Tag: Matthew Yglesias

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free trade & free markets ideological culture too much government

Their Solution Is Our Problem

J.D. Tuccille at Reason took on journalist Matthew Yglesias’s vox​.com video that I wrote about yesterday, focusing on Yglesias’s pooh-​poohing of the sheer size of the national debt. Tuccille noted that Yglesias under-​reported its humungosity, and that the Congressional Budget Office finds, counter to Pollyanna-​liberals, no small reason to worry about the ballooning debt.

But I’m still shaking my head that Yglesias really did argue the federal debt is no problem, because — get this! —  the Fed can always just print more money. 

We know! What he sees as a solution we see as a problem.

The modish government-​as-​savior view of society seems pure simplicity: major inputs and outputs — money supply, fiscal spending, debt, inflation — all of which liberal-​progressives will “expertly” adjust.

Fed this, no wonder people ask questions like “why haven’t we seen inflation, following the huge influxes of quantitative easing?” Well, it is not just about consumer prices, but investment prices, too, which we have long known to be more volatile than consumer goods; investments can easily suck up new money to create an unstable boom, which bursts.

The biggest problem for today’s market recovery — aside from subsidies and wage controls and all the folderol that directly discourage new jobs — is federal government irresponsibility itself (symbolized neatly by the federal debt) which signals to investors and other market participants that they cannot make viable long-​term plans.

Economist Robert Higgs called this effect “regime uncertainty.” It’s the uncertainty bred by bad policy.

Just the kind Yglesias and his comrades adore.

Fiddle with the economy’s dials, oh wise ones, and uncertainty seems a certain result.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets ideological culture too much government

Not a Problem?

Increasing public debt is bad for a number of reasons. Journalist Matthew Yglesias, speaking on vox​.com, gives voice to a very different, very Pollyannish perspective: “Debt is just not a problem right now,” he says.

Why?

“The U.S. can never run out of dollars.” After all, the Fed can just print more.

That’s not an uncommon view where I live, near the center of privilege, Washington, D.C.

The video starts with an instruction: “Stop freaking out about the debt.” It sports nifty, simple graphics and comforting music. Matt Yglesias sounds convinced himself.

Nothing he says convinces me. But I’ll concentrate just on the frank inflationism.

Yglesias mentions inflation. But it’s obvious he means CPI numbers, even though he offers the short-​hand “too much money chasing a fixed amount of stuff” definition to stand in for the “supply of money increasing faster than the demand for money” definition that I hear from competent economists.

But while he admits that price inflation can be a problem, what he is promoting is inflationism. That’s the doctrine that central bank fiddling with increases in the rate of money growth is the way to control the economy. And that it’s costless.

Like money cranks of the old days, he only sees the costs of not inflating the credit system.

It never enters into his ideologically-​driven thoughts that maybe artificially lowering interest rates fakes out investors and consumers, getting them to make bad investments that destabilize relative prices that, when they unravel, wreak havoc.

Inflationists are folks who are always trapped by the cure they prescribe. We’re left with boom-​bust forever and ever.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets too much government

Texas vs. No-​Growth Coasts

Governments must rely upon profitable businesses. Without them, government has next to nothing.

And yet “next to nothing” is what governments can do to best help businesses succeed.

Thank Texas Governor Rick Perry for these thoughts … and Matthew Yglesias, who commented on Perry’s recent “nuclear-​strength” video promotion, inviting businesses to leave places like New York and locate themselves in Texas, which has fewer regulations and no income tax. The ad claims Texas is “big for business.” Yglesias quibbles:

If New York was a terrible place to live, work, and do business, then it would be cheap to live in New York. But New York is not cheap. It’s not Detroit. It’s not even average. It’s, in fact, hellishly expensive. If New York emulated Texas and eliminated its income tax, rich people would bid up the finite supply of New York City land at an even more furious rate — the city wouldn’t see Houston or Dallas growth rates.

I’m no economist, but I have quibbles with Yglesias’s critique. New York is expensive, yes. But the cause of the expense isn’t just that people bid up housing and services. It’s expensive in no small part as a result of all those regulations, especially courtesy of one regulation in particular: rent control. Get rid of rent control and the city income tax? Watch housing grow.

And growth, Yglesias rightly points out, is what’s really in Texas’s favor. Texan low-​impact government policies favor growth, while “the residents and politicians” of blue-​state/​beach-​front states, though “liberal,” have, in fact, “become exceptionally small‑c conservative and change averse.” Because they do too much, allegedly to “help.” But mostly to gentrify.

This is Common Sense. I’m Paul Jacob.