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Archive for March 10th, 2011

People periodically ask me why I’m so down on David Cameron, the Prime Minster of the United Kingdom. I’ve already pointed out that his pre-election agenda was big government. And I’ve pointed out that his post-election record is more spending.

(and you can read more of my whining and complaining here, here, here, here, and here)

But now I’m really disgusted, because the United Kingdom’s version of  George W. Bush is now reversing one of the few pro-market aspects of British policy.

The Wall Street Journal Europe is appropriately disappointed.

On Tuesday Iain Duncan Smith announced a sweeping reform of the U.K.’s state-pension system. In the name of simplification, the Work and Pensions Secretary plans to raise the basic pension, eliminate the current multitiered system—and pay for it all by rolling back the personal retirement accounts that were first introduced by the Thatcher Government in 1987. Pension systems across the developed world are being stretched to the breaking point as populations gray and governments face ballooning public debts. Britain today is in the privileged position of possessing on top of its public savings system an extensive private one, relatively insulated from the government’s increasingly uncertain ability to deliver on its pension liabilities. Pity, then, that Mr. Duncan Smith’s reforms serve in the long run mostly to entrench the unsustainable elements of the British system and trash the desirable ones.

Addendum: Jose Pinera reminds me that George W. Bush actually proposed personal retirement accounts in 2005, one of the few positive actions of his eight-year reign. So Cameron’s actions may put him even further to the left than Bush on economic policy, a rather challenging achievement.

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A lot of guests for this appearance, but I think I got a fair share of airtime. More important, I explained why it is not a good thing for Ben Bernanke and the Federal Reserve to let the inflation genie out of the bottle.

Monetary policy is one area where I always try to display some humility. While I know the right goal is zero inflation, I realize that achieving that goal requires central bankers to know both the supply of money (not as easy as it used to be) and the demand for money (always a challenge).

This is why I’m skeptical of QE2, but also willing to admit that it might be the right approach (though it grates on me that it is often portrayed as a form of stimulus, which definitely is wrong).

I’ll soon release a video that begins to tackle monetary policy. I don’t want to give away too much right now, but suffice to say that a monopoly central bank run by government is a recipe for mischief.

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