publish his “stuff,” on my blogs.

Sigmund Silber <sigmundsilber@q.com> wrote:
http://www.project-syndicate.org/commentary/politics-of-economic-stupidity-by-joseph-e–stiglitz#AL36G2Abwt15dk7V.99

He has won a Nobel Prize. But I have to disagree with him to some extent.

Yes for sure austerity policies are stupid. They are based on some false assumptions about debt especially when money can be created out of thin air. But even without that, one person’s debt is some other person’s asset so debt is overrated……until you get to the point where you can’t pay the interest. If you have a central bank that is never a problem. As an aside, Europe has its own particular issues which are addressed quite well in this article econintersect.com/a/blogs/blog1.php/stratfor-the-european-union-nationalism

But I certainly am not disturbed that we have fewer public-sector employees. In fact I am elated. In New Mexico we may have insufficient state and local employees. That is because we are a very large state with generally a low population density. But there are far too many Federal Workers. This data may be out of date or wrong but if correct it indicates that in 2009 the average Federal Employee earned $81,258 with $41,791 of benefits. Thus the Federal Bureaucracy is a tremendous drain on the economy. econintersect.com/b2evolution/blog2.php/2015/01/19/killing-the-american-dream And the Federal Government does not attract the best and brightest that is fairly obvious. Fail anywhere in society private or state and local government and off you go to the Feds for a nice sinecure.

The recommendation that we build roads to nowhere also does not impress me. Based on my research, which I suspect is as good as Stiglitz’s research or better, in developed nations infrastructure investments are not very effective at improving the economy. The n th road does not produce the same benefit as the first road. I wonder how you can not know that and still win a Nobel Prize. Infrastructure is usually based on major inventions. Has Stiglitz read Schumpeter? It might be a good investment of his time. Major paradigm shift innovations do not occur on a regular schedule. Chances are there will be some soon. Chances are the public sector employees that Stiglitz loves so much will slow their deployment or prevent their deployment entirely. Why do we not have automated highways or vehicles that drive themselves? It is not a deficiency of engineering expertise; it was public sector employees. Why does it take twenty years to get a new drug approved? Public Sector employees.

I think our problems are more complicated than Stiglitz thinks. But he has the Nobel Prize. And it is tax free. I suspect the reason for this article was shopping around for political clients. I am just speculating on that but that is how it struck me.

But for sure you do not improve an economy by extracting purchasing power from the citizens in the economy. So there I totally agree with Stiglitz. On the other hand, redistribution is a strange concept based on the probably correct assumption that some are more likely to spend than others but countered to some extent at least by the equally correct assumption that spenders are less likely to invest. In the olden days, investment was considered more effective than consumption at improving an economy. Does redistribution encourage innovation and investment? Is Europe doing better than the U.S.? How about Russia? To me it seems that a disrespect for private property is a negative for an economy growing. But Stiglitz may not be thinking about redistribution but simply helicopter drops. In fact neither is discussed in the above linked article but I am speculating that this is on his mind.

I agree with Stiglitz that it is not wise to deflate economies as the World has been doing. But I do not agree with his Marxist/Sayian/Reaganist/IBM Supply Side strategies. To have demand you have to produce things that people want badly enough to exchange labor for those things whether they be products or services. It is very difficult to mandate demand other than by draconian policies. One could mandate that every house have an outside outhouse. That will stimulate demand. Would the World be a better place? GDP would be higher.

Perhaps we have sufficient toys.

Yes with a helicopter drop of currency, sales of toys would increase. Is that progress?

Would more bridges improve things? Keeping bridges from falling down is certainly a good idea. One can call that investment and account for it as investment but it really is maintenance. There is no impact on the economy other than the spending associated with doing the maintenance. Those receiving the payment for their services are better off but the overall wealth of the nation does not change.

I think it is an old fashioned concept as applied to a developed nation. That is not to say that there are no infrastructure opportunities. There certainly are. But I think Stiglitz has made an incorrect diagnosis in that area but a correct one re austerity policies.

Sometimes one just has to wait for demand to materialize especially in developed nations. In less developed nations we need to avoid garroting their economies. I think that Stiglitz and I probably see monetary policy in the same light in this regard. But again time can solve a lot of problems. And in some cases growth is generational.

Pipeline Obama Built … Not The XL

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Visit: TerrellAfterMath

Sylvia Bokar: A Citizen Tries To Be Heard Before A Legislative Committee

 The following is posted with permission of Ms. Bokar and it demonstrates how and why it is difficult and expensive for a citizen to participate in “participatory” government.

 

GaHa  Defend NM Biz ltrhead

 Dear New Mexicans,

Yesterday, February 14, before I left for Santa Fe in order to testify before the HJR 6 committee, I checked the calendar on the Legislature site and read that the hour had been changed to 8:30 A.M.

I envisioned the large committee room that is used for legislation that reasonably expects large crowds. I arrived at 8:19 A. M.

HJR 6 was assigned to an incredibly small room. Taking up about 1/3 of the space was a very large, wide table at which the committee members sat. The public — testifiers, I assumed — were jammed into 2 rows of about 25 chairs smashed against the back wall. Each chair was occupied.

The hall outside the committee room was jammed with about 15 people. In addition, two house staff people manned the door. One policeman and a RoundHouse Security member milled through the crowded hallway. Did the guilty expect trouble?

Those of us in the hall were not allowed into the committee hearings, not even to stand against the wall, Fire regulations were dutifully repeated. Some of us were allowed to enter in order to tell the committee we were present. I also wrote a note to the Committee Chair and asked to be called first on HJR 6.

HJR 6 was third on the list of 4 bills to be heard in that room at that time in those conditions. Preceding it was a bill regarding “Boards of Regents Nominating Committees” and :”Land Grant Fund Distribution.” Following it was a bill regarding “Removal from Public Office for Felonies.”

I hope this gives you — as it did me — a vivid idea of what socialist politicians, such as Miguel P. Garcia, think of business people and the importance of business to the state. Such individuals are aware of but blank out the fact that were it not for business peoples’ earnings their salaries and spending programs would be voided.

As usual, the committee hearings did not start on time, keeping everyone waiting until around 9:20 or so. It took about 15 minutes for the first hearing. I was hopeful.

The Land Grant Bill went on and on. Around 10:45 or so, someone said that the socialists Democrats were deliberately delaying the land grant discussion in order to avoid hearing HJR 6. Could it be so, I wondered. I looked through the door windows. No one in the audience was speaking. The politicians talked and talked. My hopes were dashed.

By 11:20 the hallway had cleared of people waiting to testify, except for myself and two youngsters.

Also waiting it out were Carla Sonntag, President of New Mexico Business Coalition, and Matthew E. Gonzales, Vice-President of Association of Commerce & Industry — both of whom had come to oppose HJR 6.

Around 1130, people started coming out of the committee room. I got ready to enter but was stopped. It was announced that HJR 6 had been “rolled over” — meaning it would be re-scheduled for another day. When I asked why, I was told that the politicians had to go to the floor for a House session. They had run out of time.

Yes, indeed, they surely have.

I went to each of the offices of the Democrat committee members and left a note. My anger had left me. I simply felt empty. My mind was churning with ideas on how to deal with this type of shenanigans.

Since I was able to leave notes only for the socialists on the HJR 6 committee, I wrote a longer note and more personal to the Republicans on the committee.

Here’s my note to each of them.

+++++++

Dear Representative (name),

I went to Santa Fe yesterday, February 14, to testify my opposition to HJR 6. I was disappointed that it was rolled over to be heard on another day. Nonetheless, I hope to be able to attend the re-scheduled hearing.

Meanwhile, I trust you will oppose HJR 6 as it is an exceedingly destructive idea to force business people to annually raise the minimum wage.

I have sent you my arguments. I have sent other arguments to a number of different newspapers around the state. I hope that we together — the many New Mexicans opposing this bill and your constituents — will persuade the socialists that their idea is wrong and that we will prevent HJR 6 from getting on the ballot.

Thank you for your attention to this e-mail and for the work you are doing to oppose HJR 6.

Sincerely,
Sylvia Bokor
Whoa1syl@aol.com
Grassroots Ad Hoc Association To  Defend NM Businesses
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Sincerely,
Sylvia Bokor
Whoa1syl@aol.com
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