Monday, May 17, 2010

Important Things I Read Today

First, from the Director of the Congressional Budget Office:
The United States faces a fundamental disconnect between the services that people expect the government to provide, particularly in the form of benefits for older Americans, and the tax revenues that people are willing to send to the government to finance those services. Changes of the magnitude required to make fiscal policy sustainable could have important economic and social effects—but they also provide an opportunity to address existing concerns about tax and spending policies. Given the time required to implement significant policy changes, determining those changes is an urgent task for policymakers.
Then this from New York Times columnist Ross Douthat:
If Robert Rubin’s mistakes helped create an out-of-control financial sector, then naturally you need Timothy Geithner and Lawrence Summers — Rubin’s protégés — to set things right. After all, who else are you going to trust with all that consolidated power? Ron Paul? Dennis Kucinich? Sarah Palin?

This is the perverse logic of meritocracy. Once a system grows sufficiently complex, it doesn’t matter how badly our best and brightest foul things up. Every crisis increases their authority, because they seem to be the only ones who understand the system well enough to fix it.

But their fixes tend to make the system even more complex and centralized, and more vulnerable to the next national-security surprise, the next natural disaster, the next economic crisis. Which is why, despite all the populist backlash and all the promises from Washington, this isn’t the end of the “too big to fail” era. It’s the beginning.

I wanted to title this post Depressing Things I Read Today, but thought that would be grossly irresponsible. Reminders of the challenges ahead that come in the form of thoughtful analysis are far more difficult to dismiss than talk radio antics designed to generate ad revenue. If these aren't the kind of wake-up call we desperately need, then I don't know what is.

1 comment:

D said...

Geithner and Summers have clearly proven they don't know the first thing about what is happening. Nobody in a position of power does. This is proven by the fact that they didn't see this problem coming, with Paulson and Bernanke saying as late as 2008 that the economy was 'strong,' or that 'there is no housing bubble.'
Throw on top of this the fact that they clearly think printing endless dollars and more debt can fix a problem caused by the same and you have a recipe for disaster. These policies extended the GD to almost 17 years. How long will this one last with these jokers in charge?