American Elephants

reThink: “The Big Short” and the 2008 Financial Crisis by The Elephant's Child

“The arrival of “The Big Short” in movie theaters a few weeks ago and its subsequent nomination at the 88th Academy Awards has reignited interest in the causes of the 2008 financial crisis. The film would have you believe that private greed on Wall Street and a lack of regulation caused the economic crash. ” While stories like this might make for a fun movie, any story that blames “a lack of regulation” in the Obama era clearly does not align with the facts. Surely you don’t believe a movie made in Lefty Hollywood would correctly deal with real economics!

See Peter Wallison’s book “Hidden in Plain Site: What Really Caused the World’s Worst Financial Crisis and Why It Could Happen Again”

Political Campaigns And Missing the Point Entirely. by The Elephant's Child
March 12, 2016, 6:11 am
Filed under: Politics | Tags: , ,


Political campaigns have their own fashions and traditions, and often those are not much related to the actual art of governing. The media, of course, are major participants, but we spend too much time on the performance of the candidates and neglect the performance of the media. It’s all remarkably artificial.

The media’s idea seems to be to get the candidates to attack each other and somewhere in the melee, we are supposed to find the best qualified candidate to be a future president of the United States.

And the media will interpret what went on and who said what, and what it all means, probably incorrectly. Surely there must be a better way. I am not pleased with the media. They misunderstand and overestimate their own role. They believe it is their role to tell us who to vote for,and who  gets their approval.

The American economy, 7 years after the “great recession” ended, is still dragging along at a dismal 2.1% growth rate, when it should be over 3% — the slowest recovery in history. Forty seven million, six hundred and thirty six thousand people are living on food stamps. I spelled it out to emphasize the absurdity. It’s a disgrace. So who is talking about the economy and how to make it grow?

There is a real need to have a president who has a good understanding of basic economics, we get in too much trouble when presidents don’t. Trade is suddenly a major issue. Mr. Trump has no understanding at all, and is selling a misplaced fear of free trade.

If we want to buy large numbers of red baseball caps from Asiastan, we pay for them with dollars, which Asiastan spends in the United States, perhaps buying other products from the United States. Sometimes the foreign country spends the dollars on setting up a baseball cap factory in the United States, because it saves the expense of shipping them. That’s why Hondas and Toyotas are built in the United States. Free trade benefits both parties, by definition. If it doesn’t, the trade does not take place.

Tariffs simply make imported goods more expensive — harming the consumer in this country, not the 91IvA3PAgyL._UL1500_producer of the goods, except in reduced sales.  Trump’s red baseball caps, by the way, are made in China, only embroidered here.

There are many examples of what seems to be conventional wisdom. like the minimum wage, where the conventional argument is that  no one can raise a family on the minimum wage. That is of course true, but there are millions of people who are fully qualified to hold down a minimum wage job. It is a position for beginners, but you are not supposed to stay there. There are plenty of people who have climbed to manage a McDonald’s store who have gone on to own a McDonald’s franchise, and several stores. The fact is that  for every two people who get a newly raised minimum wage, one minimum wage job permanently disappears. Oregon is attempting to raise their minimum wage significantly, with the expected bad results.

Here’s another. Regulation stifles entrepreneurship, creativity, and growth. We learn by experimenting and making mistakes. If regulation prohibits experimentation, you stifle learning and the growth that might have come from those experiments. Regulation kills jobs. Is the regulation really necessary?

We desperately need a President who understands those simple basics of economics.

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