Catallaxy Files

There was a front page story in yesterday’s Washington Post, “For Romney and Paul, a strategic alliance”. Moreover, this was no hit piece or structured, so far as I could see, in a negative direction. It was simply about how Mitt Romney and Ron Paul like each other personally.

Despite deep differences on a range of issues, Romney and Paul became friends in 2008, the last time both ran for president. So did their wives, Ann Romney and Carol Paul. The former Massachusetts governor compliments the Texas Congressman during debates, praising Paul’s religious faith during the last one in Jacksonville, Fla. Immediately afterward, as is often the case, the Pauls and the Romneys gravitated together to say hello.

This is how politics on the same side of the fence needs to be done when the enemy awaits. But I suspect that it is deeper still. They both represent similar values and on domestic policy there may not be a dime’s worth of practical difference between them.

Meanwhile the ducks are falling into line. Donald Trump’s endorsement today carries I suspect few votes. Its signifcance is in the recognition that you should not mess with someone who may very well be the president a year from today.

On the front page of The Washington Post we find this snippet about Newt Gingrich:

The former speaker, having seen plenty of ups and downs, vows that ‘people power’ will overcome ‘money power’ in the end.

This is almost the perfect statement of a leftist ideologue, where the evil Mr Moneybags is set upon for stealing the election along with everything else from the benighted poor.

For myself, having been quite hopeful about Gingrich on his second coming during this campaign, I have become totally disenchanted and I can see that many others have travelled the same road over the past few weeks. Having been a very early supporter of Ronald Reagan back even before 1980, and being the very essence of a small government fiscal hawk, being every inch the Tea Party member that I am, and holding a very low membership number amongst the Anyone But Obama school of thought, I am hardly a sell out to the left.

If you want Obama out, fiscal discipline returned, Obamacare reversed and a stronger American international presence, there is no one more likely to achieve all of these than Romney. He is, as an added bonus, also far more electable, a not minor consideration I would have thought.

I see that Gillard’s desire to do as much economic damage as possible before she leaves office with the all time worse-than-Whitlam gong continues. The Australian reports:

ABOUT 150,000 social and community sector workers have won pay rises ranging from 19 to 41 per cent after a historic equal pay decision today.

But Fair Work Australia has extended the phase-in period for the pay rises by two years to eight years, following concern about their cost impact.

The tribunal’s full bench has also split, with one senior member opposing the wage increases and finding unions had not made out their case.

Today’s ruling, the beneficiaries of which are mainly women, followed an order sought by several unions, including the Australian Services Union, which was supported by the federal government.

Understanding the relationship between productivity, employment and the cost of labour is always weak under the ALP, but the economic illiteracy of this Government may have plunged to new depths. Many of those the Government believes they have helped they have actually harmed and the effect on the economy overall will be to weigh it down with more dead weight which will lower living standards in ways that will be very noticeable but quite beyond the reasoning ability of those in the union movement.

I also see that Graeme Watson has put himself out of the running to be the next President of FWA. A brave stand and I wish it were more common.

But lastly, do yourself a favour, and direct your criticisms at the Government. This is what the Government sought. Their instrument may have been FWA but the actual reason for the decision you see is government policy. I have watched on too many occasions the Commission taking the rap for an actual decision that was driven by government. I hope it doesn’t happen that way again.

I went to the National Portrait Gallery today at the Smithsonian. Didn’t see all of it but did get to the Presidential portraits. And with each of the official portraits there was a two-three paragraph story of the main elements of their presidency. This is from Grant’s where they discuss his bad luck in being President when the Great Recession of 1873 struck the American economy:

The Grant administration took the immediate stopgap measure of releasing fifty million dollars into the stricken economy.

Doesn’t sound like much to us in our days of trillion dollar deficits but I’m sure it amounted to serious money back then. So even in classical times there were measures taken by governments. But you may also be sure the $50 mil did not create levels of debt that could never be paid off.

It was also interesting to see how many presidencies were hammered by major recessions. Van Buren in the 1830s, Grant in the 1870s, Cleveland in the 1890s and Hoover in the 1930s. Every 20-30 years, it seems, unless there is a war that postpones the recession for about a decade. So put it on your calendar. The next major recession will be in the 2040s. But first we need to recover from the recession we are now in.

I suppose I can claim to be on the ground and at the scene here in the US but I feel as close to the Republican primary here as I did watching from home. Main difference for me is that I get the Washington Post delivered to the door so I start the day with a steady diet of anti-Republican, a-plague-on-both-your-houses stream of news about Romney and Gingrich. The tenacity you need to have not to vote for the Democrats in a place like this is incredible, although my days as a reader of the Canberra Times was a mild assist in learning how it was done.

Romney has however walked it in. In the end, it was not even close. And it is not just Gingrich’s nay-saying but the very unpleasantness of it that I think has done him in. The value of the primary is in the practice it gives a candidate in presenting his arguments. It also provides plenty of opportunity to find any flaws in the armour. Who really can stand the heat in the kitchen? And in all these areas, Romney has really shown his stuff. You never actually feel that Romney enjoys the electioneering and there is a falseness in watching him perform. But more and more are seeing that as a positive. The gauntlet a candidate needs to run is not what the tasks of office will be. But the meanness to be a candidate and get in the ring with Obama is crucial, and in dealing with Gingrich in a good-bye-Mr-Nice-Guy way has made the possibility of nominating Romney seem more plausible. If he can do to Obama what he did to Gingrich, I’ll try to get back a year from now for the inauguration.

This is from the best story I thought that captured how it looked to me. Please note how it is written as warning from one Democrat to another. This is the way of the media.

Mitt Romney’s resounding win in the Florida GOP primary is a warning shot to any Democrats who think the former Massachusetts governor will be a soft target.

Romney and his advisers showed dexterity, smarts and toughness in retooling his campaign within hours of his stinging loss in South Carolina on Jan. 21. Romney followed the revised roadmap to a tee.

He shredded Newt Gingrich in Florida’s two debates, leaving the former House speaker fuming and flailing in the campaign’s closing days. He summoned a host of prominent Republicans to denounce Gingrich. And he regained his image as the person best positioned to take on President Barack Obama this fall.

Democrats ‘like to comfort themselves with the thought that a competitive campaign will leave us divided and weak,’ a buoyant Romney told the crowd celebrating his victory Tuesday.

The media in this has been relatively neutral. They will pull all stops to re-elect Obama once the campaign is really on. I now do think Obama can lose. But wall-to-wall negatives about Romney and the failure to really discuss the in-depth failings of the current President are an advantage that only Obama’s incredible incompetence may be able to neutralise. But the election will be close.

I was just sent this disgusting article by a friend without comment. This is Paul Krugman trying to show how Keynesian economics has now shown its mettle based on the evidence that economies around the world are collapsing. Read this, and then I will come back with something more to say.

Last week the National Institute of Economic and Social Research, a British think tank, released a startling chart comparing the current slump with past recessions and recoveries. It turns out that by one important measure — changes in real G.D.P. since the recession began — Britain is doing worse this time than it did during the Great Depression. Four years into the Depression, British G.D.P. had regained its previous peak; four years after the Great Recession began, Britain is nowhere close to regaining its lost ground.

Nor is Britain unique. Italy is also doing worse than it did in the 1930s — and with Spain clearly headed for a double-dip recession, that makes three of Europe’s big five economies members of the worse-than club. Yes, there are some caveats and complications. But this nonetheless represents a stunning failure of policy.

And it’s a failure, in particular, of the austerity doctrine that has dominated elite policy discussion both in Europe and, to a large extent, in the United States for the past two years.

It was me not Krugman who wrote back in 2009 that if governments took the policy actions they took, then the outcome would be the disaster of major proportions that we now actually have. I said our economies would not recover. I said unemployment would remain high. I said investment would not return to anything like their previous rates. I argued prosperity would not return.

This was merely the application of classical business cycle theory which Keynes overturned in 1936. There may have been a few of these folk who lived on until the 1960s and 70s. But by then they were without policy relevance and had gone from the world of policy debate. Today all we have are various cuts of Keynesian theory and a vaguely classical Austrian economics that does not treat Say’s Law as anything other than peripheral. As for the classical theory of the cycle, there are few enough around who use this economic theory to make sense of events.

What really has embedded into me the recognition of how far from understanding what has gone wrong economic theory now is has been the return of this vindicated Keynesian triumphalism with hardly a word of response from any economist who might actually get a hearing in any paper or media outlet today.

I said in 2009 that what you see now is exactly what you would get if you did the things they were doing. And I have been meeting with economists during this brief trip of mine who are on the more market side of things but not one of them has a genuinely anti-Keynesian anti-stimulus theoretical story to tell. They still talk about monetary policy errors often going back to before the financial crisis. And they talk of debt and deficits. None tell a story of policy failure in 2009-11. Where is the critique of the stimulus? Where’s the theoretical flaw? What did governments do wrong? Is it just debt or the deficit, or is there something more?

Until I ventured forth on this trip, I had assumed that at least economists on the conservative side of the fence had a critique that even if not the same as mine, would at least focus on the stimulus and why it not only did not work but in fact made things worse. They would point out, in their own ways, that the depth of our current problems stemmed from the stimulus. Well forget it. Every economist I have met with so far thinks about macro using some version of aggregate demand as a reasonable proxy for events.

Well, I am meeting a whole lot more over the next two weeks and I am going to find out what it is with great specificity that they believe has gone wrong.

My question really is this. Just exactly what is wrong with what Krugman wrote? This is what I want to know. What’s wrong with Krugman and Keynes?

It’s two in the morning. I’m going to bed.

A very late night the night before last from which I am only just recovering. Went to the very Waffle House where the adventures recorded in Waffle Street: the Confessions and Rehabilitation of a Financier took place. This was in the company of Jimmy Adams who went to work in a Waffle House – think American south, fast foods and very downmarket – which he did after getting the sack from a hedge fund in 2009.

If classical economics and Say’s Law ever do make their return to a conscious understanding amongst economists, Jimmy Adams and the Waffle House in Durham, North Carolina will be included as part of the romantic literature on how it happened. Keynesian economists still today talk about “the Cambridge Circus” and its role in overturning classical theory. If classical theory ever does make its way back, Jimmy’s book and his six months as a server will be part of this story.

Jimmy had worked for a hedge fund until 2009 and then in the company of thousands of others found himself unemployed. The form of penance he took was to become a server on the night shift in the Durham Waffle House. There he had much time to reflect on economic matters, the nature of value added and the causes of the global financial crisis while preparing grits and sweeping the floor. The result was his autobiographical tale of what things were like combined with his knowledge of finance and classical theory of the business cycle. I have written about this once before in Say’s Law as literature. I write about it again which is only right since the book now has a second edition. You can even find a quote from me on its back cover.

I can only say that for me it is extraordinary becaused we both see the operation of the economy in almost identical ways. Which is another way of saying that everything he said made perfect sense to me.

From the front page of The New York Times, January 25, 2012:

Prince Fielder, a slugging first baseman, agreed to a nine-year, $214 million deal with the team his father, Cecil, played for in the 1990s

Also from the front page of The New York Times, January 25, 2012:

Mitt Romney and his wife, Ann, made $27 million in 2010.

I suppose, if you are a Democrat, this would also disqualify Prince Fielder from running for President of the United States.

The attack on Julia Gillard and Tony Abbott is front page news here on Drudge via The Daily Mail. Merely for the present as an outside observer, I must tell you my disgust is unbounded. We tend not to jail such people, but that is in the way of more fool us than anything.

My airplane book coming over was Saul Alinksky’s Rules for Radicals which I probably read when it was first released and no doubt at the time, thought he made a lot of sense. Well, I still think he makes a lot of sense. But now that I have joined the middle class and am no longer amongst the OWS crowd, I find his genius in the ability to stage various stunts, some of which work to “expose” “the estabilishment” and some of which do not, but all of which are driven towards a nihilistic destruction of our way of life.

So in Canberra yesterday. There are no positives to come out of this for anyone that I can see. But who is to say what value will ultimately be derived for those who attempt to assault our Prime Minister and Leader of the Opposition, people whose good will for Aborignal people is exemplary and undoubted.

Democrats for Gingrich are pouring money and assistance into his campaign in Florida. Easily more beatable than Romney, there are now an ongoing supply of anti-Gingrich stories that outline his opposition to Reagan when Reagan was President to the various positions he has held on a range of issues that make him less Republican than Romney.

The push signals a growing belief among Democrats that they may have a real chance at helping to derail Romney, who has long been viewed as Obama’s most formidable GOP opponent but is reeling from a loss to Gingrich in South Carolina. Gingrich and Romney are locked in a tight race ahead of Tuesday’s Florida primary.

While unions and other groups commonly run political ads supporting their candidates in the general election, this is something different — an unusually direct intervention by one side into the other party’s primary race, political strategists said.

And with Senator Marco Rubio coming out to outline the assistance he received from Romney when it really mattered and his primary win over Charlie Crist was so uncertain, there is genuine evidence of which is the more conservative candidate of the two, and it isn’t Gingrich.

I also had the experience of watching Obama’s State of the Union speech in the company of many others. I found it hollow empty rhetoric but then everything Obama says seems to be hollow empty rhetoric. But this time others seemed to find the same as the audience just drifted off. You could see they wanted to believe but there was nothing there at all and eventually they gave up listening. With his audience down 12% compared with one year ago, there is real reason to think his hold has deserted him.

Update: In Texas in the middle of the night, not Melbourne in the middle of the evening. But here is Ann Coulter providing more of the same and is doing so when it means taking a different position from many in her natural constituency. A genuinely brave view who has much to lose by taking the strong position she has. Read the comments after the article to see just how out on a limb she is.

In a world where words have meaning, Mitt Romney is not the “moderate” in this race. He is the most conservative candidate still standing, with the possible exception of Rick Santorum, who is bad on illegal immigration. (Santorum voted in the Senate against even the voluntary use of E-Verify by employers, which means he doesn’t want to do anything about illegal immigration at all.)

Romney is “moderate” only in demeanor — which is just another word game. His positions are more conservative than Gingrich’s, but he doesn’t scare people like Gingrich does. Ronald Reagan and Jesse Helms were moderate in demeanor, too. No one would call them political moderates.

Romney is the most electable candidate not only because it will be nearly impossible for the media to demonize this self-made Mormon square, devoted to his wife and church, but precisely because he is the most conservative candidate.

Conservatism is an electable quality. Hotheaded arrogance is neither conservative nor attractive to voters.