Op-Econ
About the Author
The columns and essays of Dr. Paul Heise, Emeritus Professor of Economics, Lebanon Valley College. Professor Heise has 25 years experience in the Federal Government and in teaching economics. Most of these essays appear as columns in the Lebanon Daily News.
No prophet is accepted in his own country, and so it is with Jimmy Carter. He warned of the financial and political crises now crashing down around us. America rejected that prophecy and it became the greediest of times, the most profligate of times. It was the era of Ronald Reagan.
In 1979, Carter recognized that our country was headed in the wrong direction. In a most basic act on democracy, he went to the people and asked them what they saw the problem to be. The people told him that "we are confronted with a moral and a spiritual crisis" that was more important even than the crippling stagflation of the time. They said "we are ready to experiment ... deal with the energy problem on a war footing ... the moral equivalent of war, Mr. President, don't issue us BB guns." Read More »
In 1979, Carter recognized that our country was headed in the wrong direction. In a most basic act on democracy, he went to the people and asked them what they saw the problem to be. The people told him that "we are confronted with a moral and a spiritual crisis" that was more important even than the crippling stagflation of the time. They said "we are ready to experiment ... deal with the energy problem on a war footing ... the moral equivalent of war, Mr. President, don't issue us BB guns." Read More »
Limited government is the mantra of those who think the government is always the problem and never the solution. They are consistently late when government action becomes necessary. When forced to act, they overreact. And they are committed by their philosophy to doing a poor job.
This pattern is clear in the three current and most newsworthy events of the week: hurricane Gustav and the Republican convention, the choice of Sarah Palin as the Republican vice presidential candidate and, always current, the ongoing fight against terrorism and the war in Iraq. Read More »
This pattern is clear in the three current and most newsworthy events of the week: hurricane Gustav and the Republican convention, the choice of Sarah Palin as the Republican vice presidential candidate and, always current, the ongoing fight against terrorism and the war in Iraq. Read More »
John Maynard Keynes showed us that government can, through deficit spending, stimulate an economy out of a recession. Military Keynesianism is the idea that a large military budget will stimulate and maintain a growing economy.
That's true if you don't care what kind of economy you have and you're willing to go bankrupt.
The recent stimulus package of $150 billion simply mailed out to the public was pure Keynesianism. The stimulus worked. It delayed the onset of the recession for at least two quarters. It did much to keep our slow-motion recession from tumbling into immediate crisis. It also added $150 billion to the national debt. We had to borrow that somewhere.
Unfortunately, the financial mess that we are in reflects more than the usual recessionary drop in total demand. It comes from out-of-control Military Keynesianism; the spending of money we do not have for things we do not need.
-- Read More »
That's true if you don't care what kind of economy you have and you're willing to go bankrupt.
The recent stimulus package of $150 billion simply mailed out to the public was pure Keynesianism. The stimulus worked. It delayed the onset of the recession for at least two quarters. It did much to keep our slow-motion recession from tumbling into immediate crisis. It also added $150 billion to the national debt. We had to borrow that somewhere.
Unfortunately, the financial mess that we are in reflects more than the usual recessionary drop in total demand. It comes from out-of-control Military Keynesianism; the spending of money we do not have for things we do not need.
-- Read More »
America faces a multitude of dire economic and fiscal crises. Things are really bad but why aren't they worse?
Why, if everything is so bad, is the economy continuing to grow, even if just barely, and why are the presidential candidates ignoring these serious crises to play the politics of distraction? No one seems to care that the world is falling apart.
The catalog of desperate threats is mind-boggling. Read More »
Why, if everything is so bad, is the economy continuing to grow, even if just barely, and why are the presidential candidates ignoring these serious crises to play the politics of distraction? No one seems to care that the world is falling apart.
The catalog of desperate threats is mind-boggling. Read More »
The era of limited government is ending in a crash. We subjected those limited government theories to the market test and, like President Hoover's theories, they failed.
The idea that we can limit government and depend on markets alone to allocate resources and income in a just and efficient manner led us to a world of multiple economic crises. The word depression is back in the economist's vocabulary.
From President Reagan to the present, the free-market ideology was tried and simply did not work. The most telling example of resulting wasteful injustice is the crisis in our banking system. Banks are failing and people are losing their homes and savings because of the deregulation where government did not do its job. Read More »
The idea that we can limit government and depend on markets alone to allocate resources and income in a just and efficient manner led us to a world of multiple economic crises. The word depression is back in the economist's vocabulary.
From President Reagan to the present, the free-market ideology was tried and simply did not work. The most telling example of resulting wasteful injustice is the crisis in our banking system. Banks are failing and people are losing their homes and savings because of the deregulation where government did not do its job. Read More »
Figuring out patriotism is first off a no-brainer. It is clearly and simply the willingness to sacrifice our private interests for the common good of our country. But then things get a little sticky. The principles that guide us as individual citizens and as a nation, not flags and fireworks, are the real signs of our patriotism. The problem is that these principles have overtime changed for better and for worse.
Americans believe that we are an exceptional country on a unique trajectory through history, a shining democracy of liberty and union blazing through the sky of time. Or at least we did; now there are doubts. That is what 85 percent of the people are talking about when they say we are going in the wrong direction. We see confusion about this experiment that we love and that we are patriotic and proud of. Read More »
Americans believe that we are an exceptional country on a unique trajectory through history, a shining democracy of liberty and union blazing through the sky of time. Or at least we did; now there are doubts. That is what 85 percent of the people are talking about when they say we are going in the wrong direction. We see confusion about this experiment that we love and that we are patriotic and proud of. Read More »
In politics, framing is everything. For years the Republicans framed the issues so that they were always the good guys and the Democrats were the bad guys. Now it is going to be the other way around.
Barak Obama is in the process of framing his campaign and he's doing it in the context of his values and the organizational skills of Chicago politics. We see reflected in Obama's campaign the efficiency of a well-oiled political machine that serves its constituents. We also see the grass roots democracy that makes Chicago an idea that works. Read More »
Barak Obama is in the process of framing his campaign and he's doing it in the context of his values and the organizational skills of Chicago politics. We see reflected in Obama's campaign the efficiency of a well-oiled political machine that serves its constituents. We also see the grass roots democracy that makes Chicago an idea that works. Read More »
Let's think about the world as if it had tipped into a new era.
Imagine that the peak oil worriers are right and that oil would go to $130 a barrel and imagine that the Malthusian types were right and corn would go to $6.60 a bushel and, finally, imagine that those skyrocketing resource prices were here to stay. What would that world be like?
First, Operation Iraqi Freedom would become irrelevant. The American people would recognize this and the Iraq war would disappear from your television screen and page 1 of your newspaper. The people would put this war behind them.
The Iraqis, too, would want to end this war. Until they could, the insurgents would declare a cease-fire or even cooperate with us. And the Iraqi people would vigorously oppose any alliance with permanent American bases. Our demand to use our military to "protect" their oil would be correctly viewed as the relic of a past when military power determined everything. Read More »
Imagine that the peak oil worriers are right and that oil would go to $130 a barrel and imagine that the Malthusian types were right and corn would go to $6.60 a bushel and, finally, imagine that those skyrocketing resource prices were here to stay. What would that world be like?
First, Operation Iraqi Freedom would become irrelevant. The American people would recognize this and the Iraq war would disappear from your television screen and page 1 of your newspaper. The people would put this war behind them.
The Iraqis, too, would want to end this war. Until they could, the insurgents would declare a cease-fire or even cooperate with us. And the Iraqi people would vigorously oppose any alliance with permanent American bases. Our demand to use our military to "protect" their oil would be correctly viewed as the relic of a past when military power determined everything. Read More »
America idealizes the middle class and denies the validity of an upper or governing class. Yet we have so structured our economy that all the increase in income since 1980 has gone to the already wealthy, undermining the idea of a governing middle-class. The resulting inequality of income and wealth commits future generations to be divided into the wealthy and the workers, nobles and serfs. Maldistribution of income is bad. It leads to a lack of opportunity and a pauperized middle class, to political corruption and for-sale politicians, to lower economic growth and to economic and political instability. Read More »
Obama would be impossible in the world that was. He is right for the one we are shifting into. That is why he and not Clinton or McCain will be the next President.
Obama will be President because it is time for a new generation and he is the chosen one. It is that simple. Unfortunately for the contenders, their time is past, McCain as the tail end of the greatest generation and Clinton as a baby-boomer.
Before we swear Obama into that high office, though, we ought to ask two pertinent questions: can he win the presidency and, if he can, is he likely to be the kind of President that we want. In effect, the youth of America gave him the edge but what are our prospects with this candidate when you discount the charisma? Read More »
Obama will be President because it is time for a new generation and he is the chosen one. It is that simple. Unfortunately for the contenders, their time is past, McCain as the tail end of the greatest generation and Clinton as a baby-boomer.
Before we swear Obama into that high office, though, we ought to ask two pertinent questions: can he win the presidency and, if he can, is he likely to be the kind of President that we want. In effect, the youth of America gave him the edge but what are our prospects with this candidate when you discount the charisma? Read More »
The present state of the economy being as awful as it is, the three presidential hopefuls are looking at a mountain of problems come next January. It is reassuring that they recognize this as each of them has laid out a detailed plan for the economy.
The pity is that the media and the voters are fixated on political gossip and ignoring the very specific economic plans that the candidates have offered. Voters, directly worried about immediate dislocations, have some excuse. The press should do better. They treat every proposal as a pitch for votes when they should look at needs and consequences.
Few people read the detailed plans and for good reason. These plans are full of pie-in-the-sky proposals that are quickly lost in the rough-and-tumble of the politics of a new administration. These proposals are, nonetheless, of interest for they lay out what the presidential candidates would do if they had their druthers. These plans tell us more about the candidates than TV snippets replayed endlessly, whether it is 100 years, an embellished war story or an out-of-the context sermon.
So, caring about the economy as I do, I went to their web sites and read what the candidates had to say about what I thought was one of the most important economic problem facing us: the sorry condition of our infrastructure. Read More »
The pity is that the media and the voters are fixated on political gossip and ignoring the very specific economic plans that the candidates have offered. Voters, directly worried about immediate dislocations, have some excuse. The press should do better. They treat every proposal as a pitch for votes when they should look at needs and consequences.
Few people read the detailed plans and for good reason. These plans are full of pie-in-the-sky proposals that are quickly lost in the rough-and-tumble of the politics of a new administration. These proposals are, nonetheless, of interest for they lay out what the presidential candidates would do if they had their druthers. These plans tell us more about the candidates than TV snippets replayed endlessly, whether it is 100 years, an embellished war story or an out-of-the context sermon.
So, caring about the economy as I do, I went to their web sites and read what the candidates had to say about what I thought was one of the most important economic problem facing us: the sorry condition of our infrastructure. Read More »
A letter to the editor accused me of being like an Old Testament prophet, warning of horrible retribution if we do not change our evil ways. To some extent it is true because economists are assigned the unwelcome task of informing people that there is no free lunch.
More personally, friends and family accuse me of too much gloom and doom. That might also be true and if it is I want to make amends because things are really getting better. Read More »
More personally, friends and family accuse me of too much gloom and doom. That might also be true and if it is I want to make amends because things are really getting better. Read More »
Bursting bubbles is the metaphor of the day. First, it was the stock market and then it was housing. Now, I fear, the Iraq war surge is about to explode "all at once and nothing first just as bubbles do when they burst."
The consequences will be a real catastrophe for the Iraqi government, a success for Iran and an important determinant in John McCain's bid for the presidency.
A bubble, in economic terms, is high volume trading at prices that are well above intrinsic values. It takes a delusional denial of reality to continue to support such an economic overvaluation because bubbles are usually quite apparent to the impartial spectator. Bubbles grow ever larger. Finally, they burst when someone tries to collect the delusional value in the real world.
The model can also apply to politics. In political terms, a bubble would be the same irrational and delusional overvaluing but of some political capital, action or program. Read More »
The consequences will be a real catastrophe for the Iraqi government, a success for Iran and an important determinant in John McCain's bid for the presidency.
A bubble, in economic terms, is high volume trading at prices that are well above intrinsic values. It takes a delusional denial of reality to continue to support such an economic overvaluation because bubbles are usually quite apparent to the impartial spectator. Bubbles grow ever larger. Finally, they burst when someone tries to collect the delusional value in the real world.
The model can also apply to politics. In political terms, a bubble would be the same irrational and delusional overvaluing but of some political capital, action or program. Read More »
When the dot.com bubble burst in 2000, trillions of dollars of value vanished yet the expected severe recession arrived as a minor downturn. We were spared the full effects because the housing bubble followed quickly and re-created the fictitious wealth and debt necessary to refund the system.
The recession that we are just now entering could be an economic disaster, unless we float another bubble, create the fictitious value necessary to refund the system and we get well along within the next nine months. Then we just might get by again with a short and shallow "soft landing". Read More »
The recession that we are just now entering could be an economic disaster, unless we float another bubble, create the fictitious value necessary to refund the system and we get well along within the next nine months. Then we just might get by again with a short and shallow "soft landing". Read More »
Though there is little difference between Clinton and Obama in specific policy agendas, there are profound differences in how they would govern and how they would change this country. It is the "vision thing" that George H. W. Bush put down, and cost him the presidency. The difference is their vision of change.
Change to Senator Hillary Clinton means replacing the sorry mess that is the Bush administration's policies in regard to war, taxes, economic regulation, healthcare and everything else that incompetence and insincerity have messed up. This is a worthy vision for any administration.
Senator Barack Obama, despite his agreement on virtually all of these issues, has an entirely different vision. He wants, above all else, to first renew the spirit of hope and self-respect that will make people again proud of themselves and the government that represents them. To Obama, the renewal of the spirit will lead to far more than the replacement of old ideas and the fixing of mistakes. Read More »
Change to Senator Hillary Clinton means replacing the sorry mess that is the Bush administration's policies in regard to war, taxes, economic regulation, healthcare and everything else that incompetence and insincerity have messed up. This is a worthy vision for any administration.
Senator Barack Obama, despite his agreement on virtually all of these issues, has an entirely different vision. He wants, above all else, to first renew the spirit of hope and self-respect that will make people again proud of themselves and the government that represents them. To Obama, the renewal of the spirit will lead to far more than the replacement of old ideas and the fixing of mistakes. Read More »
"Dropping money from helicopters from sea to shining sea," is the cynical characterization of the $150 billion "tax rebate the president and Congress are now working on.
It is, of course, not a tax rebate but a straightforward giveaway of our grandchildren's money and is at best a palliative. While it probably does some good to alleviate the present downturn, it does nothing to address our deep-seated economic problems.
The president's promise made him look proactive but it preempted any discussion of the structural faults in our economy, our dysfunctional financial system or the Federal Reserve bail out of the banks. These are the causes of the housing crisis, the subprime financial mess, the runaway $3 trillion budget and our looming recession. Read More »
It is, of course, not a tax rebate but a straightforward giveaway of our grandchildren's money and is at best a palliative. While it probably does some good to alleviate the present downturn, it does nothing to address our deep-seated economic problems.
The president's promise made him look proactive but it preempted any discussion of the structural faults in our economy, our dysfunctional financial system or the Federal Reserve bail out of the banks. These are the causes of the housing crisis, the subprime financial mess, the runaway $3 trillion budget and our looming recession. Read More »
The story of how the failures of the Fed got us into this fix is short and well understood. The fault belongs to the 18 year tenure of Alan Greenspan as chair of the Federal Reserve. Greenspan, the premier disciple of Ayn Rand and her libertarian economics, watched approvingly as financial markets were freed of regulation and inevitably spun out of control.
The economic and financial powers-that-be panicked yesterday -- and for good reason.. Blame Greenspan and hold onto your job, your house and your family because nothing anyone is proposing is going to cure the problem. But, with the expected shift in the political landscape, we might, in the long run, have an opportunity to re-start the economy in the right direction
The White House just asked Congress for a fiscal stimulus of $150 billion -- and sooner rather than later. The Federal Reserve moved almost precipitously for a monetary stimulus, lowering the federal funds rate by an almost unheard-of three-quarters of a percent between meetings. Read More »
The economic and financial powers-that-be panicked yesterday -- and for good reason.. Blame Greenspan and hold onto your job, your house and your family because nothing anyone is proposing is going to cure the problem. But, with the expected shift in the political landscape, we might, in the long run, have an opportunity to re-start the economy in the right direction
The White House just asked Congress for a fiscal stimulus of $150 billion -- and sooner rather than later. The Federal Reserve moved almost precipitously for a monetary stimulus, lowering the federal funds rate by an almost unheard-of three-quarters of a percent between meetings. Read More »
Democracy is on the rise. In Iraq it is welling up in an "awakening" in spite of the violence and the occupation. At the same time, our own American democracy is seeing an improbable candidate talk of unity and common ground in spite of the cynicism, polarization and gridlock we have been enduring. In both places, the tide of democracy is coming, as it always does, from the people.
First Iraq, where the people and not the military are dampening the violence. To some, the surge inserting 30,000 additional American combat troops is working because it is pacifying the country. To others, the surge is not working because the Maliki government can't get its act together and govern the country.
Both are wrong. Our military is not imposing control. Causation runs the other way. The Iraqis are doing it on their own. They are controlling the violence because they know the American military cannot sustain the surge and will soon start leaving. Simply put, the Iraqis do not want Al Qaeda in Iraq controlling their country and they are doing something about it. Read More »
First Iraq, where the people and not the military are dampening the violence. To some, the surge inserting 30,000 additional American combat troops is working because it is pacifying the country. To others, the surge is not working because the Maliki government can't get its act together and govern the country.
Both are wrong. Our military is not imposing control. Causation runs the other way. The Iraqis are doing it on their own. They are controlling the violence because they know the American military cannot sustain the surge and will soon start leaving. Simply put, the Iraqis do not want Al Qaeda in Iraq controlling their country and they are doing something about it. Read More »
2008 is going to be a doozy and so it deserves a preview.
Politically, the campaign for president will be the most contentious, down and dirty brawl we have had in a century. Economically, we face a recession and the popping of the double bubble (housing and credit). Militarily, we botched the war but we are not about to leave Iraq. This column talks about the politics of 2008. The next column will deal with the economy and the war.
The relentless political drama of this year will shortly hit its first high point in January in Iowa and New Hampshire. The next peak will be Super Tuesday, February 5, when 22 states vote or caucus. If no candidate locks up a majority, then in March and April it will be Ohio and Pennsylvania, respectively.
Finally, on to the conventions in August and the campaign through to November.
During this overlong next 10 months, candidates will bombard us with $1 billion worth of campaigning. And that does not include the (right and left) wing nuts who will be spending huge amounts of special interest money spewing their respective brands of hate. Read More »
Politically, the campaign for president will be the most contentious, down and dirty brawl we have had in a century. Economically, we face a recession and the popping of the double bubble (housing and credit). Militarily, we botched the war but we are not about to leave Iraq. This column talks about the politics of 2008. The next column will deal with the economy and the war.
The relentless political drama of this year will shortly hit its first high point in January in Iowa and New Hampshire. The next peak will be Super Tuesday, February 5, when 22 states vote or caucus. If no candidate locks up a majority, then in March and April it will be Ohio and Pennsylvania, respectively.
Finally, on to the conventions in August and the campaign through to November.
During this overlong next 10 months, candidates will bombard us with $1 billion worth of campaigning. And that does not include the (right and left) wing nuts who will be spending huge amounts of special interest money spewing their respective brands of hate. Read More »
Peace on the earth, goodwill to men (or peace to men of good will). Luke 2:14.
The ancient texts, my biblical scholar tells me, leave some ambiguity as to whether God is wishing peace and goodwill to all of us or whether His peace is just for those who have goodwill. I choose to think of this in terms of the inclusiveness of the New Testament. We are charged to reach out with peace and goodwill to everyone and that is what the Christmas spirit really is. But I fear our society is veering otherwise.
Starting with the Reformation this became a sore point as Catholics took one side and Protestants the other but it is ambiguous. If for some strange reason, you should care, it boils down to whether the word for goodwill is in the nominative or genitive case. The ancient texts in Aramaic and Greek are just not clear. If you are really up to date on biblical studies, I can tell you the Anchor Bible also says it is ambiguous.
But I don't really know who took which side nor do I care. It is a fine point of exegesis and the kind of thing that theologians come to blows over, which is ironic since the point is really peace and goodwill, however you parse it. Theologians, like all other professions, have not always been a credit to their subject matter.
Peace and goodwill are what God is talking about here and what we should be thinking, talking, and praying about during this Christmas season. I see peace as an inner quality reflecting that we are right with God and our fellow man. Good will is the extension of that peace, the reaching out, to those around us. This is the peace and goodwill we extend when we voice the Christmas spirit with "Merry Christmas". Read More »
The ancient texts, my biblical scholar tells me, leave some ambiguity as to whether God is wishing peace and goodwill to all of us or whether His peace is just for those who have goodwill. I choose to think of this in terms of the inclusiveness of the New Testament. We are charged to reach out with peace and goodwill to everyone and that is what the Christmas spirit really is. But I fear our society is veering otherwise.
Starting with the Reformation this became a sore point as Catholics took one side and Protestants the other but it is ambiguous. If for some strange reason, you should care, it boils down to whether the word for goodwill is in the nominative or genitive case. The ancient texts in Aramaic and Greek are just not clear. If you are really up to date on biblical studies, I can tell you the Anchor Bible also says it is ambiguous.
But I don't really know who took which side nor do I care. It is a fine point of exegesis and the kind of thing that theologians come to blows over, which is ironic since the point is really peace and goodwill, however you parse it. Theologians, like all other professions, have not always been a credit to their subject matter.
Peace and goodwill are what God is talking about here and what we should be thinking, talking, and praying about during this Christmas season. I see peace as an inner quality reflecting that we are right with God and our fellow man. Good will is the extension of that peace, the reaching out, to those around us. This is the peace and goodwill we extend when we voice the Christmas spirit with "Merry Christmas". Read More »
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