Wall Street Government???

Reading this online from the Washington Post, reminds of the line from Inside Job that we have a "Wall Street government...".  I ususally tell my students we have the best government money can buy, both describe the contents of this article.

I am scandalized by the audacity of these businessmen!  After running these firms into the ground and requiring taxpayer bailouts, they claim to deserve any bonus!!!  I suppose once the funds are paid back they might have more leeway, but while they still owe Uncle Sam - NO!

If we will not legislate limits on executive pay, perhaps we could tax them as sources of externalities when they and their firms cause a recession that costs so many outside the transactions their jobs!

Any ideas students?

U.S. Heathcare Costs

I just read an op-ed piece in the Washington Post  online with suggestions for President Obama for how to address rising healthcare costs.  I found some of the data deeply disturbing.  The writer appears to be very practical in his approach.  Incentives of player, and  trade-offs are addressed.

Personally I think this is an excellent idea and perhaps an activity one of my future macroeconomic classes might tackle.

A Bit Off Topic

I read this article in the Washington Post online this morning and thought "This guy should be on the talk shows!"

After the recent bitter election and during all this discussion about what to do about our national debt, here is a voice in the wilderness calling for us to come together to avoid a standoff on the economic direction of our nation.

I always return to John Anderson's claim that we can only satisfy all our wants with mirrors.  Instead we must set priorities and move forward.  These priorities will be differrent for individuals, but trade-offs we must all make.  Let's get down to business.

Speaking of Incentives

Coming home form a wonderful family Thanksgiving, I learned that the Powerball Lottery is at a record level!

What an incentive to buy a ticket!  Let's watch demand for tickets to increase.  I hope I remember to buy one.  I know that the probability of winning is super low, bult it's nice to dream.

Memories of past elections

I have been wondering when someone in the mainstream news media would interview Ross Perot about his position on the US budget deficit.  USA Today did just this.  This morning I read what I already assumed; Perot is still concerned.

Back in 1992 when Perot bravely took on both the Republicans and Democrats, I was a staunch supporter.  Friends told me I was throwing away my vote, but I believe in standing up for what you believe in.  I voted for Ross.

Since that November , I have returned to the economics profession.  I now teach 3 courses of economics at a Florida university.  Out current text is by a macro expert, former advisor to a President and chair of the economics dept. at an Ivy.  While my graduate and undergraduate educations were steeped in Chicago School/ Milton Friedman monetarist theory, I have come to understand Keynesian theory much better.  I even read blogs of another Ivy economist who is unabashedly a radical Keynesian.

I now reflect on what I believe about budget deficits and their risk to US citizens.  I am conflicted.  On the one hand, I am still worried about the effects of high government debt.  I understand the concept of compounded interest.  We must eventually get this under control.  It has been 20 years and we have done nothing to curb our love for government programs neither have we been willing to subject ourselves to higher taxes.  On the other hand, I fear another Depression.  Keynes had some excellent recommendations and we have tried some of those, at great expense to the federal budget.

There is much to consider.  Do we remove ourselves as policeman to the world and let chaos rein in some parts?  Do we weaken our social safety nets just as my generation (the biggest) ages?  Do we abandon our standard of living to compete with emerging economies' eager labor forces?  Do we offer more of our earned income to government instead of making private sector choices?

I fear it be some of all of the above.  We must make some tough decisions in the near future.  Will a democracy be able to do this?  Can we make these difficult choices with respect and dignity?  Do we need a teacher like Ross Perot?

Sadly, I remember what the culture did to Perot back in the 90s.  He was ridiculed for his accent, his appearance and his charts.  Well, folks we need to stop and think about all the tidings we don't like, but which are true.  Don't "shoot" the messengers.

Unemployment, Debt and Election

After the GOP convention and prior to the Democratic convention, CNN aired this short report on US unemployment and debt.  There are annoying ads prior to the actual video, but hey, "There's no such thing as a free lunch!"

What I find so annoying about this debate is that it is all "spun" on each side to make the other appear "guilty" for this economy.  There is plenty of blame to go around and the "good ole boys" responsible for the dangerous economic crisis are still holding their cushy Wall Street jobs.  (I just viewed "Inside Job 2 more times!)

The main problem, as I see it with our government is that as a commenter in the video says, "We have a Wall Street government."  My favorite line that I use in my classes is, "We have the best democracy money can buy!"  How do we change this?  Is everyone corrupted.  My students actually say they would take the money if offered, so where does this stop?  Can it be stopped?  Are the incentives of $ and power too enticing to pass?

I must search for the comments from Marx on capitalism and greed.  Someone told me he predicted that greed would be the downfall of capitalism!  Capitalism is an economic model that has served us very well for generations.  Can it continue?

I believe I have written on this concern before.  It just keeps rearing its ugly head .

Back to the CNN video cited above.  When I look at the US debt composition, I must hold the Bush administration accountable for most of the debt.  I keep harking back to the election of 2000, when Gore wanted to put the budget surplus in a lock box for Social Security and Medicare, because although we had a surplus then, we did not know what was down the road.  George Bush promised the refund to the taxpayers because it was their money.  The greedy voters took the refund and lowered taxes.  Thus the start of this rapid deficit pile up.

Bottom line:  We are all greedy.  Whe do we quit "kicking the can down the road" and begin to find ways to decrease annual deficits with both tools - more tax revenue and less government expenditure.  As John Anderson suggested during the 1980s, we must set priorities and move to accomplish these goals.

My favorite candidate

Unfortunately I cannot vote for my favorite candidate.  She is running for the US Senate in Massachusetts and I live in Florida.  Reading about her in the Washington Post today, I came across an article she wrote in July that I missed at that time.  She was focused on the LIBOR scandal and the fraud it exposes in the financial system.

Currently I am designing my lesson plans for a course I will soon be teaching on Money and Banking.  I hope my students will appreciate the crucial role of the financial system in our economy and daily lives.  along with the importance of the system  is the importance of integrity in the system.  If investors and borrowers do not trust the system, it will not function efficiently.  It will cease to be the engine of economic growth that has propelled the capitalistic markets to greatness.

In my view this issue reaches beyond the noble concern of fairness to the root of the capitalistic market as the premier system for improving economic growth and prosperity for citizens.  If the system is hijacked for the benefit of the few, we will end up no better than the people under the thumbs of the communist party in the USSR.  We will be serfs under the thumbs of Ivy League good ole boys.

Let's rally around the women and men who will stand up to power.  I am reminded of the old 60's civil rights motto "Speak truth to power".  I think this what the Occupy movement was meant to do.  I believe I have become what I wasn't in the 60s, a radical!   Perhaps, I have lived to see the world from different perspectives.  Oh what reflection one can do as one ages!  My husband once had a boss whose favorite line was, "I grow older constantly learning".  Thanks Dean!