Thursday, January 29, 2009

The Keynesian 'Solution'

Dictionary.com describes John Maynard Keynes as follows:

1883–1946, English economist and writer.

British economist who proposed that high unemployment, being a result of insufficient consumer spending, could be relieved by government-sponsored programs. He also advocated deficit spending by governments to stimulate ecomomic activity.

English economist who advocated the use of government monetary and fiscal policy to maintain full employment without inflation


Keynesian economics has dominated the American political economy for decades, going back at least to the great depression. It was Keynesian policy which FDR used to get us out (cough, gag) of the depression. In the late 1960s early 1970s Richard Nixon (who had taken us off the gold standard completely) stated “We’re all Keynesian now.”

Virtually every president since at least FDR has been to some extent or the other, Keynesian, no matter what else you may say about him. That even includes Reagan, though possibly to a lesser extent.

As can be seen from the above definitions, one of the main, perhaps THE main tenant of Keynesian economics is that during times of economic slowdown, the government should spend money on infrastructure and various projects in order to provide jobs, spur consumer spending, etc. This, supposedly will get the economy through the tough times. Once the economy recovers, the government spending can be curtailed. It is a form of planned economy.

Sounds good on paper to the layman, but there are more than a few drawbacks.

To start with, it really does not work. As I have said elsewhere, the state of the economy was at least as bad, if not worse in the late 1930s, after years of FDR, than it was when FDR took over. FDRs programs were, among many other things, Keynesian.

It is not a natural thing for the whole economy to be in a downturn all at the same time. Unfortunately, most people think that the free market will frequently result in a total economic meltdown, at which point some government intervention (in the form, at least, of Keynesian policies, if not outright socialism) is required. However, while no possible economic system can ever insulate every individual from hardship, the free market will never end up in an economic meltdown. The meltdowns that do occur (such as 1929 onward and our current situation) are almost always directly related to government intervention. However, the solution proposed by our government leaders? More government intervention. Make sense to you??? Yeah, me neither.

1929 was the result of government intervention. The as bad or worse situation of 1938 was due to continued government intervention.

Second, it is as close to an absolute fact as anything in the world that once government spending is started, it is not stopped. Many of the programs for economic recovery of the 1930s are still with us today. This causes continued deficits and other problems which result in further economy wide problems on down the road.

Third, and most importantly, there are long term negative effects of this type of spending (deficits and higher taxes and the further economic hardships that occur due to these things). When asked about what the effects of his policy would be in the long run, Keynes himself famously quipped, “In the long run, we’re all dead.” There ya go. That’s the philosophy we want to hand down to our kids, right? We want policy which we believe (rightly or wrongly) will benefit us, but who gives a rip what it will do to our descendents? Sure, count me in. I don’t care what Jr. says.

Now, what to do about our current mess? First off, let us be clear. Our problems are not the result of the free market gone wild. Our problems are directly related to over arching government intervention into the lives and businesses of individuals and corporations, from bad, even terrible tax policy, from wretched spending programs, from freedom squelching regulations, from currency devaluing monetary policy, and on and on. The proposed solution? More government. Create money out of thin air and spend it on ‘infrastructure,’ and a myriad of other social programs. In short, the current proposed solutions are the same old tired Keynesian policies which have actually contributed to the current mess.

In the end, I have no idea exactly how all this will turn out. But I can promise you, absent any major change, the direction we are heading is wrong. We can keep putting band-aids on our severed jugulars and keep the patient alive until hopefully, in the long run, we are all dead, OR we can care about our descendents and try to fix the problems permanently with sound, honest money, low taxes, limited government, and so forth.

What do you think?

Another Freebird Falls

I heard on the way home last night, that Billy Powell, keyboardist for Lynyrd Skynyrd, passed away.

Powell's story was an interesting one. He had been classically trained as a pianist. In high school, he befriended Leon Wilkeson, future bassist for Skynyrd. Ultimately, he began working for the band as a roadie, setting up and taking down equipment, etc. No one in the band really knew that he even played an instrument, let alone that he was good.

One night in 1972 after the band had played at a prom (can you see Skynyrd playing a prom???) Billy had a few minutes and he sat down at a piano, and began playing "Freebird." Ronnie Van Zant was blown away. "Man, you mean you've been working with us for two years, and you can play like that??? We've been wanting to add a keyboardist. You're in the band."

The rest is history. Other members of the band have joked about Billy's playing. The problem is in holding him back. He does not know when to not play. he plays constantly, throughout the song. Although classically trained, Billy's work with Skynyrd produced more of a 'honky tonk' piano style.

This band (a favorite of my youth, and one that still holds a special place in my heart and mind) has had perhaps the most tragic history of any band. Everyone, of course, knows about the plane crash of October 20, 1977. That crash killed the heart and soul of Skynyrd - Ronnie Van Zant, as well as the most recent addition - Steve Gaines, who had replaced Ed King as third guitarist.

In subsequent years, guitarist Allen Collins was seriously injured (and his girlfriend killed) in an alcohol related auto accident. Collins was left permanently crippled.

In 1987, the band reunited and embarked on a reunion tour. On October 20, the ten year anniversary of the plane crash, they played the Birmingham-Jefferson Civic Center. Your's truly was present, about 15 rows back from the stage. It was a great show. Included were Gary Rossington, Powell, Leon Wilkeson, and Ed King (original 3rd Guitarist). I'm thinking Artimus Pyle may have manned the drums that night, but I am not sure. Of course Johnny replaced his brother Ronnie on vocals. A touching moment was when Allen Collins came onto the stage in his wheelchair and praised the band, and encouraged everyone to not drink and drive.

The show was great and the band has been playing with varying lineups ever since. However, most of what they have done is insignificant tripe compared to the old days.

Since that night, however, Allen Collins subsequently passed away (I think around 1990) from further complications going back to his accident. A falling out occured amongst many of the old members. Ed King was kicked out (he claims that as a Californian, he was never accepted by the other members, even in the old days - even though he is responsible for the licks on Sweet Home Alabama, their biggest hit) Artimus Pyle has had major legal battles and is no longer welcome ni the band. Many of the old timers speak ill of Rossington.

In 2001, Leon Wilkeson died of liver problems, likely related to years of not living right.

Now, Powell dies at 56. He had a history of heart problems, and was significantly overweight in later years. I am sure that he had had substance abuse issues in his life too, but I have no idea if that was a demon he had conquered or if he still dealt with it.

During the original years of Skynyrd fame (1973-1977) the band had 6 or 7 members at any one time on any one album. With some rotation, this included a total of nine people. Of these, at least five are now dead (unless there are others I am unaware of.) Of these, Powell lived the longest, and that only to 56. The only ones still living are original drummer Bob Burns, replacement drummer Pyle, Original 3rd guitarist (and sometimes bassman) Ed King, and Gary Rossington. Of the current Skynyrd recording/touring group, only Rossington is present. King has had major heart problems. Pyle has had major legal problems. I don't know much about what has happened to Burns.

I got into Skynyrd after the plane crash - probably first latching on to their music around 1980. During my high school years, all of music could be divided into two categories. There was Lynyrd Skynyrd, then there was everything else. I've grown a great deal since then, thankfully. But the original Skynyrd will always have a place in my heart. Powell was an incredible talent, and, from what I could tell seemed to be a nice, soft spoken gentleman. He will be missed and remembered fondly.

Incidently, the childhood friend/neighbor I grew up with - his birthday was October 20, the day the plane went down. Now Powell dies on January 28 - my son's 19th birthday. Weird.

Wednesday, January 21, 2009

Thursday, January 8, 2009

A New Day on the Plains

I wrote a couple of posts below concerning Tuberville's tenure at Auburn. Some people loved him. Some people didn't.

I never quite knew where I stood with him. I did not understand the fuss about him when he was hired. He had five years head coaching experience. This was at Ole Miss who he took over when they had been hit with major probation. He did ok. Not great, but not terrible especially considering the circumstances. But, was he the best coach Auburn could have gotten?

He came to Auburn and brought his entire coaching staff in tact. After five years he had two four loss seasons, two five loss seasons, and a six loss season. His overall record was 38-24 (0.613) No conference championships (though he did play for one). Nowhere near any National Championship contention. I was ready for him to go. So were a lot of other people. Some were not.

The powers that be then made Auburn a laughing stock. Instead of firing him or doing something to improve things and generally going about it the right way, they sercretly flew the private jet of a major donor (and Board Member) to Louisville to hire Bobby Petrino just before the Alabama Game. Apparently they were then going to fire Tuberville and announce Petrino. I am glad we did not get Petrino.

However, the best laid plans have a way of failing. The plan leaked out. AU was embarassed. Petrino was embarassed and backed out. The AD got fired. Auburn surprisingly beat Alabama. Tuberville was kept on, given an extension. He promised a National Championship in his tenure. "You can write that down."

Surprises kept coming. After starting out with no seasons in five with less than four losses, in his sixth season he went 13-0, won the SEC, should have been able to play for the National Title. All of a sudden, everyone loves Tubby. He gets a huge extension. Big money. Oh, great great Coach. What then?

They start out the 2005 season losing the Georgia Tech. However, the only other loss in regular season was an OT loss to LSU who was a pretty darn good football team. The season ended on a low note with a bowl loss to Wisconsin.

2006 was a weird year. They were highly rated at one point. The finished a very good 11-2. However, they lost to Arkansas in embarrasing fashion and did not even show up for Georgia.

In 2007 they started out 1-2, losing to South Florida and Mississippi State. They did not show up for Georgia again. They finished 9-4.

2008....well.....don't get me started.

So, really, 2004-2006 were very respectable, even very good years. But, other than those three years, Auburn lost at least four games every single year under Tubby. Sure they won six straight over Bama (a Bama that was down mostly). They kept barely winning over Bama while Bama's bookend wins over Auburn were blowouts. Tubby never had the killer instinct. He never quite got AU over the hump, and was now on the downhill slide. He had a revolving door at the coordinator positions, yet kept basically the same staff in tact for fifteen years. He totally blew the Franklin hire.

Good or bad, love him or hate him, I truly believe it was time for Tommy to go.

"We should get a great coach," I thought. When we hired Gene Chizik, a man with a head coaching record of 5-19, I was speechless.

However, while only time will tell, I am very pleased with what Chizik has done so far. He has hired Gus Malzahn as OC. Gus led Tulsa to be a top 2 offense the last two years. This year they were in the top ten in both rushing AND passing as well as scoring. He has hired what appears to be several assistants on offense that are succesful coaches plus great recruiters. He kept one of the better defensive coaches off of Tuberville's staff who also is a good recruiter. He has hired a potentially very good D Coordinator. The good thing is that between all thee guys they have recruiting connections all over from Oklahoma, Arkansas, Texas, Alabama, Georgia, Florida, and maybe others.

Oh, and the 13-0 season at Auburn? Chizik was the defensive coordinator. He left and went to Texas in 2005 where they went 13-0 and won the National Title. So Dude CAN coach!

It will be very interesting to see how that goes.

Tuesday, January 6, 2009

Is this what is wrong with the current economy?

Awhile back, I wrote on the dismal state of economic knowledge. This lack of understanding is never more evident than in an economic crisis such as we now have.

Several weeks ago I happened to be watching TV. I believe it was CNN - which I never watch but I was at someone elses home who had it on. Some guy was talking about the current crisis. I very much wish I would have written his name down and took notes so that I could be more specific than I am able to be.

He was talking about how some experts have said this collapse was coming for quite some time. He said, until now, most 'experts' just thought these guys were crazy. Now it turns out they knew what they were talking about.

My immediate thought was that yes, the Autstrian School economists (and those of similar inclinations that may go by various names) have for years explained the business cycles and particularly huge drawn out recessions/depressions such as the one from 1929 to ~1942. These guys have stated again and again how we are going down the same road that led us to that disaster (only it is worse now because more and more of the obstacles on that road have been removed) and the result will be a depression even worse than that.

The problem is the market is not allowed to work. Government intervenes through regulation, through monetary policy, (including now the removal of the gold standard that at least we still had in 1929), Keynseyen (sp??) spending, jerking around interests rates, etc. The Austrians would argue that this government intervention into the natural economy is what causes the huge and drawn out crises.

Sure, in any economic system there will be countless contiunous 'little crises'. If you lose your job, that is a crisis and no type of economic system can guarantee that you will always have a job. However, a planned economy (where the government tries to control the whole economy) leads to economy wide crises. Just read the current headlines to see the result.

So, naturally, I assumed that this was what the CNN reporter was getting at. Planned economy, debased currency, all encompassing economic policy is what got us here. Some experts have said this for years, now it is coming true. The answer is to shrink government and reduce (almost to the point of elimination) its effect on the economy.

But, NOOOOOOO that is not what this guy was saying. He went on, and I paraphrase, but this is a very accurate paraphrase: "One thing we know for sure is that we can no longer just let the free market rule. That is what we have been doing and it has led us into this mess. We must have more regulation and control."

Does this guy live in the same universe that I do? We have had a free market up to now?

This of course was the exact same argument that has been used for eighty years now concerning the Great Depression. We had a free market. It began to crumble. Hoover refused to do anything thinking the free market would work. It crashed. FDR came in and instituted economic policies which led us out of the depression. Hurray for FDR. Hurray for our government saviour. Boo freedom.

However as Murray Rothbard showed conclusively in his book "America's Great Depression" this is not at all accurate. We were hardly a 'free market" in the years leading up to 1929. Hoover increased government intervention drastically (to the point that FDR ran against Hoover's 'big government' philosophy. FDR was clueless what to do. The result? Unemployment was higher in 1938 than it was in 1932 when FDR too over.

I don't know about you, but all that sounds familiar to me. We have not been in a free economy in my lifetime. Bush, in the face of bad economic indicators has tremendously increased government intervention, but is going down in history as a 'do nothing.' Obama is our FDR/Messiah. What will this all look like four, five or six years down the road.

I shudder to think.

However, I can't think for long, I have to go look for a job.

Thursday, December 25, 2008

Christmas

I know I have not been active at all on here lately. Too much going on. I love to write, but seldom really have the time.

Lessons are learned the hard way sometime. Christmas is a good example. We over-commercialize it. We stress out over it. We spend too much. We hate that others spent so much on us but did not necessarily get us what WE would have wanted. We worry if we got others what THEY would have wanted. We lose the real meaning in all of this.

This year was particularly hard in the Philosopher's home. The day I bought my first gift for my lovely Bride (of 20 + years) I learned that I was going to be laid off for at least six weeks. We were already tight.

Already, I could not get Philosopher, Jr., and my two unbeleivable daughters what I would like or what they would like.

Times are hard, money's tight.

However, maybe more than at any time in memory, I feel blessed. We had a wonderful Christmas. Our gifts, though in total costing far less money than usual, were all very nice. Both the ones I gave, and the ones I got. Maybe it is because of the love that is represented in those gifts.

I see Philospher. Jr. growing to be a mature, caring, thoughtful, wonderful, intelligent young man in whom I am very proud.

My girls are beautiful, loving, thoughtful, caring, thankful.

I love Mrs. Philosopher more than I ahve words to say.

Life is hard.

But

Life is good.

God refines us in the fire...

but

God loves us and provides all we need.

I have friends...family....church...freedom....SALVATION.

Merry Christmas