Mike Darda offered a scathing review of Ben Bernanke’s July testimony to Congress–not of the Fed chairman’s performance, but his interrogators’: http://article.nationalreview.com/?q=MTdkMDkxZjMzNWNiNTgwYzZhNWUxNjZlY2NiZTY1OTY
"Many congressmen and women have tried to beat up Bernanke over wages not rising fast enough relative to inflation (including food and energy). Not only do many members of Congress have their facts wrong (real non-supervisory wages have risen at two times the rate during this cycle than the first five-and-a-half years of the last), but they’re inconsistent since not one would want the chairman to hike the funds rate because of the elevated energy prices they decry. In other words, congressional “leaders” berate the Fed chairman over high energy prices, lampoon him for a focus on core inflation, and then scold him for having raised rates too much! It’s a heady combination of hypocrisy, stupidity, and ignorance that’s otherwise known as Washington D.C."
Good points all. And if memory serves, there was little posturing on behalf of "big oil" when crude prices sank to $10-20/bbl around 1998; starry eyed pols lacked the understanding and/or cajones to pin much of the blame on ‘el Maestro’ (though a quick search did turn up this interesting transcript from an episode of PBS’ Frontline on the 1998 stock market panic: http://www.pbs.org/wgbh/pages/frontline/shows/crash/etc/script.html).
Darda also offers the following argument, which echoes the observations we’ve been making here about federal policymaking:
"…it would be helpful if the congressional leadership resisted lowering structural productivity to a rate below the Fed’s reduced forecasts by way of totally unnecessary and growth-retarding tax hikes on capital and labor. Sadly, the U.S. shift toward economic populism and tax hikes, and away from free trade, is coming at a time when most of the rest of the world is moving down the Laffer curve by cutting tax rates and removing obstacles to commerce. Perhaps it’s time for Congress to end the clown show and become acquainted with the basics of monetary policy and pro-growth economics. American competitiveness and prosperity depends on it." [emphasis added]
George Will and Steve Conover (our source link for Will’s column) give separate coverage to Senator Ron Wyden’s ‘Fair Flat Tax’ proposal here: http://www.msnbc.msn.com/id/19649892/site/newsweek/page/0/ and here: http://www.optimist123.com/optimist/2007/07/the-tax-system-.html
Conover: "…Senator Ron Wyden (Oregon Democrat) might have a better idea. He’s pushing a tax simplification plan dubbed the "Fair Flat Tax" in spite of long odds…It’s similar in principle to the dual-rate tax described above, and it’s a compromise between the six-rate rube goldberg system we have today versus the single-rate flat tax that keeps getting nowhere…If tax simplification has a chance, Senator Wyden might be on to something."
Will: "Under Wyden’s plan, all Americans—and all corporations—would use a one-page form. There would be three rates (15, 25 and 35 percent) instead of today’s six (10, 15, 25, 28, 33 and 35) for individuals, and a single rate for corporations. The alternative minimum tax…would be abolished. The standard deductions…would be tripled…The time is ripe for reform, for two reasons. The 2001 tax cuts will expire in 2011, so Congress cannot avoid re-examining the existing tax code, which nobody, given a blank slate, would re-create. And Democrats, who control Congress, are suffering stinging disapproval for underachieving."
The Wyden plan has yet to get much traction, but it deserves serious attention. Such a dramatic simplification of the federal tax code would enhance the competitive position of the U.S. relative to the rest of the world, and that would mark a refreshing divergence from our current legislative trajectory.
Positive feedback from two critics of the war in Iraq following a recent visit: http://www.nytimes.com/2007/07/30/opinion/30pollack.html?_r=3&pagewanted=all
"How much longer should American troops keep fighting and dying to build a new Iraq while Iraqi leaders fail to do their part? And how much longer can we wear down our forces in this mission? These haunting questions underscore the reality that the surge cannot go on forever. But there is enough good happening on the battlefields of Iraq today that Congress should plan on sustaining the effort at least into 2008."
For anyone wanting to catch up on developments in the world of ‘clean energy’, the Green Wombat website has a posted a slew of related stories over the past week–see links under ’Recent Posts’: http://blogs.business2.com/greenwombat/
Bob Novak warns that the Administration, facing yet more unintended consequences of the invasion of Iraq, may embark on a high-risk, low return venture in the Middle East by helping Turkey to suppress leftist Kurdish rebels based in northern Iraq: http://www.suntimes.com/news/novak/489380,CST-EDT-novak30.article
"…significant cross-border operations surely would bring to the PKK’s side the military forces of the Kurdistan Regional Government, the best U.S. ally in Iraq. What is Washington to do in the dilemma of two friends battling each other on an unwanted new front in Iraq?"
"…in secret briefings on Capitol Hill last week by Eric S. Edelman, a former aide to Vice President Dick Cheney and now undersecretary of defense for policy… who once was U.S. ambassador to Turkey, he revealed to lawmakers plans for a covert operation of U.S. Special Forces helping the Turks neutralize the PKK. They would behead the guerrilla organization by helping Turkey get rid of PKK leaders that they have targeted for years. Edelman’s listeners were stunned. Wasn’t this risky? He responded he was sure of success, adding that the U.S. role could be concealed and always would be denied. Even if all this is true, some of the briefed lawmakers left wondering whether this was a wise policy for handling the beleaguered Kurds who had been betrayed so often by U.S. governments in years past."
We’re not convinced that the KRG would come to the aid of the PKK, especially in a scenario like the one (allegedly) being floated by Edelman. But we agree with Novak that this is a high-risk venture with low to negative returns, and we find the the tactics (again, allegedly) proposed by Edelman especially disconcerting, as it threatens to destroy yet more of our country’s global political capital. Like all other forms of capital, political capital will expand only if it is invested well. We’re supposed to be the good guys. Let’s invest our political capital abroad accordingly.
Wealth and income distribution is a point of interest across the pond as well, and it gets quality treatment in this piece by David Smith, economics editor of London’s Sunday Times. His observations are just as applicable to the States as they are to the UK: http://www.economicsuk.com/blog/000538.html
"The central point is that when claims of record levels of inequality are bandied around, people will often reach for the knee-jerk response; that the rich need to be taxed a lot more and the poor given more direct financial support from the government…The real solution to inequality lies elsewhere. The gaps that have emerged in recent decades are between those who have the skills to prosper in a globalised world and those who do not."
Interesting historical dissertation by monetary economist Steve Hanke, in light of the hyperinflation currently plaguing Zimbabwe, with a focus on Yugoslavia in the 1990s: http://www.cato.org/pub_display.php?pub_id=8232
The Washington Post (via MSNBC) offers a good overview of research comparing male and female approaches to negotiation, especially the interesting turns such research has taken recently: from the idea that women simply faced a gap that could be closed thru learning negotiation skills, to the realization that aversion to negotiation may actually be a rational response to certain social incentives that arise out of our biological makeup.
Thanks to my own fairer half for the link: http://www.msnbc.msn.com/id/20030873/