Are You an Austrian?

No, it's not a question about your ethnic heritage or national citizenship, but a quiz about your economic views. The quiz can be found here. Set aside 20-30 minutes to make sure you have time to carefully read the questions. The quiz helps show how your philosophies align with the various schools of economic thought, and in some cases provides a link to an article discussing the Austrian point of view. I scored an 83/100, which suggests that I favor the Austrian school over others by a wide margin, but to see how some of my answers were classified was a little surprising. In economic matters, I generally find myself in agreement with the Austrian-centric Von Mises Institute's mission:

• In this cause, the Mises Institute works to advance the Austrian School of economics and the Misesian tradition, and, in application, defends the market economy, private property, sound money, and peaceful international relations, while opposing government intervention as economically and socially destructive.

However, it will take a little more study for me to understand everything the Austrian school proposes.

Take the quiz yourself and see which of the major schools of economic thought best suits your beliefs.

http://mises.org/about.aspx

Unemployment and the next Big Deal

I had a discussion recently about unemployment and how it related to the effectiveness of the "$700,000 million" (chop it up any way you want, but it's a seven with twelve, count 'em, twelve freaking zeroes behind it) bailout/rescue package. We discussed the current rate of 6.1% and how it would be a grave concern if it rose to something like 7.5%. Obviously, an upward trend in unemployment is cause for concern, but we concluded that the media may be largely overhyping unemployment to create undue fear when you view the statistic through the long lens of history. Unemployment during the Great Depression reached 25% and didn't drop below 10% until the start of WW2; a terrible situation to be sure, but one that may have been exacerbated by FDR's policies. Consider the ten highest monthly rates of unemployment in the post-WW2 era:

11/1982 10.8
12/1982 10.8
10/1982 10.4
01/1983 10.4
02/1983 10.4
03/1983 10.3
04/1983 10.2
05/1982 10.1
05/1983 10.1
06/1983 10.1

If you were to only look at unemployment, you would conclude that Reagan's first term was pretty disastrous for the economy, especially considering the average rate was a little over 7.5% when you look at the month by month statistics. However, consider what happened with GDP growth from 1981 to 1988:

1981 2.5
1982 -2.1
1983 4.3
1984 7.3
1985 3.8
1986 3.4
1987 3.4
1988 4.2
Average: 3.4

Recession in '82, but excellent growth throughout the rest of Reagan's presidency. By the time he left office, unemployment was around 5.3%. Now let's look at the Bush I/Clinton era:

Unemployment
1989 5.3
1990 5.6
1991 6.8
1992 7.5
1993 6.9
1994 6.1
1995 5.6
1996 5.4
1997 4.9
1998 4.5
1999 4.2
2000 4.0

The month by month breakdown results in a 5.6% average for these twelve years.

GDP Growth
1989 3.5
1990 1.7
1991 -0.5
1992 3.1
1993 2.7
1994 4.1
1995 2.2
1996 4.5
1997 4.5
1998 4.2
1999 3.9
2000 4.3
Average: 3.2%

Putting all the mind-numbing figures together, here's how the composite unemployment/GDP growth figures look:

Reagan
Avg unemployment: 7.5%
Avg GDP growth: 3.4%

Bush I/Clinton
Avg unemployment: 5.6%
Avg GDP growth: 3.2%

A good statistician would glean much better information from these numbers than me, and I freely admit that it might not be fair to compare eight years to twelve by lumping Bush I and Clinton. In fact, to be completely forthright, the average numbers under Clinton were 5.2% unemployment and 3.8% GDP growth. However, my point stands which is that even 10%+ unemployment for a year didn't prevent us from making a remarkable recovery in GDP growth and employment. I would actually contend that what Reagan had to deal with was the consequences of the policies of Nixon, Ford, and Carter, and that the temporary pain was the result of a drastic shift in economic policy that required the markets and economic institutions to adapt. I would also contend that we have been the beneficiaries of those policies through today. I believe Reagan, by and large, greased the wheels nicely for Bush I and Clinton. Reagan didn't react to bad economic conditions by calling for greater government regulation, stimulus packages, or nationalization of private institutions. That had been the trend for years, and it hadn't worked. He instead cut taxes, lowered interest rates to make capital available, and allowed the market to flourish. His philosophy was to get the government out of the way so that the greatest number of people would benefit as the result of economic growth.

My concern is that today, we panic at a 6.1% unemployment rate, declare the current financial situation the worst crisis since the Great Depression, and demand that the government empty the treasury to save capitalism. When we start setting arbitrary thresholds, whether it's unemployment, LIBOR, foreclosure rates, home value depreciation, or anything else, to determine when the federal government comes to the rescue, we begin to throw ourselves down the slippery slope.

There are numerous commentators, only hiding their glee with some difficulty, now declaring the end of Reaganism and the beginning of another "Deal." We are led to believe the FDR saved capitalism during the Great Depression, that Lyndon Johnson cured our nation of poverty and racism with the Great Society, and that now Barack Obama is the next Big Deal, here to save our helpless nation from destroying itself. A great nation doesn't need great government programs. It may take decades to determine whether spending (Investing? Really?) $700,000,000,000 of the nation's wealth was economically beneficial or not, but I believe it has potentially paved the way for a generation or more of a gargantuan federal government that seeks to ensure, not promote, but ensure the welfare and prosperity of the nation, which it will ultimately fail to do.

Another Depression?

“Lots of other places—from Britain to Australia—took a hit in 1929 but, alas, they lacked an FDR to keep it going till the end of the Thirties. That’s why in other countries they refer to it as ‘the Depression,’ but only in the U.S. is it ‘Great’.” —Mark Steyn

If America's financial situation continues to worsen, what kind of policies will the next president enact to reverse it? Will he look to the example of FDR and increase the size of, and dependency on the federal government, or will he force the government to shrink in size and get out of the way of the people? Anyone who believes that our current financial troubles are the result of an under-regulated free market and not the malfeasance of our elected officials are seriously misguided in my opinion, but if they get their way in this election, they will act on their incorrect assessment and plunge the country into another deep, prolonged depression.

In difficult economic times, the appetites of the government must be curbed so that people can allocate their scarce resources as efficiently as possible, as they see fit based on their intimate and up to date understanding of their own circumstances, not at the whim of a bureaucrat. In times of plenty, the government's size has swelled enormously, resulting in the porcine behemoth we now have in Washington. As the real economy shrinks, it is imperative that the federal government do so as well. Unfortunately, when a politician sees the budget for one of his pet projects threatened because tax revenues are falling, he doesn't care much about why the money's no longer there, just that his precious program must be preserved at all costs, even if that means raising taxes. The true wealth of America is under assault from the government that is supposed to protect it, and unless our next president can convince Congress to reduce the size of government, it risks killing the goose that laid the golden egg.

Cavuto: Blood sucking government zombies!

Cavuto nails it again

Game night

I attended my first board game night at Table Top Game and Hobby, my new FLGS, (http://www.tabletopgameandhobby.com/) and had a blast even though I only played one game. There were around thirty people in attendance and for the most part, everyone was very courteous and engaging. I was unable to keep track of everything that was played, but a few that come to mind are the brand new release Conflict of Heroes, Tide of Iron, Zombies, Shogun, Axis and Allies miniatures, and Heroclix. Several people brought crates full of games of all types, although the traditional wargame genre was noticeably underrepresented. The impression I got was that there is just a small cadre in the group that enjoys wargames, so I'll probably end up sticking close to them. I didn't see anyone playing Twilight Struggle, so I think I may take it along next week and try to get a game going. I might also take my copy of Conflict of Heroes so we can get a second game of that going. I was encouraged to learn that some in the group have played A Game of Thrones and enjoyed it.

I was blown away by how many people were there and by how knowledgeable and friendly they were. I doubt there's a more active gaming group anywhere else in the Midwest. I think I know how I'll be spending my Thursday nights.

National Service Forum

I'm halfheartedly watching the national service forum at Columbia University and nearly fell out of my chair when I heard Obama say something to the effect that he was listening to McCain discussing the question of the racial composition of the military. After the Saddleback forum, the media created a controversy by suggesting the McCain had been listening to some of Obama's answer and that there wasn't a so-called "cone of silence" (that was an off the cuff joke by Rick Warren, by the way). I wonder if they'll question why Obama was allowed to listen to McCain's answers or if they'll give him a free pass on this. I predict talk radio will have a good time with this, as they should.

Also, Judy Woodruff just said that "Tonight is not a night to focus on contrasts between you and Senator McCain, but help us understand how you see the role of government in all of this differently from the way he does." Obama's answer started with, "Listening to his presentation..." It's probably just as well that McCain lost the coin toss that decided the order tonight. He would have taken a lot of heat for admitting what Obama has about listening to the other candidates answers.

Split Ticket

I immersed myself in coverage of the RNC this week after learning of John McCain's selection of Sarah Palin for VP. Like most Conservatives, I was excited when she was announced, and absolutely giddy after hearing her speech Wednesday night. She has generated an unbelieveable amount of energy in the party and has given McCain a very solid chance of winning the election.

Without getting into too much detail about my opinion of Palin, I will just say that I believe she can be the same type of transformative political figure as Ronald Reagan, which is the highest praise I could lavish on a modern politician. She's right on the issues and presents the most well-rounded picture of authentic Conservatism I've seen in recent years. As opposed to the stories of a rabble-rousing youth we have come to expect in most candidates (Bush, McCain, Obama, et al), Palin presents the image of a smart, circumspect woman who tackled the challenges and responsibilities of life head on with vigor and enthusiasm. She didn't need a strong spouse to refine or settle her. Traditionalists admire women who demonstrate the ability to balance the responsibilities of marriage, motherhood, and career gracefully. Far from expecting or demanding that women stay at home to raise children while the husband works, most Conservatives do not feel threatened by strong, capable women. However, unlike the Left, they honor and respect women who make the decision to be full-time mothers and homemakers. About the only women Conservatives don't respect are those that take it upon themselves to criticize and judge other women for making different choices.

In summary, I'm overwhelmed with enthusiasm for Sarah Palin and could easily see her being the first female President of the United States. She has become the unofficial recipient of the mantle of leadership for the Republican Party and can expect to be the party's nominee for President in 2012 and/or 2016. I am one of several people who would like to have seen her at the top of the ticket this year. The only thing standing between her and the role of standard bearer of the Conservative movement in America is... John McCain.

Like many Conservatives, I was less than enthused about the nomination of John McCain. He has often seemed more interested in being a contrarian than helping his party succeed, and his compromises on issues such as campaign finance, immigration, and the environment have been deplorable. The Palin announcement initially assuaged my fears about McCain's Conservative credentials, but the reaction from some Republicans has revealed a rift, despite talk of the party being unified after the convention.

I do not have any hard data to support this notion, but I suspect that it would be difficult right now to find anyone who enthusiastically and without reservations supports both McCain and Palin. At first, I thought it was just Conservatives who were holding their noses a little bit, choosing to vote for McCain to get Palin now and in the future. However, I am now starting to think that those Republicans who are squarely behind McCain are offended and put off by Palin. They express concerns about her being a radical Conservative, much in same vein as Bush (my side cues, "Won't Get Fooled Again," by The Who), and bring up many of the same minuscule and petty slanders as the liberal press. It seems to me that Republicans who are happy with the moderation of the party, and were finally able to get their man nominated, view Palin as a threat in much the same way they viewed Reagan.

The party may be united in the sense that its members are motivated to pull the lever for the Republican ticket this year, but ideologically I believe there is still a rift. They will come together for the next eight weeks to defeat Obama, and may enjoy a brief hiatus during the holidays, but the fight for the heart and soul of the party will resume in earnest in January, 2009.