Friday, September 09, 2011
  Frustrating Brooks (as always)

David Brooks keeps doing it. Unlike most pundits, his reasoning process is excellent. He usually manages to draw the right conclusions from facts, and sometimes draws a uniquely valid conclusion. Thus he's always worth reading. But his 'universe of observation' is NY-centered, which blinds him to the experiences of Americans.

He's done it again in today's column.

The good part:
A few years ago, Kenneth Rogoff and Carmen M. Reinhart wrote the definitive guide to the current economic downturn, a book called “This Time Is Different.” Rogoff and Reinhart studied data from eight centuries of financial crises. They found that banking-crisis recessions are worse than normal recessions. They last longer.

The general lesson I take from this history ... Use the winter of recuperation to take care of the fundamentals. Work hard to fix the education system, the tax code, the fiscal mess and the regulatory system. None of these things will produce short-term benefits. But when the recession finally does run its course, the economy will be ready to surge. Paradoxically, you have more power to influence these fundamental issues than you do next month’s jobs report.

Perfectly right. Best advice of any pundit.

In fact, it's exactly what FDR did in the 1930's depression. Unlike the idiotic caricature of FDR by both modern sides, he didn't 'stimulate' anything. That wasn't why he spent money. He spent money to straighten out the banks, stomp out the speculators, improve education and build a complete new infrastructure. After the depression was over, America had its best 40 years, all because of FDR's 'winter of recuperation'.

But then:
This is the problem the Obama administration is facing. Like everybody else, it has seen a sluggish economy come grinding to a halt. There is clearly now a significant risk of a double-dip recession.

DOUBLE-DIP? Stop it. This wording implies that the recession began in Sept 2008 and ended sometime thereafter. Maybe that's true in Wall Street.

Some parts of America have been in a depression since 1975. The depression has been slowly spreading since then, and finally reached NY in 2008. At that point, the average speculator saw his daily income drop from its usual trillion to only 999 billion, which drove him to desperation. He was only able to destroy nine entire planets per day instead of his accustomed ten entire planets! Oh no!

The recession ended for NY when Shotgun Paulson stole the entire American economy and handed it to the speculators.

One part of America never fell into the recession. North Dakota. Perhaps we should be looking to ND for solutions instead of NY. And if we looked there, we'd find the North Dakota State Bank, which has operated in a unique way since 1919. The state bank receives all tax revenues BEFORE the government itself gets them, and treats the revenues as an investment to be preserved. It lets the state government have what it needs, and uses the overflow for business development and emergency aid. All commercial banks in the state are dependent on the state bank.
 


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Polistra was named after the original townsite of Manhattan (the one in Kansas). When I was growing up in Manhattan, I spent a lot of time exploring by foot, bike, and car. I discovered the ruins of an old mill along Wildcat Creek, and decided (inaccurately) that it was the remains of the original site of Polistra. Accurate or not, I've always liked the name, with its echoes of Poland (an under-appreciated friend of freedom) and stars. ==== The title icon is explained here. ==== Switchover: This 2007 entry marks a sharp change in worldview from neocon to pure populist. ===== The long illustrated story of Polistra's Dream is a time-travel fable, attempting to answer the dangerous revision of New Deal history propagated by Amity Shlaes. The Dream has 8 episodes, linked in a chain from the first. This entry explains the Shlaes connection.

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