"Government is always oppressive and should be abolished."

[Mikerotch]

On the advice of my dear friend on the Left Coast, Bill Mc., I have started this thread with hopes of dealing with all my anti-government "issues". I am asking for your help, so if any of you can name any government entity that does anything at all well, and at a somewhat reasonable cost, I might add, please let me know. I will concede up front the military has done an admirable job of keeping away most enemies, although the cost aspect of their endeavors is highly suspect. But for purposes of this thread, allow me to concede our military, as I am compelled to respect those in uniform, even though the commander in chief is a Nation Building, Imperialistic, Socialistic, Constitution Trashing, Big Spending Facist whom I have very little use for.

Mikerotch, Beginning The Healing Process

[Wayward Son]

People being what they are, I think government is a necessary evil. I like the constitutional one the framers set up just fine, it'd be great if we could try living under it sometime while I'm still alive.

As for what govt does well, outside of the military there's not that much that comes to mind. And the military contributes to the waste factor through a variety of means. Still, I don't want a 2nd best military & if some waste is part of the cost I can handle that.

[Bill McIntyre]

I object to your sig line. You know damn well that I suggested that you start a thread with that title if you wanted to get it off your chest, but its dishonest to imply that those words express my opinion.

[jackpine savage]

National Institute of Health to name just one government body that does a remarkable job.

[jackpine savage]

National Science Foundation is another government body doing a great job as well as the Library of Congress.

[Steel Shootin']

I object to your sig line. You know damn well that I suggested that you start a thread with that title if you wanted to get it off your chest, but its dishonest to imply that those words express my opinion.

Bill, I didnt' read it that way. He said, "I have started this thread with hopes of dealing with all my anti-government "issues".

He didn't imply anywhere that it was your opinion, just that you suggested that he might start the thread (which you conceed).

[Steel Shootin']

People being what they are, I think government is a necessary evil. I like the constitutional one the framers set up just fine, it'd be great if we could try living under it sometime while I'm still alive.

As for what govt does well, outside of the military there's not that much that comes to mind. And the military contributes to the waste factor through a variety of means. Still, I don't want a 2nd best military & if some waste is part of the cost I can handle that.

:toast:

[chuam]

Bill, I didnt' read it that way. He said, "I have started this thread with hopes of dealing with all my anti-government "issues".

He didn't imply anywhere that it was your opinion, just that you suggested that he might start the thread (which you conceed).

Scott, read Mike's signature line.

NASA is a pretty good govt. agency along with NOAA.

[Mikerotch]

I object to your sig line. You know damn well that I suggested that you start a thread with that title if you wanted to get it off your chest, but its dishonest to imply that those words express my opinion.

I apologize Bill. Forgive me, but I just couldn't resist putting such an eloquent phrase in quotes on your behalf after you said it. For any who don't know, Bill did not express such as his opinion.

Mikerotch, Apologetic To His Favorite Left Coaster

[Bill McIntyre]

How about the justice system, law enforcement, and fire protection. Its a real stretch to see those functions handled by the private market.

[Mikerotch]

National Institute of Health to name just one government body that does a remarkable job.

Correct me if I'm wrong, but I can't think of a single cure that has ever come out of the NIH. If so, I can guarantee the value of said cure pales in comparison to the cost associated. Latest figures I could find were
$ 28,000,000,000.00 for 2005. Something tells me the private sector could have made better use of those confiscated funds.

Mikerotch, No Fan Of The NIH

[Mikerotch]

How about the justice system, law enforcement, and fire protection. Its a real stretch to see those functions handled by the private market.

Bill, I must grant that these are probably legitimate governmental functions, even for most diehard Libertarians. I can not; however, say that they are executed at all proficiently. With regard to justice, simply look at today's headlines. Democrats are pursuing the A G's head (and probably rightfully so ) for the alleged political firing of U. S. Attorneys. If, in fact, they were fired for the alleged reasons, and I don't doubt it, then how in the world can we ever expect such a system to function correctly? Same with Law Enforcement. The FBI and others are taking the ball known as the Patriot Act and destroying our Civil Liberties. Not that all those rank and file FBI guys are bad, but any government system is destined to end up fubar. The best of the bunch you named is no doubt the fire protection guys, but I dare say that it is because the vast majority are under local control and are thus somewhat better managed. I do not at this time know of a better free market system for justice, fire protection, law enforcement, or roads. There are some fairly convincing arguments made for private roads, but I am a little ways from drinking the private roads koolaid.

Mikerotch, Still Looking For Nonessential Well Run Government Programs

[jackpine savage]

the NIH funds a huge amount of medical research in our university systems. The private sector also does a pretty poor job in basic scientific research in comparison to the amount of government funded research being done in our nations universities. Another one for the list, the public university system. While there are amazing private universities, Berkeley, U-Virginia, U-Texas, UCLA, Michigan, etc are all state universities and are world class

[jackpine savage]

http://nihroadmap.nih.gov/molecularlibraries/fundedresearch.asp
That link will direct you to an index of research that as funded through the NIH. Scientific research isn't always about discovering the miracle cure for cancer. For that to happen someone has to research the basic functions of a cell, the cancer discovery takes that and other research and builds upon it. Would you rather have the privae sector fund research and not share what the results are with other scientists. That is what is happening in the pharmacuetical industry. Government funded research is opn access so that the results can be built upon by other researchers through our nation and the world.

[Mikerotch]

NASA is a pretty good govt. agency

It's great until you look at the benefit/cost side of things.
The National Aeronautics and Space Administration (NASA)has a requested 2007 budget of almost $17 billion. The government agency has spent close to $150 billion dollars simply on the shuttle program, which calculates to about $1.3 billion per launch. This is a decent sum considering that the space shuttle program was sold to the taxpayers as only costing $5.5 million per launch. $ 1,300,000,000.00 divided by $5,500,000.00 Thats $ 236.00 for every $1.00 estimated. ( Not counting all the dead astronauts ) My family's share of the cost for this year is approx $ 300.00 if I did the math right. We could buy a nice telescope for that. Or a good start on a new Wong.

Mikerotch, Says NASA Is Winging On My Wong

[Wayward Son]

The early years of NASA we actually did get a pretty good deal for our money. Through the 60's & early 70's, it cost an avg on $0.05 per taxpayer per day to fund.

When I think of all the technology & medical breakthroughs that poured into society as direct result of solving problems for those missions, it's not a bad return at all. Micro circuitry, telemetry, all sorts of diagnostic & surgical procedures, communications, etc. Everything they comes up with goes into the public domain so private sector businesses can turn it into products & the results of that have had an impact in just about all aspects of our lives.

But I have not seen anything that quantifies the expenditures & looks at the benefits since we ended the old Apollo missions & started with the shuttle program, so I have no idea how the later era compares to the earlier one.

[Bill McIntyre]

I do not at this time know of a better free market system for justice, fire protection, law enforcement, or roads. There are some fairly convincing arguments made for private roads, but I am a little ways from drinking the private roads koolaid.


Well I'll be damned. I was tempted to add roads to my list, but I held back in the first round.

Now that you concede that there are actually a few functions for government, I think I'll retire from the field.

[Mikerotch]

the NIH funds a huge amount of medical research

Patently wrong. The taxpaying citizens fund. Just like fish research, global warming research, or any other government research, only those willing to research in certain directions are funded. Many may be on to something, but no doubt many are not. It is an inefficient means by which to fund. Not to mention, from a freedom perspective, we loose control over what gets funded by our money. You may prefer cancer research, I may prefer aids research, but some bcrat decides on funding heartburn research.

Mikerotch, Opposed To Taxpayer Subsidized Heartburn Research

[Mikerotch]

Now that you concede that there are actually a few functions for government, I think I'll retire from the field.

Bill, for what it's worth, I have never said that there aren't some legitimate government functions. Nor have I ever said I was diametrically opposed to paying taxes. That being said, the government has an inate ability to do everything poorly, even those functions that are legitimate. It is not the fault of those who work there necessarily, it's the nature of the beast. That is why I oppose government involvement in anything outside the essentials. There may be some benefit to some things the government has done over the years, but in those rare cases I would still suggest that if all the unknown costs were known, the cost would exceed the benefit. Please don't retire, a thread without Bill Mc. is like a bun with no weiner.

Mikerotch, Advocate Of Each Bun Having A Weiner

P.S. Read the drunk driving piece yet ?

[jackpine savage]

The government is the people. If you want to change anything change how Americans feel about their government. The government isn't the problem, its the apathy of the American people that is the problem. I trust the will of the people of your free market that isn't answerable to the needs of the people. Remember their is a difference between the needs of the people and the needs of the marketplace.

[firefyterx]

The government is the problem, or at least those in the government that think we are too ignorant to run our own lives. Many of the laws and programs assume that we are too stupid to care for our selves. They also seem to reward people who are unwilling to work, or aren't worth their paycheck. I'm sick and tired of paying taxes to support women with 5 kids from 5 different men or guys who are of able body but just unwilling to work. I don't have a problem with special needs kids or educating unwed mothers so they can support them selves. But in order to recieve aid the need to show some responsibility and the will to better them selves, The will to change, the will to succeed. I'm sick of an open checkbook to support every pork project that comes down the road, the add ons that turn a good bill to a bad bill just to help assure some fat assed senator get reelected. That goes for either party. I 'm sick of presidents who don't just veto these bad bill and tell them to send them back without the pork. That includes our present leadership. Besides national defense and infrastructure I'm not sure the government can do anything than the private sector. :rant:

[Bill McIntyre]

fyerfyterx,

Have you heard anything about the welfare reform act of 1996?

According to the Department of Health and Human Services, welfare reform helped to move 4.7 million Americans from welfare dependency to self-sufficiency within three years of enactment, and the number of welfare caseloads has declined by 54% since 1996.

It sounds like you memorized a script.

[NOTANX]

. Micro circuitry, telemetry, all sorts of diagnostic & surgical procedures, communications, etc. .
you forgot that cool spongie matress. :thumps:

[mnguy]

you forgot that cool spongie matress. :thumps:

And Tang. Mmmmmm Tang :thumps:

[bikewrench]

And Tang. Mmmmmm Tang :thumps:
Don't forget adult diapers.

[Steel Shootin']

Scott, read Mike's signature line.

Sorry about that, Bill. Didn't see the sig line.

Anyway, as far as Mike's beef, I think it would help to distinguish between State and Federal Government. I would personally like to see the Federal Government stay out of issues reserved to the States. They don't do that, however. State's Rights is supposed to be a plank of the Republican Platform, but the current President has infringed at every opportunity, which has many Republicans fuming.

Mike, if everything were privatized, you would still have to have government agencies to oversee and regulate the companies providing the services. Total de-regulation would result in wide-spread fraud and corropution. Hell, it already has, even with regulation.

[Mikerotch]

Remember their is a difference between the needs of the people and the needs of the marketplace.

?

Mikerotch, ?

[JLittle44]

I have been to more than twenty different county clerks offices in Texas over the years. They are incredibly well organized and efficient. Those little old gray haired ladies know how to keep shit straight.

At least that's the way it was until the attorney general started f'ng up everything.

http://www.davickservices.com/tx_ag_opinion.htm

[gumshoe]

I'd be pretty content if the main role of the Federal Government was to protect Americans from foreign enemies.

[Mikerotch]

I think it would help to distinguish between State and Federal Government.

I agree. The federal government seems to be more inefficient and out of touch with reality than state governments are, which is quite an accomplishment.

Mike, if everything were privatized, you would still have to have government agencies to oversee and regulate the companies providing the services. Total de-regulation would result in wide-spread fraud and corropution. Hell, it already has, even with regulation.

There will always be fraud and corruption, it is one of the inescapable results of the nature of man. Free markets are the best tool for keeping this problem in check. Government, via the judicial system, would still have the obligation to protect our private property rights when someone violates said property rights. Adding a second layer of fraudulent and corrupt government officials to "regulate" and /or "oversee" only exascerbates the problem.

Mikerotch, Anti-regulation To The Core

[Mikerotch]

And Tang. Mmmmmm Tang

Although made popular by NASA, Tang was created by General Foods Corporation, a private sector entity.

you forgot that cool spongie matress.

Tempur-Pedic, another private sector entity.

I can't remember exactly who began the micro circuitry thing, but it was well on its way prior to NASA. NASA did probably speed up the manufacture of such, since they probably paid many times what the initial market would have paid.

Mikerotch, Still Searching For Government Value

[JLittle44]

What about that pen that works upside down and Teflon? Didn't NASA fund some of the R&D or contract production?

Favorite movie quote regarding NASA:
You know we're sitting on four million pounds of fuel, one nuclear weapon and a thing that has 270,000 moving parts built by the lowest bidder. Makes you feel good, doesn't it?

[Mikerotch]

I have been to more than twenty different county clerks offices in Texas over the years. They are incredibly well organized and efficient. Those little old gray haired ladies know how to keep shit straight.

Those little one person entities tend to do a pretty good job of whatever it is they do, but it is only if they are kept small so that the bcracy and politics don't begin to manifest themselves. Once it starts, there is no force known to man that can reign them back in. Example : Today's local paper headline regarding the Federal Department Of Labor's Office of Occupational Safety and Health Administration has a "news release" that they are "proposing" a
$ 65,500.00 fine for the local mobile home plant. There is no possible way that the employees of this entity will benefit from these bcrats, in effect, writing themselves a check out of this company's account. Less capital will make it more difficult to keep their plant "safe" as upgrades and safety supplies will now be harder to afford. Meanwhile, the offenses include all kinds of hazardous items like poor "documentation" of various crap.

Mikerotch, Antioshaite

[Mikerotch]

Didn't NASA fund some of the R&D or contract production?

Taxpayers have funded it all. In order for any government entity to "fund" something, there must be a corresponding "defunding" of private individuals.
Here is where the rub is. In order to spend a dollar, they must first take a dollar. That individual then looses control over his dollar and it is then not spent or saved as he desires, but how the thief (legislator) desires. Given the choice, most people, if not all, value other things in life greater than NASA. For those who would disagree, I would ask, "How much of your money have you voluntarily sent Nasa in the past 12 months?" Sort of like Bill Clinton thanking G.W. for his tax cut after G.W. was elected. He decried how it was unfair for people making his kind of money not to be paying more in. If he really believed he should pay more, he could have still written a check to the IRS for his "old" tax rate, I'm sure they would have gladly accepted it.

Mikerotch, Let NASA Supporters Support NASA, I Want A Wong Instead

[Bill McIntyre]

Anyway, as far as Mike's beef, I think it would help to distinguish between State and Federal Government. I would personally like to see the Federal Government stay out of issues reserved to the States.

That may be a good principle, but there are sometimes good reasons for the Federal Government to meddle in the state's business.

When I was stationed in Meridian. MS in the summer of 1964, three civil rights workers were murdered and the local sheriff helped set them up by calling the killers and letting them know when the guys were being released from jail. Local law enforcement was not about to do anything about the murders, but the FBI came in and found the bodies and found out who did it. Of course justice was still thwarted because juries composed of local people wouldn't bring convictions until decades later.

I realize this example is not about efficiency, but about times when the state can't be trusted to do its own business. President Eisenhower sending troops to integrate the high school in Little Rock is a similar example, although I suppose some of you won't agree that it should have been done.

[toecheese]

I'm a former military, lifelong republican- but from what I can tell in politics, there aren't any republicans left.

As far as government doing something well- compared to letting the people decide- watch Idiocracy. You're a libertarian because you're intelligent and can make smart decisions. People vote for more government because they "want someone to do something about X".

I'm amazed that people vote away their rights all the time.

The government should be about national defense- and it does it well. We have the most powerful military in the world- don't we do that well?

[Steel Shootin']

That may be a good principle, but there are sometimes good reasons for the Federal Government to meddle in the state's business.

When I was stationed in Meridian. MS in the summer of 1964, three civil rights workers were murdered and the local sheriff helped set them up by calling the killers and letting them know when the guys were being released from jail. Local law enforcement was not about to do anything about the murders, but the FBI came in and found the bodies and found out who did it. Of course justice was still thwarted because juries composed of local people wouldn't bring convictions until decades later.

I realize this example is not about efficiency, but about times when the state can't be trusted to do its own business. President Eisenhower sending troops to integrate the high school in Little Rock is a similar example, although I suppose some of you won't agree that it should have been done.

Yes, there are times when the Federal Government should be involved. But you are citing examples of the Federal Govt enforcing the United States Constitution in areas where they have jurisdiction. I am not saying the Federal Govt has no jurisdiction into the affairs of the individual states.

My point was that part and parcel of the Republican platform is to limit the Federal Govt's involvement in powers and rights reserved to States, and interfere only when constitutionally empowered to do so. Unfortunately, that has not happened.

[Steel Shootin']

I'm a former military, lifelong republican- but from what I can tell in politics, there aren't any republicans left.

As far as government doing something well- compared to letting the people decide- watch Idiocracy. You're a libertarian because you're intelligent and can make smart decisions. People vote for more government because they "want someone to do something about X".

I'm amazed that people vote away their rights all the time.

The government should be about national defense- and it does it well. We have the most powerful military in the world- don't we do that well?


Right on! :toast:

[peterv]

"That government is best which governs least."

Every law & government agency should have a regular sunset review.
If it isn't needed , or hasn't been effective, abolish it.

[Bill McIntyre]

"Giving money and power to government is like giving whiskey and car keys to teenage boys."
P.J. O'Rourke (1947 - )
U.S. Political Humorist

[jackpine savage]

http://www.davesite.com/webstation/net-history.shtml

Another program developed and funded by government research. Mike likes to say that the government didn't do this because it is the peoples money that is spent. Who do you think the government is but the people. For every dollar that the government taxes and spends that is wasteful there is a dollar that it takes and spends that helps out society. Social Security and Medicare are two government programs that have taken the elderly out of poverty. I am sure you will come up with how they are either wasteful or running out of funds but I didn't see the private sector coming to the assisstance of our society during the depression.

[JLittle44]

Mike likes to say that the government didn't do this because it is the peoples money that is spent.

This statement alone is important enough to bear further debate. If the government didn't spend the money, what would get done? I doubt seriously that we would have interstate highways. Tollways maybe, but no good public roads. How much research would be done? The american people are some of the most generous and empathetic people on the planet. But how much of your salary would you be willing to donate for public projects? More importantly, how much would your neighbor donate?

[Mikerotch]

"Giving money and power to government is like giving whiskey and car keys to teenage boys."

Damn, Bill, Saying stuff like that almost makes me teary-eyed.

Mikerotch, Almost Speechless

[Bill McIntyre]

Just thought I'd throw you a bone.

[Mikerotch]

I doubt seriously that we would have interstate highways. Tollways maybe, but no good public roads.

No retreading of previous concessions.

How much research would be done?

An amount equal to the demand. Unfortunately, there may be a decrease in the amount of research done regarding the sex habits of lesbian penguins.

Mikerotch, Lesbian Spearfisher

[Mikerotch]

Who do you think the government is but the people.

It is people, but not THE people. Primarily leaches, parasites, unproductive, check that, counterproductive idiots who believe they are better suited to spend our assets than we are. Most are about the business of taking away our rights and liberties for our own good, while forcing us to foot the bill.

Social Security and Medicare are two government programs that have taken the elderly out of poverty. I am sure you will come up with how they are either wasteful or running out of funds but I didn't see the private sector coming to the assisstance of our society during the depression.

Even many economists who would disagree with libertarian philosophy will acknowledge that government programs slowed the recovery from the great depression. While on that subject, the depression was the exclusive responsibility of our misdirected government policies. I would categorically disagree with the notion that SS and Medicare have "taken the elderly out of poverty", but to the extent they have, they have taken more resources out of the economy than they could ever put in. Might I suggest that if the goal is to make a case for government programs, pick something besides those two lest the big guns come out. For even a mildly armed conservative or Libertarian there is no easier target on earth than the boondoggles known as Social Security and Medicare.

Mikerotch, Advocate Of No Social Security Or Medicare

[Bill McIntyre]

Even many economists who would disagree with libertarian philosophy will acknowledge that government programs slowed the recovery from the great depression.

Could you be more specific? The text books I used are unanimous in stating that what got us out of the Great Depression was deficit spending on WWII. All that spending created jobs and put people to work. That, BTW, was a Keynesian solution, although Lord Keynes didn't advocate going to war as an antidote to dips in the business cycle. As I used to tell my students, it would have worked even better if we had used all that government spending on things like building an interstate highway system. This would have resulted in an increase in national capital rather than building things like planes and tanks and bullets that got left overseas.

One government policy that probably did slow the recovery was an attempt by FDR to raise taxes to balance the budget, but that was before the war overrode such concerns.

While on that subject, the depression was the exclusive responsibility of our misdirected government policies.

Agreed, but we learned from our mistakes. The depression is generally thought to have resulted from three big government mistakes.

First, we had a recession, with increased unemployment. But with no changes in the tax codes, recessions result in decreased tax revenues since unemployed people don't pay taxes. So the Hoover administration, thinking that the primary concern should be to balance the budget, raised taxes. This took more spending power out of the hands of the public, which purchased fewer goods and services, which in turn caused more people to be laid off, etc. etc. etc.

Second, the Fed really didn't know how to use its power to change the money supply and interest rates to dampen swings in the business cycle, and it let the money supply shrink drastically.

Third, with Americans out of work, we demanded protection from the output of foreign labor and Congress obliged by passing the Smoot Hawley Tariff Act of 1930, which imposed tax rates of up to 60% on 3200 imported goods and materials. In theory, there was a chance if might have worked, but of course our trading partners retaliated with tariffs of their own, and trade ground to a halt, slowing the entire world economy.

So government did make big mistakes, but now we know better. The Fed understands the uses and limits of changes in the money supply.

Economic advisors would caution the Congress against a big tax increase in the face of a recession, and its likely they would listen. Hell, the present mood is to cut taxes without regard to the swings of the business cycle.

And we generally realize the benefits of free trade, as evidenced by treaties like NAFTA.

If you doubt the value of government interference, I wish I could show you some slides showing the huge boom and bust swings of the economy when government did not engage in stabilization prior to WWII, contrasted with the very mild swings since then when government has taken responsibility for stabilization. Is it perfect- hell no- but its so much better than it was before. There is always the problem that politics overrides good economic policy, and of course the last 7 years is a graphic example. But hopefully the next administration, no matter which party, will return to some concern for the good of the nation rather than the short term interests of fat cats.

In any event, there is no choice but for government to try. Leaving it to laissez faire never worked and never will.

I would categorically disagree with the notion that SS and Medicare have "taken the elderly out of poverty", but to the extent they have, they have taken more resources out of the economy than they could ever put in. Might I suggest that if the goal is to make a case for government programs, pick something besides those two lest the big guns come out. For even a mildly armed conservative or Libertarian there is no easier target on earth than the boondoggles known as Social Security and Medicare.


I disagree. The percentage of the elderly living below the poverty line has dramatically decreased since Social Security and Medicare. They sure need some fine tuning now that we live so much longer, but relatively moderate changes would fix Social Security.

But since you think they are such easy targets, give us the facts.

[jackpine savage]

I think we can all agree that there is quite a bit of governmental spending that is unneccesary. There are some very good government funded programs but for every one there is a $75 billion agricultural subsidy which is pork spending at its worst. They key is to eliminate the governmental subsidies to business, cut back on some of the unneccesary social programs that are federally mandated but can be done better by the state and local governments. I think there are some good things that the government has and is doing but there is a hell of a lot of waste out there too.

[Mikerotch]

Could you be more specific? The text books I used are unanimous in stating that what got us out of the Great Depression was deficit spending on WWII.

Allow me to quote someone whom I am no fan of, Ben Bernanke. At the very least, I would not call him a "free market" or Libertarian thinker, although there may be a few crumbs of free market economics in his thought process.
http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/default.htm

Granted, he is quoting some more "free market" philosophers, but he is confirming their conclusions. I will try and post some others later, when I have more time.

Mikerotch, Can't Believe I'm Quoting Bernanke

[Bill McIntyre]

First of all, you replied to my allegation that deficit spending was what got us OUT of the depression with a speech by Bernanke that talked about what got us INTO it.

As everyone here knows, in their Monetary History Friedman and Schwartz made the case that the economic collapse of 1929-33 was the product of the nation's monetary mechanism gone wrong. Contradicting the received wisdom at the time that they wrote, which held that money was a passive player in the events of the 1930s, Friedman and Schwartz argued that "the contraction is in fact a tragic testimonial to the importance of monetary forces [p. 300; all page references refer to Friedman and Schwartz, 1963]."

Second, in my list of three things generally believed to have caused the depression, I in fact listed the contraction of the money supply as one of them. That's what Bernanke is saying in that passage quoted above.

Bernanke was speaking on the 90th birthday of Milton Friedman, and Friedman is the head of the Monetarist school of economics, which says basically that the money supply is all that matters. Not everyone agrees with that fiscal policy is irrelevant, and I doubt that Bernanke completely agrees either, but he wasn't speaking in front of John Meynard Keynes- he was speaking in front of Friedman and honoring his work. Friedman's work was indeed important, but I think Bernanke is not quite so insensitive to quibble about the small stuff when he is asked to give a speech honoring Freidman.

I doubt many people reading that speech have the background to fully understand everything that Bernanke said, and even those probably won't want to wade through all of it. But lets look at his conclusion:

Conclusion
The brilliance of Friedman and Schwartz's work on the Great Depression is not simply the texture of the discussion or the coherence of the point of view. Their work was among the first to use history to address seriously the issues of cause and effect in a complex economic system, the problem of identification. Perhaps no single one of their "natural experiments" alone is convincing; but together, and enhanced by the subsequent research of dozens of scholars, they make a powerful case indeed.

For practical central bankers, among which I now count myself, Friedman and Schwartz's analysis leaves many lessons. What I take from their work is the idea that monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Note this statement

"Perhaps no single one of their "natural experiments" alone is convincing; but together, and enhanced by the subsequent research of dozens of scholars, they make a powerful case indeed."

So he said that no one study was conclusive, but together they make a good case, and subsequent research has tended to back it up. No one disputes that monetary policy is extremely important, but the question is whether fiscal policy also matters. Note that he didn't say "a conclusive case" but instead said "a powerful case." Again, he wasn't asked to give a speech at the birthday of John Meynard Keynes, so what would he be expected to say?

"The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation."

Well no shit. Bernanke happens to be our central banker. Our central bank (the Fed) has no other function but to control the money supply, so its not surprising that he thinks that the money supply is important and that a stable monetary background is a good ideal. Hell, even the most rabid Keynesian would agree that a stable monetary background is important. Who the hell would want an unstable monetary background? Even advocates of fiscal policy would say that it doesn't stand much of a chance of influencing the economy if the monetary background is unstable.

I'm probably going to really make everyone's eyes glaze over, but Bernanke actually uses control of the money supply in a way that Friedman does not approve of. Since the Volker Fed uses a strict monetarist approach in the early 80s and caused back to back recessions, the Fed has gone back to a generally Keynesian approach to monetary policy. Friedman advocates restricting the Feds license to controlling money so that it grows at the long run growth rate of the economy- maybe 3% per year, no matter what the state of the economy. But the Keynesian idea is that during recessions, the Fed should loosen up and let the money supply grown faster, and during booms with accompanying inflation, they should let it grow slower. Friedman counters that its that stop and go monetary policy that causes the business cycle in the first place rather than moderating it. But I digress. The main point is that while honoring Friedman's contribution, Bernanke's Fed is not entirely adhering to his theory of how money should be controlled. Friedman would call the present regime of monetary policy an "unstable background."

If anyone is still awake, you gave me a speech that addressed the cause of the depression in response to my statement about what got us out of it. And I had already said that improper monetary policy was a major contributor, but also stated that there were two other major contributors.

Edit- just in case there is someone who isn't screaming for mercy, I have an afterthought. You might ask how it could be that overly tight monetary policy was what caused the depression, but loose fiscal policy (taxes and spending) is what got us out. The answer is usually put this way- its easier to pull on string than push on one. That translates to mean that if you shrink the money supply and drive up the cost of money (interest rates), you will indeed make it too expensive for business to borrow money to expand capacity, make it too expensive for consumers to borrow money to buy houses or cars, etc. So you can cool off a boom with tight money. But if you have 25% unemployment as in the depression, you can create all the money you want and drive interest rates down almost to zero, but banks still aren't going to make loans to businesses and individuals who don't have the prospects to repay the loan. A more modern example was in the Japanese economy where interest rates were almost zero, but the recession still went on for years.

But if government buys a lot of stuff, be it defense goods, highways, or whatever, people get hired to produce the stuff, and we get out of the recession or depression.

End of economic lecture, I promise (at least until he gives me something else to work with).

[Mikerotch]

As I understand the problem, and if you look through Bernanke's speech, there are numerous actions taken from 1929-1933 that are, at least in their minds, problematic. All of these are after the crash, thus it appears, as I understand the problems, to contribute to the slow rebound. Perhaps I am stepping out into areas that I am certainly no expert in, but I lump actions of the Fed in the category of actions of government, as I see them as anything but a "Free Market" entity. I can not for the life of me, understand how the "Fed" system is in the best interests of this nation.

Mikerotch, Slightly Glazed

[Bill McIntyre]

As I understand the problem, and if you look through Bernanke's speech, there are numerous actions taken from 1929-1933 that are, at least in their minds, problematic. All of these are after the crash, thus it appears, as I understand the problems, to contribute to the slow rebound.

It sounds as if you are making a mistake common to many- that the stock market crash was the depression. It got the ball rolling, but it was not the depression or even a major contributer. It was all the actions of the government after the crash that really drove the economy downhill.

And yes, in a way I'm making your argument that government is the problem, but I also said that economists learned from those errors and we can do better now. And there are also the wild swings of the economy in the past to show how poorly it was going when the government used a hands-off policy.

Perhaps I am stepping out into areas that I am certainly no expert in, but I lump actions of the Fed in the category of actions of government, as I see them as anything but a "Free Market" entity. I can not for the life of me, understand how the "Fed" system is in the best interests of this nation.


I guess we have totally different understanding of the functions of the Fed, but after teaching economics for 20 years, I can't for the life of me understand how the nation could get along without it. All developed nations have central banks, and while they may differ in the small stuff in terms of which economic theory of money is being used, a modern economy couldn't get along without them.

Prior to the Fed's creation, any bank in the country could create as much money as it wanted simply by making loans, and chaos ruled.

[Bill McIntyre]

My econ lecture seemed to have killed the thread, but it reminded me of some other things that government does well, or at least better than other alternatives.

Prior to the Federal Reserve Act of 1913, banks frequently failed, and if you had deposits in a bank that failed, you lost it. That was not only bad for depositors, but bad for the economy since bank deposits are the largest portion of the money supply.

The Federal Reserve Act was supposed to solve the problem because the Fed would set reserve requirements for banks, meaning a percentage of deposits that had to be held in reserve rather than being used for loans. (That is an oversimplification, but I don't think you want the entire lecture).

It still didn't solve the problem. Lets say that the reserve requirement is 20%. Then rumors get around town that the bank management is making very poor loans that are likely to be written off, so a "run on the bank" ensues, with all the depositors trying to withdraw their money. Only 20% of the money is there, and the rest are out of luck. Even if the loans are very sound, the bank can't get me to pay off my 30 year mortgage, for instance, instantly so that they can pay off depositors, so the bank fails due to what is called a liquidity crisis.

So what solved the problem was creation of the Federal Deposit Insurance Corporation, a government entity that collects premiums that are a tiny percentage of insured deposits to create a fund that can pay off depositors if a bank fails. This gave the public confidence in the banking system, so people were willing to put money in banks, and banks in turn had money to loan to help build the economy.

You might say that the banks could have banded together and done this voluntarily, but the fact is that they had not. Government meddling is what turned the tide.

Just in case you think that proves that the Fed is unnecessary- it doesn't, but that is another lecture.

[mcjaret]

As a former Adjunct Professor of Economics, I generally concur with Bill's lecture. Still, in regards to the effects of WWII spending on the economy being less powerful than purely domestic spending, does your analysis fully allow for the exceptionally competitive position blowing industires in Europe and the far east to hell and gone left the US in after the war? We had a pretty good 20 year run after that.

Things the Government does well, or at least important things that wouldn't likely get done otherwise:

1. National Defense

2. Police protection against violent felonies

3. A civil justice system that allows individuals and business to resolve conflicts without resort to violence

4. Major highways

5. A relatively stable monetary system that facilitates trade

6. International trade and treaties (Just because we decided we didn't ned a government doesn't mean everyone else on earth would agree)

7. Some sort of social safety net (My libertarian brothers may crucify me for this, but I've been to countries where children are allowed to starve on the streets. I've seen mothers prostitute their 13 yr-old daughters for a can of dog food and I don't want to see that ever again. We can argue over the shape, scope, qualifications and even penalties for the parents -- forced sterilization, work houses? -- but we have to take care of the weakest and most vunerable amongst us.)

[Mikerotch]

Just in case you think that proves that the Fed is unnecessary- it doesn't, but that is another lecture.

Not to beat the Fed horse anymore, but one last shot. The problem with the government involving itself with the daily business of people, is that once it starts, there generally is no end. For example, the problem with bank runs certainly needed a fix, but once Big Brother jumps in, there generally is no room for the market to respond. Regulations generally forbid it or make it practically forbidden and funds that would have been available are no longer there as they get sucked into the blackhole of government coffers. This seems to me at least, to apply to every area that they involve themselves in, including, but not limited to: employee safety, unemployment, poverty, education, housing, healthcare, parks, recreation, drug addiction, labor relations, urban problems, food, drugs, sanitation, vehicle design, mileage standards, emissions, wage issues, toilet water flushing limits, mattress labeling, pillow labeling, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on, and on.

Mikerotch, Tired

[Mikerotch]

My libertarian brothers may crucify me for this

Your cross is under construction.
Give us the 60% of our earnings currently taken, coupled with the undisputed generosity of the American people, and give us a stab at it. According to Jesus, we will always have the poor, but I would bet my life, literally, we would have far less.

Mikerotch, Acme Cross Builders, Could We Help You ?

[Bill McIntyre]

Not to beat the Fed horse anymore, but one last shot. The problem with the government involving itself with the daily business of people, is that once it starts, there generally is no end.

Gimme a break. Would you say the same thing about national defense- its a foot in the door, and then there is no end to government meddling?

I don't want to say that you are not totally educated on this matter, but I wonder if you really understand this Fed that you are bitching about. Very few people have any idea what the Fed Funds rate is, how the Fed makes the rate hit its target though Open Market Operations, what the hell Open Market Operations even means or how it works, or what the Fed was saying yesterday when the latest Open Market Committee meeting ended. I wouldn't know what this stuff meant if I hadn't had to teach it for 20 years.

(I'll be happy to explain all that, but then it might shut down this thread for good.)

A central bank is essential to the health of our economy, and to try to equate it to toilet flush limits or mattress labeling shows that you either don't have much understanding of the importance of a stable money supply, or that you do understand but are not being honest. Argue about OSHA, product labeling, etc. if you want, but don't try to say that they are a natural outgrowth of the Fed.

[mcjaret]

In Kenya, I saw a man lying in the sidewalk with a bowl. Being a beggar there is an honorable profession and his family had apparently decided to give him a leg up in life. Each of his legs, below the knees had 2 right angle bends fused in the bone and his ankles were rotated another 90 degrees for good measure. I gave him some money, but had to think "how bad does life have to be for you to do something like that to your child?" I didn't notice any place on earth where people didn't love their chiildren and hope for good things for them, so it must have seemed like a good idea at the time. Generosity only goes so far. Like I said, somethings I want to be sure I don't see here.

Before I get attacked with a reduction to the extreme argument (no, I am not a communist or a democrat), I am not saying the current government or system is perfect, efficient, or even desirable. I am saying we do, like it or not, have to keep some government structure around for limited functions.

Frank, the Realist!

God loves the poor. Why else would he have made so many of them?

[Bill McIntyre]

As a former Adjunct Professor of Economics, I generally concur with Bill's lecture. Still, in regards to the effects of WWII spending on the economy being less powerful than purely domestic spending, does your analysis fully allow for the exceptionally competitive position blowing industires in Europe and the far east to hell and gone left the US in after the war? We had a pretty good 20 year run after that.



I can't argue with you about the post war boom. I was confining myself to what broke the depression. In Keynesian terms, the economy had settled into a high unemployment equilibrium, with no forces to break us out in the near term. In the long run, every piece of machinery in the country would have eventually broken down and needed to be replaced, every roof would have leaked and needed to be repaired, etc. and finally jobs would have been created to build new machines, repair or replace roofs, etc. But as Keynes famously said, "in the long run we'll all be dead" so maybe we need to focus on the short turn. His prescription would be massive government spending without raising taxes to pay for it, the idea being that if we raised taxes, personal or business spending would fall and offset the increased government spending.

Keyes had caught on a bit in academia, but its not as if government willingly started massive deficit spending because it had read his work. The Japanese and Germans forced us into a Keynesian fix even though didn't do it for that reason. Our survival dictated massive defense spending and we created jobs like never before or never since. The unemployment rate hit an all time low of 1.2% in 1944.

This is what lead to the Communist rap on us that said capitalist economies needed wars to be successful. But as I said in an earlier post, it would have worked even better if government had spent the money on building the interstate highway system, building levees around New Orleans, building airports, or whatever your public works project of choice may be. We would have broken the depression, but been left with things that amounted to national capital that enhanced our ability to produce and transport goods.

[Wayward Son]

We also would not have dealt with the problems of nazi Germany & Imperial Japan. I kinda doubt they would have just ceased being a problem on their own.

[Mikerotch]

Gimme a break. Would you say the same thing about national defense- its a foot in the door, and then there is no end to government meddling?

As Reagan used to say, "there he goes again". If you bothered to read the initial post, I conceded national defense as a legitimate government function. I also conceded several other activities. Allow me simply to say that I am no fan of the Fed, and I am no expert on the Fed. One must not know 100 % of the facts regarding an issue to make a decision as to whether or not you are a fan. I need not know 100 % of the activities of the Department of Labor in order to oppose their existence. In any event, even if the Fed is the greatest thing since sliced bread, it is a mere blip on the screen of Federal stupidity. And MC, not even a diehard Libertarian like myself is opposed to the government performing limited functions, but in each case that I see where they are outside of those powers enumerated in the constitution, the result is, as far as I can see, somewhere on the scale from counterproductive to disastrous. I have yet to see any example of government meddling named that is even slightly "successful" in the sense that its cost is not outrageously higher than its "benefit".
Meanwhile, the tragedies in Africa are far worse in the countries where liberty and private property rights are least regarded.

Mikerotch, Liberty And Private Property Advocate

[Bill McIntyre]

As Reagan used to say, "there he goes again". If you bothered to read the initial post, I conceded national defense as a legitimate government function. I also conceded several other activities.

I did indeed read that and remembered it. But then you started a sentence with the Fed and went on to imply that it was the first step toward labeling of pillows, and that was what prompted my reply.

[mcjaret]

Of course, having millions of young men in uniform did a little towards lowering the unemployment rate. And we did tranform the industrial expansion we made during the war (building planes, tanks, trucks, ships, metals, plastics, etc.) towards pent up civilian demand after the war. It wasn't all wasted. Many current airports were built as military training facilities during the war. The interstate highway system was designed for national defense. Frozen orange juice was devised to get vit c to the troops in the Pacific and has been a staple ever since.

Additionally, tax rates combined with bond drives did amount to fairly heavy taxation during the war. This by itself would have inhibited the recovery, but the overall expenditure exceeded the drag many times over. Still, without the unifying factor of total war, it would have proved difficult to rally the people behind a similar effort and government controls no matter what the possible result. We still would have emerged from the depression eventually just not as quickly or robustly.

Querry: If Roosevelt had kept his campaign pledge of 1940 and kept us out of the war and we had just kept manufacturing and selling products to the warring parties, would we have done better? We did come out of the depression as the "arsenal of democracy" before we actually started fighting.