Moments we’ve been waiting for

While we’ve been seeing some signals that the economy is trending upward, I think there were some bigger signs that the economic growth is gaining enough traction to be able to sustain a period of growth and employment.

The first, last week, was the passage by the Senate, of the “health care bill.” While many small business owners were not in favor of that particular bill, the mere passage of it means that there are some contours beyond which the bill will not go — and that affords stability to the business climate.

The second, of course, came in the form of reports that Christmas shopping sales were higher than expected.

A late boost from procrastinating consumers and an extra day of shopping between Thanksgiving and Christmas increased total retail sales, excluding automobiles and gas, 3.6% over the year-earlier period through Christmas Eve, according to MasterCard Inc.’s SpendingPulse unit.

It seems to me that “retail is the new heavy industry.” That is, whereas some writers have lamented that the US has lost its “manufacturing base,” the new and genuine symbol of the economy is retail, where money and goods change hands. (And “goods” now including a lot of things like software — produce them once, distribute them anywhere). Given that retail sales account for 2/3 of the economy, a 3.6% rise is not insignificant in the current climate.

And a third (that I have seen) suggests that corporate optimism was at the highest level in six years.

Britain’s business leaders are more optimistic about the UK economy improving than at any point in the past six years, according to an annual survey of captains of industry. In the yearly Ipsos Mori Captains of Industry poll of 100 company bosses, 36 per cent thought that the economic situation would improve, compared with just 4 per cent last year.

The FT story goes on to suggest that most business leaders think government policies will not be helpful to the economy. But again, even though these policies may not be helpful, folks know what they are, and can plan for them.

These three signs seem to indicate that most people will go into the new year with the expectation of an improving year — that the recession is behind us. There may still be some bumps in the road, and even some significant ones. But on balance, things are moving forward.

“The Old Oligarch”

Cited in an old “History of Western Philosophy” textbook:

What it comes to, therefore, is that a state founded on democratic institutions will not be the best state; but … the People does not demand that the city should be well governed and itself a slave. It desires to be free and to be master. As to bad legislation, it does not concern itself about that. In fact, what you [the “better sort”] call bad legislation is the very source of the People’s strength and freedom. If you seek for good legislation [it will be necessary to restrict the franchise to] the cleverer members of the community who will lay down laws for the best …. The better class will deliberate in behalf of the state and not suffer crack-brained fellows to sit in council, or to speak or vote in the assemblies. No doubt; but under the very weight of such blessings the People will in a very short time be reduced to slavery. (from “A History of Western Philosophy,” W. T. Jones, (c) 1952; pg 11.)

Jones summarizes: “In a word, the Old Oligarch concluded, it must be allowed that universal suffrage and direct democracy result in inefficient administration of the state’s business. But this is not an important objection since some things (at least from the people’s point of view) are more valuable than efficiency. A state has to choose between freedom and good government.”

Footnote: This account was written after the defeat of Athens in the Peloponnesian war, by someone known only as Old Oligarch.” His name is unknown. He is called the Old Oligarch because of his evident political sympathies.

The Health Care Police

There are fines attached to the Health Care bill that was just passed by the House.

The Cato Institute, a libertarian think tank, suggests that the “compulsory” aspect of this program is the most dangerous part:

The most hazardous health reform measure before Congress is not the so-called “public option,” but proposals to make health insurance compulsory via an individual or employer mandate.

Compulsory health insurance could require nearly 100 million Americans to switch to a more expensive health plan and would therefore violate President Barack Obama’s pledge to let people keep their current health insurance. In particular, the legislation before Congress could eliminate many or all health savings account plans.

But … who’s enforcing this? Who’s going to make sure that you have a “qualified health care plan,” and further, who’s checking and enforcing the fines?

In Pennsylvania (and other states), there’s a parallel in terms of mandatory auto insurance. But you can drive a long time without it, and if you don’t have an accident, well, you can drive a long time without it.

But if you do have an accident, that’s the time when it’s enforced. So too with health care insurance. It’ll be enforced at the time of need. That means some sort of police force or collection agency stationed at hospitals. I just see a train wreck coming ahead if the senate passes a similar bill.

There are free-market options to reduce the cost of health care.