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Tuesday, 28 October 2008

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Ah, Duff - you're always good for a belly laugh, even - or especially - in these straitened times. (Sorry - can't resist an English language point: I presume you mean 'straitened' as in 'restricted' and not 'straightened' as in 'corrected').

Can't actually disagree with anything in this post. The current maelstrom looks to me like Hurricane Katrina. The powers that be took a laissez faire attitude when all was going well, and now, as we watch the waters destroy everything we have built, they sit around wondering why we don't trust them any more.

Actually, in my view, this was all got up by Bush and the Republicans who knew they couldn't win another election and so decided they'd just wreck the place before the new guy got in. You think I'm crazy? Just wait a few weeks, and I confidently predict I won't be the only one saying this.

Anyway, keep on keepin' on, old buddy. I'll see you in the shelter, with a hoarded tin of sardines and a copy of the Racing Post.

David,

The error in Laffer's worldview was very succintly critiqued by John Kenneth Galbraith in 'The Affluent Society', published over half a century ago. If it is believed that government is sterile an uncreative, then the private ownership of cars assumes greater political importance then the public maintenance of the roads on which they are driven.

Andy M, good to hear from you again and I trust you are well. I have added a 'mea culpa' to the post. I was tempted to wriggle off (nearly typed 'of'!) your grammatical hook by pleading the difficulty of editing oneself but the embarrassing fact is that my error never even occurred to me. Please, please, keep monitoring me - I just had to spell-check 'monitoring/monitering' - says it all, really!

Martin, welcome to 'Duff & Nonsense'. As I write I have only had time to skim your blog but it is now up on my 'Favourites' list for further and regular reading. I cannot speak for Laffer, only for myself, but it seems to me that there are two orders of things. There is the natural activity of trade, using that word in it's widest sense, which is (or should be) left to the private sector; and there is the activity of *facilitating* trade which is the job of government - which is why I say above that there are certain things which only governments can do. You analogy of privately-owned cars and government-run roads is a case in point.

I'm not sure what you mean by "political importance" as between the two. I should have thought that the 'political' aim of private ownership of cars is of prime importance to any government and thus the building and maintainence of roads as a means of encouraging it should also be a priority.

I think the point Laffer was making is that when a government steps beyond its remit to facilitate trade and instead indulges in trading activities itself, the result is nearly always badly done and very expensive, see: NHS, state education, the old BT, etc. Finally, I would remind you that one of the most important things a government should do is to *regulate* trading activities and not the least of the causes of our current difficulties is their falure to do that properly.

The road/cars analogy is a good one... if you forget the question of who funds the government's control of the roads and don't ask the question, 'Could no private organisation do the same job (minus the huge expense and suffocating bureaucracy that comes with government control)?

Repeat after me: EVERYTHING governments do is affected by waste, mismanagement, incompetence, stupidity and short-termism. (Some of these things affect private business, too, they just tend to be less expensive.)

Interesting post.

Not that I'm defending Herbert Hoover but conventional wisdom has it that Roosevelt saved America when in reality he prolonged the depression

Dan and 'TDK', welcome to Duff & Nonsense.

Dan, I am not unsympathetic to the thrust of your argument but I am not an extreme Libertarian. There are matters which should be the responsibility of government, not least because private industry would find it insufficiently profitable to undertake, or, because there might be strategic reasons, both economic and military, for certain things to be done. Deciding the border-line between them should be the stuff of day-to-day politics.

'TDK', your second link is fascinating and I urge everyone to read it. Alas, without detailed knowledge, I have never admired Roosevelt's 'New Deal' and always suspected that the recovery could have been handled better with better policies. It was good to read a scholarly analysis of its failings.

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