In the two weeks since the Supreme Court ruled that the Patient Protection and Affordable Care Act was constitutional (given the taxing capabilities of the federal government), supporters have told opponents “it is time to get over it” and deal with the implications of what detractors still call “Obamacare.” Depending upon the outcome of the November elections, it may well be time to “get over it” and consider implications. In the final analysis, however, those who advocate for the Affordable Care Law may find themselves unpleasantly surprised by the reaction of markets.
Jul 10 2012 | Posted in
Jim Newton |
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Some people say the definition of insanity is doing the same thing over and over again and each time expecting a different outcome. Assuming this definition is reasonable, one has to wonder if a deep vein of insanity runs through the economics profession. For the past few years, most beginning-of-year forecasts have been composed of the same basic message: this is the year when things will turn around. This is the year when U.S. economic growth will re-emerge in a significant way and produce huge numbers of new job opportunities. And each year very early economic data suggest economists may have finally beaten the odds and gotten the forecast right, only to find by spring that the economy remains under significant stress.
Jul 5 2012 | Posted in
Jim Newton |
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A world of known-knowns, known-unknowns, and unknown-unknowns… it might make one wonder if we have all somehow passed through Lewis Carroll’s looking glass. And yet for planning purposes, Donald Rumsfeld’s path to understanding the various factors that could impact the future can be remarkably illuminating.
Jun 26 2012 | Posted in
Jim Newton |
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Some years ago when he was the nation’s Secretary of Defense, Donald Rumsfeld presented an analytical model that might be useful when attempting to plan for the future. He spoke of the need to consider known-knowns, known-unknowns, and unknown-unknowns. Many people — myself included — wondered who but a politician/bureaucrat could possibly come up with such a ridiculous and convoluted means of assessing the complex world within which we live. Since that time, however, I have come to the conclusion that as an organizing principle, when attempting to identify and understand the events likely to impact the future of the economy, this framework proposed by Mr. Rumsfeld can be incredibly useful.
It should come as no great shock that people are everywhere. People are the driving force behind the consumer sector (as buyers), people are the driving force behind business operations (as employees at all levels, including the most senior positions) and people are the driving force behind government (as politicians, bureaucrats, judges and the like). Markets have the ability to efficiently/objectively bring people together in their first two roles so as to satisfy individual and societal objectives.
Jun 12 2012 | Posted in
Jim Newton |
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While few of us give them much thought, market mechanisms are amazing. They generally take the collective desires of both producers and consumers and allow these two incredibly diverse groups to find a reasonable outcome. Of course in this outcome, which is significantly influenced by the pricing mechanism, consumers would be ecstatic with lower prices while businesses would happily charge higher prices. But somehow, unanimity is reached and market activity proceeds in a way that will help meet consumer, business and societal needs.
Over the past several weeks, as discussed in last week’s column, Americans have experienced the upside of worldwide market activity in the energy sector. Specifically, despite the notion that Big Oil can manipulate activity in both the short and long run to their advantage, markets are far too big and adaptable to allow such self-serving activities to continue forever. While they may not be perfect, they seem to do an outstanding job over time bringing together buyers and sellers in a way that is mutually advantageous to both groups.
May 29 2012 | Posted in
Jim Newton |
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One constant theme Americans have heard — and will no doubt continue to hear — during the on-going 2012 presidential cycle is the role of markets and government in economic decision making. In a nutshell, the basic problem every society faces is how scarce resources (land, labor, capital,and entrepreneurship) should be allocated so as to best satisfy unlimited wants and needs. Within this decision-making process, a “who-do-you-trust” choice must be made, that is, allow markets or government or some combination of the two to make such decisions. No matter which choice is made, some “opportunity costs” will be incurred.
