Robert A. Weigand

Why Economic Dogma Threatens Our Future Prosperity

Elevate your level of reading up to my level of writing -- Reagan is not blamed for the tech bubble, loose lending standards, etc., it's our tendency to inaccurately weight information ("it's the greatest bull market of all time!") that reinforces what we want to believe -- what we wish to be true -- that's cited as the cause of the bubbles.


On Jul 10 11:05 AM CautiousInvestor wrote:

> "One of the longest-lived and most pernicious problems is one of
> the least discussed — or even recognized. For example, this problem
> is responsible for many Americans' longstanding (and misguided) obsession
> with cutting taxes, which is the primary reason the federal debt
> has been allowed to explode out of control (and California is on
> the brink of bankruptcy). This problem fueled the market’s overvaluation
> in the 1990s, culminating in the infamous tech bubble. It lent a
> significant tailwind to the crazy lending standards and housing bubble
> that propped up the bull-market-that-wasn’t from 2003-2007, and the
> problem is still with us today, preventing us from clearly evaluating
> conditions in the economy and financial markets — particularly how
> we arrived at our current state of affairs
>
> The data are in, folks — $14 trillion of debt and counting — the
> fictional Arthur Laffer “tax-cuts-pay-for-them... narrative has been
> proven false beyond a shadow of a doubt. California tried its own
> version of this with Proposition 13 and they are on the brink of
> bankruptcy.
>
> It’s not unthinkable that our federal government could be in similar
> straights soon. If a household cannot escape this basic common sense,
> then neither can a business or a government — you have to pay your
> bills as they come due. You either raise taxes or cut spending, but
> you have to live with a balanced budget every year. But once Reagan’s
> minions got us believing that a different alchemy existed, hundreds
> of politicians have reinforced that dogma in their hollow campaign
> promises to the point where about a hundred million Americans now
> accept something false as true."
> ______________________...
>
> This author is somewhat paradoxical, capable of attributing all of
> our fiscal ills, the tech bubble and the housing bubble to Reagan,
> which is utter rubbish, while also making informed observations about
> today's market and the likley future.
>
> Like cognition, budgets have two sides: the income side and the spending
> side. Had we been genuinely concerned about federal, state and local
> deficits we would have contained spending, something politicians
> are loathe to do. By nature, politicians are predisposed to spend
> in the mistaken belief that they can allocate resources better than
> either the market or the source of income.
>
> After we cut through the psycho babble, the author makes a couple
> of interesting observations about big business, healthcare and lobbyists.
> He fails to connect the dots, though, and does not state the obvious:
> were government less involved in micro managing various industries
> through complex rules, regulations and tax exemptions we would have,
> miracles of all miracles, fewer lobbyists. Intrusion of the government
> in business is a welcome mat for lobbyists.
>
> I also happen to agree with his outlook for the future and his assessment
> that we are constantly fed a diet of economic pablum by mainstream
> media because of inherent conflicts of interest owing to ownership
> and sponsorship issues. The most egregious example of this is CNBC
> which is owned by General Electric. Not only has GE received $billions
> of TARP funds but it also stands to benefit from development of infrastructure
> and alternative energy.
>