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November 17, 2014

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Latest Posts from Economist's View

Paul Krugman: When Government Succeeds

Posted: 17 Nov 2014 12:06 AM PST

Sometimes, government is the best solution:

When Government Succeeds, by Paul Krugman, Commentary, NY Times: The great American Ebola freakout of 2014 seems to be over. ...
When the freakout was at its peak, Ebola wasn't just a disease — it was a political metaphor. It was, specifically, held up by America's right wing as a symbol of government failure. ... Leading Republicans suggested ignoring everything we know about disease control and resorting to extreme measures like travel bans, while mocking claims that health officials knew what they were doing.
Guess what: Those officials actually did know what they were doing. The real lesson of the Ebola story is that sometimes public policy is succeeding even while partisans are screaming about failure. And it's not the only recent story along those lines.
Here's another: Remember Solyndra? It was a renewable-energy firm that borrowed money using Department of Energy guarantees, then went bust, costing the Treasury $528 million. And conservatives have pounded on that loss relentlessly... Last week the department revealed that the program that included Solyndra is, in fact, on track to return profits of $5 billion or more.
Then there's health reform. As usual, much of the national dialogue over the Affordable Care Act is being dominated by fake scandals drummed up by the enemies of reform. But if you look at the actual results so far, they're remarkably good. ...
One last item: Remember all the mockery of Obama administration assertions that budget deficits, which soared during the financial crisis, would come down as the economy recovered? ... Well,... the deficit has indeed come down rapidly...
The moral of these stories is ... that ... government-hating politicians can sometimes turn their predictions of failure into self-fulfilling prophecies, but when leaders want to make government work, they can.
And let's be clear: The government policies we're talking about here are hugely important. We need serious public health policy, not fear-mongering, to contain infectious disease. We need government action to promote renewable energy and fight climate change. Government programs are the only realistic answer for tens of millions of Americans who would otherwise be denied essential health care.
Conservatives want you to believe that while the goals of public programs on health, energy and more may be laudable, experience shows that such programs are doomed to failure. Don't believe them. Yes, sometimes government officials, being human, get things wrong. But we're actually surrounded by examples of government success, which they don't want you to notice.

Links for 11-17 -14

Posted: 17 Nov 2014 12:06 AM PST

'The Real Scientific Study of the Distribution of Wealth Has, We Must Confess, Scarcely Begun as Yet'

Posted: 16 Nov 2014 09:45 AM PST

This is a small part of Irving Fisher's presidential address to the American Economic Association in 1919 (it is worth reading in its entirety, via Piketty's book and online notes):

Economists in Public Service: Annual Address of the President: ... The real scientific study of the distribution of wealth has, we must confess, scarcely begun as yet. The conventional academic study of the so-called theory of distribution into rent, interest, wages, and profits is only remotely related to the subject. This subject, the causes and cures for the actual distribution of capital and income among real persons, is one of the many now in need of our best efforts as scientific students of society. I shall here merely throw into the discussion a few tentative thoughts which seem to me to be now either completely overlooked or only dimly appreciated.
There are, I believe, two master keys to the distribution of wealth: the Inheritance system and the Profit system.
The practices which happen to be followed by men of great wealth in making wills is certainly the chief determinant of the distribution of their wealth after their death. Mr. Albert G. Coyle, one of my former students, has estimated that four-fifths of the one hundred and fifty or more fortunes in the United States having incomes of over $1,000,000 a year have been accumulating for two generations or more. It is interesting to observe that, although the formulae expressing distribution by Pareto's logarithmic law are similar for the United States and England, the number of wealthy men at the top is two and a quarter times as great, in proportion to population, in England as in the United States, presumably because the number of generations through which fortunes have been inherited are much greater there than here.
Yet the man who wills property does so without regard to its effect on the social distribution of wealth. In fact even from the private point of view careful thought is seldom bestowed on the solemn responsibility of bequeathing property. The ordinary millionaire capitalist about to leave this world forever cares less about what becomes of the fortune he leaves behind than we have been accustomed to assume. Contrary to a common opinion, he did not lay it up, at least not beyond a certain point, because of any wish to leave it to others. His accumulating motives were rather those of power, of self-expression, of hunting big game.
I believe that it is very bad public policy for the living to allow the dead so large and unregulated an influence over us. Even in the eye of the law there is no natural right, as is ordinarily falsely assumed, to will property. "The right of inheritance," says Chief Justice Coleridge of England, "a purely artificial right, has been at different times and in different countries very variously dealt with. The institution of private property rests only upon the general advantage." And again, Justice McKenna of the United States Supreme Court says: "The right to take property by devise or descent is the creature of the law and not a natural right-a privilege, and therefore the authority which confers it may impose conditions on it."
The disposal of property by will is thus simply a custom, one handed down to us from Ancient Rome. ...

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