Smart Links 12 September 2012

Commentary on the history of public debt, the problem with central banks and austerity, Russian rabbit hole, Germany bends, and David's economics.

With central banks long entered into new monetary no-person’s lands, a call for fiscal expansion despite high debt levels.

Financial Times -- Lessons from history on public debt
What happens if a large, high-income economy, burdened with high levels of debt and an overvalued, fixed exchange rate, attempts to lower the debt and regain competitiveness?

Quote worth quoting.

“So how did this commitment to fiscal famine and monetary necrophilia work? Badly.”


Financial Times -- Beware the ‘central bank put’ bubble
The Federal Reserve remains the best friend of many investors. It is among several key western central banks that are supporting asset prices not as an end in itself but as a means to promote growth and jobs.

Investors beware. (ed’s note: diversify, diversify, diversity, as in: Lear’s terrible revelation at Cordelia’s death: “Thou’lt come no more, / Never, never, never, never, never.” -- Act 5 Scene 3).

“Finally, investors should take with a pinch of salt the operational feasibility of maintaining a maximum “risk-on” position until the markets turn, then making a quick exit. It is an idea that risks sounding better in theory than it works in practice.”

Russian struggle.

New York Review of Books -- Russia: The New Struggle with Putin
Although they have gotten little attention in the Western press, the regional elections taking place throughout Russia on October 14 may be Vladimir Putin’s greatest test since his return to the presidency last spring.

Angela’s ashes.

Telegraph --  Angela Merkel recoils from Greek showdown on Spain contagion fears
Angela Merkel, the German chancellor, has stamped her seal of approval on Greece's austerity plan and vowed to stand by the country as "partner and friend", signalling almost certain approval for the next tranche of EU-IMF Troika aid.

David Suzuki's economics lesson.

Globe and Mail – David Suzuki Needs an Economics Refresher Course
Popular environmentalist David Suzuki has described conventional economics as a form of brain damage.


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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.