Thursday, February 24, 2011

Thursday round up.

In a must-read from RCM, Louis Woodhill runs the numbers and finds economic growth is far more effective at balancing the budget than spending cuts.

From Bloomberg, Caroline Baum notes America’s many economic strengths.

Cato’s Steve Hanke examines the Middle East and North Africa's misery index.

On Forbes, Ralph Benko advocates a smaller warfare/welfare state.

Also from Forbes, Jerry Bowyer notes that democracy can be as tyrannical as autocracy.

In The WSJ, James K. Glassman explains why his Dow 36,000 theory didn’t come true, but omits the dollar’s volatility since 1999 from his analysis.

The first major change is that the relative economic standing of the U.S. is declining. The Congressional Budget Office estimates that U.S. growth will average a little more than 2% over the next 70 years, compared to about 3.5% during the second half of the 20th century. This is a stunning decline.

The reasons? One is a demographic imbalance, with too few workers supporting too many retirees and other non-workers. Another is a growing preference for European-style security. Still others include inefficient investment in human capital, especially K-12 education, and an enormous buildup of debt partly meant to prevent financial catastrophe in 2008-09. Meanwhile, developing nations like China, India and Brazil are growing far faster than the U.S....

But there is a second kind of risk, the kind that we can't really measure or expect—the murder of 3,000 Americans by terrorists in a single day, the Dow losing 1,000 points within minutes in a "flash crash," or home values in the U.S. suddenly plummeting. These discontinuous risks—or "uncertainties," as the famous University of Chicago economist Frank Knight called them—are multiplying in a world in which technology provides instantaneous connections among markets and allows just about anyone to do just about anything, anywhere.

The Financial Times reports on a Goldman Sachs study that says deep budget cuts will slow the U.S. recovery.

Keynesian Stephen Roach applauds China’s plan to consume more.

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