June, 2009 Archives

30
Jun

The Implications of a filibuster proof Senate

by Riaan Nel in News

The decision by the Minnesota Supreme Court today to rule that Democrat Al Franklen is “entitled” to be certified as the winner in this hotly contested election heralds a significant shift in political power in America.
The Democratic Party now has 60 seats in the US Senate – enough to overcome any Republican filibuster. The Democratic Party is solidly in control of the Senate, the House of Representatives, and the Presidency. We can expect more liberal policies to become the law of the land. I also expect to see more changes in US foreign policy. The recent Energy Bill passed by the House of Representatives is an example. The bill has a provision that will impose trade penalties on countries that do not accept limits on global warming pollution.
Franklen’s victory is the dawn of a new era. Conservative Republican ideology will be significantly curtailed. One can ask if this is a good thing or a bad thing?
Without commenting on the merits of “conservative” or “liberal” ideology, I can comment that I believe a system of diffuse power will produce better policy. When one party has too much power you will find more idealism in policy making as opposed to pragmatism. Ideals are wonderful – we all should have them, and we all should aspire to realize our ideals – but, it is pragmatism that get things done. Often times ideals are not realistic or practical. With control of all three branches of government the danger exists of unrealistic and impractical idealism to permeate policy.
I realize that I can be criticized for an argument that sees a causal link between different ideological parties controlling the different branches of government, and more practical policy making. Let me clarify that this is not my argument. I do think, though, that there is a higher likelihood of finding more practical solutions, more workable solutions through legislative compromise. Ideological antagonists often hammer away at the unrealistic aspects of their opponents’ views.
Putting these value judgments aside, expect more collective, liberal policy in the future. The pendulum has swung – the era of Big Government is upon us.

10
Jun

Should America emulate the French economic model?

by Riaan Nel in Uncategorized

The American version of capitalism is in disrepute worldwide after the financial crisis and resulting global recession. Many ordinary people and elites in the global political economic system blame American-style capitalism for the crisis in the world economy. American-style capitalism – also known as laissez-fair capitalism, or entrepreneurial capitalism – was for the last two decades considered the model to emulate. Countries that emulated this model were success stories in the global economy – for instance the United Kingdom and Ireland. Laissez-fair capitalism is also referred to as the so-called Anglo-Saxon model, since free-market capitalism was born on the British Isles, and the many adherents to this model are countries that were formally British Colonies.
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5
Jun

Economists foresee a slow recovery and fundamental restructuring of the US economy

by Riaan Nel in Uncategorized

In a recent Wall Street Journal survey of 52 leading economists the prediction is that the recession will end in the fall. The turnaround and recovery, however, will be very protracted and slow. The economists also see a fundamental restructuring of the US economy.
A major aspect of this restructuring is the increase in the US savings rate, which will lower consumer spending’s share of GDP. In 2006, personal consumption was 70% of GDP according to the Hoover Institution.
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5
Jun

Financial crisis: Let’s get to the root cause

by Riaan Nel in Uncategorized

We are inundated by recriminations and accusations of who is to blame for the current financial crisis. To chart our way out of this malaise we need to understand the root causes. Failure to understand the true origins of this crisis will lead to solutions that might only exacerbate the current situation. Was it greedy Wall Street that must be regulated more? Was it unscrupulous mortgage brokers that fleeced unsuspecting home buyers? Was it complicated mortgage backed securities and other derivatives that imploded? Or was it government interference in the free market to increase home ownership? The answer is much simpler, and much more complex!
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