Selasa, 19 Juni 2012

In this I believe

As a supply-side libertarian, I firmly believe in the power of free markets, capitalism, the rule of law, and limited government. I believe in these things because they have proved to be the best way yet discovered to create the most prosperity for the greatest number of people. So naturally I believe that fiscal policies which respect free markets, capital, the rule of law and limited government are superior to those that do not. As an investor, I believe that such policies are more likely to lead to stronger economic growth, rising incomes and more widespread wealth gains.

Investors cannot live in a political vacuum, because politics and economics are firmly entwined; one can never underestimate the ability of policies to change the outlook, whether for better or worse. Policies informed by left-leaning politicians tend not to respect the things I believe in, while policies informed by right-leaning politicians do tend to. There exists the very real possibility that the November election may reinforce the message of the Nov. 2010 election, and lead to a rightward shift in policies going forward which could have huge and positive consequences for economic growth and financial markets. Moreover, the Supreme Court's decision on Obamacare, due out any day now, could have far-reaching consequences since it could put important limits on the scope and size of government.

Deirdre McCloskey has penned an eloquent summary of how the views of liberals and conservatives contrast, (HT Don Boudreaux) and I'm compelled to post this extract:

The liberals' narrative:

Modern life is complicated, and so we need government to regulate. Government can do so well, and will not be regularly corrupted. Since markets fail very frequently the government should step in to fix them. Without a big government we cannot do certain noble things (Hoover Dam, the Interstates, NASA). Antitrust works. Businesses will exploit workers if government regulation and union contracts do not intervene. Unions got us the 40-hour week. Poor people are better off chiefly because of big government and unions. The USA was never laissez faire. Internal improvements were a good idea, and governmental from the start. Profit is not a good guide. Consumers are usually misled. Advertising is bad.
Externalities, asymmetrical information, and other collective action problems are . . . pervasive in economic life. Countless ways of conducting business reap gains for some while imposing unjust costs on others. Create a cartel. Stuff rat feces in sausages. It is a truism to say that in order to achieve the benefits of an efficient market economy (increasing productivity, greater economic output, increasing productive capital, etc.), the basic rules of property, contract, and exchange must be structured [by government] to realize efficient market relations.

The conservatives' narrative:

Externalities do not imply that a government can do better. Publicity does better than inspectors in restraining the alleged desire of businesspeople to poison their customers. Efficiency is not the chief merit of a market economy: innovation is. 
... anyone who after the 20th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labor unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.
In the 19th and 20th centuries ordinary Europeans were hurt, not helped, by their colonial empires. Economic growth in Russia was slowed, not accelerated, by Soviet central planning. American Progressive regulation and its European anticipations protected monopolies of transportation like railways and protected monopolies of retailing like High-Street shops and protected monopolies of professional services like medicine, not the consumers. “Protective” legislation in the United States and “family-wage” legislation in Europe subordinated women. State-armed psychiatrists in America jailed homosexuals, and in Russia jailed democrats. Some of the New Deal prevented rather than aided America’s recovery from the Great Depression.
Unions raised wages for plumbers and auto workers but reduced wages for the non-unionized. Minimum wages protected union jobs but made the poor unemployable. Building codes sometimes kept buildings from falling or burning down but always gave steady work to well-connected carpenters and electricians and made housing more expensive for the poor. Zoning and planning permission has protected rich landlords rather than helping the poor. 

Plus much more; read the whole thing, especially the comments section, where Deirdre addresses numerous criticisms.

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