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People are getting pretty annoyed with the never ending struggle to fix the economic and financial problems of the Eurozone. I liked this quote:

These two quotes from the IMF actually point to the problem itself: the belief that technocrats can “run” an economy. These statements are almost nonsensical when you think about it: if they could do these things they say that need to be done, why haven’t they already done them, and if they have done them, why haven’t they worked?

The Daily Capitalist

Ouch. The problem is really pretty simple: you can’t live above your means forever – eventually you have to pay the piper, which means living below your means for long enough for things to balance out. This ain’t rocket science. Tyler Cowen gets it right:

When it comes to “failure to remedy the euro crisis,” as opposed to initial causes, let’s look long and hard at “unwillingness to consider solutions which admit that citizens’ standards of living will fall.”  That’s not socialism, but it is one pernicious form of modern interventionism and you will find it very much here in America too.

It’s the last part that’s worrisome.

Related articles

• IMF slashes world outlook (business.financialpost.com)

But before we despair too much, we should remember where we are. We are the wealthiest nation on earth and we have the highest standard of living. Most people in this world would gladly change places with poor Americans. Our “way of doing things” has produced not only inequality and scary debt, but also an extremely high standard of living.

I’m not defending the status quo, but efforts to fix things often break things as well, so we should be cautious about changing anything with undue haste. Our ungainly political system usually protects us from hasty legislation, but, as we saw with Obamacare, the occasional concentration of political power produces sloppy legislation. Parts of Obamacare have already been jettisoned as unworkable, other parts are looking dubious, and no one seems totally happy with it. Democrats had a rare opportunity to make big changes and they acted in haste. Should the Republicans take control of government next year, they will be tempted to do the same.

We have plenty of problems that need fixing, but all change is not improvement. For all our problems, we’ve got it pretty good. We need more calm deliberation and prudence and less fiery rhetoric. We will probably be disappointed.

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, there are a lot more important things than facts.

1. The improvement of our standard of living requires an extensive banking system.
2. An extensive banking system will, of necessity, occasionally implode and cause great havoc for innocent bystanders.

Reality can be depressing. Banking seems to have a three steps forward, two steps back cycle. Sometimes everything just hums along and we’re fat, dumb, and happy. Then it all tanks and we hold the bankers in contempt. I’m smart enough to see why it works this way, but not smart enough to see how it could not work this way.

As an aside, remembering the banking is essential, how do we get people to be bankers, knowing that they will be reviled and despised? Hint: for enough money, some people will do anything.

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Politicians are even less rigorous. They think they know what consequences will be mostly judged as good, so they describe their choices and actions only in terms they hope voters will see as “good” consequences. They act as if there are no “bad” consequences. In the real world, there are always trade-offs; in the real world, people will view the goodness of consequences differently; in the real world, most actions have “good” and “bad” consequences. Politicians tend to ignore these real world conditions. This isn’t a beef about any politician in particular: they all do it – and probably wouldn’t get elected if they didn’t. Most pundits are little better.

I would like to see more focus on the consequences of policies with less opining about which are “good” and “bad” consequences. Identifying consequences, or the likelihood of consequences, is tricky enough without overlaying the process with somebody’s moral philosophy. At the very least, we should clearly differentiate between the two in our thinking.

This raises a key question – what changes would make for a better life?

This isn’t a new question. People have been wrestling with this for over a hundred generations. The conclusions drawn from millions of observations are available to us. Yet we are reluctant to tap into this resource – after all, our ancestors didn’t have cell phones or iPads – what relevance could they possibly have?

One of my new year goals is to explore more of the wisdom of the past. Best I can tell, human nature hasn’t changed much. Perhaps we are so busy keeping track of what’s new that we neglect learning what’s important.

We’ll see whether I can really focus more on what’s important (rather than current). As part of that effort, I’m suspending my tumblr activity. Don’t expect this to go fast – my posts may come slower – but hopefully they will also be better!

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It’s pretty clear that she hasn’t connected all the dots (yet), but I imagine she will.

It’s sometimes seems a harsh awakening to realize that good intentions don’t always lead to good outcomes, using government power to help someone always harms someone else, and that men are not angels. Though it may be harsh, it’s an awakening that needs to be more common.

Economists try – they call it hedonics, but establishing a numeric value for Facebook access (for example) is not going to be without controversy.

The stagnation narrative makes sense when you look at the numbers, but it makes a lot less sense when you consider your overall standard of living.

Our qualitative wealth is even more impressive if you take the long view.