The Battle Between Sunni and Shiite Muslims And US Policy In Mid-East

Like most Americans, I know little about the conflict between Sunni and Shiite Muslims.  I found this article informative.  It describes the conflict in the Mid-East as sectarian warfare and it does not offer much hope for US intervention in the civil wars that are underway in the Mid-East.

Should We Worry About China's Ecnomic Problems?

Paul Krugman offers his description of China's economic problems and discusses the implications for the global economy.  His first take is that China's slowdown is very important since it accounts for 25% of global manufacturing.  He confesses some ignorance because there are many doubts about the statistics available from China.  Moreover, China's has the second largest economy in the world but it is only a small share of the global economy.  His greater concern is that many nations will have difficulty using monetary policy and fiscal policy in a weak business cycle.  Monetary policy is close to its limits in the US and Europe since interest rate are already close to zero.  Politics prevent the use of fiscal policy in the US and Europe. Therefore, we will be stuck in a bad business cycle for longer than necessary.

My view is that Krugman's analysis of the global economy is colored strongly by his understanding of business cycle theory in a nation state.  Nations that export raw materials to China are in trouble and they will purchase less from the rest of the world.  Oil prices and the prices of other commodities have also fallen in response to weak global demand.  This has already created turmoil in the currency exchange markets. Its also hard to gauge the reaction of stock markets to the problems in China's market.  I worry much more about financial contagion than Krugman. 

Why Do So Many Americans Oppose Efforts To Reduce Carbon Emissions?

The post below is critical of the claim that well informed individuals make rational decisions about the economic impact of climate change mitigation on their household budget.  Consequently, they vote against government proposals to reduce carbon emissions. In other words, democracy works.  This article describes the methods employed by energy companies  to misinform the "rational agents" who vote against government proposals to reduce carbon emissions.  It concludes that energy companies have corrupted the democratic process.  It also elevates the issue of climate change above and beyond the narrow economic interests of poorly informed voters.  It argues that we have a moral duty to prevent the certain harms to the only planet that we have.  We owe this to ourselves and to future generations. Of course, there is no room for morality in economics.  Economic efficiency is the only objective of economic analysis.

Our founders were concerned about the dependency of a democratic government on well informed citizens.  They recognized the importance of education and a well informed public. The opponents of democracy have been doing what they can to mobilize the political activity of the information poor segment of the population.  The GOP primary debates bear witness to their success.  It is also apparent in the US House of Representatives.  One would think that our representatives would be primarily concerned with the global trouble spots that are real national threats.  Unfortunately, they have been more interested in repealing Obamacare.  They approved a bill to repeal Obamacare with the full understanding that it would be vetoed by Obama.  They did so primarily to demonstrate their hatred for the president that their base has been taught to hate.  They also showed support for armed protesters who have occupied a government facility.  The protesters are demonstrating their hatred of government and we have elected representatives to Congress who share that hatred.  Of course, they realize that their efforts will be cheered by those who voted for them.  Fox News has been turning the armed occupiers into heroes.

A Rational Agent Explanation For Opposition To Climate Change Mitigation

Its not easy to pass legislation which will put a price on carbon emissions.  One source of opposition is the energy industry which is directly effected.  They have lobbied governments, and they have sponsored climate change denial "studies" which have misled the public.  This article offers another explanation for resistance to carbon pricing.  It assumes that each voter is a rational agent who calculates the costs of carbon pricing versus benefits which might never be received.  A simple economic analysis tells them to vote against carbon pricing.  Therefore, we should not blame the energy industry and its allies for resistance to carbon pricing.  "Economic Man" has made a rational decision and voted accordingly.  Consequently, according to a simple economic analysis, an optimum allocation of resources will occur.  Everyone will be better off if we give free reign to individuals so that they can maximize their self interest. 

There are many problems with this article.  The first problem is that businesses which oppose carbon pricing do much of the analysis for the rational agents assumed in this article.  They have misled the public by warning them of the costs and minimizing the benefits.  They will not allow Economic Man to make rational decisions without a lot of help from their propaganda.  Independent rational agents are a fiction.  Furthermore, we expect governments to use expert advice to make decisions which are in the best interest of society.  For example, the FDA does not permit the sale of a prescription drug without testing the effectiveness and safety of the drug.  Rational agents (consumers) spend billions on non-prescription drugs which do not require FDA approval.  Many of those drugs do not even contain the ingredients listed on the labels, and few of them provide the advertised benefits.

Is Saudi Arabia A Reliable Ally?

The recent terrorist attacks have inspired a lot of poorly informed comments from politicians who know little about the complex situation in the Mid-East.  This editorial in the NYT provides three different perspectives on Saudi Arabia.  Their interests do not always coincide with our national interest but we have learned to live with some of the differences.  Hopefully, the commentary in this editorial will be informative.

China Sneezes And Global Economy Reacts

The manufacturing index in China fell for the tenth consecutive month and its stock market contracted by 7% in response to a wave of selling.  Concerns about slowing growth in China spread to nations which depend upon exports to China.  Recent events in the Mid-East between Iran and Saudi Arabia also raised concerns about the oil supply and higher energy prices. 

What Did Obama Accomplish During His Presidency?

Politics is essentially about how the government is funded and what the government does with the money it collected.  President Obama's tax policies were very different from those proposed by his Republican opponents.  He raised taxes on the top 1% substantially.  They are back to where they were before Ronald Reagan and George Bush reduced the top rates.  He also passed the Affordable Care Act which has increased the number of insured citizens by 17 million.  Furthermore, one of the major reasons why Republican's oppose ACA is that it includes a substantial tax on the top 1%.

 Paul Krugman reminds us that elections have consequences.  If McCain or Romney had been elected they would have cut the top tax rates even further and they would not have spent money to increase the number of insured citizens.  All of the Republican candidates have proposed tax plans which would cut taxes for the super rich, who fund their campaigns,  and they would cut government spending on programs that provide benefits for the majority of Americans.  They argue that cutting taxes for the rich will encourage the "job creators" to grow the economy.  They falsely argued in their campaigns against Obama that his tax policies would shrink the economy and increase the unemployment rate.  The unemployment rate is now lower than Mitt Romney claimed that it would be if he were elected, and more jobs were created under Obama than were created under George Bush.

If most Americans understood the real differences between the two political parties the Republican Party would continue to lose national elections.  There is little discussion among the Republican presidential candidates about tax policy and spending priorities.  The early debates were mostly about social values and conservative ideology.  After the terrorist attacks in Paris and California they have turned to foreign policy.  All of the candidates tell us how tough they are but none of them have demonstrated an understanding of the real issues that we face; nor have they described responses that are more likely to make us safer than those that have been employed in the Mid-East and elsewhere.