The New York Times has a David Leonhardt column asserting, "A politicized central bank is a first step toward runaway inflation." Well, since the Federal Reserve was created in 1913, the cost of the goods and services you could buy for a dollar in 1913 has soared to about $21. Or, to put it another way, the purchasing power of a 1913 dollar has fallen to less than five cents today, as Ron Paul writes in his book End the Fed. Seems like we've had some inflation under the supposedly depoliticized status quo. I distrust politicians as much as the next guy, and certainly as much as David Leonhardt distrusts them, but "politicized" can mean controlled by the politicians, or it can mean responsive to the voters as opposed to being unaccountable. A government responsive to the voters rather than unaccountable is a basic, core concept in democratic government. It's not clear to me why Mr. Leonhardt and other defenders of central banks insulated from politics think voters will favor inflation. Inflation is not popular; just ask President Carter, who was voted out of office in part because of it. The Leonhardt column does have a pretty good recounting of how the Fed missed the housing bubble.

A director of Central Intelligence during the Clinton presidency, John Deutch, has served as a director of Citigroup from 1996 to the present, a period that ended badly for a lot of Citi shareholders. President Clinton pardoned him after he got in trouble for allegedly storing top secret government documents on his home computer. In February, the Obama administration appointed Mr. Deutch to an intelligence advisory panel. The latest step in the rehabilitation of John Deutch came today with the Department of Defense's announcement that Mr. Deutch is one of 39 new members of the Defense Science Board. "We are grateful to these superb individuals for their willingness to serve," under secretary of defense Ashton Carter is quoted as saying in the press release. Mr. Deutch's name is (typically) buried in a PDF (reading PDF's is one of the services FutureOfCapitalism.com provides for its readers.) The PDF identifies him as "former deputy secretary of defense, and Massachusetts Institute of Technology," with no mention of either his Citigroup board service or his Clinton-era pardon.

The Web home page of the Wall Street Journal this afternoon is touting a blog item with the headline "Climate Change May Increase Income Inequality." The angle is reminiscent of the old joke about the New York Times headline after a nuclear armageddon; "World Destroyed; Poor, Minorities Hardest Hit." It's not bad enough that the global warming folks predict we are all going to drown from rising sea levels; even worse, there might be an increase in income inequality! People were worried when Rupert Murdoch bought the Wall Street Journal that he was going to turn it into the Fox News Channel; sometimes I wonder if the real danger is that he is going to turn it into the New York Times. The blog item is totally unskeptical. All five comments that were posted on the item on the Wall Street Journal site by late this afternoon thought the item was essentially ridiculous. One aspect of it that is ridiculous is the obsession with relative poverty. Isn't it bad enough that global warming would hurt the poor without having to frame it as a story about the gap between the rich and the poor? It's as if the existence of the rich makes poverty somehow worse than it would be without the rich. There's a whole world-view on display here, complete with an ideology, that goes far beyond a mere report on an economics paper. The economics paper, for what it is worth, "Climate Shocks and Exports," by Benjamin Olken of MIT and Benjamin Jones of Northwestern, concerns not rich and poor individuals but rather rich and poor countries, which the paper defines by "whether the country is in the bottom or top half of the world per-capita PPP income distribution in the first year GDP data is available." By this definition, on a list of 100 countries with 1 being richest and 100 being poorest by per capita GDP, if you are 49th on the list you are rich but if you are 51st you are poor. And if you were 51st on the list one year but move up to number 3 for the next and all subsequent years, you are still "poor." This is a definition so far afield from reality that only an economist could come up with it. One Wall Street Journal commenter referred to it as "the problem of using static models to make long-term inferences in a dynamic world."

The Financial Times reports on some of the risks of investing in China: "The vast majority of listed companies remain majority state-owned and senior management appointments are made by the Communist party. As a result, senior executives always have an eye on their political responsibilities. Investors hoping to back successful management teams of state-controlled companies must be prepared for their favoured chief executive or chairman to be transferred suddenly to the helm of a rival company or the governorship of a province." As I mentioned before, as a casual reader with no particular expertise in China, it seems to me that since the Washington Post's Phil Pan left for Moscow, the FT has had the best China coverage of any of the Western dailies.

The left-of-center New York Time columnist likes the health care overhaul almost as little as the Wall Street Journal editorial page does, writing: "We've spent a year turning ourselves inside out with arguments of every sort over health care reform only to come up with a bloated, Rube Goldberg legislative mess that protects the insurance and drug industries and does not rein in runaway health care costs."

The New York Times editorialists, who only three days ago were referring to a "housing bubble" and who as recently as 2007 were complaining about an "affordable housing crisis" have now found a new crisis: "Figures released last week show that after four months of gains, home prices flattened in October." This, the Times declares, is "unfortunate," "grim," and "bad." After all, the Times declares, "The economy is hard pressed to function, let alone thrive, when house prices are falling." That's just silly. If housing prices rise inexorably without ever flattening, eventually there will be a bubble and an affordable housing crisis. While falling prices are unfortunate, grim, and bad for homeowners, they are good for those who are renting and hoping to find homes they can eventually afford to buy. They are good for speculators betting against the housing market. A public policy designed to assure that the price of a certain asset always keeps going up is almost sure to create a bubble in that asset class and to make it hard to afford for people who don't already have one. The sentence "The economy is hard pressed to function, let alone thrive, when house prices are falling" makes it sound like house prices are something that exists outside of the context of the economy, rather than being part of the rest of the economy and, like everything else, having prices that are set by the interaction of supply and demand. Meanwhile, as John Stossel has observed, "'Crisis'" is the friend of the State." If too-high housing prices are a crisis and too-low housing prices are a crisis, maybe the government and, by extension, its policy advisers over at the Times editorial page should get out of the business of trying to make sure that housing prices are exactly perfect, because it's an un-achievable task. The best mechanism for finding a perfect price is allowing buyers and sellers the freedom to make contractual exchanges.

The Wall Street Journal has now published its second op-ed piece in three months warning of a doctor "shortage" and calling for increased federal spending to fix it. The first called on Congress to "increase doctor pay." The second, which, like the first, is written by a doctor, Darrell Kirch, calls on Congress to "lift the freeze on support for medical training." In fact, there's no such freeze; as I reported the last time the Journal ran a piece like this, federal support for graduate medical training grew to $8.8 billion in 2007 from $6.9 billion in 2000 and $6 billion in 1995. Only in the topsy-turvy world of ever-escalating medical costs does an increase to $8.8 billion from $6 billion qualify as a "freeze." There is a federal limit on the number of residency slots, which is a different thing altogether from the nonexistent supposed "freeze" on "support for medical training." It shouldn't surprise anyone that a government effort to control the supply of physicians would cause a shortage. Genuinely free markets are dynamic and self-correcting; efforts by government central planners to control supply lead to shortages. Dr. Kirch wants Congress to take more money from taxpayers, many of whom are poorer than doctors and who paid for their own graduate training, if they got any, and use it to add to the $8.8 billion in subsidies for graduate training that already goes to doctors. It's a reverse Robin-Hood. Why should a lawyer who put himself through law school and is now working at a district attorney's office or as an associate at a law firm have money taken from him by force by the government to pay for the training of some dermatologist who is going to make $4.8 million a year or some reproductive endocrinologist who is going to make $3 million a year? Those are real reported salaries. One can understand why people who run these graduate programs would advocate for this; they are an interest group that wants more money from the government. But just because an interest group asks for more money from Washington doesn't always mean it's the best thing for the country as a whole.

In the long Goldman post, I wrote that the case for American companies to do business in Communist China is at least in part that American values — capitalism, rule of law — are imparted to the Chinese. But I warned that there was a risk — not a certainty, but at least a risk — that some of the values flow back in the other direction and that instead of American companies exporting capitalism and the rule of law to China, China ends up exporting Communist-style state ownership, arbitrary government decision-making, and cronyism back to America. Now comes the announcement of a settlement with the Securities and Exchange Commission in which a California-based American telecommunications company, UTStarcom, agreed to pay $3 million in fines as a penalty for what the SEC characterizes as "millions of dollars on illegal bribes to win and keep customers in Asia." Says the SEC, "UTStarcom's wholly-owned subsidiary in China paid nearly $7 million between 2002 and 2007 for hundreds of overseas trips by employees of Chinese government-controlled telecommunications companies that were customers of UTStarcom, purportedly to provide customer training. In reality, the trips were entirely or primarily for sightseeing." Yikes. If it amounts to bribery to pay for an overseas sightseeing trip, what does it say about our Congress, whose members regularly accept such trips? Sometimes, sad to say, it's hard to tell if the Chinese are corrupting us or if we are corrupting the Chinese.

No sooner had I reviewed Thomas Sowell's book in which the economist writes of comparisons of prison costs versus college costs, "the relevant comparison would be between the costs of keeping someone in prison versus the costs of letting a career criminal loose in society," than the New York Times issued an editorial complaining, "state spending from general funds on corrections increased from $10.6 billion in 1987 to more than $44 billion in 2007, a 127 percent increase in inflation-adjusted dollars. In the same period, adjusted spending on higher education increased only 21 percent." The Times editorial complains that this spending increase on prisons took place in many states "with falling crime rates," as if increased prison spending and decreased crime were somehow contradictory. In fact the number of murders in America fell to 16,272 in 2008 from 20,096 in 1987, even as the population of the country grew by 60 million. It may be that keeping violent criminals in jail prevents them from committing additional crimes. How does one value the cost of a crime committed by a criminal let out of prison early at the behest of the New York Times editorialist? Never mind that much of the increased spending was driven by mandates supported by Times editorialists for things such as prison-based health care, rehabilitation and literacy programs and other improved conditions for prisoners. Fox Butterfield may be retired, but his spirit is alive and well and writing editorials for the New York Times.

Bloomberg's David Reilly sat down and read 1,279-page House "Wall Street Reform and Consumer Protection Act." He writes: "The bill calls for more than a dozen agencies to create a position called 'Director of Minority and Women Inclusion.' People in these new posts will be presidential appointees. I thought too-big-to-fail banks were the pressing issue. Turns out it's diversity, and patronage."

A book with the title Intellectuals and Society can be expected to range widely, and Thomas Sowell's latest does not disappoint, covering ground from economics to criminology and foreign policy.

In each area, Mr. Sowell's complaint is that intellectuals -- "people whose occupations deal primarily with ideas – writers, academics, and the like" – are having negative effects. And, maddeningly, these intellectuals are "unaccountable to the external world," immune from sanction, insulated even from the loss of reputation that those in other fields suffer after having been proven wrong.

The reputation of certain intellectuals may not be quite so immune after Mr. Sowell has finished with them, because he is withering in assessing and recording their failures.

Excessively easy monetary policy wasn't to blame for the housing "bubble," the chairman of the Federal Reserve, Ben Bernanke, said today in Atlanta at a meeting of the American Economic Association. The text of his remarks, as well as the slides that went along with them, is available at the Federal Reserve Web site. The arrogance of central planning is very much on display. The Wall Street Journal news article about the speech reports, "The Fed's views on asset bubbles are slowly changing. Earlier this decade, when Mr. Bernanke was a Fed governor, he and other central bank officials said financial bubbles weren't something the Fed could identify or pre-empt effectively. ..Sunday, he accepted that there might be situations that warrant such an approach." Bubbles are an unfortunate consequence of group-think and attempts to guess the future; if the Fed acts to prevent them by raising interest rates, it also risks retarding growth and making it more difficult for investors to take risks. Nearly as striking, to my eyes, was the section of the speech where Mr. Bernanke spoke of everything the Fed had done to try to rein in what he called "more exotic types of mortgages":

"With competitors like China, India and the others, the belief that our big fat national government can somehow subsidize, much less identify, the U.S.'s next creative edge is straight from the dusty book of the original flat-earth society," writes Daniel Henninger in today's Wall Street Journal, noting a Pew poll that found 44% of Americans call China the world's leading economic power. Mr. Henninger's a national treasure, but he seems to neglect the fact that in China, the national government subsidizes and identifies plenty. Sure, China has moved toward capitalism somewhat over recent decades, but the government still plays a big role there, much bigger than in America, even after Secretary Paulson and President Obama's expansion of the government role here. I'm not citing China as a model to be emulated (remember how it treats its human rights lawyers), but those who do often cite it as an argument for a stronger government role rather than a weaker one.

Should "price gouging" after a hurricane be illegal? Should television's Judge Judy make $25 million a year, while the chief justice of the United States, John Roberts, makes $217,400 a year? Should a professional golfer with a bad leg be allowed to ride a golf cart in tournaments? Should the Purple Heart be awarded to soldiers who suffer post-traumatic stress disorder?

These are some of the questions that a professor of government at Harvard, Michael Sandel, explores in his book Justice, based on his popular Harvard College course of the same name.

It's lively stuff, as far as political philosophy goes, and, as far as commenting on current events goes, it has the advantage of clearly exposing the broader principles that undergird many of our political debates, including many of the debates aired regularly at FutureOfCapitalism.com.

A Bloomberg News article assessing how Mary Schapiro is doing as chairman of the Securities and Exchange Commission, reports, "After saying in April that she would consider curbs on short- selling, which lawmakers blame for pushing down stock prices, Schapiro has postponed any rules until next year. The decision followed push back from hedge funds, including Citadel Investment Group LLC, D.E. Shaw & Co. LP, and Renaissance Technologies Corp. They told the SEC in letters that there was little evidence that bearish traders caused the steep decline of share prices in 2008. The fund managers also said the SEC's plans would damage markets." D.E. Shaw's involvement here has gone beyond "letters." On September 21, 2009, the firm's Darcy Bradbury met with SEC commissioner Luis Aguilar about the short sale rules. On the same date, Ms. Bradbury met with SEC Commissioner Troy Paredes about the short selling rules. This is the same D.E. Shaw that paid Lawrence Summers, now chief of President Obama's National Economic Council, $5.2 million a year for a one-day-a-week job. Ms. Bradbury's federal campaign contributions in the 2008 cycle were a reported $89,492. There's nothing wrong with a person exercising her First Amendment right to donate money to politicians, engage in free speech, or petition the government, and hedge funds have every right to have a say in regulations that might affect their businesses. Even so, the involvement of D.E. Shaw in the short-selling regulation has generated none of the uproar that attended, say, the involvement of oil companies in Vice President Cheney's energy task force. The Bloomberg article mentions it almost as an aside; the New York Times had a short item about it that ran inside the business section back in October.