First from Tyler Cowen on the Eurozone crisis:

Chris Calomiris wrote in 1999 that the euro is doomed (pdf).  Milton Friedman had some pretty good predictions about the euro.  Here are my 2004 predictions about the euro, and here is my bit from 2003 (“The three percent rule is effectively dead…The real question is what will happen when one of the smaller nations thumbs its nose at France and Germany…and then claims exemption from the relevant penalties.”)  I have been worried about euro-like arrangements since the late 1980s.  Here are Paul Krugman’s 1998 remarks,

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Roubini predicted the course of the current Italian financial crisis in 2006.  And so on.

It is sometimes asserted that the economics profession should lose some status because so few economists predicted the U.S. financial crisis.  I’m not sure economists should be judged by their ability to predict asset price movements, but grant the point.  The euro crisis is now here, and it seems our profession should win some of its status back.

And perhaps even more pertinant, here are the Bleeding Heart Libertarians on the rise of the Corporate State:

America is suffering from rampant, run-away corporatism and crony capitalism. We are increasingly a plutocracy in which government serves the interests of elite financiers and CEOs at the expense of everyone else.

You know this and you complain loudly about it. But the problem is your fault. You caused this state of affairs. Stop it.

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We told you this would happen, but you wouldn’t listen. You complain, rightly, that regulatory agencies are controlled by the very corporations they are supposed to constrain. Well, yeah, we told you that would happen. When you create power—and you people love to create power—the unscrupulous seek to capture that power for their personal benefit. Time and time again, they succeed. We told you that would happen, and we gave you an accurate account of how it would happen.

You complain, perhaps rightly, that corporations are just too big. Well, yeah, we told you that would happen. When you create complicated tax codes, complicated regulatory regimes, and complicated licensing rules, these regulations naturally select for larger and larger corporations. We told you that would happen. Of course, these increasingly large corporations then capture these rules, codes, and regulations to disadvantage their competitors and exploit the rest of us. We told you that would happen.

It’s not rocket science. It’s public choice economics.

Read the rest. Enjoy your morning coffee. Here is the most depressing thing you can do with the next hour of your day.

For those of you not following, fracking is the technology that is allowing the shale-gas revolution to escalate not only in the US but in dozens of countries around the world. Not only is gas a competitor to oil, but its wide dispersal across the globe has the incredible potential to stop corporatist companies like Gazprom from their blackmailing tendencies.

The LA Times investigates the big-money culture of Texas politics, which has gotten even bigger and money-er since Rick Perry became governor:

Perry has received a total of $37 million over the last decade from just 150 individuals and couples, who are likely to form the backbone of his new effort to win the Republican presidential nomination….Nearly half of those mega-donors received hefty business contracts, tax breaks or appointments under Perry, according to a Los Angeles Times analysis.

Perry, campaigning Monday at the Iowa State Fair in Des Moines, declined to comment when asked how he separated the interests of his donors from the needs of his state. His aides vigorously dispute that his contributors received any perks. “They get the same thing that all Texans get,” said spokesman Mark Miner.

Nearly half! And this doesn’t even include anything about David Nance and the largesse Perry distributes via his $200 million state-managed venture capital slush fund. Doling out political favors in industrial quantities is obviously something that isn’t frowned upon by Texas political culture, and Perry has taken it to whole new levels.

That was from Kevin Drum at Mother Jones (one of the Progressives I read regularly, some of you have openly wondered who I read from the “other” side). It would be nice to see folks recognize that this is not some isolated indictment of Perry. We live in the corporate state, a system of privilege, back-scratching, protection and borderline corruption that creates a rot from the inside, massively violates the rule-of-law and reduces the dynamism of the economy from where it ought to be.

In 1890 the US passed the Sherman Antitrust act, which had as its goal the elimination of monopolies or attempts to monopolize. This was the dawn of the Progressive Era (needless to say, this act was passed on behalf of big business, don’t like your HS history classes tell you otherwise).

In 1914 the act was strengthened via the Clayton Antitrust Act. This act exempted unions (and farmer coops) from the original legislation, and the act put a sharper focus on predatory pricing practices of firms.

Summary: Capitalism is prone to monopoly and Bigness. Big Business Bad. We need Progressives to rein them in.

Episode 2: The Golden Age of the Progressive Era

June 1933: Congress passes the National Industrial Recovery Act to establish the National Recovery Administration. Its purpose – to cartelize business and encourage business to work according to the vision of Rex Tugwell by preventing wasteful competition, and to have firms grow large and work with government to promote stability and growth. The goal was to raise prices and wages in lieu of a deflationary problem allowed to persist by poor Fed policy between 1931 and 1933.

May 1933: Congress passes the Agricultural Adjustment Act to establish the Agricultural Adjustment Administration. This was the farm analog to the NRA – which was passed to cartelize the farm sector, to help farmers establish cooperatives, limit production and even destroy crops (in the face of 25% unemployment and widespread poverty and hunger) all for the purpose of raising prices and wages, and all as a way to have big-farma work closely with government to promote prosperity.

We’ll leave for many future posts analyses of each of these laws. The point today is to compare the intellectual ideas behind each.

Summary: Competitive capitalism is not prone to monopoly, and competition from thousands of small entrepreneurial activities is wasteful and harmful to other firms. We need Progressives to establish cartels and monopolies.

I would love to be a Progressive. You get to claim that competition in capitalism causes monopoly, giving you the justification to centrally plan the economy via anti-trust rulings and rules. You did this of course under the guise of “promoting competition.” At the same time you get to claim that competition in capitalism is wasteful, that it is disruptive and puts downward pressure on prices, which is “bad.” This then gives you the justification to centrally plan the economy via National Industrial Policy. Of course you do this in the name of stability and giving everyone a seat at the table.

You cannot have it both ways. The only thing common to these policies is that they are driven by mistrust, even hatred, of voluntary cooperation and open competition. So take your pick – is capitalism evil because it produces monopoly or is it evil because it makes monopoly impossible? Or take both sides, but then have the intellectual decency to be honest about the inconsistency.

President Barack Obama is calling for a six-year, $53 billion spending plan for high-speed rail, as he seeks to use infrastructure spending to jump-start job creation.

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Obama’s push for high-speed rail spending is part of his broad goal of creating jobs in the short-term and increasing American competitiveness for the future through new funding for infrastructure, education and innovation. During last month’s State of the Union address, Obama said he wanted to give 80 percent of Americans access to high-speed rail within 25 years.

I was actually planning on penning a piece giving Obama a break when I opened Firefox to see that piece. I’ll write much more on what we know about high speed rail in the future, but I wanted it on the record that this action demonstrates rather clearly that Mr. Obama is listening to the wrong people. Did some of his advisers just get back from a Junket? Someone ought to hand the President a copy of this.

Glad to see that the President knows that 80% of us will want and need high speed rail in the next 25 years. I wonder how he came to that conclusion. For those of you not familiar with high speed rail, it is the ultimate white elephant. They do not ever make economic sense, and very rarely even make environmental sense, and in fact, do little to improve traffic conditions and can arguably make them worse. I am sure the President thoughtfully weighed all of that against the benefits of paying off American labor and getting a private thrill at taking a really fun fast train ride. My future posts will summarize a little of what we know about the costs and environmental impact of high speed rail.