Sunday, 15 September 2013

He's more concerned about shoe throwers

This story is about how journalists are trying to imply
that their messages are listened to by politicians.
Sometimes,the media think that their bright ideas
mean that they know how to run a country.

So, journalists are ignored. Talk show hosts are the
ones that politicians go to for attention. The conversation
stays within bounds of polite chit chat.

So, Mark Carney is unassailable. He doesn't have to listen to anybody.
City AM have to try harder to recruit sane staff.

checkit: City am
Mark Carney should learn from the failure of the Soviet shoe industry
by John Butler
July 1, 2013, 2:39am
GROWING up in the West in the 1980s, new Bank of England governor Mark Carney was almost certainly inundated with stories about how the Soviet Union was not only an odious regime, but how even the possibly well-intentioned aspects of Soviet central planning inevitably resulted in sub-optimal economic outcomes.
A classic example was shoes. Absent a pricing mechanism to match supply and demand, there was invariably either a glut or shortage. And even when there was a glut, there were plenty of summer shoes, but a shortage of winter boots. Central planners just couldn’t get it right. By contrast, the largely capitalist West, responding to real price signals in real markets, did a pretty good job at producing, in sufficient quantities, a range of shoes that customers wanted, that fit, that they could afford.
But you can’t produce shoes without machines and materials. Machines and other productive assets comprise the capital stock producing all things that we consume. To provide a higher standard of living in future, the capital stock must grow and adapt. And as it ages and depreciates, maintenance is required just to keep it working efficiently. But if central planners can’t even get the day-to-day shoe situation straight, how are they going to maintain, grow and adapt an economy’s entire capital stock to provide for the future needs of consumers?
They can’t. Only real price signals in real markets can do that, although in the case of the capital stock, the prices that matter are asset prices. Stocks, bonds, interest rates, and all associated derivatives thereof that trade in our capital markets are the critical signals that determine, today, what the capital stock is becoming next week, next year, or next decade. If these signals are distorted, how can we be confident that the capital stock we are growing for the future can produce what is even remotely desired?...