South By North Strategies, Ltd.

A Self-Inflicted Decline?

Malcolm Fraser, a former prime minister of Australia, argues that the United States is suffering from “a self-inflicted decline.”

America’s current fiscal problems are rooted in a long period of unfunded spending. Bush’s wars in Afghanistan and Iraq, and the manner in which he conducted the “global war on terror” made matters much worse, contributing to a totally unsustainable situation. Indeed, Obama inherited an almost impossible legacy.
…
In the weeks since the debt ceiling agreement, it has become increasingly clear that good government might be impossible in the US. The coming months of campaigning for the US presidency will be spent in petty brawling over what should be cut. The example of recent weeks gives us no cause for optimism that US legislators will rise above partisan politics and ask themselves what is best for America.

Around The Dial – August 31, 2011

Economic policy reports, blog postings, and media stories of interest:

• Matt Stoller shakes his head at one of  the NY Fed’s “public” representatives.
• Henry Blodget thinks BofA still has capital problems.
• The NY Times profiles the outgoing head of the National Labor Relations Board.
• Mark Thoma argues for providing some economic help to households.
• Harold Meyerson doesn’t want to celebrate our “great offshorers.”

No Policy Is Better Than Bad Policy

Naked Capitalism points out that the adoption of “weak and ineffective” public policies is not harmless.

Earth to base: implementing weak and ineffective polices DOES have a cost, which is that it takes political capital and keeps a bad status quo intact. Remedies of this sort then lead to “well we need to see how this works” arguments that then delay more effective measures from being implemented Even worse, they also serve to feed the false perception that nothing will work. Notice how the stimulus program at the beginning of the Obama administration, which pretty much every reputable economist said was too small to do much, is now being used to argue that stimulus doesn’t work? Yet another at best not-very-effective housing market remedy will serve to cement beliefs that government intervention won’t work, when that is the only possible route out of a massive private market failure.
…
So yes, there are plenty of reasons not to act for the mere sake of acting. But that logic doesn’t register with the defenders of this Administration, it seems.

Helping The Poor In A Globalized World

In a recent op-ed, French political scientist Dominique Moisi wonders how to help the poor in an increasingly globalized world.

It would be absurd to condemn, as some do, globalization as the main and only culprit in the erosion of traditional sources of support for the poor. Globalization is above all a context, an environment, even if the consequences of the first major financial and economic crisis of the global age will further deepen the gap between the very rich and the very poor.
…
But globalization makes the weakest among us more visible, and therefore makes the absence of social justice more unacceptable. A world of much greater transparency and interdependency creates new responsibilities for the rich. Or, more precisely, it makes the old responsibility to protect the weakest both more difficult and more urgent.
…
In a world of increasing complexity, perhaps what is needed are simple solutions. One could follow, for example, Adam Smith’s principle of comparative advantage: what Europe does best is the state, while Asia still relies on the family and the US continues to focus on individual initiative. The problem is that in a world of universal benchmarking, the legitimacy of solutions will stem more than ever from their cultural acceptability and their efficiency.

He goes on to conclude the following:

Globalization does appear to have weakened cultural differences noticeably in the past decade. But, when it comes to the protection of the weakest and the struggle against rising social injustice, perhaps “global deculturation” creates an opportunity to combine the best of what remains in particular traditions. Perhaps countries should seek to base their social-welfare systems on a new synthesis of the state, the family, and philanthropy.

Around The Dial – August 30, 2011

Economic policy reports, blog postings, and media stories of interest:

• Ed Glaeser says “universal refinancing” won’t fix the housing market.
• Adam Levitan agrees that the plan is “malarkey,” though for different reasons.
• The PBS NewsHour reports on America’s changing marriage patterns.
• Peter Goodman doesn’t think a change in staff means a change in policy.
• Joschka Fisher describes “Europe’s shaky foundations.”