Kirsten Mortensen's blog

Great piece here by an Australian economist by name of Steve Keen.

He argues that the US Government is mistaken in thinking that the solution to our economic crisis is to swap private debt for public debt.

What got us into this pickle, he says, is that we created “a debt-financed speculative bubble [that] generated illusory wealth as it grew.” Its collapse, in turn “left us with a mountain of private sector debt.” So today,

the debt bubble is acting in reverse – reducing demand as firms and families reduce debt, and necessarily spend less in the process.

The mistake our pols are making is to think that they can re-start the economy by getting us to borrow more — by stimulating renewed growth in private debt.

It’s worked before. But it ain’t gonna work this time — because US private debt is at 300 per cent of GDP.

We’re done, and we know it. We’re sick of borrowing. And we don’t trust that we’re going to be getting raises every year any more, or that our taxes aren’t going to jump up considerably, or that gas prices aren’t going to spike again. That our fixed rate credit cards aren’t going to suddenly switch to variable and shred our family budgets.

We want to be out of debt. We’re more than happy to tighten our belts if it means we can be out of debt.

Yeah, strikes me as brutally lucid analysis . . . I’ll go with Keen over Washington on this one, thanks.

Maybe there is still a bit of Jefferson’s influence hanging around.

From a new Washington Post-ABC News Poll. When asked, “Generally speaking, would you say you favor smaller government with fewer services, or larger government with more services?” 53 percent of respondents picked smaller government, to 43 percent who picked larger.

Of course, it’s just common sense.

Too bad our politicians don’t have any.

Via Just One Minute.

People once fled New York State for California. And bragged about it.

Now they’re moving away. (Granted, not to New York, where all our leaves are brown, still. Also covered with a couple feet of snow. And chilled down to a cozy 4 degrees this morning.)

The number of people leaving California for another state outstripped the number moving in from another state during the year ending on July 1, 2008. California lost a net total of 144,000 people during that period — more than any other state, according to census estimates. That is about equal to the population of Syracuse, N.Y.

The state with the next-highest net loss through migration between states was New York, which lost just over 126,000 residents.

California’s loss is extremely small in a state of 38 million. And, in fact, the state’s population continues to increase overall because of births and immigration, legal and illegal. But it is the fourth consecutive year that more residents decamped from California for other states than arrived here from within the U.S.

When the article moves on to answer the burning question of “why,” it falls back on the usual dreamy litany. Unemployment. High foreclosure rate. Personal income flat.

Well, yeah. Those are the immediate causes. But I also agree with Shannon Love that the real issue is the state’s fiscal policy:

California has followed the grim path of the Great Lakes states.

[T]hose states where [sic] once the industrial dynamo for the entire Earth, yet they destroyed that enormous economic dominance by political policies hostile to economic creativity . . .

It seems that in post-New Deal America, economic and civil success sow their own seeds of destruction. When things are going good, socialist experimentation seems harmless. A booming economy can pay for increased government spending and an ever-increasing scope of government power. Eventually, however, socialism strangles the economic engine and destroys civil society.

In 2006, California held the number 8 slot in the list of states with highest tax revenues per capita. (New York was #3.)

What have they done with all those riches?

Does running California really cost $1800 more per person than running New Hampshire?

Of course not. At least, it shouldn’t.

America is wasting its assets by funneling our money through political machines that add ZERO value.

California is our canary in the gold mine . . .

(P.S. California’s population is still growing, incidentally, thanks to the birthrate etc. It’s the people who can voluntarily move who are leaving. The babies are staying put for now.)

Came across this article from 2003. It’s a reprint of a piece by Kevin Hasset that was originally published in the October/November 2003 issue of The American Enterprise magazine.

Hassett compares the fiscal health of states that voted for Bush to that of states whose voters when for Gore.

Ha ha ha.

Though the total population of Bush and Gore states are almost identical, the states that voted Democratic account for fully 70% of today’s state deficits; Republican states ring up only 30% of the total. And of 10 ten states with the largest per capita budget deficits (see nearby table), every single one voted Democratic in the last presidential election.

But wait, there’s more!

. . . in the top 10 deficit states (again: all Democratic) tax revenues increased at the dramatic rate of about 5% a year over the last decade.

And more!

. . . the average tax revenue per person in today’s sickest ten states was $2,445 in the last data available–compared to only $1,923 per person in the 10 healthiest states. This blasts out of the water the idea that states get sick because they have been starved of revenue; indeed it shows the opposite.

Hassett doesn’t pick on Democrats alone, mind you. He reserves some sharp words for President Bush, who, he notes

increased spending on just about everything. Three of the five biggest increases in federal spending in U.S. history occurred during Mr. Bush’s first three years in office (the other two took place during World War II).

Something that makes me positively sick to my stomach, btw.

Because those of us who understand that government spending is a hugely, hugely inefficient way to take care of people have no party that even approximates our views. We’re forced to hold our noses and consort with fringey groups that attract only marginal political talent. Ugh.

My only hope is that people will finally wake up and look at the data. It’s right there, if you just look. Increasing taxes should NEVER be the first line solution. We have to tighten our belts. We have to stop running deficits. We have to truly cut the size of government.

Until we can show the maturity and discipline to do those things, our situation is only going to get worse. It might take a generation or two, but we will impoverish ourselves.

Like Norway.

No, that isn’t a joke. That’s a New York Times article. Click it and read for yourself.

THE received wisdom about economic life in the Nordic countries is easily summed up: people here are incomparably affluent, with all their needs met by an efficient welfare state. They believe it themselves. Yet the reality – as this Oslo-dwelling American can attest, and as some recent studies confirm – is not quite what it appears.

Even as the Scandinavian establishment peddles this dubious line, it serves up a picture of the United States as a nation divided, inequitably, among robber barons and wage slaves, not to mention armies of the homeless and unemployed. It does this to keep people believing that their social welfare system, financed by lofty income taxes, provides far more in the way of economic protections and amenities than the American system. Protections, yes -but some Norwegians might question the part about amenities.

In Oslo, library collections are woefully outdated, and public swimming pools are in desperate need of maintenance. News reports describe serious shortages of police officers and school supplies. When my mother-in-law went to an emergency room recently, the hospital was out of cough medicine. Drug addicts crowd downtown Oslo streets, as The Los Angeles Times recently reported, but applicants for methadone programs are put on a months-long waiting list.

More:

After I moved here six years ago, I quickly noticed that Norwegians live more frugally than Americans do. They hang on to old appliances and furniture that we would throw out. And they drive around in wrecks . . .

One image in particular sticks in my mind. In a Norwegian language class, my teacher illustrated the meaning of the word matpakke – “packed lunch” – by reaching into her backpack and pulling out a hero sandwich wrapped in wax paper. It was her lunch. She held it up for all to see.

Yes, teachers are underpaid everywhere. But in Norway the matpakke is ubiquitous, from classroom to boardroom. In New York, an office worker might pop out at lunchtime to a deli; in Paris, she might enjoy quiche and a glass of wine at a brasserie. In Norway, she will sit at her desk with a sandwich from home.

So those of you who want our country to abandon our Constitution and go socialist, there’s your template.

Celebrate politicians who call for tax increases.

Call at the top of your lungs for more government “services.”

Beg for more government intervention into businesses and our private lives.

And, if things go really really well, we might one day be as well-off as Norway.

Goody goody.

Front page, yesterday’s Wall Street Journal. Article titled The Doomsayers Who Got It Right. The “doomsayers” being folks who had the audacity, while the rest of the world was drunk on paper wealth, to suggest that a crash was coming.

Well guess what, they’re still worried.

[They] fret that U.S. government spending on bailouts and stimulus plans that preserve failed business models could increase the likelihood of a worse calamity later.

They foresee a long season in which consumers cut their spending, and instead sharply increase the savings rate. That would be healthy for savings-anemic U.S. households, which have spent beyond their means for years, but deeply problematic for a country where consumers drive 70% of all economic activity.

They also envision higher taxes and the likelihood of further declines in U.S. stock prices as the Standard & Poor’s 500-stock index bottoms out as much as 30% lower than today. And while noting that “deflation” is today’s catchword, several experts say that inflation and perhaps even hyperinflation (in which prices rise at double- or triple-digit percentages) is the real issue a few years down the road as the Federal Reserve increases the money supply and relies on untested measures, such as buying home mortgages or other assets, to spur the economy.

Meanwhile, via Instapundit, this Reuters story: U.S. governors seek $1 trillion federal assistance.

Governors of five U.S. states urged the federal government to provide $1 trillion in aid to the country’s 50 states to help pay for education, welfare and infrastructure as states struggle with steep budget deficits amid a deepening recession.

The governors of New York, New Jersey, Massachusetts, Ohio and Wisconsin — all Democrats — said the initiative for the two-year aid package was backed by other governors and follows a meeting in December where governors called on President-elect Barack Obama to help them maintain services in the face of slumping revenues.

There we have our leaders, America. Not the so-called “doomsayers” who actually have the tools (i.e. intellect and integrity) to make a pretty sound estimate of the effects of our fiscal choices. Oh, no. Instead we have people whose only concern is to “maintain services.”

Because heaven forbid, in the face of a worldwide fiscal meltdown, anybody has to actually do without “services.”

The medicine has been poured. It sits there in the spoon in front of our mouths, so close our noses tell us clearly how bad it’s gonna taste.

But we’re still kicking and screaming like a bunch of babies that we aren’t going to take it.

Begging our government to give us sugar instead. Make it all go away. Sugar for the auto industry, sugar for the banks, sugar for the mortgages we shouldn’t have signed in the first place. And now sugar for the state governments who have been overspending their budgets for years.

It never ends, because we’re fearful and unimaginative, and if that’s not enough we’re being led by politicians who are stupid and corrupt and whose only worry is whether their policies will buy the votes they’ll need later to get re-elected.

We’re big babies. Infantalized by our government, by the so-called socialist model that proposes government solve peoples’ financial problems for them.

Not enough money to pay off our bills? No problem! Just print more!

What could possibly go wrong if we do that?

I remember once, years ago, reading about a ferry that capsized somewhere. Near Thailand maybe. The ferry was fine. But it started to rain. Half of the deck had a canopy over it, and when the rain started, all the people on the deck of the boat rushed over to that side.

They tipped the boat over.

I feel like I’m on that boat.

You got it, New Yorkers: a bloated, paraciticistic bureaucracy that taxes us rapaciously one day, then gives a bit back (aka pork projects, STAR rebates) the next with a nice wet “see all we do for you?” kissy kiss.

Apparently it works for most of us most of the time. But what about now, when the economy is stumbling?

We’ll soon find out: as the WS Journal reported a few days ago, New York is one of many states facing a huge tax shortfall.

A spokesperson for Paterson is out there softening us up with the words “fiscal crisis.”

The Albany Times-Union piece lists some possible solutions. Guess what they cite at #1? Raise taxes, of course.

Once you’ve fed it and fed it and fed it, you can’t cut it off — it won’t let you.

Good thing the government’s in charge of keeping us happy and healthy and entertained! Such a deal, such a deal!