Lack Of Wisdom Is Prevailing
Just a short post about where the economy is headed in the medium term. When policy promotes net private benefits, social negative externalities climb higher. Private businesses can profit in the short-term, but social-economic inefficiencies accumulate.
All the policies I see coming out of Washington at the moment... suppression of wages, lowering of corporate taxes, gutting social programs, rejection of climate issues and more... all say that social negative externalities will build over time... As if they hadn't built up enough. So now the answer is to do more of the same that created large social negative externalities.
I am laying low. I am just watching as economic institutions become more and more socially inefficient.
The guiding principle of economics is... to maximize social net benefits, not to maximize net private corporate benefits. The economics at play now has little wisdom. Their thinking is that maximizing net private benefits will increase benefits to society. It is failed trickle-down thinking.
In Chinese philosophy, there are 5 elements that interact in nature. The elements have a destructive cycle to create the world. The elements interact in an unregulated manner. However, within a living being, the elements are regulated by the endocrine system which has processes to maximize homeostatic conditions. In actuality, the endocrine system maximizes net body benefits by regulating homeostasis. It is a higher wisdom.
Imagine if the body had no endocrine system and all organs were set free to act as they choose. A person would die from uncoordinated physiology. And yet we see deregulation about to go to extremes. The social negative externalities will accumulate fast.
There came a time in Rome when many intellectuals went back to the farms because they saw where Rome was heading. They lived in peace away from the craziness. Yet now-a-days there is too much at stake globally. People need to resist the lack of wisdom in Washington.
Disclosure: None.
I think that even the Republicans on Lido Isle in Orange County, California, realize the steady rise in sea level, but they are fairly helpless to fix it. They can increase the wall, the barrier to the ocean, but it ruins the view. And Lido is tiny, not like Hawaii or other big islands that are impacted by storms more and more as the sea levels rise.
My question is whether you think it is socially efficient to raise interest rates now, knowing there is some bad inflation but no real price driven inflation?
Is it socially efficient to raise interest rates? Interest rates aren't affecting savings accounts and consumer loans much yet. The real impact is among the rich who move large sums of money in arbitrage. So interest rates are not a major factor in being socially efficient now. The major factor will be the cut in taxes for the rich, the import taxes that will raise prices for US consumers, and the cap being put on wages as seen by the cap on Federal wages.