Smart Links 15 September 2011

Articles on right sizing the state and related thoughts, France’s banks, the five stages of grief as it applies to global markets, the real economy at street level, Marx is back, European shell games, can China save us, and how to preserve French in Quebec.

The first step to an excellent future is to quantify the size of the state as a percentage of GDP.  Thanks to Richard of Victoria.

The Globe and Mail -- Canada’s enviable shrinking of the power of the state
[In his book, The Government versus the Market] economist Vito Tanzi predicts the shrinking of the modern state, asserts that it has already begun and regards Canada as an early leader in the process.


Quote worth quoting.

“He simply tracks the trajectory of a central conundrum of the 21st century. The state can’t survive without the market economy – but the market economy cannot survive the excesses of the state.”

Related. -- Review of Government versus Markets: The Changing Economic Role of the State, by Vito Tanzi
As the full economic impact of the global financial crisis became apparent in early 2009, a chorus of commentators began to predict the resurgence of the state.

Pdf below – Victor Tanzi, The Role of the State in the 21st Century

Quote worth quoting.

“Tanzi’s main thesis is that the modern state has three main functions: resource allocation (broadly the provision of public goods including defence, internal order and a legal system); the redistribution of income; and macroeconomic stabilisation.”

Whatever people think about the power of the market, in the end, the state has the monopoly on legal violence, and forced borrowing.

Financial Times -- Forced borrowing: the WMD of fiscal policy
A spectre is haunting Europe – the spectre of sovereign default.

What ails the French banks.

Wall Street Journal -- What's the Matter With the French Banks?
Whether the market's worst fears are realized or not, the financial system maintains too close a relationship to the state.

Getting to acceptance.

Financial Times –Five stages of grief for global markets
The well-known Kübler-Ross model of grief has five stages: denial, anger, bargaining, depression, and acceptance.

In the guts of the real economy.

Financial Times -- America’s economy: An uncertain outlook for Main Street, USA
Putting struggling small businesses back to work has been placed at the heart of the quest for growth – and for a president under pressure, the political stakes are as high as the economic ones.

What Marx got right, and wrong.

Business Week -- Marx to Market
The economic crisis has made the philosopher’s ideas relevant again, but the world shouldn’t forget what Marx got wrong.

No hiding the truth of Europe’s looming financial disaster.

Bloomberg – European Bank Blowups Hidden With Shell Games
The last time the world had a major banking crisis, fair-value accounting rules were near the top of the list of scapegoats most likely to be denounced by government and industry leaders. Not so this go-around.

China steps forward.

Washington Post -- How China can help Europe get out of debt
The European crisis is no longer a European crisis.

Want to preserve French in Quebec, get the economy growing.

Toronto Sun – Economy at the Root of Saving the French Language
Quebecers are very sensitive when it comes time to talk about language issues.


The Role of the State in the 21st Century.pdf111.82 KB
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Twin Virtues: Inequality of Outcomes & Equality of Opportunity©

Twin Virtues

Ultimately, the most successful societies find the balance between the twin virtues of inequality of outcomes and equality of opportunity.

The new politics must marry the twin virtues of unequal outcomes and equality of opportunity.

When too few get too much everybody loses.

Feminism is about women living their lives on their own terms, marshalling the resources of the society to make that possible, and men embracing this as vital to a successful society and their own liberation.

Can it be that striving for equality of opportunity however imperfect the process not only benefits the individual but also creates benefits for the society that are unintended but wonderful?

Economics must be a 'moral enterprise' as much as politics claims to be. Economic outcomes need to be framed in terms of right and wrong not just efficiency if only because these often align in surprising ways that are good for society and the economy.

My vision of Canada is that any Canadian child from a family of limited circumstance can expect to have a chance at lifetime of unlimited opportunities.

Free trade is a wonderful thing. Time and time again economists have proven that free trade creates enormous wealth for each country 'on the whole'. Historians have shown that free trade is usually associated with rising political, social and cultural liberty. The perennial problem is that free trade always creates tremendous disruption for thousands even millions of individuals often concentrated in one geography, and where the state is idle, not investing in best in class instruments of social justice, free trade can be a permanent ticket out of the middle class, down, not up.

Tax policy should be founded on the principle of generating steady tax revenues sufficient to maximise environmentally sustainable economic growth in order to fund fair government.

Public policy should be designed to decrease inequality before the law and increase equality of opportunity.

Capitalism is not the problem; the problem is what we do with capitalism.

Content is always more difficult to argue than conspiracy.

Let the state regulate and the market operate (most things).

Welfare strategies are best designed as a hand up, not as a hand out.

Political debate should not be fact free fighting.

Explanation lasts longer than eloquence.

Always favour empowerment over dependency.

The most enduring public figures are embraced for the causes they fought for and not the concept of themselves they hoped others would remember them by.

Find your voice and don't be the echo of somebody else.

It is possible to operate on two different levels: the practical, cautious and conservative; and the realm of ideas, open, free, and radical.