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Good summary of a very important issue in this election - the role of the government in a "capitalist" free market economy (cough cough).  If you have trouble loading this locked WSJ article, the solution is simple.  Paste "Michael Boskin: The Anatomy of Government Failure" into a google search.  The article with link will show up as "online.wsj.com/...../  Just click the headline and read.  The google paste gives you a free pass to WSJ articles.  ........ Great cartoon image with this post :)  http://goo.gl/7QQZh excerpts: In a market economy, price signals automatically steer society's scarce resources to the uses people value most, and at minimum cost. This is Adam Smith's famous Invisible Hand. But sometimes markets aren't competitive, or they generate effects such as congestion or pollution that are not accounted for in the price system. These "market failures" potentially justify government intervention......... "More generally, the costs of government regulation may be higher than the benefits-the cure may be worse than the disease. Before undertaking a new government intervention or adopting a new rule, instituting a new program or expanding an old one, the problem of "government failure" has to be considered. Government failures include the cronyism and pork that arise from spending and subsidy programs. Helping people experiencing hard times to get back on their feet is proper, but if overdone it may induce dependency. Laws are administered by agencies, from the EPA to banking regulators, with their own bureaucratic incentives-and they are prone to capture by the very interests they are supposed to regulate. Government failures are as pervasive as market failures due to monopoly or externalities, such as pollution, that arise because of ill-defined property rights. The potential for such failures grows as government grows. More government spending or regulation doesn't necessarily lead to better outcomes. If that were true, Washingto

For all our obsessing about it, the national debt is a singularly bad way of measuring the nation's financial condition. It includes only a small portion of the nation's total liabilities. And it's focused on the past. An honest assessment of the country's projected revenue and expenses over the next generation would show a reality different from the apocalyptic visions conjured by both Democrats and Republicans during the debt-ceiling debate. It would be much worse. That's why the posturing about whether and how Congress should increase the debt ceiling by Aug. 2 has been a hollow exercise. Failure to increase the borrowing limit would harm American prestige and the global financial system. But that's nothing compared with the real threats to the U.S.'s long-term economic health, which will begin to strike with full force toward the end of this decade: Sharply rising per-capita health-care spending, coupled with the graying of the populace; a generation of workers turning into an outsize generation of beneficiaries. Hoover Institution Senior Fellow Michael J. Boskin, who was President George H.W. Bush's chief economic adviser, says: "The word 'unsustainable' doesn't convey the problem enough, in my opinion." Even the $4 trillion "grand bargain" on debt reduction hammered out by President Barack Obama and House Speaker John Boehner (R-Ohio)-a deal that collapsed nearly as quickly as it came together-would not have gotten the U.S. where it needs to be. A June analysis by the Congressional Budget Office concluded that keeping the U.S.'s ratio of debt to gross domestic product at current levels until the year 2085 (to avoid scaring off investors) would require spending cuts, tax hikes, or a combination of both equal to 8.3 percent of GDP each year for the next 75 years, vs. the most likely (i.e. "alternative") scenario. That translates to $15 trillion over the next decade-or more than three times what Obama and Boehner we

President Obama is returning to Jimmy Carter's higher taxes and Mr. Clinton's draconian defense drawdown. Mr. Obama's $3.6 trillion budget blueprint, by his own admission, redefines the role of government in our economy and society. The budget more than doubles the national debt held by the public, adding more to the debt than all previous presidents -- from George Washington to George W. Bush -- combined. It reduces defense spending to a level not sustained since the dangerous days before World War II, while increasing nondefense spending (relative to GDP) to the highest level in U.S. history. And it would raise taxes to historically high levels (again, relative to GDP). And all of this before addressing the impending explosion in Social Security and Medicare costs.