Two Links on Political Economy
That are complementary:
Fabius Maximus –Our fears are unwarranted. America is in fact well-governed.
….America is in better shape than Europe and Japan. We have good demographics, sound fundamentals, relatively easily solved problems, and no powerful enemies. Why the constant sense of crisis? QE2, hyperinflation, climate armageddon, Obama the socialist, AIDS, alar on apples, jihadists, debt, swine flu – a constant drumroll of doom, explained by Peter Moore in “The Crisis Crisis” (Playboy, March 1987). Answer: elites govern a weak people by exploiting their fears. For example, look at the “government is broke” panic.
- The Federal government’s net debt is only 2/3 of GDP, well below the 100% of GDP “red line” (that Italy reached many years ago).
- The short-term deficit is mostly the result of the recession. The medium-term deficit results from the Bush tax cuts.
- Social security’s funding gap is small vs. GDP and easily fixed.
- The massive funding gap is mostly Medicare, easily fixed by adopting features from the mixed public-private systems in Europe.
Panic pushes Americans to allow cuts to popular social services plus increased and highly regressive taxes. No matter who wins, after the 2012 election our representatives will implement the necessary policy changes: raising taxes, cutting expenditures, rebuilding our infrastructure, and beginning the long process of reforming health care. It will be another morning in America. There is no crippling polarization, just distracting noise masking a consensus between both parties about the key points of economic and foreign policy.
We do not see this long-standing pattern (see the previous post for details) because our collective OODA loop is broken (see section 6 here). That makes us easier to lead. Relying on wealth-based elites to run the country has a cost. They take a large share of the pie; we take a small slice….
Global Guerrillas –JOURNAL: Global Financial Cancer
….A couple of years ago, I wrote that the underlying structure of the global financial system was a “bow-tie.” Here’s what I said (it’s worth going back and reading the entire article and this paper on bow-ties from John Doyle at Caltech):
If we look at this new global system from a distance, its architecture is something called a bow-tie. This is a universal control system architecture that underlies complex systems from the Internet to cell metabolism.
What is a Bow Tie?
The bow-tie is a very powerful approach to organizing a complex system (it’s a system design that is used by controls engineers.) Visually, it starts with complex inputs (the left side of the bow-tie), boils them down into simple build blocks (the knot), which then allows the construction of complex outputs (the right side of the bow-tie….
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