Thursday, June 17, 2010

Sunday, June 13, 2010

Why does the "rational actor" approach to social problem solving fail?

Here is an eleven minute lecture explaining the problem behind the problem behind the problem.

It is posted by Paul Rosenberg at OpenLeft. For those of us who are not academic researchers buried in the literature Jon Hanson lays out how the problem of tobacco sales was dealt with in law and public policy (the rational actor policy) and how the tobacco companies quietly applied psychology and social psychology to subvert the efforts of the government and the legal system to protect the public. It's found right after about the 9:45 mark.

To me this also very clearly shows the utter failure of all libertarian approaches to public policy. He does not use the term in his discussion, but he clearly demonstrates how the rational actor economic and legal model places all the blame for social problems on the individuals who have the problems and provides blinders to be used by those who benefit from those problems.

Wednesday, June 09, 2010

Which is more important? Jobs or keeping the federal deficit down?

The Media Consortium has posted an excellent post at OpenLeft. Consider this:
...take a look at Friday's jobs report. As Tim Fernholz notes for The American Prospect, this report was the most disappointing piece of economic news in months. While the economy gained 431,000 new jobs during the month, 411,000 of them were temporary hires by the U.S. Census, meaning the private sector is not able to support much new hiring.

There's a critical lesson there: The only serious engine of job growth in the month of May was the federal government. Absent government hiring, the economy is not improving at all. There is an almost bottomless supply of critical social needs that require work right now, but no private-sector momentum to meet those needs.

The BP oil catastrophe should underscore how important new, green energy is to the U.S. economy-yet U.S. efforts to develop green energy solutions have fallen far behind those of China and other industrial powerhouse nations. Major federal investment into the research and implementation of green energy would be good for our environment and good for our economy."

The only strength in the American economy is federal spending. It is maintaining some employment where the private economy simply cannot.

Why does this matter? The Great Depression II was limited to merely the Great Recession in 2009 by this federal deficit spending. Right now is too damned soon to stop deficit spending that maintains jobs!!

Is deficit spending inherently bad?

Should a family ever borrow money to buy a house? If they can't, then available housing drops throughout the economy and so do jobs. but housing itself builds and protects families so that the children can grow up to join and expand the economy. It's investment spending both for the families and for the economy.

That contrasts with families that gamble away their income and have nothing to show for it, or economies that borrow money to go to war and have nothing to show for it. Some deficits are good, some are bad. Spending to protect jobs is inherently good spending, because ultimately the borrowed money can be repaid from the increased work performed by the economy overall.