Canadian Cincinnatus

Obama’s Looming Debt Crisis

I had been speculating on these pages what Obama’s Presidential trajectory would be, whether his administration would be more like Jimmy Carter’s or more like Bill Clinton’s. Then I thought it might be more like Bob Rae’s Ontario Premiership, but I had been undecided until recently. However now with the latest sky-high deficit projections for the US Federal government, I am much more certain. Obama will become America’s Bob Rae.

For the benefit of those readers who aren’t Ontario residents, Bob Rae was the NDP Premier of Ontario from 1990 to 1995. When he came to power, Ontario was entering a severe recession. He tried to pull Ontario out of it with deficit spending. By 1994 the deficit had reached a record $17 billion. Because the Keynesian pump priming was not working, Bob Rae then became a born-again fiscal conservative. This alienated his public sector union base. When he was thrown out of office in 1995 by Conservative Mike Harris, he was hated by the right for being a socialist and the left for being a capitalist stooge.

The first part of Obama’s Presidency is certainly looking to parallel Bob Rae’s. The question therefore becomes, can Obama avoid Bob Rae’s fate?

Personally, I can’t see how the United Sates can avoid a debt crisis, if not in the next 4 years then certainly within the next 8 years. This is because, right now, US federal spending is completely out of control and Obama’s plan is to increase it even more.

The projected deficit for 2009 is $1.2 trillion and, if I am not mistaken, this does not include the $825 billion (over 2 years) ‘stimulus’ package that the Democrat Congress recently passed. Some estimates indicate that the deficit might top $2 trillion before the year is out. In addition, the Democrats are planning to massively increase entitlements. Last week, Congress passed a bill expanding government medical insurance to middle class children who are already covered by their parent’s health plans. The stimulus package includes permanent increases in unemployment insurance and welfare payments. And then there is socialize medicine, which Obama says is coming. Entitlements are not like last year’s ‘stimulus’ rebates. These things are long term financial commitments, not here-today-gone-tomorrow line items in the budget.

Because the economy will likely improve in the next several years as the credit markets repair themselves (thanks to low gas prices and an extremely loose monetary policy - the Great Depression was the only protracted economic contraction in history precisely because the Federal Reserve tightened the money supply when they should have loosened it), the budget shortfall will be ameliorated somewhat. This happened in 2007 as an improving economy caused the US federal deficit to drop to $161 billion from $248 billion the year before (an improvement that was brought about by George Bush’s income tax cuts).

But the important thing to remember about government spending is that it isn’t the absolute amount of spending that makes people happy, it is only the increase in spending that causes joy. When people are used to receiving government money, they immediately take it for granted. They expect it. Have you ever seen a welfare recipient thank the government for their cheque? People are only happy when they get a government cheque that they don’t expect. This means that in order to maintain the happiness quotient and remain a Santa Claus President, President Obama will have to increase government spending continuously. In other words, the deficit must grow exponentially.

How even the US Federal government can sustain that level of spending for any period of time is beyond me. At some point it has to stop. And that means a debt crisis.

For Canadians this is familiar territory. We had a debt crisis in 1995. It occurred when bond rating agencies became skittish, causing Canada’s borrowing costs to go through the roof. In America’s case, it may happen simply because there will no longer be enough excess money in the world to pay the bills.

The good news is that the debt crisis is where socialism stops. Oprah Winfrey and compassionate conservatism (and compassionate everything else of that matter) will be out. Hard-headed realism will be in.

The other good news is that while it will be painful for the government, it isn’t necessarily bad for the economy as a whole. Canada (and Ontario) in the late 90’s did rather well for themselves, even as governments painfully downsized.

The third bit of good news is that those in charge can weather the storm if they are proactive in their budget cutting. While Bob Rae certainly didn’t make it out of Ontario’s debt crisis with his reputation intact, Canada’s Liberal party did, thanks to Finance Minister Paul Martin’s aggressive belt tightening.

How will Obama do? Will he be a hero like Paul Martin, or will he be consigned to the ash heap of history like Bob Rae? I dunno, but we are about to find out.

Blame Scarborough and North York?

Why is the city of Toronto increasing taxpayers' water bills by 9% a year over three years?  Given what I've heard Toronto water officials say, you'd think the problem was Scarborough and North York.

A couple of times over the summer I read comments by city water officials about Scarborough and North York having cast iron water mains that are brittle and susceptible to fractures.  Just last week a Toronto Star article about the recent cold snap complained that, "at least eight had burst in North York and Scarborough alone."

The Star doesn't say how many breaks there were throughout the city that day, so I did an informal survey after reading the article.

I run in Toronto neighborhoods built in the 1920s.  My typical run is a 13 kilometer loop (marathon training, I know its crazy).  As I ran, I kept an eye out for city work crews.

I found two crews repairing broken water mains: one at Davenport and Ossington, and one at Chaplin Crescent just west of Avenue Road, both breaks in the old city of Toronto.  If I can find those two breaks so easily, there must be more in old Toronto, so why the finger pointing at Scarborough and North York?

Lead pipes.  Another Toronto Star article detailed the woes of lead service connections to Toronto homes.  More than half the homes tested last year had lead levels above the acceptable limit.  These service lines were install before 1955, when most of Scarborough, North York and Etobicoke were still farmland.  Thus, these lines are almost all in the old city of Toronto.

So why are water rates rising so far above inflation so quickly?  The city of Toronto's website boasts that, "In 2007, Toronto City Council approved one of the most aggressive lead pipe replacement programs in North America."

It's a big job.  There are 60,000 lead service connections that need to be replaced.  A friend of mine had it done at her home, and it was a day-long job, not including the half-day job the week before to install a water meter (most downtown homes don't have water meters and are charged a flat rate.)

So just to replace the service connections is 60,000x8hrsx2 workers: a stunning 960,000 work hours!  That's a conservative estimate, since I only allowed for two workers and didn't touch on capital equipment like backhoes.  The home-owner is expected to pay for the part of the line on their property, but in Toronto, with postage-stamp lawns and wide road allowances, the city must pay for the lion's share of the replacement.

By comparison, Scarborough and North York could suffer a thousand water main breaks per winter and would take 60 years to reach the cost of the lead replacement program.  But realistically, we're talking about 8 breaks per cold-snap and 10 cold-snaps per year, which means that they'll never come close to a fraction of the cost of the lead pipe problem.

So, the real reason water rates are rising so dramatically is fifty years of head-in-the-sand neglect of lead service pipes by a succession of pre-alamgamation, socialist, inner-city governments, ones that shun maintenance as boring and opt instead for trendy spending like today's "green initiatives."

Since I live downtown and I have kids, I approve of the lead pipe replacement program, but I'm not blaming the former cities of Scarborough and North York for my water rate increases.  In fact, I feel I owe them an apology, since their new water rates will go to paying for my new service connection.  Blame old Toronto.

Mike Downtown

What George W. Bush did wrong - Part II

Profligate spending by the federal government:

Until George W Bush was elected, the Republicans were America’s fiscal conservative party and the Democrats were the tax-and-spenders. While the GOP remains true to its tax cutting roots, the out-of-control deficit spending from 2001 (when the Clinton administration ended with a balanced budget) to 2006 (when the Democrats regained control of Congress and can once again shoulder some of the blame on this issue) means that, at present, the Republicans simply have no credibility with the public on the spending issue. While profligate government spending is fine with the New Deal socialists, the current federal deficit has seriously alienated many members of the small-government, libertarian, leave-us-alone coalition that constitutes an essential element of the Republican base.

What could George Bush have done differently?

In my opinion, his moment of opportunity came on Sept 12, 2001. The 9/11 attacks was a perfect time for George Bush to have rallied the American people on fiscal restraint. This crisis was a window of opportunity when people were patriotic and therefore willing to subordinate their personal interest to the greater good.

In his immediate post-9/11 speech to the joint houses of Congress, President Bush should have clearly stated that the increased military, intelligence and security spending necessitated by the 9/11 atrocity required drastic cuts in the other federal departments in order to maintain a balanced budget. He should have said that the cuts he is proposing will be painful but that the continued economic health of the United States mandates fiscal responsibility. In this way, all manner of wasteful spending, from the useless Department of Education to ethanol subsidies to pork barrel spending, could be eliminated – things that would be impossible to touch in any other political climate. The left’s predictable opposition to these measures would only serve to alienate them with the American public even further. In the days after 9/11, the American people wanted leadership, not special-interest rancour. Of course, seven years later, this window of opportunity has long since been closed.

Instead, America got the No Child Left Behind Act, the pork-laden 2002 Farm Bill, the 2003 prescription drug entitlement, the 2005 pork-laden highway bill and 69,341 earmarks! All this, on top of (necessary) military spending increases, is why the US budget is now a sea of trillion dollar deficits.

 On a related matter, war bonds should have been issued, just like they were in World War I and II. Psychologically, this would have been a smart move. It would have allowed people to buy into the War on Terror personally, making it their war now. By instead telling people to go out and shop, not only was Bush saying something economically ignorant (by ignoring Say's Law), but also on a psychological level he told them that Islamic fundamentalism is no big deal. It’s something that can be left to the experts.

Mark Steyn on the culture wars

I think Mark Steyn is right when he says, “If the non-political sphere is permanently left-of-center — the movies, the pop songs, the plays, the sitcoms, the newspapers plus the churches, schools and much else — it's simply unreasonable to expect people to walk into a polling booth every other November and vote conservative. The culture is where the issues get framed and the boundaries set.”

To me, this touches on one thing that bugs me about red Tories like John Tory and Joe Clark. They think they can be successful by avoiding potentially explosive and messy issues such as the left-wing domination of popular culture. They prefer to toil in the political space that the left has designated as a safe-play area for conservatives. In return for this priviledge, they promise to be gracious losers after the left trashes them in the election campaign for being heartless accountants.

Trouble in Putin-land – part II

A reader with the nom de cyber, “reality” has taken me to task with my blog post Trouble in Putin-Land, the point of which was to describe how authoritarian regimes like Nazi Germany and Putin’s Russia often look more successful than they really are. Since Mr. Reality raises a number of commonly held fallacies, I would like to take the time to debunk them in detail.

The first point Mr. Reality disputed is my assertion that Nazi Germany had very little gold reserves in the late 1930’s and only kept itself solvent through the conquests of Austria, the Sudetenland and the rest of the Czech republic. He states, “first of all Germany, at the end of the war, still had a large gold reserve discovered in mines by g. s patton.” 

I learned about the Nazi economy by reading Adam Tooze’s work, The Wages of Destruction: The Making and Breaking of the Nazi Economy, considered the authoritative book on the subject. Nazi economics is best described with an analogy: Think of a person who borrows money from a bank. First he secures the biggest mortgage he can. Then he maxes all his credit cards. All the money he receives he spends on weapons. When he can’t borrow another penny because he is in hawk up to his eyeballs, he takes over the bank with the weapons their loans helped finance, shoots the Jewish tellers and steals the money in the vault. That is how Hitler’s Germany operated. While it may have been true that there was gold stockpiled in German mineshafts in 1945, this had undoubtedly been looted from all over Europe (like the art treasures that Hermann Goering collected). The fact however remains that in late August 1939 the Reichsbank was broke and the only way Germany could remain solvent was by invading Poland.

Mr. Reality doesn’t like my take on Putin either. “As for Putin, like him or not, hate to be the one telling you this but he is ‘elected’ by the people.” Like it or not, I hate to be the one to tell you this but Vladimir Putin  became President in a Kremlin palace coup on Dec 31, 1999 (under circumstances that remain murky). While it is true that he did win re-election twice, this was only after he was able to use full executive power to control the media, manipulate events (see the Moscow apartment house bombings) and arbitrarily jail opponents and suppress opposition. Goodness knows how many ballot boxes his people stuffed. Mr. Reality then states, “why does the west always expect the rest of the world to be just like them, that if a countries politics is not parallel to ours then they are the bad guys.” I don’t expect Putin to behave like a western democrat. I expect him to behave like a typical Russian authoritarian thug. And with the events like the apartment house bombings, the murder of Putin-critic Anna Politskovskaya  (on Putin’s birthday – October 7) and the assasination of tell-all FSB defector Alexander Litvinenko  (by polonium 210 poisoning), Putin has not surprised me. Do I hold foreign leaders up to a western standard? Absolutely. Condoning stuff like this in the guise of ‘moral equivalency’ and ‘multiculturalism’ is just moral midgetry at best, and authoritarian toadyism at worst.  

Mr. Reality then states, “Putin has done an extraordinary job with the economy”. Did you not read the Washington Post  and International Herald Tribune  articles that I linked to in my original post? If the Putin miracle is not simply the flash and glitz of rising oil prices, I suppose it is just a coincidence that the sheen of Putin’s Russia is fading at the same time that oil prices have plummeted.

He also believes the myth that Russia’s military is a well-oiled machine, “To actually call russias military a rusting shell, is propaganda, they took an agressor from georgia, trained by the west, armed by the west and ate him up, spit him out and made a joke out of him in 2 days. So much for rusting shells.” For a country of 142 million to take over a small section of a country of 4.7 million is hardly the stuff for a Leni Reifenstahl movie. The authoritative web site on military matters is strategypage.com. This is what they  have to say about the Russian war machine. It is a well know fact that morale among Russia’s conscripts is rock bottom, as friends of mine who have served in the Red Army can attest, and as the suicide rate among today’s Russian conscripts corroborates.

It also seems that Mr. Reality is buying into Kremlin propaganda that Georgia started the war with Russia because of some internal clash between Georgian forces and South Ossetian separatists. Only somebody completely naïve about military logistics could conclude that the Russians (or anybody else) could have reacted as quickly as they did with as much force as they did to an incident which suddenly flared up. Even a modern military (which the Russian army is not) would require several months of detailed preparations and planning to execute such an operation, as this article  details. The ‘coincidence’ that the invasion happened on the day the world was distracted by the opening ceremonies of the Beijing Olympics also strongly suggests that the decision to invade Georgia was taken many months ago. The provocations Russia cites as its excuse reminds me of the German radio station along the Polish border that Joseph Goebbels claimed was attacked by Poland just before Germany started World War II.

To sum up, I think Mr. Reality’s reply illustrates my original point that authoritarian governments have a sex appeal that is able to bamboozle many unwitting fools in the west.

What George Bush did wrong (Part I)

While I definitely think that history will be much kinder to George W Bush than current public opinion polls suggest, the fact of the matter nevertheless is that, at this point in time, he is a deeply unpopular President. This series of articles examines why this is so.

But before I begin to list his faults, I would like to say why I think he will be viewed much better in the future. I think the Presidency his parallels the most is Harry S. Truman’s. Both men had an indifferent record on domestic matters and both were unexpectedly propelled by circumstances beyond their control into prosecuting long, festering - but necessary - wars that were initially popular but which became unpopular as they dragged on. History teaches us that conventional wars (those where the front moves forward when battles are won and backwards when they are lost) rally the populace, in spite of the fact that these are the deadliest types of wars. History also teaches us that unconventional wars where there are no set battles that can be followed by the civilian populace like a ball game may be initially popular, but inevitably become unpopular if they drag on inconclusively. The obvious parallels with Iraq are Vietnam and the Philippines Insurrection.

The conventional ‘wisdom’ - that unconventional wars are unpopular because of the casualties they rack up - is shown to be false by the fact that these wars produce only a small fraction of the casualties of conventional conflicts. Iraq has one of the lowest casualty rates of any war the US has fought (actually the lowest if you don’t count the bloodless Kosovo mission).

Conventional ‘wisdom’ also states that it is impossible for conventional forces to beat a guerrilla force. Again, history teaches us this is false. The US eventually triumphed in the Philippines and set up a pro-American government that lasted until the country was invaded by Japan in World War II (at which point the Fillipinos fought side-by-side with the Americans against the Japanese). Contrary to popular belief, the US also triumphed over the guerrillas in Vietnam. By the time the US military left in 1973, the communist guerrillas had been decisively defeated and a more-or-less stable pro-American government left in charge. Vietnam was defeated in 1975 by a large-scale conventional invasion heavily backed up by military aid from China and the Soviet Union. The US Army did not lose Vietnam, the post-Watergate Congress (led by the Democrats) lost Vietnam by refusing to give militarily supplies to their ally when they were engaged in an existential struggle.

Guerrilla wars are unpopular because they do not affect human psychology the same way conventional wars do.

Conservatives should also remember some of George W Bush’s accomplishments that have been overshadowed by the economy and Iraq, but which are extremely significant. First of all, he nominated two rock-solid constitutionalists to the Supreme Court. The recent Second Amendment ruling would not have been possible without Roberts and Alito. You can be sure their influence on American jurisprudence will continue to be felt long after the recession is over.

The second is missile defence. He brought back missile defence from being a minor pet project in the Pentagon to the technological success story that it is today (judging by the number of successful tests). To do that he had to take a lot of heat by abrogating the ABM treaty with Russia. Given that Russia has over 5,000 nukes, the real possibility that these can be effectively checkmated cannot be underestimated. Given the uncertain course of history, I can easily see a time in the near future where the free world will be breathing a sigh of relief thanks to George W. Bush’s farsightedness on this issue.

So if Iraq isn’t one of Bush’s mistakes (though it is a significant source of his unpopularity), what did he do wrong?

This series examines that question, so stay tuned…

“U.S. military report warns ‘sudden collapse’ of Mexico possible”

As reported by the El Paso Times .

According to the U.S. Joint Forces Command’s "Joint Operating Environment (JOE 2008)" report, two countries are currently susceptible to “sudden and rapid collapse”, Pakistan and Mexico. No surprise about Pakistan. But with Mexico, it should be recognized that the under-reported conflict between the Mexican government’s and the drug cartels has been growing exponentially in the past few years. Drug gangs have gotten so bold that they have assaulted police precincts with automatic weapons and RPG’s. I guess the Mexicans’ take the ‘War on Drugs’ seriously.

So if the Pentagon’s warning comes to pass, I guess the border fence will start to look like a really good idea. If Mexico morphs into Somalia, refugees and violence are bound to spread across the border. Of course, if the border fence were completed today, it is likely that today’s drug violence would instead be subsiding as the river of narcotics to the U.S. – the money which fuels the anti-government rebels – dries up to a trickle. Not that drugs wouldn’t continue to flow into America, they just wouldn’t be Mexico’s problem any more.

The only reason the border fence has not been built yet is because the idea of it is so politically incorrect to so many politicians. However, if civil war breaks out in Mexico (and the military report only describes the potential for this), it would be another example of reality trumping political correctness. In the end, no matter how hard you try, reality will always win. And all those politicians – like Obama – who looked so smug and holier-than-thou in 2007 when they supported the amnesty and opposed nasty border fences, will look like the authors of an avoidable disaster. 

Trouble in Putin-land

Read all about it here and here. 

The thing that has to be remembered about authoritarian dictatorships is that when they are in their ascendancy, they often seem better run than they actually are. Their public is enthusiastically behind them, their industrial progress is a well oiled machine and their military is awe inspiring.

When we look at the ‘success’ of that diminutive czar wannabe, Vladimir Putin, we should remember that Hitler’s Germany was an even bigger success story in the 1930’s. While the US was mired in dust bowls, soup lines and 23% unemployment, the German economic machine looked like an unstoppable juggernaut to most people. In reality, Germany’s economy was grossly distorted. Hitler sold off Germany’s entire gold reserves to pay for weapons of war. When he ran out of money, he had to have an Anchluss with Austria to remain solvent. When Austria’s gold was also gone, he took over the Sudetenland, and so on. The Triumph of Will was just an economic house of cards with no capital investment taking place.

In Putin’s case, the Russian economic triumph circa 2008 was just the glitzy byproduct of rising oil prices. His military triumphs over Chechnya and Georgia were exercises in brutality over tiny states that stressed the Red Army to the breaking point. In spite of Putin’s trumpeted military buildup, the Russian Army is mostly just a rusting shell of a Cold War era conscript Red Army, which was already in an advanced state of decay in the 1980’s. Only a handful of volunteer units are effective, and all of them had to be employed to take Southern Ossetia, a land of 46,000 souls. Under Putin, Russia is just one big, oil-powered Potemkin village.

In dictatorships, the success is up front and the weaknesses are hidden. In a democracy, it is usually the other way around. The political fault lines and the economic problems are displayed for all to see, thanks to the transparency of democratic government and the modern corporate structure. But it is precisely this transparency that gives liberal democracies their regenerative power and their strength. The depression-era United States was the real economic powerhouse - as it demonstrated in World War II. The grandiose opening ceremonies of the Beijing Olympics papers over a society that thinks nothing of displacing landowners to build expressways, without compensating them by even a cent. We don’t see this aspect of China because the Communist government buries stories about the ensuing riots.

But at some point, when they can’t sweep things under the rug any more, it will become evident that the emperor has no clothes on.

John Tory finds a vacant seat to run in....damn!

I was really hoping that none of the Ontario Conservative MPP’s would cave in and give Tory an open seat to contest. After the disastrous 2007 provincial election, what the Ontario PC party was – and still is - most in need of is regeneration. This can only come from a leadership race and a fresh leader with new policies. Right now, there is still plenty of time for rebuilding. The best thing that could happen – from Dalton McGuinty’s perspective – is for a weak, wounded opposition leader to keep hanging on by his fingernails. Just as it was bad news for Stephane Dion to resign - from a Conservative perspective, it is bad news from a Liberal perspective for the right-wing version of Stephane Dion to resign.

And this is coming from somebody who had high hopes for John Tory when he first won the PC Ontario leadership. I saw his credible run against David Miller in the Toronto mayoral campaign and thought that, while he is a red tory, perhaps his strategic savvy would counterbalance his lack of conservative principles. Unfortunately, I failed to factor in the dismal campaign of Kim Campbell (Campbell-mania anyone?), the worst showing by a right-wing party in Canada - ever - which he managed. And now, after the 2007 provincial election, he has two full-blown calamities under his belt, so he doesn’t deserve another chance. He needs to put his party ahead of his personal career and step aside.

We can all forgive somebody for one mistake, but not two - especially when they are this big. At this point it is time to go. Especially when it can be argued that he made a third serious mistake by selfishly delaying his party’s rejuvenation by hanging on to what is an untenable and ignominious position.

I can understand if he feels that he is too young to retire from politics. But in this case, he should rehabilitate himself the way Stockwell Day did after losing the Alliance leadership to Stephen Harper. Work quietly and modestly in the background and prove your worth, one small bit at a time. In his case, quit as leader, run as an ordinary MPP the next time around, and do fundraising for the party in the meantime. People might then slowly change their minds about him.

Leaders refuse to face root cause of recession

The essential problem with the economy is that people, mostly Americans, have borrowed too much money and saved too little. This created a credit bubble that was buoyed up by increasing house prices (i.e. people borrowed on the equity of their home in order to keep their lifestyle up). When this bubble inevitably burst, a painful credit crunch predictably followed. Consumer spending has plummeted as credit has dried up. In other words, the problem was, people spent too much and saved too little.

None of this is particularly controversial. It may even be called ‘conventional wisdom’. What is surprising is how few people in a position of power are willing to act on this knowledge. If the problem is too much spending and too little savings, why is the government so obsessed with spending money it doesn’t have? Do they think they can reinflate a bubble that collapsed when the total aggregate spending of the entire mass of American consumers was no longer enough to keep it going?

If they think that this is something that the US government can accomplish, then they are dreaming in Technicolor. But even if it were possible to resurrect the bubble, why would one want to do that when it is the underlying problem that created the mess in the first place?

It is clear that the people in government are in denial. If the savings rate is too low, then the solution is for consumers to start paying off their bills. This will unfortunately be painful for the manufacturers of consumer goods (such as carmakers) and this is what the politicians don’t want to hear. They want to hear that the day of reckoning can be avoided - at least on their watch. However, if one faces reality head on, it can be seen that while the transition from spending to saving will be painful, it is inevitable and, indeed, is the only way the economy can heal itself.

Many people seem to think that when consumers pay down their debts or stock away money in a savings account, their money is being wasted, that it is being dropped into a black hole. Taking this line of thinking to its logical conclusion, consumers are being more ‘responsible’ when they blow their cash on DVD’s and lap dances than when they save for their retirement.

In reality, when people put away their money, the money doesn’t go away. It is invested, whether in a savings account or on the stock market, it doesn’t matter; the money is being put to work. For starters, this buoys up the stock market and buttresses teetering banks. All good things. But it does something even more fundamental than that. It provides seed capital for productive businesses, businesses that will convert the newly plentiful capital into an economic recovery.

This is in fact what is already happening. The savings rate of American consumers has risen from 0.5% to 7 – 8% in the past several months. This is a good consequence of the present recession. Many left-wing commentators have held this recession up to be an example of market failure. Nothing could be further than the truth. This is a market correction to the problem of not enough savings. This is the good underlying something that is inherently unpleasant. Markets don’t just work when they go up. Going down is also sometimes a necessary market function - when a situation needs correcting.

However just because the market is already functioning to correct the problem, it doesn’t mean that government doesn’t have a role to play. It does. If we face the fact that the cause of the current recession is too much spending and too little saving, then the logical public policy choice is to do everything possible to encourage savings and investment. The unpleasant truth is that a painful readjustment is unavoidable. But by encouraging savings and investment, we can minimize the duration of the unpleasantries by barrelling through then as fast as possible so that a recover can begin as soon as possible.