Hot drink parties

My Ode to Modernity ended with an oblique reference to the Tea Party movement. A comment on the post suggested I look into the Coffee Party counter-movement, I think with the implication that I host one.

Obviously, I'm an academic. My first economics book was Hayek's Road to Serfdom, and I identify strongly with the Austrian School of economics. I simply don't believe that any bureaucrat can know enough to successfully manage the economy. Unfortunately, some eighty years of government backed private debt (fan though I am of Sheila Bair) and regulatory capture have created a system that generates wealth a lot faster than a free market ever could.

Now this system is breaking down. The past three years have seen something unprecedented as a financial crisis in a highly indebted nation led to a vast increase in the number of people buying that nation's debt. This is not a sustainable system, the deficits that helpfully created all that debt to buy cannot be sustained. The Navy, whose services many of those foreign investors are effectively buying, is overstretched and does not have a coherent shipbuilding plan. Deficit reduction in the US will require both cutting services and raising taxes, but the political will to do so does not exist. Meanwhile, our recent attempt to stop one sector of the economy from dragging down the rest can be described, at best, as a halting step towards making a bad system slightly less unpalletable (a tee shot, in a previous post).

We are now having an internet-style national philosophy debate. Tea Partiers seem to believe most strongly that our best days were in 2003-2005, when the economy was growing strongly on the back of gov't backed bad mortgages (including pension funds buying non-FHA stuff). The Coffee Parties are generally more "progressive", seeking smarter regulation to tame the business cycle and more equitable wealth distribution. The first have already been captured by the neoconservative wing of the GOP, the second probably host a lot of Howard Dean supporters and may find themselves backing democratic candidates this fall.

As the former head of the Pie Cabinet, I will not host either in my home. Historical irony might inspire me to turn up at a rally with a bundle of sticks tied together, or perhaps a sign warning "Beware the Red Tide!" (oh, so many meanings!). However, I remain committed to asking simply what is the best way to incentivize a sustainable economy that provides at a minimum the capacity for each family to make a pie every week. Come on over, I've got plenty of tea and a brand new coffee grinder.