Marko has a short, pithy political quiz:
- Psst! Wanna buy a metal grate? (The Munchkin Wrangler)
Here’s a quick political quiz: You read a story about some scruffy small-caliber criminals stealing public storm grates for scrap.
If you talk about punishment and complain about the lenient criminal justice system, you’re a Conservative.
If you talk about bad vocational opportunities and rehabilitation, you’re a Liberal.
If you talk about the evils of capitalism that force people to steal metal for scrap, you’re a Socialist.
If you say “PUBLIC storm grates?”, you’re a Libertarian.
Speaking of the pitfalls of public provision, Todd Zywicki points to a crash course in corporate cronyism:
- Ohhh, so that’s how you become a billionaire! (The Volokh Conspiracy)
You just get your buddy the Secretary of the Treasury to give you insider information at the same time that he is telling the public something completely different.
This all comes up around the conservatorship of Fannie Mae and Freddie Mac in July 2008. While markets were speculating about F&F’s fate, Paulson met with a dozen Wall Street execs and essentially showed them the government’s hand:
The fund manager says he was shocked that Paulson would furnish such specific information — to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.
There’s no evidence that they did so after the meeting; tracking firm-specific short stock sales isn’t possible using public documents.
And law professors say that Paulson himself broke no law by disclosing what amounted to inside information.
Click through to the Bloomberg article and have a read — then tell me if you think this was nothing more than innocent communication between the government and the financial sector.
And speaking of connections between the government and the financial sector, Livio di Matteo has some insight on Italian public finance:
- Italian public finance (Worthwhile Canadian Initiative)
To start with, unlike the public finance tradition I was brought up in, in which there is a private sector and a public sector – cruising along as it were in two separate analytical compartments – De Marco views the two as intertwined. That is, the activities and institutions of the state are very much a part of the production process of private firms providing them with institutions, infrastructure, goods and services.
As a result, the Italians and probably the Europeans in general (but not les anglais) are probably more sensitive than North Americans to the idea that tackling a deficit and associated debt is not just a simple cost-cutting exercise with short-term spillover effects and adjustments. The spill-over is not just in terms of budget reductions that lead to cuts in entitlements or unemployed civil servants but can fundamentally redefine the role of the state as well as affect private sector activity in terms of the services it obtains from the public sector whether those services are financial regulation or clean water and street lighting.
I’m a bit dubious about generalizing this observation from Italy to “Europeans in general”, but if true it suggests that Germany’s insistence on austerity is even less likely to be well-received (or acted upon) by the Southern Eurozone.