Time for another Texas vs. California roundup!
Posts Tagged ‘waste’
While attention was focused on the Boston bombing, Gosnell, and gay marriage, Greece just got another bailout. This is in exchange for further “austerity.”
So Greece wants more money because it can’t even keep to its previous promises on its fake austerity goals.
Let me explain it once again: Real austerity is cutting spending until it matches incoming receipts. Not reducing the rate of deficit spending. Not raising taxes so politicians can continue to spend.
No country in the EU (at least outside the Baltics) has practiced real austerity. That Forbes piece on the Baltic nations includes a lot of good advice that EU nations are largely ignoring:
Don’t run up big debts. It is a lot easier to manage when things go bad if you aren’t overextended to start. Observed Rosenberg: “Estonia’s experience shows that prudent policies during the boom may not avoid a bust, but they can put the country into a better position to deal with shocks.”
Don’t engage in an orgy of “stimulus” spending. That will run up big debts without generating long-term growth. When budgets eventually are cut, as they will have to be, the economic loss and political pain will be even greater.
Make tough decisions early. People typically are ready to act after the crisis hits. In the case of Latvia, argued Asmussen, by acting swiftly “most of the required painful budgetary decisions could be passed before the so-called ‘adjustment fatigue’ kicked in.”
Maintain fiscal responsibility. Otherwise any progress will be transitory. Growth is the natural result of reform. Delaying reform exacerbates the problem while prematurely terminating reform short-circuits the recovery.
Emphasize budget cuts. Expansive and irresponsible public outlays usually contribute to economic crisis. Moreover, the state as well as citizens should sacrifice after a crash. The answer is to cut expansive and irresponsible public outlays. In fact, economists Alberto Alesina and Silvia Ardagna found that “spending cuts are much more effective than tax increases in stabilizing the debt and avoiding economic downturns. In fact, we uncover several episodes in which spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.”
Finally, don’t rest on one’s laurels. There always is more to do. Even nations which have implemented serious reform programs, like the Baltic States, could make further improvements.
As far as I can tell, none of the core EU states (and certainly none of the PIIGS) has tried this approach since the 2008 recession hit. They keep trying Neo-Keynesian pump-priming and deficit spending to keep both the Euro and their unsustainable welfare state float, and they keep experiencing endless recession. Their fake austerity comes in slightly reducing the amount of their deficit spending enough to pretend they’re in compliance to keep the bailouts coming. Ireland hasn’t practiced real austerity. Neither has Portugal, Spain, or Italy (though Italy has come closest).
The shell game of bailouts and fake austerity will continue as long as the Eurocrats can keep getting away with it.
Instead of going out and doing the heavy lifting myself on a Texas vs. California update, Victor Davis Hanson [[Corrected. - LP]] has done another of his California is totally screwed pieces, and it’s a cornucopia of facts on California’s decline.
A few tidbits:
Read the whole thing.
Judging from the Fiscal Cliff votes, the United States appears to be eager to follow in the footsteps of Greece and California, rushing to unsustainable spending, crushing debt loads and inevitable bankruptcy, rather than following the lead of Texas and the Red State model of debt-free limited government and free enterprise. So let’s see where the two states are, shall we?
“Good afternoon, and welcome to the Lipsky Extreme Lobbying Seminar. And by ‘Extreme,’ I mean both our proven seminar methods and the profits you’ll be raking in after you get out of here.”
“Is that why we’re wearing the shock collars?”
“Got it in one! Immediate, painful correction is necessary for maximum learning in minimum time. You’ll learn more here in three hours than three years of law school. Now, on to the topic at hand: Emergency funding bills. Today’s example: the relief bill for Superstorm Sandy. Now, let me ask you bright boys and girls a question: What should go in an emergency relief bill. Mr. Smith?”
“Uh, emergency relief for victims of AGGGHHHHHHHHHHH!!!!!”
“Sorry, Mr. Smith, but Mr. Shock Collar says you’re mistaken. Anyone else? Mr. Dewey?”
“Whatever a lobbyist client pays for?”
“Ding ding ding! Correct on all counts! Now, can someone give me an example of an ideal item to put in an emergency spending bill? Mr. Smith?”
“Uh, $5 million for emergency power generAGGHHHHHHHHHH!”
“Sadly, it appears that Mr. Smith is a slow learner. Ms. Cheathum?”
“$150 million for Alaskan fisheries?”
“Correct! Mr. Howe?”
“$188 million for Amtrack?”
“Excellent! Mr Smith?”
“$20 million for tearing down flood damaged AGGGGGGHHHHHHHHHHH! Why does learning have to be so painful???”
“Pain is just stupidity leaving the body. Mr. Solitary?”
“$600 million for a global warming slush fund?”
“Brilliant! That’s thinking big! Mr. Smith, care to give it one last try?”
“$188 million for hurricane cleanAGGGHHHHHHHHHH I mean tunnels! Random tunnels!”
“I’m glad to see that my proven learning methods have finally gotten through to Mr. Smith. Class dismissed.”
I hope you’ve been enjoying your mythical Mayan Apocalypse.
But there’s a real, slow motion apocalypse that’s been going on all around you, and nobody is panicking about it, at least not in the open. I’m not talking specifically about the fiscal cliff, which is only a symptom of the problem rather than the problem itself.
The real apocalypse is out-of-control federal spending, and the tsunami of debt it’s creating. And I don’t feel “apocalypse” is too strong a word. Excessive debt destroys economies. When the money printing presses run unchecked for years on end, hyperinflation is the inevitable result.
The only reason we’re not suffering from hyperinflation right now is that Europe is sucking worse than we are. The Spanish economy is failing. The Greek economy has already failed. Were it not for that, it’s likely our huge budget deficits and the Fed’s printing presses would have already caused the Euro to replace the dollar as the world’s reserve currency. And, as Mark Steyn is fond of pointing out, Germany’s economy is big enough to bail out Greece and Spain. No one’s economy is big enough to bail us out.
Obama and the Democratic Party has wagered our future on the proposition that they can run trillion dollar deficits for years on end without destroying the value of the American dollar. If they’re right, they deserve to win, since everything we know about economics is wrong, and we can just print dollars until we’re all rich.
But the fundamental laws of economics haven’t been repealed. A reckoning is coming, and it’s going to destroy savings, economies and lives. And professional politicians, the Democratic Party, lobbyists and their mainstream media enablers would prefer to talk about anything else but the looming catastrophe. No wonder they want to talk about gun control and “the war on women.” Anything to keep the con game going until they’ve sucked the body politics dry. Just keep that deficit spending heroin coming.
The only question about that reckoning is exactly when it’s coming, and exactly how bad it will be. If we’re lucky, it will only be as bad as Argentina 2001. If we’re not, then we’re talking Weimer Germany 1921-23.
This was supposed to go up last night, but there was a glitch. Ten hours late sounds about right for California…
With the election less than two weeks away, time for a roundup of how the champions of their respective political models (Texas for Red States and California for Blue States) are doing:
The total personal income (TPI) in Texas reached $1.07 trillion dollars in the second quarter of this year, according to the U.S. Bureau of Economic Analysis. That’s an increase of 71 percent from the state’s corresponding total 10 years earlier, $626.7 billion.
Here’s another way of looking at it: Texas accounted for 8.02 percent of the nation’s TPI this year, up 1.10 percentage points from 6.92 percent in 2002.
That’s nearly five times larger than the runner-up, Florida, which increased its share of national TPI by 0.23 points in a decade. Just four other states registered gains better than a tenth of a point.
(Hat tips for many Texas items: WILLisms’ Twitter feed.)
Looks like California has done such a good dog of screwing the pooch that I may have to start doing these roundups weekly: