The following post was written on October 25, 2012:
If you are part of the official Manhattan groupthink, you read the New York Times, and particularly its tribune of matters economic, Paul Krugman, and so you know for a certainty that there is nothing wrong with the American economy that cannot be fixed by higher taxes and even more government spending.Of course others have tried the high tax higher spend massive deficit approach, so from time to time we need to look at results from other locations to see how their policies are working out. Here are just a few recent examples:
Here’s a report from Walter Russell Meade on the state of California, Illinois and New York relative to the rest of the United States. It’s more about Illinois than the other two. My favorite part is that Illinois has issued close to $40 billion of pension bonds because they basically make lavish pension promises and then don’t fund them at all. Even with the $40 billion of phony borrowed contributions, they have an $85 billion shortfall in pension funding. Good luck with that!
Here’s an up-to-date report on the slow motion collapse of Greece:
Well, how about Japan. Massive deficits and zero interest rates for over 20 years. Accumulated debt now is over 200% of GDP. Demographic collapse such that there is effectively no hope that anyone will be around to pay off those debts. How’s it working out? Stagnation! So what’s the solution? According to today’s [Oct 25, 2012] Wall Street Journal, Japan is planning a new “stimulus package.”
You can’t make these things up. The Keynesian fallacy is so powerful that it seems to make it completely impossible to learn from experience.