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Wednesday, January 07, 2004

Don't Warn Against Bush's Economic Policy: It Might Help Make Your Fear Come True

Economists for Dean has a piece on (the dangers of) using the Dollar as the World Reserve Currency.

I commented:
I searched for it but could not find anything substantial on this subject on Dean's or Clark's site.
Should econ4dean not try to get some attention from Dean (and or other dem candidates) for Paul Krugmans Rubin Gets Shrill?

The point made by Mr. Rubin now, and by Mr. Mankiw when he was a free agent, is that the traditional immunity of advanced countries like America to third-world-style financial crises isn't a birthright. Financial markets give us the benefit of the doubt only because they believe in our political maturity — in the willingness of our leaders to do what is necessary to rein in deficits, paying a political cost if necessary. And in the past that belief has been justified. Even Ronald Reagan raised taxes when the budget deficit soared."

But I can see that that's dangerous. The Bushites will argue that bringing up the possibility that "investors will eventually conclude that America has turned into a third world country, and start to treat it like one. And the results for the U.S. economy won't be pretty." is unpatriottic because it raises the chances of this scenario coming true....

What it comes down to is the problem of arguing with populists.

Very hard.

If you want to, you can make a link to a comment I wrote at the nice new blog Cabalamat who writes on the very bad idea of "yourparty": "the basic idea is that all elected representatives of Your Party will be obliged to vote on every issue the way the majority of Your Party membership tells them to - by using the Internet"

My comment there:
"A terrible idea. It's the worst kind of demagoguery: trying to make anti-politician / anti-politics / anti-governments sentiments work for YOUR political aims. The bottom line is that politics is simple but the politicians won't listen. The idea that people can manage to make a judgment on all subjects the representatives have to deal with! They simply have not the time for it.

My idea is the strict opposite: I propose more independent politicians (in both ways this can be read) combined with indirect elections. In such a system representatives at the lower level (districts, towns) do not just elect the representatives on cumulate levels but also discuss politics on the higher lever. "

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