From: leung@DSG.Tandem.COM (Steven Leung)
Subject: Re: Review of the Republican National Convention
Organization: Tandem Computers
Date: Wed, 26 Aug 1992 22:33:34 GMT

cw@orion.uucp (C.W. Chung) writes:
|>     In article <1992Aug25.170418.1869@cs.brown.edu> ylq@lems22lems.brown.edu (Yan Shen)
|> writes:
|>     >|> In article <1992Aug22.135529.1@cua.edu> 54yang@cua.edu writes:
|>     >|> >
|>     >|> >First, the Republicans believe a small government: the government 
|>     >|> >should do as little as possible in domestic economy, whereas the 
|>    
|>     >In 1930s, government created million of jobs for American through spending 
|>     >money on building infrastructure like bridges, roads. That spending led the 
|>     >way out of the depression.
|>     
|> You can stimulate the economy by increasing government spending at the risk
|> of increasing inflation and increasing the budget deficit.

Govt spending based on tax is a means to redistribute wealth. I felt that
very few people would have a problem with this in principle. But when you
look at the details of implementation, then problems emerge:
  * how much tax
  * where to spend the money

|>     >|> >Democrats believe there needs more governmental regulations for 
|>     >|> >the economy.   But common goal: make the economy grow.
|>     >|> >
|>     
|>     >How about about that S&L scandels caused by Ron Reagan's deregulation on 
|>     >banking system? It costs $2000/person to bail out that mess. 
|> 
|> Before de-regulation, the S&L can only pay 5 to 5.25% on saving deposits.  It
|> didn't take a genuis to notice that the money market account by the banks are
|> paying a lot more.  So billions of dollars flowed away from S&L. So supply
|> of captial to S& L is negative.  At that time, the secondary mortage market 
|> was still at its infancy.  Most S&L are still holding the loans in their portfolio.
|> The capital flight was a serious problem (call dis-intermediation at the time)
|> that S&L industry couldn't survive without major changes.
|> 
|> The deregulation was intended to revitalize S&L.  Some do propser (e.g. Great
|> Western Savings, now Bank, is a stelling example).  However, the S&L were
|> allowed to branch out to unfamilar territories like commercial real estate.
|> Many falter badly when the market turn sour.  In addition, fraud, mismanagement,
|> speculation alll contribute to part of the problems.  
|> 
|> It could be another case of 'survival for the fittest', and the badly-managed 
|> ones will be washed away, and the well-managed one will prosper.  However,
|> we have the govt as the SLDIC (S&L deposit insurance corp). So we are left
|> with the bag of the failed S&L.

Here is another example of unsolvable problem: you cannot have banking/etc.
without any regulation (just depending on people's self control); but if
you regulate too much, it will do more harm than good. So, how much regulation
is good? Unsolvable. I think that the society will always oscillate around
the imaginary equilibrium point on issues like this.

Steven
------
328. Seek opportunity, not security. ...
        - Life's Little Instruction Book by H. J. Brown, Jr.

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