Sweden goes Conservative and Deficit Free

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

So far the Keynesian advice has been consistent to get us out of these financial difficult times.  And wrong.  If you want proof look at Sweden.  When the Keynesians said stimulus the Swedes did instead something wholly anathema to Keynesians.  They cut taxes.  And guess what?  They don’t have a debt crisis.  How about that?  But wait.  It gets better.  They no longer have a deficit (see Sweden’s Finance Minister Helped Cut The Deficit — By Cutting Taxes by Adam Taylor posted 4/20/2012 on Business Insider).

With the Swedish deficit wiped out last year (and Borg’s Conservatives voted back into power) the decision is now looking increase wise.

“Everybody was told “stimulus, stimulus, stimulus”,” he tells Fraser. “It was surprising that Europe, given what we experienced in the 1970s and 80s with structural unemployment, believed that short-term Keynesianism could solve the problem.” Non-economists, he says, “might have a tendency to fall for those kinds of messages”.

Instead, Borg cut taxes in a bid to lure entrepreneurs, and lowered benefits to make up the difference. Entrepreneurs “are the source of job creation,” says Borg.

The history is all there to see.  Keynesian economics failed in the Seventies.  Absolutely.  But those who thought like Anders Borg, Margaret Thatcher and Ronald Reagan, did what he did in the Eighties.  Thatcher turned the UK around.  And Reagan turned the U.S. around.  Pity no one remembers history these days.  Other than Sweden’s Finance Minister. 

A conservative in Sweden?  Who would of thunk it?  If only Europe and the United States would follow Sweden’s lead then they, too, could have smaller deficits.  And more prosperous economies.  But, alas, they simply can’t put their people before their politics.  Apparently.

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The Irish Parliament begins Debate on Bill that will Provide Limited Access to Abortion

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

Representative government transferred the power from the privileged few to the people.  And once they did things got better for the people.  Because the government started serving the people instead of the people serving the government.  And to keep it that way representative governments introduced separations of powers.  And checks and balances.  They created legislative bodies to write laws.  Where legislators represented the people in proportion to the population.  So laws represented the will of the people.  And not minority interests. 

Of course, this made it difficult to pass some laws.  Especially those that went against the will of the people.  So some found a way to get around the will of the people.  By legislating from the bench.  Where instead of needing a majority of hundreds of legislators you only needed a majority of a handful of judges.  Which has been the legislative tool of choice for liberals to write laws.  Using the judiciary to write law that they could not write in the legislature.  Violating the separation of powers.  And going against the will of the people.  Such as making abortion legal in countries where the majority oppose it.  Like the United States.  And Ireland (see Ireland Takes Up Bill on Abortion Access by DOUGLAS DALBY posted 4/18/2012 on The New York Times).

One of the most deeply divisive issues in Irish society was reignited Wednesday night when the Irish Parliament began debate on a bill that would provide for limited access to abortion.

As in the United States, it was the Supreme Court here that legalized abortion, although in strictly limited circumstances. But in the 20 years since the decision in the “X Case,” successive governments have shied away from enacting the legislation needed to carry out the order…

“We believe that it is only a first step for abortion to be legalized in Ireland in all circumstances. We have waited long enough,” Ms. Daly said. “Over 100,000 Irish abortions have taken place in Britain for many different reasons, none of them easy, all of them valid. The hypocrisy, injustice and expense of having to travel to England for terminations, away from family and friends, is a disgrace.”

But in this conservative and Catholic nation, sentiment against abortion runs strong, and over the past few months anti-abortion groups have been pressuring politicians to oppose the bill, and are confident it will be defeated.

Governments shy away from putting abortion in the hands of the legislature.  Especially in countries with large Catholic populations.  Which is why there are no abortion laws on the books in the U.S. or Ireland.  Just Supreme Court rulings that created an abortion law from the bench.  As Supreme Court justices typically serve for life they don’t have to worry about the political fallout of their decisions.  Which gives some a green light for judicial activism.  Giving them leeway to disagree with laws they don’t like.  Or creating laws they like that the people don’t.  They can do this.  Legislators can’t.  Which is why they shy away from abortion law.  Because a legislator usually has another election to try to win.  And that isn’t easy to do when you go against the will of the people.  As many found out in the U.S. after they voted for Obamacare.  And lost their jobs in the 2010 midterm elections.  Because they not only acted against the will of the people but against their own constituents.

Ireland is a Catholic country.  And they take their Catholicism pretty seriously.  Which is why so many Irish hate the English.  Who are Protestant.  If you’re not familiar with this history read up a little on it.  Perhaps looking up some names like Elizabeth I, James I or the Earl of Stafford.  Then you’ll get a feeling for the love between Irish Catholics and English Protestants.  So the Irish are Catholic.  And fiercely so.  They stay true to their Catholic beliefs.  Which includes an absolute opposition to abortion.  Which is why there is no abortion law in Ireland.  Only a Supreme Court decision.  Until now, perhaps.  As the Irish legislature is now debating this subject.  What will the Irish Catholic do?   Whatever they do one thing is for certain.  It won’t make the issue any less divisive.

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Waiting Times in the UK’s National Health Service Grow Longer, some even Waiting a Year or More for Treatment

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

The advocates of national health care said that it will give all people quality health care.  While cutting costs, too.  Which was the claims made during the Obamacare debates.  Opponents said it was impossible to increase the number of people getting quality health while cutting costs at the same time.  For any national health care system would require massive new taxes and the rationing of services.  To make those limited resources spread over the greater number of people in the system.  Increasing wait times for medical treatment to unacceptable levels.  Like they are struggling with now in the UK.  As wait times have increased for the second year in a row in the National Health Service (NHS) (see David Cameron faces pressure as NHS waiting times grow by Denis Campbell posted 4/18/2012 on The Guardian).

Patients are enduring increasingly long delays before having some of the most common forms of surgery, according to official data that casts serious doubt on David Cameron’s pledge to keep NHS waiting times low.

New research by the Patients Association also shows that fewer patients are undergoing planned operations such as joint replacements, cataract removal and hernia repairs, as the NHS tries to make £20bn of efficiency savings at a time when demand for healthcare is growing.

A report from the association, based on information supplied by 93 of England’s 170 acute hospital trusts, found that waiting times for a range of elective operations rose between 2010 and 2011

The average wait before having a new knee fitted rose from 88.9 days to 99.2 days, while patients needing hernia surgery typically waited 78.3 days in 2011 compared with 70.4 the year before. The delay before the removal of gallstones increased over the same period, by 7.4 days, as did the delay before having a new hip (6.3 days longer), hysterectomy (three days) and cataract removed (2.2 days).

Smaller numbers of patients also had surgery for all these procedures over the same period, according to responses from hospitals to freedom of information requests submitted by the association. Trusts that supplied figures jointly performed a total of 18,268 fewer operations for these conditions in 2011 than in 2010, with those blighted by worsening vision, especially older people, most affected.

There is only one reason for these increases.  Their limited resources can’t treat the same amount of people as last year so they increased waiting times.  That is, they rationed these services more.  Now funding could have remained the same and the number of patients rose.  Or they cut funding while the number of patients remained the same.  Or more likely it was both.  More patients and less funding.  Because of an aging population.  And rising budget deficits (the NHS accounts for a very large part of Britain’s budget deficit).  Which is exactly what will happen under Obamacare.  Only on a greater scale.

But the health department said data from every hospital trust showed waiting times were low and stable and more patients were being treated, including for conditions in the report. The document was based on “partial” data and did not reflect the situation across England, it added.

Health secretary Andrew Lansley said: “There are fewer patients than ever waiting a long time for treatment in the NHS. The number of people waiting over a year for treatment has reduced by two-thirds since we came into office and the average time patients have to wait for treatment is at the same level as two years ago.”

Okay, so the data may be a bit skewed.  For the people waiting longer than a year for treatment has fallen by two-thirds.  Which means that one third of that group is still waiting over a year for treatment.  So that’s something to look forward to with Obamacare.  A new metric to enter our lives to remind us how good Obamacare is.  People waiting a year or more for treatment is down.  Yeah.  But the US is far more populated than the UK.  So Obamacare will treat far more patients than the NHS.  So it’s not likely that we’ll be hearing that metric reported as going down.  So we’ll probably hear something more along the lines like “though the number of people waiting over a year for treatment has increased the rate of that increase is smaller than the previous year.  Just another fact to tell you that Obamacare is taking care of you.”

Let’s face it, based on the sheer size of the US and the amount of time the British have been practicing national health care Obamacare will never be as good as the NHS.  For the size of Obamacare will make the NHS look like a walk-in clinic.  Because all the numbers are working against it.  An aging population that is living longer.  And declining birth rate that creates fewer people entering the workforce than leaving it.  You put these together and it can only mean one thing.  Massive new taxes and the rationing of services.  And all on a far greater scale than in the NHS. 

The only thing Obamacare will do is make the NHS look better.  Even with wait times of over a year.

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The LGBT Community just can’t Catch a Break from President Obama

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

The first disappointment was his stated belief that marriage should be between a man and a woman.  A crushing blow for same-sex marriage advocates.  Then came Obama’s less than enthusiastic support for the State of Israel in dealing with the Palestinians.  Hamas in the Gaza Strip and the West Bank.  And Iran.  Who all oppress and persecute the LGBT community.  Unlike Israel.  Who affords them the same rights as any other Israeli.  In fact, Israel is a popular destination for the LGBT community.  For in Israel there is no discrimination against pretty much anyone.  Having been the butt of discrimination for much of history they’re just not a fan of it.  And now this latest blow (see Russian lawmakers target gay ‘propaganda’ by Michael Birnbaum posted 4/17/2012 on The Washington Post).

The anti-Western rhetoric that dominated Russia’s recent elections has a new focus, with gays targeted as symbols of Western permissiveness in a wave of laws being adopted across the country.

Here in St. Petersburg, a city that prides itself as the most European in Russia, the lawmaker behind a new local ban on gay “propaganda” has said that he is defending traditional Russian values against an onslaught from the West. Gay activists — two of whom were the first to go on trial this week on charges of violating the new law — counter that the rules will legitimize homophobic attitudes and aggression even as Europe and the United States move toward acceptance.

St. Petersburg’s parliament was the latest to enact such a law, which imposes fines of up to $17,000 for spreading “propaganda of sodomy, lesbianism, bisexuality or transgenderism among minors,” and the national parliament in recent weeks has taken up similar legislation. In a country where a 2010 poll by the respected Levada Center found that 74 percent of Russians deemed gays and lesbians “morally dissolute or deficient,” advocates for gay rights worry that the laws could rapidly become more common.

Wow.  Ronald Reagan never did anything like this.  And he was probably the most hated Republican.  Though George W. Bush gave him a run for his money.  As much as the Left hates Republicans, conservatives, Christians, etc., the LGBT community was never attacked like this by them.  Sure, some in these groups may applaud these Russian developments, but even they have never advanced legislation like this.  At most issuing moral condemnation about American televisions shows like Glee.  Which is a far cry from what’s happening in St. Petersburg.  Or should I say Leningrad?  Which is how some do doubt feel it’s become.

President Obama has condemned George W. Bush’s Russian policies.  He didn’t approve of placing anti-ballistic missile defenses in Europe that could intercept Russian missiles as well as Iranian missiles.  And he didn’t like the swaggering cowboy image of George W. Bush (who condemned Russian human rights abuses) in general.  So one of the first things he did as president was to send Hillary Clinton there with a ‘reset button’ for U.S.-Russian relations.  So the U.S. and Russia can start a new era of friendship and cooperation.  And about those anti-ballistic missile defenses in Europe?  Well, a hot microphone picked up the president telling Russian president Dmitry Medvedev not to worry about that.  And to tell incoming president Vladimir Putin (a man that likes to portray an even more swaggering cowboy image than Bush) that once the current election is behind him he will be more flexible on that missile defense issue.  Because it didn’t matter what the American people thought after that election.  So he had more freedom in his actions.

So if Obama is going to give away a defensive anti-ballistic missile defense system for his pal Vladimir chances are he’s not going to make a big issue out of Russia’s new policies on the LGBT community.  Yet another let down for this community and liberals everywhere who helped elect him believing his message of hope and change.  Little did they know that hope and change was only for the people who agreed with his vision that marriage should only be between a man and a woman.  Which creates quite the quandary for liberals.  Do they keep ignoring these slights to issues they hold dear?  Or do they say things weren’t really that bad under Republicans.  And during those good economic times they at least had jobs.  A lot more than they do now.  And probably a lot better and higher paying.  Because businesses can do that when they can earn a profit.  Which has to eventually make some people ask if they’re not getting their policies why should they keep suffering with this bad economy.

Like I said, quite the quandary.

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The Economic Prognosis is Not Good in the U.S., China or Europe

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

For those of you who think the U.S. economy is picking up don’t get your hopes up.  The same goes for the Europeans.  And anywhere governments actively interfere with market forces.  They can provide a little succor.  But their efforts provide only temporary relief from reality.  And what is that reality?  That Keynesian economics and state capitalism do not work.  And that government meddling makes things worse in the long run.  Which is no secret.  Investors know what’s going on.  And aren’t fooled by the self-congratulatory praise the politicians heap upon themselves (see Analysis: Spluttering economies to curtail earnings horizon by Mike Dolan posted 4/18/2012 on Reuters).

Exuberant global markets have taken a reality check this month on chronic U.S., Chinese and European growth concerns, and investors should hold companies’ relatively rosy profit outlooks up for scrutiny too…

Macroeconomic hopes hinge on a U.S. recovery gaining more traction, a soft landing of Chinese growth to about 7.5 percent from the double digits of the past decade and a resolution of euro zone’s systemic sovereign debt and banking problems.

All three of these, however, were in doubt again in April and the anxiety knocked some 5 percent off MSCI’s world equity index from their March peaks. That leaves stocks still up 8 percent on the year but, just like last year, the price momentum and direction seems to have stalled.

Even though bouts of central bank money-printing and cheap lending in the United States, Europe and elsewhere periodically offer a fillip, as the European Central Bank’s money flood did again spectacularly in the first quarter, the effect on the real economy and market prices tends to fade fast…

What’s more, ThomsonReuters data shows that margin gains from cost-cutting in jobs, pay and other expenses was a significant part of the U.S. profit recovery since 2009 but that this route to bottom-line improvement is reaching its limits.

The major economies aren’t improving.  All of those government fixes didn’t fix anything.  Printing money just put more inflation into the pipeline.  And increased prices.  You ever notice the boxes of cereal getting smaller?  The bags of chips getting smaller?  They’re getting smaller because of inflation.  Unable to raise prices anymore because people can’t afford them they’ve held prices steady.  And shrunk the portion size.  Making consumers spend more in the long run to buy the same quantities as before.  Or simply go with less.  This is the result of all that money printing.

In business you don’t solve problems on the cost side.  You solve them on the revenue side.  For healthy revenue can pay for anything.  Even the worst cost management.  That’s why during good economic times the focus is on revenue.  Not cost cutting.  During good times companies hire people and expand production.  To grow revenue.  It’s during recessions when they lay off people and cut costs.  Temporary provisions to make it through the recession.  And when they emerge from these recessions they start hiring people and expanding production again.  To grow revenue.  So when margin gains are due to cost-cutting and NOT revenue growth you’re still in a recession.  No matter what the numbers say.  And no one is optimistic about the future economy.  Businesses.  Or investors.

Now would be a good time for governments everywhere to acknowledge their failures.  And let the Invisible Hand take control of the economy again.  For the longer they wait the harder it will be for the Invisible Hand to do its magic.  And the longer and more painful the recovery.  It’s time we drop the ‘state’ from capitalism.  And replace it with ‘free market’.  And trust in the free market.  Like we did during the Industrial Revolution.  Like we did when we abandoned FDR’s New Deal during World War II.  And like Margaret Thatcher and Ronald Reagan did during the Eighties.  All periods of incredible economic growth.  That no period of state capitalism ever equaled.

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The Reforms of Manmohan Singh are Eroding and Threatening India’s Economic Growth with a Return to a Welfare State

Posted by PITHOCRATES - April 22nd, 2012

Week in Review

The BRICS economies are doing pretty well.  Well, better than Europe and the United States at the moment.  Which is saying something.  But it’s not all rosy.  China is struggling to get housing prices under control while at the same time not hindering economic growth.  Not easy to do.  When inflationary policy gives you both that growth and those high home prices.  And now people in India are worrying about sustaining their economic growth.  Which appears to be making a transition from free market capitalism to state capitalism.  Putting the brakes on economic growth much as it has in Europe and in the United States.  Where policies now are turning (or returning) to be more anti-business than pro-growth.  And a rise in public spending that would seem to indicate a return to a welfare state.  For which Manmohan Singh, India’s prime minister, was hammered for at a recent event (see Now finish the job posted 4/15/2012 on The Economist).

The event, in Delhi, was billed as a discussion of India’s economic reforms, hosted by a prominent and respected economics think-tank, ICRIER, along with Oxford University Press. The idea was to celebrate Mr Singh and the launch of an updated version of a book marking his momentous economic reforms of the early 1990s. These, everyone agrees, did more than anything else to usher in sustained and rapid economic growth which has helped to lift millions out of absolute poverty.

As ever, Mr Singh sat twinkly-eyed and almost entirely silent, as a series of speakers took turns to address the room. Yet rather than waste time celebrating his work of two decades ago, everyone pushed on with far more urgent business: trying to get India’s prime minister to understand that, without a second round of economic reforms, and soon, India’s economic prospects will look far grimmer in the next few years than they have recently. In turn, Mr Singh may not be remembered as the man who reformed India’s economy, but the man who only got the job half done…

Then a blunt-speaking economics professor from the University of Chicago, Raghuram G. Rajan, pointed out that things are looking bad when “domestic industry prefers to invest abroad” rather than brave the hassles and uncertainty of India today. Nor did he shy away from identifying who was at fault: “paralysis in growth-enhancing reforms” is a blunt way for an economist to speak; it means Mr Singh and his cabinet have done almost nothing to promote growth, devoting energy instead to ways to dish the proceeds of growth as welfare and other public spending…

He frets, too, that India’s middle class has no clue how high economic growth was first brought about, and instead is deeply, and increasingly, suspicious of capitalism and liberalisation. The result, as another speaker eloquently pointed out, is that there is no political constituency for reform. He saved his most explicit attacks for the budget passed last month, which came with a baffling mix of anti-business measures, especially over retrospective tax, and which is now scaring away the foreign investors that India desperately needs.

Those economic reforms replaced India’s socialism with free market capitalism.  And the subsequent burst in economic activity lifted millions out of “absolute poverty.”  Something their kind and caring socialism never could.  Yet another example of how capitalism helps those least able to help themselves.  But with robust economic activity comes great tax revenue.  And the temptation is to spend that tax revenue instead of cutting taxes further.  Because that excess tax revenue is not needed.  But politicians being politicians are weak.  And they will spend that excess tax revenue.  As Ronald Reagan learned in the Eighties.  His cut in tax rates created so much economic activity and tax revenue (nearly twice what it was before the cut in tax rates) the politicians increased their spending faster than the money came into Washington.  Which is why Ronald Reagan had great budget deficits.  It had nothing to do with the tax cuts.  For they increased tax revenue.  It was the massive increase in spending.  As it always is.

This is the danger of any democracy.  Once the people get a taste of this government largess they want more.  And will vote anyone out of office who doesn’t give them more.  Or, worse, takes some of it away.  Which leads to some problems.  As in chronic deficits.  And sovereign debt crises.  Like they currently have in Europe.  And are getting dangerously close to having in the United States.  All made worse by the fact that during the good times voters become blissfully ignorant about the economic policies that made those good times so good.  All they know is that they like getting a lot of free stuff.  And want to keep getting a lot of free stuff.  So they vote for the politician that promises to give them more free stuff.  Even when they can no longer sustain that level of public spending.

So when the people are blissfully ignorant it us up to the politicians to be responsible.  And not give in to pandering for votes.  They need to do the right thing.  To continue the good times.  By cutting taxes.  Cutting spending.  And cutting regulations.  The proven way to lift people out of poverty.   A particularly difficult task when many in the population have only known the good times.  And have no idea how quickly those good times can turn bad.  But unless the Indians want to slip back to their impoverished socialist past Mr. Singh should take stock of this wise counsel and keep the miracle going in India.  The miracle of free market capitalism.

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