Why A Permanent Balanced Budget Is Policy Nonsense

July 27, 2011 2 Comments

Simple.

A balanced-budget, instead of being countercyclical (spending is increased in a recession to expand the economy), is pro-cyclical (spending is cut in a recession and increased in a growing economy).  Countercyclical policies counters inflation, unemployment and slow growth, while pro-cyclical makes deflation and inflation worse, increases unemployment in a recession, reduces growth in a recession and pushes growth when it is not needed.

A balanced budget amendment takes economic policy out of the hands of government—not a good result by making business cycles worse.  Policies become exactly backward to what they should be.  Nevertheless, you can reduce government debt through spending and revenue changes, but not just spending without gutting publically-favored social safety net programs.

Filed under Economy

Website lets homeowners compare insurance rates – South Florida Business Journal

July 26, 2011 Leave a comment

For your information only:

 

Website lets homeowners compare insurance rates

South Florida Business Journal

Date: Tuesday, July 26, 2011, 2:43pm EDT

A predecessor to Florida’s new HomeOwners Insurance Comparison Electronic System (CHOICES) had nearly 10,000 hits a month.

The Florida Office of Insurance Regulation has relaunched an online system that allows consumers to compare pricing on homeowner insurance.

The new system, called the Consumer HomeOwners Insurance Comparison Electronic System (CHOICES), allows consumers to select between two standard risks, and pick any of Florida’s 67 counties. The system generates a window with rankings for the rates of the leading insurers in that county.

Florida Insurance Commissioner Kevin McCarty said the system is designed to encourage Floridians to shop for a better rate; the system also illustrates the competitiveness of the homeowners’ insurance market in Florida and the benefits of shopping for insurance.”

CHOICES was originally released in 2007 as shopandcomparerates.com. At its peak, the website received nearly 10,000 hits a month.

The rate quotes reflect the most recent rate filings OIR accepted. The rates do not reflect surcharges or discounts, and OIR encourages consumers to contact their insurance agent, or the company directly to obtain an official premium quote, according to OIR’s statement about the relaunch of the program.

via Website lets homeowners compare insurance rates – South Florida Business Journal.

Filed under Business and Commerce, Florida

Economic Growth is Uncertain, at the Least

July 26, 2011 Leave a comment

An objective view of the future of the US and other developed countries suggests more challenges rather than fewer ones.

Perhaps for the first time in modern history, the future of the global economy lies in the hands of poor countries. The United States and Europe struggle on as wounded giants, casualties of their financial excesses and political paralysis. They seem condemned by their heavy debt burdens to years of stagnation or slow growth, widening inequality, and possible social strife.

via The Future of Economic Growth – Dani Rodrik – Project Syndicate.

Filed under Economy

I Forgot About The Balanced-Budget Multiplier

July 25, 2011 Leave a comment

A view simple concept–if you expand government spending and taxation by the same amount, then there is an equivalent increase in national income. Hence, there is more income, but not more national debt.  Great!

I wrote about the concept of the balanced-budget multiplier and of raising taxes and government expenditure by the same amount, dollar for dollar. These ideas were first put on the national stage in 1943 by Paul Samuelson, the Nobel laureate. He argued that such a policy would be one-for-one expansionary: each dollar spent is a dollar of new national income. As long as interest rates are near zero — as they were then and are now — there should be no “crowding out” of private expenditures by government ones.

…

This is an expansionary change in fiscal policy that won’t require additional increases in the national debt. We should start a dialogue right now about taking such action, before the damage of protracted unemployment worsens.

via Tax and Spend, but Keep Your Balance – Economic View – NYTimes.com.

Filed under Economy, National

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