The Smartest People in the World™ are mostly cargo cultists. Today I found yet another article arguing that without yet another round of “quantitative easing,” the economy is doomed. We used to call it “printing money,” but that never seemed to work out. Hence the new label. Anyway — we were talking about cargo cults.
Cargo cults arose in the South Pacific during the Second World War. US soldiers and marines would arrive on an tropical island, and one of the first things they’d do was build an airstrip. Then the cargo planes would arrive and — Americans being Americans — our boys would share their loot with the half-starved locals. Candy, clothes, condoms, whatever.
The war eventually ended and the soldiers left and the cargo planes stopped coming. So the locals would make their own airstrips, using whatever tools they had — some quite elaborate. Then they’d stare at the skies and wait for the cargo planes to return.
That’s what quantitative easing is. “Print the money,” they say, staring at the skies, “and the goods will come.”
Well, no.
The goods must first be produced, and with the expectation of a profit. I know it’s fashionable for Paul Krugman to assert that “uncertainty is just a myth.” But this idea that there are Person Units called “Businessmen” who continue to produce goods no matter what government does to them is a liberal conceit. It’s the same liberal conceit that believes there are other Person Units called “Doctors” who will go on treating patients and finding new cures for diseases, no matter what government does to them.
People change their behavior as incentives change. And for the last three years, the incentive has been to hunker down and try not to get hurt.
But Krugman and the rest are immune to simple reason and plain facts, because they’re creatures of faith. They’re cargo cultists. Print the money and the goods will rain down magically from the skies.
We’ve tried that twice now. It hasn’t worked. And so the cargo cultists tell us that the gods are angry gods. We have not appeased them enough. We must print more money. We must have a third round of quantitative easing. That will make the goods appear.
Meanwhile: Obamacare, Dodd-Frank, 782 days without a budget from the Senate, impending tax hikes, a plummeting dollar, an Administration that is frankly hostile to free enterprise — the incentives remain to take no risks and avoid pain.
Start repealing laws and fix our broken entitlement system. Get Washington’s boot off the economy’s throat. Or as John Galt put it, “Get the hell out of my way!”
And while they’re at it, maybe they can stop accusing the Right of being the religious fundamentalists.
“But the fact remains that the idea that there are Person Units called “Businessmen” who continue to produce goods no matter what government does to them is a liberal conceit.”
That reminds me of another quote from _Atlas Shrugged_, this time from the looters: “You’ll do something, Mr. Rearden!” And then with the striking. Somehow I don’t think that’s what the looters had in mind by ‘something’.
And, for profits to be made, costs have to come down, ie productivity must go up. Our current admin thinks the opposite.
The thing that floors me the most about this monopoly money business is that I remember being 10 or 11 years old, hanging out with my smart 12 year old friend and asking him “why can’t the government just print enough money for everyone to be rich?” He said “because then it wouldn’t be worth anything, because everyone would have it – just like rocks or leaves on a tree.”
And I understood immediately, perfectly. So if an 11 year old (who attended school in the same building her mother had attended with no air conditioning, and who went to Church 3 times a week), could understand this concept as explained by a 12 year old, why can’t these people see they are devaluing their own bank accounts when they do this?
Because they aren’t. Creating new money out of thin air benefits the first group of people into whose hands that money falls, because they get to spend it before prices adjust. The people who get screwed are the ones who wait the longest before the new money propagates through the economy into their hands, because they have to deal with the increasing prices without the offset of the extra money.
Since the new money is created by the government and is initially placed in the hands of those connected most directly to it, the net result of creating money out of thin air is the transfer of real wealth from the hands of the politically unconnected to the hands of the politically connected.
Explaining why the people running the government don’t have a problem with this is left as an exercise for the student.
Where does this “the Senate hasn’t passed a budget” meme come from? If they hadn’t passed a budget, or something close enough as to make no difference, the government would have gone into shutdown some time in 2010.
It isn’t a meme, it’s a fact. The Senate has signed on to the various continuing resolutions for the last two years, but has failed to propose, debate and pass an actual budget. The House failed to do so for almost as long, but got back to work after the GOP Congress was sworn in back in January.
Ah, that’s how they’re doing it. Follow-up: Why should I care?
When our representatives debate and vote, we get some idea of what they’ll do. That helps businesses make plans.
Without all that? Not so much.
You should care, because they add things time to time without being restricted to an overall budget. Things which should end never end this way.
Also, they are avoiding producing a budget, so they do not have to make the tough decisions or be held accountable for things. If they never vote, they have no record.
The Republican-controlled House has passed budgets, but the Senate has voted them down.
You should care because the Demcrats, despite controlling both houses of congress at the time, failed to carry out their most basic obligation – adopting a budget for FY 2011.
On another topic, who is spqr2008?
You’re free to not care about good governance all you want so long as you have the integrity to stay home on election day.
I love the concept of Cargo Cults. When you first hear about them, they sound so absurd they can’t possibly be true. But then as you look around, you see Cargo Cult thinking everywhere.
I recommend the classic South Park episode “Margaritaville” which also has the same ideas in it. Also, it’s hilarious.
In this case, I think printing more money would qualify as tripling down on stupid.
Correct me if I’m wrong, but isn’t creating and passing a budget one of the things that Congress is constitutionally obligated to do? Unlike most of the actions that our elected officials undertake, of course.
Perhaps the problem is that there is no controlling legal authority. The law says they have to, but if they don’t, there is no mechanism for forcing them to do it or adverse consequences to them if they don’t. If there is a legal controlling authority, they haven’t had the guts to do something about it.
I would be leery of calling progressives religious fundamentalists when Michele Bachmann is one of the bright lights of the Tea Party.
Dunno about the rest of you, but her devout (excuse the pun) desire to outlaw all legal gay relationships, and teach intelligent design as science make me a teensy bit nervous.
That said, the whole QE scam is, well, pathetic.
The Cargo Cults were smarter than the Keynesians, though still wrong;
They built decoys to lure the planes in, just as they did when hunting birds,
and they attempted to repair abandoned equipment just as they had seen the GIs do, using replacement parts, such a spark plugs, make of painted wood.
If someone had suggested diluting the local booze with water, they would
have observed, correctly, that it would then not be worth a wooden nickel.