Wednesday, August 3, 2011

Principles Never Change!

Once again I have to credit Milton Friedman for today's wisdom. I feel it's important that everyone understand these principles of economic, first because they have worked historically, and secondly because when it comes to our government, the people who enjoy an informational advantage have a tendency to exploit those who don't. Even if that information appears to be fraudulent or skewed. So here's a short tidbit of economic wisdom, not long enough to bore you, but interesting enough to put some ammo in your pouch. After all, information applied is power.

" In fiscal policy as in monetary policy, all political considerations aside, we simply do not know enough to be able to use deliberate changes in taxation or expenditures as a sensitive destabilizing mechanism." (You have to love a guy who starts out humbly). "In the process of trying to do so, we almost surely make matters worse." ( Would someone notify Washington of this). " We make matters worse not by being consistently perverse- that would be easily solved by simply doing the complete opposite of what seemed at first the thing to do. We make matters worse by introducing a largely random disturbance that is simply added to other disturbances."

I think what he's saying here is to quit micro managing the economy. Whatever fluctuations there are work themselves out. Specifically, it's against common sense economic policy to try to stimulate an economy that'll right itself if just left alone, as we'll find in this next text.

"What we need is not a skillful monetary driver of the economic vehicle continuously turning the steering wheel to adjust to the unexpected irregularities of the route." (Quick note, this is how the car got into the proverbial ditch Obama is always trying to drive out of). " But some means of keeping the monetary passenger who is in the back seat as ballast from occasionally leaning over and giving the steering wheel a jerk that threatens to send the car off the road."

You'd have thought Milton Friedman wrote this yesterday, not back in 1982. But you see, principles never change, methods always do. Stick to the economic principles and everything will be just fine. Quit meddling with the ship, it'll right itself.

God Bless!
Capt. Bill


No comments:

Post a Comment