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Friday, June 06, 2003

Anyone For A Helicopter South?

Joerg is back again. Paying teachers not to teach, as Joerg says, this certainly does seem to be one of the stupider consequences of the structural reforms and the growth and stability pact (or the Bush tax cut come to that) given the imporatnce of human capital formation for all our futures.

I guess you want to find out how many of your site visitors will say that Bush is waging his own version of the Ruhrkampf on the shores of the Tigris. I certainly wouldn´t have thought about that one, but maybe the parallel is justifiable.

But economically speaking, any historical analogies that predate 1971 don´t cut it. Since then, it is the real economic effect of any state expenditure that needs to be looked at - not its accounting cost. Laying off teachers - so they are being paid for not teaching anymore - only does damage, whereas stimulating employment would positively contribute to economic recovery. Am I supposed to believe that printing money is only good as long as the money is not spent for any useful purpose - since that would constitute dreadful debt we might never be able to repay -, whereas having it circulate casino-style - or not circulate that much at all - is an economic panacea because it comes close to seeing Keynes´ prescription of getting the unemployed to dig up mountains of greenbacks coming to fruition?

Murdoch´s publicly stated reason for cranking up his propaganda machine in support of the Iraq war was that he would like to see a decline in the price of oil. Current price action doesn´t vindicate him. While medium-term his wish may be fulfilled, long-term there is the risk of terrorists blowing up newly opened pipelines. Not to mention the absolute silliness of not stretching out a scarce resource like oil for as long as possible by taxing it heavily and thereby incentivizing energy conservation, faster switching to natural gas, renewables and a renaissance of nuclear energy. So Bush may really be debasing America´s future - not in monetary terms, but by limiting the potential for future growth.

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