By Arnold Kling
I’ve been away, mostly in Prague (where the big economic question is why so many older buildings have so many fancy details. My answer is that there must have been a very unequal distribution of wealth, so that rich folks could afford to hire a lot of labor for building). Some things I would have put more time into had I been around:
1. Jeffrey Rogers Hummel on the prospects for a default by the U.S. government.
according to the latest intermediate projections of the trustees, the Hospital Insurance (HI-Medicare Part A) trust fund will be out of money in 2017, whereas the Social Security (OASDI) trust funds will be empty by 2037. Although other parts of Medicare are already funded from general revenues, when HI and OASDI need to dip into general revenues, the first firewall is gone. If investors respond by requiring a risk premium on Treasuries, the unwinding could move very fast, much like the sudden collapse of the Soviet Union. Politicians will be unable to react.
Read the whole thing, which fits under “banana Republic watch.” My personal prediction/fear is that the politicians will opt for a capital levy–an immediate confiscation of wealth in order to keep the creditors at bay.
2. Economists seem to be voicing opinions in groups. One bunch says not to audit the Fed. More <a href = "http://blogs.reuters.com/james-pethokoukis/2009/08/03/6-economists-on-why-ron-pauls-fed-audit-idea-is-wrong/"here.
3. A bunch of health care wonks say that it would be a good idea to turn the health care industry over to a bunch of…health care policy wonks. Like the Fed, this so-called IMAC would be insulated from politics. Once again, we have the ideology that experts know best. The alternative viewpoint is to respect the evolutionary processes of markets and traditions. Those of us with the latter viewpoint don’t seem to be as well organized with public petitions.