Hay Demand and Supply-what economists don’t understand

When I was undergraduate student in economics a accountancy professor use to tell us how Chartered accountants forget to remember which is ‘credit’ and which is ‘debit’. 

How economists misunderstand the concept of Demand and Supply. 

Brian Wesbury writes in The American Spectator: 

• “President Obama argues that, “with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life.” Unfortunately, the federal government gets those resources from the private sector in the first place. So where is the “jolt” to come from?” 
  
• “Supply-siders get excited about the future and remain mostly optimistic because they believe in human ingenuity. They look for ways to encourage risk-taking, wonder where the next invention will come from, and believe that opportunity is endless. What the Austrian economist Joseph Schumpeter described as “creative destruction” is the process of economic advancement. 
  
• In the end, supply-siders have faith in individuals, especially in times of crisis, while demand-siders have faith in government. Think about this for a minute.” 
  

I strongly recommend the American economist Thomas Sowell book on “Basic Economics- A Common Sense Guide to the Economy “ to the US President Obama  to understand the jangle of supply vs demand side and how resources are allocated an market economy vs state controlled economy.

Bubbles Warding off……….

Christopher Lingle has valid point “For its part, the Obama team increased the climate of uncertainty to stampede the general public into accepting the stimulus package and the mushrooming deficit. While successful entrepreneurs can deal with uncertainty from market conditions and even thrive with it, uncertainty created by politicians tends to stifle business activity. And so, fear-mongering and negative remarks about the economy to spook the electorate into supporting his spending plans have undermined overall confidence.”

Repeat every disastrous mistake of the 1930s

Economist Sowell has a great piece: 

• “politicians can spend our tax money like a drunken sailor,…. Barack Obama seems determined to repeat every disastrous mistake of the 1930s, at home and abroad. ,….. it has long been said that uncertainty is the hardest thing for a market to adjust to. No one can generate uncertainty as much as the government, 
  
• How a man who holds the entire population of a country as his prisoners, and punishes the families of those who escape, can be admired by people who call themselves liberals is one of the many wonders of the human mind's ability to rationalize. Yet such is the case with Fidel Castro”.
  

Good life for new president………….

Christopher Lingle says in the Korea Times “there is the elephant in the room that nobody wants to notice: rising price inflation. But myth making about this being a redux of the Great Depression induces the Federal Reserve to orient monetary policy toward warding off deflation. 

But this is not your grandfather's recession. It is more like the one conjured up by Jimmy Carter. In a single term of office, President Carter oversaw double-digit inflation, double-digit unemployment, double-digit interest rates, shrinking incomes and increasing poverty. ”

Someday pass

It may true that “the market is a force for good or ill. Its power to generate wealth and expand freedom is unmatched, but this crisis has reminded us that without a watchful eye, the market can spin out of control – and that a nation cannot prosper long when it favors only the prosperous.”

But the fact is this that every union, the government and politicians in the world need to think numerous times before taking any action “know that your people will judge you on what you can build, not what you destroy”.

“Can do” good or evil

When everybody celebrate Obama to the White House yesterday, K.P. Nayar says “Unfortunately for Obama, his choice as the next treasury secretary, Timothy Geithner, who spent part of his childhood in New Friends Colony and went to school in New Delhi, has turned out to be a tax cheat. Obama would have been better off disowning him and withdrawing him from consideration for his cabinet.” 

Of Obama & Martin Luther King

Of Obama & Martin Luther King

The above poem is written in Tamil and Translated into English!

Obama's most protectionist rhetoric

Barack Obama's victory with many war words but the prophet of "Yes, we can" is a one which is now matter than the before US election at least for India.

See Swaminathan S A Aiyar article in ET it may sound you against Obama’s future promise but we have to think the root causes keeping in mind the below some of key paragraphs:

“Now that the US is slumping into the worst recession since 1979, can Obama take measures to reduce the outsourcing of software and business services to India, and reduce visas to Indian software engineers? Yes, he can. 

Can he take measures to reduce the flow of direct and portfolio investment to India? Yes he can. He wants to raise the capital gains tax from 15% to 20%. That worsens the risk-reward ratio for US investors, and will make them more reluctant to invest in emerging markets like India, which are considered riskier than the US. 

Can Obama devise tax and other measures that will penalise US companies that invest abroad, in countries like India, rather than in the US? Yes, he can. 

Can Obama come out with protectionist measures to shift jobs from poor countries to the US? He not only can, he has promised to do so. 

Can he increase subsidies for and compulsory use of corn-based ethanol, measures that have caused a big spike in world food and fertiliser crisis? Yes, he can. 

Can he kill the Doha Round of the World Trade Organisation by taking a much tougher line than Bush on keeping US farm subsidies high? Yes, he can. 

Can he act against India for building up its forex reserves, and hence keeping the rupee weaker than it would otherwise have been? Yes, he can. He has in the past voted to penalise China for doing just this. In the current financial crisis it is wise for Third World countries to keep high forex reserves, but this is not recognised by protectionists in the US. 

He has said that if only the Kashmir issue is settled, Pakistan can better concentrate on al-Qaida and the Taliban. The Indo-US nuclear deal is through. But can Obama come up with hurdles on details, like licences for dual-purpose technology? We hope not, but yes, he can. His supporters include non-proliferators who still want to punish India. 

Can he insist that India should enact a law limiting the liability of US nuclear suppliers in the event of an accident at an Indian nuclear power plant? Can he urge India to sign an international convention shifting liability from equipment suppliers to the company running a nuclear plant? Yes, he can. 

Here again, we must not exaggerate the risks. In practice, US policy may not change much. But history shows that Indo-US relations have usually been better under Republican than Democratic presidents. Democrats are more protectionist, and tougher on nuclear non-proliferation. 

Bill Clinton was personally popular in India, but never did anything for us except impose sanctions after Pokharan II. Bush was personally unpopular in India, yet did us yeoman service by pushing through the nuclear deal. Can Obama do anything to match that? Yes, he can, but I rather doubt that he will”.