Although we must not be hung up about being “Pareto efficient”.

If a free market policy hurts some people by denying them their subsidies (even very large numbers of people) that should not stop us following that policy.

For example, a pay cut of 10% for all civilian employees of the Federal government – few such employees would resign if this policy was followed (i.e. their pay is not really set by the market – some people might leave, such as skillked FBI investigators, but only a tiny number of people out of the total Federal pay roll), yet I would not pretend that such a policy change would not “harm” Federal government employees.

Although national bankruptcy will evenutally “harm” them even more that is not the point – as I reject the principle (really from J.S. Mill – or an interpretation of him) that policy should not “harm” anyone.

I would cut the government wage bill whether or not the government faced bankruptcy – and I would carry on cutting it (till mass resignations, NOT strikes – which are no sign of anything, came about).

I think people would be surprised to learn just how much government wages could be cut WITHOUT their being mass resignations.

However, I also repeat that selling government debt (and other credit bubble stuff) is NOT an economic activity (efforts to claim it is are just double talk).

By the way trying to base an economy of hundreds of millions of people on haircuts and other such (real economic services though they are) will not work. A country the size of the United States (or Britain) must be primarily be about MAKING THINGS.

Moving away from this is not “progress” – although it is “change”. For example the Roman Empire from the second century AD onwards experienced a lot of change – but it was not progress (it was decline).

“What about banking”.

Banking (or rather honest banking) is MONEY LENDING.

One can lend money for consumption (“I want this nice stuff NOW”) – and an economy where most people are consuming more than they create is clearly on the road to Hell (the money comming from the savings of rising nations). But one can also lend money for INVESTMENT.

Real “investment” (not spending just called “investment”).

In short – mines, farms, factories abd so on ( and yes services like barbers shops).

This is the way in which banking is productive – and in no other way.

The belief that banking (and finance generally) can be productive in-its-self (without reference to creating things in the physical economy) is mistaken – it is like the bird the explorers are searching for in “Carry On Up The Jungle” – it ends up going up its own……..

However, I also repeat that selling government debt (and other credit bubble stuff) is NOT an economic activity (efforts to claim it is are just double talk).

By the way trying to base an economy of hundreds of millions of people on haircuts and other such (real economic services though they are) will not work. A country the size of the United States (or Britain) must be primarily be about MAKING THINGS.

Moving away from this is not “progress” – although it is “change”. For example the Roman Empire from the second century AD onwards experienced a lot of change – but it was not progress (it was decline).

“What about banking”.

Banking (or rather honest banking) is MONEY LENDING.

One can lend money for consumption (“I want this nice stuff NOW”) – and an economy where most people are consuming more than they create is clearly on the road to Hell (the money comming from the savings of rising nations). But one can also lend money for INVESTMENT.

Real “investment” (not spending just called “investment”).

In short – mines, farms, factories abd so on ( and yes services like barbers shops).

This is the way in which banking is productive – and in no other way.

The belief that banking (and finance generally) can be productive in-its-self (without reference to creating things in the physical economy) is mistaken – it is like the bird the explorers are searching for in “Carry On Up The Jungle” – it ends up going up its own……..

For example, John McCain (for all his many faults) made a point of never “bringing home the bacon” for Arizonia (in this, if in nothing much else, he followed the example of Barry Goldwater) – no earmarks from him.

Now Arizonians are just as greedy as other people – and the State has got some absurd projects over the years. But when faced with someone who treates them as if they were of high moral character most voters (either because they are flattered or because they are shamed) tend to live up to it.

The classic example is the Congressman for Orange County (one of the bits that acutally grows fruit) who always made a point of voting and speaking against subsidies for fruit – even the fruit growers (in fact especially the fruit growers) respected him, and voted for him.

Treat people as people and they may let you down (I accept that), but just assume the voters are scum and you have lost the battle before you even start.

So NO it is not just a few freaks like Ron Paul – even in the House leadership (on the Republican side) both Ryan and Pence are (whatever other flaws they have) are decent people who vote against a lot of evil stuff.

You can do it – indeed it is one way to make a name for yourself in politics.

The way of Pork is not the only way.

I knew it really.

As countries in the so-called Third World have used their comparative advantages to earn income, so things have changed. I consider this to be a largely good thing.

Another point to remember is that “service hubs” such as London and New York, with their financial sectors, now, as in the 18th and 19th centuries, now serve a huge, global hinterland, so that London, for example, has a “disproportionately” large focus on financial services. It therefore makes little sense to complain as some do that services make up “too high” a share of UK GDP. No doubt some people might complain that Canadians devote a “disproportionate” amount of activity to growing wheat.

What is cause and what is effect?

For my money, without the Fed’s pumping China would not have bought as much debt and both would have meant higher interest rates meaning less financial related jobs and less consumption (flipped burgers?) meaning more saving and less manufacturing jobs lost.

Ergo, this leads me to think that in the absence of the artificial boom the public would have been wealthier consuming manufactured widgets than flipped burgers. Just a guess though

Those free-marketeers who told us “step back luddites, this is just Free Trade working it’s magic”, were sold a total pup and, in turn, they helped to sell everyone else a pup.

It might be interesting to ask whether, in normal market conditions, the decline of manufacturing/production and the rise of a service economy to replace it would be sustainable and healthy, but it’s totally irrelevant because in normal market conditions it has never actually happened and probably never will.