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Why Regulation Is Good For Growth
From Azizonomics
I have in the past criticised regulation for throwing up barriers to entry and taking away opportunity from the youth.
But it turns out that regulation (the more the better) can be an engine for growth.
From Paul Krugman:
As some of us keep trying to point out, the United States is in a liquidity trap: private spending is inadequate to achieve full employment, and with short-term interest rates close to zero, conventional monetary policy is exhausted.
This puts us in a world of topsy-turvy, in which many of the usual rules of economics cease to hold. Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens: as Keynes put it, a slump goes on until “the shortage of capital through use, decay and obsolescence” gets firms spending again to replace their plant and equipment.
And now you can see why tighter ozone regulation would actually have created jobs: it would have forced firms to spend on upgrading or replacing equipment, helping to boost demand. Yes, it would have cost money — but that’s the point! And with corporations sitting on lots of idle cash, the money spent would not, to any significant extent, come at the expense of other investment.
So by forcing private firms and individuals into spending money on things they don’t believe they need, government can create demand, which will lead to jobs via the magic of Keynesian multipliers.
Central planners know better than individuals and businesses. That is because they tend to be better educated, having attended the best schools and universities. Central planners tend to think about the bigger economic picture, while businessmen and individuals tend to have small parochial horizons. They are simply not qualified to know how to spend their money.
Bastiat was wrong — anything that creates spending during a depression will have a good effect on unemployment and aggregate demand. Austrian economists and libertarians carping on about opportunity cost should look at the opportunity cost of not forcing businesses to spend. During recessions, businesses tend to hoard cash, causing a fall in aggregate demand. This means prices fall, and the value of debt rises as debtors struggle to make payments on falling incomes, which can lead to mass defaults. The cost of not creating the spending would be falling demand and greater debt deflation. Well-educated central planners understand that under such circumstances government must do all it can to get the economy flowing again to stabilise price levels, and the best way to do that is forcing businesses and consumers into spending their cash on things they would not otherwise need or want, as well as by creating inflation.
It is also imperative that well-educated central planners do all they can to alleviate the damage that citizens are doing to our environment. The common businessman does not think about environmental concerns. He only thinks about maximising profit, like a common jungle beast. And we know what happens when this primal force is unleashed upon the world — we get economic depressions. It is the job of the well-educated central planner to correct his dangerous and deleterious behaviour. This can be done through levying taxes, by passing laws to mandate spending, or by laying smart regulations.
The biggest problem with “free” markets is the stupidity of the common people. How can they possibly know what they want, or what they want to achieve when they have not attended prestigious universities like Oxford, Harvard, or Yale? Without help from central planners working with fact-based information derived from simulations, mathematical models, and empirical studies the common people will never be able to make informed economic choices. Thanks to the genius of central planning for the common good — as well as the hard work and self-sacrifice of central planners — the common people are liberated from making difficult economic decisions. They can concentrate on what they are qualified to decide — what to have for lunch (so long as its contents have been approved by central planners for consumption), what to name their children (so long as it comes from a list of names pre-approved by central planners), or what to watch on television (so long as the transmission has been approved by government censors).
Happy April Fools’.
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I always suspected M$B was Paul Krugman.
"The Nonsense of a Liberal."
Look, we gave economic liberty a chance, it just doesn't work. It's time to turn the reigns over to the people who are actually qualified to make economic decisions for all of us, like Mr. Krugman and Mr. Bernanke. Only then can we get out of this malaise.
John got one of his blogs in here, I want one!
And I promise you all —
With central planning, nothing will ever go wrong.
April Fools....right!!
hhaha beat me to it!
Now we need MDB to show up and declare his love for Austrianism and Libertarians.
Krugman is so busy publishing b.s that he doesn't realize is that there is a run on tar and feathers rapidly developing.
Central planning works. but the side effects are poor and dumb become poorer and dumber because their ignorance and poor decisions are subsidized. Commoners are happy until the smart and hard working give up because they don't see their efforts being rewarded and everyone loses.
Even graduates of Yale are subsidized because because now even elites buy into that shit that was for the lowerings.They all go into wall st. to gamble rather than create industries.
that's because people want to be lazy and stupid.
common people are why Sarah Palin is popular because half of common people have less than IQ of 100 and they make decisions on emotions rather than logic which gets them into trouble. Do you really want to reward the ilks of white trash Sarah Palin and expect that she will be able to outwit evil genius like ex-KGB "I never smile" Putin?
Ass faced fuck
Happy April 1 Senior Superiority Plus to the 5th
Your ZH handle is an incalcuable insult to the man.
How dare you name yourself after a great author who actually had vision?
Today is a good day to drown yourself.
L
common people are why BARACK HUSSEIN BARRY SOETORO OBAMA is popular because half of common people have less than IQ of 100 and they make decisions on emotions rather than logic which gets them into trouble. Do you really want to reward the ilks of black third world trash BARACK HUSSEIN BARRY SOETORO OBAMA and expect that she will be able to outwit evil genius like ex-KGB "I never smile" Putin?
THERE FIXED IT FOR YA....NO THANKS NECESSARY
You are no better.
Take your NWO Left vs. Right BS somewhere else, precious few buy into that here.
Why thank you Mugabe you bag faced cunt piece of shit.
Economic liberty failed to send the right money to the right people. All fixed now.
Because if the person who got ripped off actually wins a settlement they spend the money? And perhaps a few crooks get put in jail. Nah, crazy talk.
...or, "The Conscience of A Sociopath".
Krugman and his shifty eyes. He gives me the creeps. Charlie Manson looks more reliable.
April Fools! I get it...
Not at all. I now feel so free and liberated I cannot see the bonds forged upon my person in the form of never-ending debt.
April fool in intent maybe.
Krugman probably believes exactly that though.
Has to be true to be a really funny spoof.
Yep- Krugman is a Yale boy, so either he's being sly, or going MDB on us......
Krugman is like rest of the ivory white tower dwellers. Some ass hole told them this crap was the truth years ago and since they live isolated, shallow lives, they believe. Educated idiots. Our world is populated with them.
The above is a perfect example why you must stay off the crack. It fries the brain.
Perhpas Kruggybear should try it some time. He might have an epipanhy.
You neglected to mention Princeton?
What up with that?
Regulation ? Who needs regulation when we have the DOUCHEBAG in chief Bernanke at the helm ?
FUCK YOU, Bernanke.
I thought Obama was the "Douchbag-in-Chief" and Bernake was merely the "Douchbag-in-Thief".
Douchebag AND Thief.
I actually thought this was MDB first Zero Hedge Post. But it is not a joke actually... It is a very important question The biggest problem with “free” markets is the stupidity of the common people because at the end they will kill the free market by electing the wrong kind of people..
Actually more on our education and value system rather than the markets. I guess you can get into chicken/egg arguement with this one.
a couple of Thomas Jefferson quotes:
electing the wrong kind of people..
Ummmm... dude... all elections elect the wrong kind of people.
CH1, I think that is what Zola was getting at.
It has nothing to do with being dumb (electing "wrong" people) and everything to do with the change in societal views. The incessant pounding by the MSM that Candidate 1 will "give you free _____ (fill in blank)" while mean old Candidate 2 says we can't afford it has taken its toll. Given the lack of critical thinking and vested interest (gov't check / no taxes) what would one expect to happen?
When folks blast Ron Paul for "far out" ideas I respond that once ALL Americans considered his ideas the norm. Don't spend more than you make; follow the Constitution and prosperity comes from saving, a strong currency and peace. The fact that so few Americans (much less politicians) believe in those things says it all.
You forgot the space aliens. Space alien attacks have a glorious Keynesian multiplier.
Seriously though, the UFO thing is not far off. The pigmen like to honey pot Zero Hedge and other sources of intelligent discussion with troll posts that advocate violence, racism or extreme conspiracy theories to discredit it. Then the mind controlling MSM can create sentences like "Whackos and nutjobs who believe in stuff like alien abduction, ESP, illuminati and gold standard currency post of Zero Hedge" or "Folks like Charles Manson, Clifford Olson and Ron Paul avocate withdrawl from Iraq". The association created in the phrase program the sheep to think anything not from the MSM cannot be trusted as valid sources of information.
People who believe in the MSM are more lost than those who believe in alien abduction.
If there's one complaint I have against ZH it's that nobody ever uses any sarcasm. Of course the elite are smarter, look what a well-oiled machine the US has become.
Yea, lot's of oil. I agree with that
And getting better every day with elite solutions, e.g. NDAA, PATRIOT, SOPA, PIPA, etc., to fix all the problems of the world, which seems to be the commoners being empowered to think and act on their own rather than to have their information channeled to them and to have all their decisions pre-ordained by their superiors.
Everybody knows that in a centrally planned economy, the squeaky wheel gets greased....
You may have heard about that Trillion$$$ student loan problem (with the 35% delinquent rate)?
Here's where the loan money goes:
Fans burn couches, flip cars after Kentucky's winLOUISVILLE, Ky. (AP) — Riot police used pepper spray in small amounts for crowd control as thousands of rowdy fans swarmed into the streets near the University of Kentucky campus, overturning cars and lighting couches ablaze after a victory over cross-state rival Louisville in a Final Four matchup.
http://news.yahoo.com/fans-burn-couches-flip-cars-kentuckys-win-03383240...
Interesting, since the University of Kentucky is in Lexington... The MSM AP must have a geography problem.
The MSM AP has MANY serious problems. Geography is only a minor one.
If the government had a 5,000 page document regulating shoe laces, I would feel much safer. Unregulated shoe laces can maim, injure and kill! I hope Congress does something about this!
Laces won't be regulated. They'll be banned.
We first need to wait for the Velcro manufacturers to pay off the right politicians.
When shoe laces are outlawed, only outlaws will still wear shoe laces.
What about slip-on shoes?
Wearing slip-on shoes is the mark of anti-Velcro conspiracy theorists and homegrown anti-government terrorist extremists, and all patriotic US citizens are encourage to report such suspicious activity to their nearest Department of Homeland Security office as part of the "See slip-ons, say something" program.
Frequent fliers know about the advantages of these........
Not all regulation is created equal. Painting it all with the same brush allows the effects of financial deregulation, arguably the main cause of the financial crisis, to continue. Of course, meaningful regulation requires regulators willing to do their job, and more simple regulation is better (Glass-Steagall was far superior to the behemoth Dodd-Frank or the JOBS act). As Bill Black points out regarding the new JOBS act:
"The primary rationale for the JOBS (Jumpstart Our Business Startups) Act is the claim that we must win a regulatory race to the bottom with the City of London by adopting even weaker protections for investors from securities fraud than does the United Kingdom (UK)."
http://neweconomicperspectives.org/2012/03/the-only-winning-move-is-not-...
Well yeah, it's gotten to the point where anymore they just don't give a damn what the people think. I'd say this had been happening regularly since NAFTA.
Not all regulation is created equal.
Who cares? It's all created by a class of idiots whom are given power to control everyone else's life. That's an inescapable recipe for disaster. Always, everywhere. "Good" regulations just delay the inevitable, slightly.
The position of regulator is ruin incarnate - ALWAYS.
I would remind you that under Glass-Steagal, we had the S&L crisis, AND the .Bombz. SNL was a bit more contained because we prosecuted at least some of the fraud.
Why is regulation required in the first place? The business cycle largely the result of the actions of the very bureacrats who are charged with oversight of money and credit. This is a tale as old as tulips...at least.
Indeed. Well articulated and put forth. Bravo to the author for having the courage to stand up to thousands of years of free choices made by a myriad of human participants all making the wrong choice.
In fact I think its high time we leave the fetters of the past and replace the term "In God We Trust" on our purely contrived and conjured currency with the term "In Central Planning We Must".
Adam Smith and Basquiat had it all wrong. The successful central planning of the Eastern bloc from 1945 to 1989 shows the superiority of the socialist, dirigiste, Marxist , even National Socialist models.
It all comes down to monopoly power of the few exploiting the many. Capitalism is dead, at least free-market capitalism is dead. Who could have dreamed that espousing free markets would one day be regarded as subversive?
Soon we will see universal slackerdom rewarded by worthless fiat, per famous Russian joke "We pretend to work and they pretend to pay us."
The East-bloc was a dynamic raging success until people were corrupted with decadent western products like blue jeans and exposed to decadent western entertainment like Dallas.
Damn those running-dog imperialist capitalist roaders and the evil way in which they insidiously undermined every gloriously and perfectly engineered Five Year Plan! Why could they never accept that perfect freedom and prosperity can only be achieved through total, top-down command and control?
At least they are finally coming around under Obama and Krugman.
If we take the open-mic incident at face value, Obama and Krugman are merely the puppets ... the puppet master seems to be good old Vlad himself.
'populations were prepared to suspend judgement on their politicians and accept sacrifice if they believed there would be long term gain, but not indefinitely.'
That's from a CNBC article.
Don't need politicians anymore. In the US they don't even read the bills they pass into law. Therefore we need a referrendum system so that the entire population has the ability to vote on every law and policy. Certainly have the technology to allow that to happen today.
And a closed loop monetary system could easily be established completely without bankers.
Therefore since the time has arrived let the people, who are the only ones capable of morality, rule themselves.
Deviat elite step aside the collective human experience is about to begin.
Invert the Pyramid.
Great mobocracy for 300 million. What happens WHEN I vote to tax you at 100% to pay for my lifesyle? What happens when those who can vote, vote against the interests of those who cannot? This scheme doesn't even work in California.
The only possible way this works is if every NON-vote is counted as an automatic "NO." This way, most of us wouldn't have to waste our time actually voting "NO" for every hair-brained democractic scheme. But how do you know how many non-votes exist without.
Even still, I am going with "The Myth of the Rational Voter."
Well, shit... let's just let them bleed everything dry. What's the difference at this point?
I would disagree in one regard. It is not stupidity but fear. The animal spirits take over and the people foolishly save money instead of spending it. This is where the fearless and ever so brave defenders of our great economic machine swing into action to save the day. If it wasn't for them the prosperity of the last 100 years would have never existed.
"If it wasn't for them the prosperity of the last 100 years would have never existed."
Here here. And similarly that wealth spread over large portions of the population could not have been consolidated into fewer, more competent hands.
SPOOZ
You are right.
It is not the case that public leaders are supposed to be so much "smarter" than their private sector counterparts. And it is misleading to depict it that way.
It is rather that the public servants are supposed to head democratic and open public institutions which can counterbalance against the abuses of private autocratic and secretive institutions.
There is now complete failure in that public duty, and an alliance between big government and big corporations, ... to the detriment of small business, individual liberty, and general well-being.
Laws are now made or ignored to protect the finances of global corporations and stifle local enterprise; militarism supports a global war industry and global corporate expansion; health and the environment are degraded so as not to reduce the profitability of insurance, food, chemical, and energy giants.
On my way toPrinceton to break all their windows. They can have economic improvment first...my gift...no return gift required...you're welcome
I see wut ya did thar!!
Who has the list of fake terrorist plots involving FBI entrapment ? Please post it here.
What about transparency of government ?
Ben Fulford (COINTELPRO googles) had given 31st March as the deadline for the surrender of the elite parasites and their answer is to continue with the same garbage.
Are you English Bob?
I want to meet English Bob! who LOVES the Twit on Capital Account! Where Are You? are you busy jerking off in a corner in your mums basement? come forth!
English Bob got the fuck kicked out of him by Little Bill. Everyone knows that.
Penn State Lecture.. http://rockethics.psu.edu/
http://vimeo.com/39492883
Fuck everything about regulation/government intervention.
and here's and OLDIE BUT A GOODIE!! http://www.youtube.com/watch?v=3aKj6uJ5Mt4
We Need Austerity!
We need LESS! or NO!! Financial Regulations!!
We need the Welfare Poor to Die Off.. just like would happen if Natural Selection was allowed to occur!
and any of you that are tired of waiting for America to turn into that Dream Place of no Taxes or Government Intervention and Austerity for the Poor with NO! Child Labor Laws! (work them kids!! Little Bastards got to much energy any way!) All of you! can Move to Africa! and live with ALL the Austerity, Tax Free and Sitting on the Beach you can stand.. http://www.youtube.com/watch?v=iivVKJbtTgs you dont need America to chage into Africa.. You just need to get on a Plane and Move there!
Austerity for as far as the eye can see! and you are Free! to do what you want! No regulations!! GO!! Go! to your Dream Land of Freedom! Africa Awaits!
But America doenst need to be! Africa..
Really, i was unaware Africe was effective in protecting individual rights to life, liberty and property.
The biggest problem with “free” markets is the stupidity of the common people.
In contrast the biggest problem with "command economies" is the stupidity of those in charge.
The question is who is more stupid, the CEOs or the politicians. I'll answer it for you, it's the politicians stupid!!?!?! God Krugman is such a blowhard moron. Bridges to nowhere and we'll all be rich.
Deregulate...I like monopolies, cartels and collusions cornering my ass in the market.
My take from the Bush admin was that deregulation, laissez faire, was a complete failure.
Now, persuade me that turning the US financial system into Dodge City where anything goes, is in my best interests. I don't trust the gov't...NOR do I trust business. Tyranny from either doesn't suit me at all well.
There are more regulations now than have ever existed in the history of the universe.
Which business has "cornered your ass in the market" apart from those with the government backed ability? They dont exist
How does a business without government backing "corner your ass in the market"?
Please name one business that forces you to buy stuff at the point of a gun? They dont exist
Name one thing a business can do to take away your right to life liberty and the pursuit of happiness?
Please stop making stuff up. If this is an april fools joke you got me.
Because its not like regulation creared the housing bubble, or banks whose failure would devestate the economy... Wait, never mind... It did.
Gern B is an assmuncher, regs being dropped created the housing bubble and banks going from 10 to 1 up to 37.8 to 1 devastated the economy.
Blame the pols who dropped the regs or the corporations who bribed the pols to drop the regs.
From 'management by experts' to 'management by idiot savants.'
After reading that, I think I'll go out and break every store-front window I drive past, torch a few buildings, and then cause a 45-vehicle pile-up on the freeway. When the judge asks for a plea, I'll just say, 'Economic stimulation, bitchezzz!".
I've come to suspect that the term "liquidity trap" is economics speak for "Keynesian economics Achilies heel that proves it does not work" or to put it another way "we've flooded the market with money but people still wont borrow and spend like our brilliant theory says they will" Money gets trapped because people see through the sham. They know the money has to be paid back so they save for that day, the only solution to stealing peoples money to stimulate the economy is to steal more until the are debt slaves to a state run by the brilliant minds that concluded freedom is the enemy.
"Central planners know better than individuals and businesses"...
Huh.......???
You really had me up to the "april fool" line. I thought the article was totally /sarc.
Tell me you were "really joking". Or FUCK OFF. ;-)
I don't think this is an April Fools, Krugman really is that stupid and really does write crap like this
...it's his most serious piece of work since declaring war was an economic stimulent (surely the biggest wind-up in the history of economics)
Give that f'n retard another Nobel, i dare you
I personally prefer Krugman's "If only aliens would invade us then we could get the economy going again" economic theory.
Krugman did write it
http://krugman.blogs.nytimes.com/2011/09/03/broken-windows-ozone-and-jobs/
Sure he did - no need to make that part of the article was an aprils fool joke too!
Yes, that 800 year experiment with increasing personal liberty was clearly a mistake. The fact that it is highly correlated with increasing personal prosperity is merely coincidence.
We serfs should be grateful to go back to the service of our divine-right lords and masters, who so very wisely got us through the dark ages in roughly the same state as that in which we entered it. If it hadn't been for the pesky black-plague making individual labor an auctionable commodity, we might still be living the same sort of Eco-friendly standard of living our forebearers enjoyed in 800 A.D.
Shut up and back to your work, slaves!
Instead of working for the House of D'Medici or the House of Brabant, we can work for the House of Pfizer or the House of Archer Daniels Midland instead.
burning down krugman's house would take care of some of his idle cash. it would force him to spend on upgrading or replacing equipment, helping to boost demand too. somebody tweet Krugman's address with a special appeal to all Kentucky BB fans.
No, when someone burns down a liberal economist's house, that is merely an example of the "broken window fallacy." You have to burn down your own house to spur the economy.
The biggest problem with “free” markets is the stupidity of the common people.
Luckily that is not true, as the fool and his money are soon parted.
However it is true for
The biggest problem with democracy is the stupidity of the common people.
bacause, as I put it,
Democracy is when the stupidest 51% decide.
And there is no direct way to let the consequences of those stupid decisions only affect the deciders... except true federalism which we hadn't had since the civil war.
If this weren't April Fools, this would be the lead op-Ed on the Huffington Post, Daily Kos, NYT, and CNBC.
Happy April Fools Tyler
I would vote for Hitler himself if he promised to prosecute the Bankers AND not eat the Jews.
Gary Johnson 2012!
trollololololo
xD
As if Thugman and his ilk have been waiting in the wings while "capitalism" was tried and found wanting. Capitalism, ie., property rights, was administered a cunning drip feed of poison starting in 1913. That eye-hemorrhaging stench wafting off Thugman's editorial perch in the New York Times and every syllable excreted from Bermonkey's mendacious lips is in fact the advanced stage toxic necrosis of a zombie. As if printing money to dig holes and fill them in faster will bring the corpse back to life. Non aggression principle stands, but is sorely tested by Thugman's and Bermonkey's faces which are exquisitely suitable bases for the excellent German word backpfeifengesicht.