Are interventionist Policies Bad for the Economy’s Health?
Monthly Market Commentary: December 1, 2015
Ezekiel J. Emanuel, a well-known oncologist and a vice provost at the University of Pennsylvania argues that in the field of healthcare “more care can produce worse health outcomes.” Emanuel opines that “We - both physicians and patients - usually think more treatment means better treatment. We often forget that every test and treatment can go wrong, produce side effects or lead to additional interventions that themselves can go wrong. We have learned this lesson with treatments like antibiotics for simple medical problems from sore throats to ear infections. Despite often repeating the mantra ‘First, do no harm,’ doctors have difficulty with doing less - even nothing. We find it hard to refrain from trying another drug, blood test, imaging study or surgery.” Translating this simple wisdom into economics would surmise as follows: We both economists and fund managers - usually think more interventions mean better outcomes. We often forget that every experiment and intervention with fiscal and monetary policies can go wrong, produce side effects or lead to additional interventions that themselves can go wrong. We have learned this lesson with central planners in the former Soviet Union and in China under Mao Zedong. Despite often repeating the mantra “First, do no harm to the market and to the capitalistic system,” economic decision makers have difficulty with doing less - even nothing. They find it hard to refrain from trying another QE, government spending spree, bailout, new regulation, transfer payments, or outright wealth confiscation through negative interest rates.”
I am enclosing two reports: My friend Daniel Oliver of Myrmikan Capital (doliver@) writes about the low valuation of gold mining stocks. myrmikan.com
My readers and I contribute to several charities including Childsdream, Caravan to Classes, and Projecto Mirador. Projecto Mirador was founded by my friends Dee and Richard Lawrence (Richard runs Overlook Investments Ltd. – a very successful Asian focused fund - rlawrence@). I am pleased to enclose a recent update on Projecto Mirador. overlookinv.com
British physician, homeopath and bacteriologist Edward Bach suggested that, “The main reason for the failure of modern medical science is that it is dealing with results and not causes.” I think that the same is true of economics, and that to paraphrase Moliere, nearly all economies die of their fiscal and monetary “remedies” and not of their illnesses.
I wish my readers a wonderful festive season and excellent physical, mental and financial health in 2016.
With kind regards