Wednesday, April 27, 2016

Confidence soup

Holman Jenkins writes about "The Auto Emissions Crackup ... 'sophisticated state failure'" It's not just VW.  He mentions nine other auto-makers that have been forced to issue recalls (or worse) for similar emissions tests tampering. Could it have been any other way?

Prostitution and hard drugs have been "illicit" and illegal for some time. Enforcement has failed. Prohibition re alcohol consumption in the U.S. had to be rescinded via Constitutional amendment. Unenforced/unenforceable laws and standards are not hard to find. But vote-hungry politicians enact them anyway. Posturing is often involved.

In the auto emissions case, political posturing gives us impossible standards and automakers can cheat or go out of business. "Sophisticated state failure" sounds about right.

The slow recovery (here and abroad) strongly suggests that risk-taking has retreated in the face of policy-inspired uncertainty. Paul Krugman mocks all this as the "confidence fairy".  Alberto Alesina responds (in part) on Econtalk.  So is people's confidence way down?  It's fair to say that in desperation more and  more voters are ready to gamble on unusual candidates for high office (previous post). That looks like a desperation move. Call it confidence fairy. Call it turtle soup.


Abysmal GDP growth.

Regulation is not free