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Thursday, March 05, 2009
POLITICS: Stimulating your way out of economic crisis
DISCLAIMER: Not an MMORPG post. Stop reading if you think that MMORPG blogs should only contain MMORPG posts.
As I mentioned before, I'm Keynesian. That is, in an economic crisis like today I support the proposal of John Maynard Keynes that the government should pay people to dig holes and then fill them up. Or, even better, build schools and highways. The idea behind that is that if you gainfully employ people, they will have money to spend, which will restart the economy after a crisis.
I also support the idea that the government should intervene in the sub-prime mortgage crisis, see that the pain is shared between homeowners, banks, and the government, and ultimately enable more people to stay in the houses they built. It helps nobody if the homeowners leave their houses or get evicted for not being able to repay their mortgages, and then the bank still loses money because they can't find a buyer for the empty house.
But there is a limit to my support for government spending their way out of the crisis. When I'm reading in the New York Times about the poor guy who bought a house for $2.24 million and now can't afford it any more complaining that he isn't covered by President Obama's housing rescue plan, I'm not exactly feeling sorry for him. I'm not supporting government financing bonuses for bankers either. Financial stimulus is not there to support millionaires. Supporting millionaires is doing very little for the economy, because the richer you are, the less of the stimulus you end up spending.
At some point we have to realize that whatever stimulus there is, we cannot go back to where we were before 2007. The simple truth is that too many people spent more money than they could afford, more money than they earned. In the long run that is unsustainable, although Keynes famously said about that subject that "in the long run, we are all dead". So some painful adjustment will have to happen, the the biggest excesses of spending will have to die. Government should support people who are unemployed, or on modest incomes, not just because that is nice, but because ultimately it supports the economy. But it has no business whatsoever to finance people's million-dollar homes or pay for their yachts. Economic stimulus can prevent the recurrence of the worst events of the Great Depression, the long unemployment lines and soup kitchens. It cannot finance everybody living beyond their means.
- posted by Tobold @ 1:02 PM Permanent Link
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I'd like to recommend the book "Economics in One Lesson" by Henry Hazlitt. It's relatively short and quite readable for those who aren't economists themselves.
Once you've read that book, you'll probably remove this post embarrassed by the major flaws in it. Just kidding.
But at least you'll might reconsider saying you're Keynesian. I'm convinced a lot of the problems we have these days is because of the blind faith (hence the word 'Keynesian'?) in Keynes teachings by most of our politicians and industry leaders.
Looking forward to more mmorpg related stuff though ;-)
Once you've read that book, you'll probably remove this post embarrassed by the major flaws in it. Just kidding.
But at least you'll might reconsider saying you're Keynesian. I'm convinced a lot of the problems we have these days is because of the blind faith (hence the word 'Keynesian'?) in Keynes teachings by most of our politicians and industry leaders.
Looking forward to more mmorpg related stuff though ;-)
# posted by 
: 5/3/09 14:16
: 5/3/09 14:16
I just think that people spent far over what they could afford, I for example with Delen are considering a new car, but we wont gt it if were not financially sound enough to afford it.
these bankers who get horrendous salaries, bonuses and retirement packages for putting us in this mess do not deserve what they get
these bankers who get horrendous salaries, bonuses and retirement packages for putting us in this mess do not deserve what they get
That One Lesson of economics says "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." Which, I would say, is the point of my post: Stimulus can fix bumps in the road of economic development, but can't make us all richer and able to spend more than we earn.
But even if one accepts that one lesson, one doesn't have to accept the rest of Hazlitt's economics, who was pretty much against Keynes. It isn't an accident that I put "Politics" in the title, not "Economics". Economics is in many cases not an exact science, and the proposed response you'd get from Milton Friedman to the same crisis would be very different from that which you'd get from Keynes. And the adherents to the Chicago School of Economics aren't any less following "blind faith" than those of Keynes.
The resurgence of Keynes has a lot to do with the general impression that following the Chicago School of Economics blindly got us into the mess we are currently in. The "build it and they will come" model of supply-side economics just resulted in people building, other people coming, but ultimately not being able to afford. The Keynesian model is demand-side, pointing out that first you need to get money to the people, who when they can afford things will create the demand, and the supply will follow automatically. That is a lot less susceptible to bubbles.
But even if one accepts that one lesson, one doesn't have to accept the rest of Hazlitt's economics, who was pretty much against Keynes. It isn't an accident that I put "Politics" in the title, not "Economics". Economics is in many cases not an exact science, and the proposed response you'd get from Milton Friedman to the same crisis would be very different from that which you'd get from Keynes. And the adherents to the Chicago School of Economics aren't any less following "blind faith" than those of Keynes.
The resurgence of Keynes has a lot to do with the general impression that following the Chicago School of Economics blindly got us into the mess we are currently in. The "build it and they will come" model of supply-side economics just resulted in people building, other people coming, but ultimately not being able to afford. The Keynesian model is demand-side, pointing out that first you need to get money to the people, who when they can afford things will create the demand, and the supply will follow automatically. That is a lot less susceptible to bubbles.
Digging and filling holes is not solving structural problems of the automotive industry. This is why I would not follow Mr. Keynes too much. He has a point, but actionism based on the theory alone is not going to do much good.
But I got the impression you know all this already. I just doubt that giving people more money to buy more of the produced goods is going to help either gambling bankers or car manufacturers.
But I got the impression you know all this already. I just doubt that giving people more money to buy more of the produced goods is going to help either gambling bankers or car manufacturers.
The more important lesson from Hazlitt's book is that most people do not recognize, or simply ignore, the implications of their economical statements.
And when you say one needs to get the money to the people first, I'd say you're likely not aware, or ignoring, the implications of this statement. Unless I misunderstood, you make it sound like either debt, or increased tax (or both) is the way to a sound economy. But since the end of last year we're all experiencing what debt does to our economies.
And when you say one needs to get the money to the people first, I'd say you're likely not aware, or ignoring, the implications of this statement. Unless I misunderstood, you make it sound like either debt, or increased tax (or both) is the way to a sound economy. But since the end of last year we're all experiencing what debt does to our economies.
# posted by : 5/3/09 15:19
: 5/3/09 15:19
rvanmil,
you need to do the reading. The problem wasn't because of blind faith in any one ideology. Here in america we deregulated the industries we wanted to while protecting others. We put all kinds of regulations on the consumers to keep them from actually using court systems and due process built into the constitution and gave banks and credit cards a free ride. the people that called themselve kensyians forgot that even keynes believed that there had to be savings so that the banks had capital to loan. And yet without capital they kept lending.
That and the whole idea of bundled securities sounds good. "Spread the risk" so its smaller for everyone. The problem is the risk hits everyone when it comes due.
For 40 years we've had several groups of self serving people taking what they like from several ideologies and calling it what they want. The real problem was we were following the economics of "GREED" not keynes.
Making money is good. Making fake money and assets and reselling them is BAD. Unfortunately thats what several countries led by america have been doing for the last 4 decades. Now the credit card bill for all the money used without assets to back it up is due.
There is no quick fix and at least having people fill in holes and rebuild bridges and roads that have been negelected for 30 years rebuilds infrastructure that will encourage growth and productivity in the "LONG" run. Not the next stock cycle.
you need to do the reading. The problem wasn't because of blind faith in any one ideology. Here in america we deregulated the industries we wanted to while protecting others. We put all kinds of regulations on the consumers to keep them from actually using court systems and due process built into the constitution and gave banks and credit cards a free ride. the people that called themselve kensyians forgot that even keynes believed that there had to be savings so that the banks had capital to loan. And yet without capital they kept lending.
That and the whole idea of bundled securities sounds good. "Spread the risk" so its smaller for everyone. The problem is the risk hits everyone when it comes due.
For 40 years we've had several groups of self serving people taking what they like from several ideologies and calling it what they want. The real problem was we were following the economics of "GREED" not keynes.
Making money is good. Making fake money and assets and reselling them is BAD. Unfortunately thats what several countries led by america have been doing for the last 4 decades. Now the credit card bill for all the money used without assets to back it up is due.
There is no quick fix and at least having people fill in holes and rebuild bridges and roads that have been negelected for 30 years rebuilds infrastructure that will encourage growth and productivity in the "LONG" run. Not the next stock cycle.
I have to disagree. What worked in the 30' depression does not work now. The big difference is the technology. Back then unskilled people could be given useful menial tasks, like digging the path of the highway. Now machines can do it much better, faster and cheaper. You can replace a bulldozer with a hundred diggers, but I doubt they will be satisfied with 1/100 running cost of the bulldozer. If you pay them more, that's pure welfare.
The only place where an unskilled person can get meaningful work is in services. Tend my garden, watch for my kid, clean my street from trash and graffities, wash my car and so on. However no governmental agency can organize such jobs. Only I could give them such jobs, but I'm overtaxed, so I can't afford it, and I'd have to pay tax for their employment which I don't want to, especially because of the paperwork.
The solution is cutting taxes, especially for low income people. This way people could employ them without extra costs.
The only place where an unskilled person can get meaningful work is in services. Tend my garden, watch for my kid, clean my street from trash and graffities, wash my car and so on. However no governmental agency can organize such jobs. Only I could give them such jobs, but I'm overtaxed, so I can't afford it, and I'd have to pay tax for their employment which I don't want to, especially because of the paperwork.
The solution is cutting taxes, especially for low income people. This way people could employ them without extra costs.
Gevlon, you are worng
A program of public spending based on the improvement and construction of infrastructures: schools, hospitals, railway lines, sports complexes, gardens, etc. Or even employ more people to tend to the considerably ruined natural landscapes (in that situation because of the bigger Gevlons of this world): reforesting, tending natural parks, agricultural production, etc. Those were more than enough to gainfully employ people in order to give the money to sail through the storm and making money circulate. It's a bit silly to assume machines could do all that work.
Of course some regulation (oh, the dreaded word) must be in place to stop the banks from shoving credit down people's throats. And yes: if freedom has made some CEO's pursue self serving policies good for the quarter bonus but no to society in the whole, then their freedom to act within society must be limited. One thing this crisis has shown us is the fallacy of the invisible hand, the benefits of greed and the dangers of short term economic strategies.
Nevertheless, your last sentence shows that you have some social conscience. Usually liberals such as your self defend tax cuts for the rich in order to give them "incentives" to invest and create more wealth. Which is true, they just keep it all to themselves.
A program of public spending based on the improvement and construction of infrastructures: schools, hospitals, railway lines, sports complexes, gardens, etc. Or even employ more people to tend to the considerably ruined natural landscapes (in that situation because of the bigger Gevlons of this world): reforesting, tending natural parks, agricultural production, etc. Those were more than enough to gainfully employ people in order to give the money to sail through the storm and making money circulate. It's a bit silly to assume machines could do all that work.
Of course some regulation (oh, the dreaded word) must be in place to stop the banks from shoving credit down people's throats. And yes: if freedom has made some CEO's pursue self serving policies good for the quarter bonus but no to society in the whole, then their freedom to act within society must be limited. One thing this crisis has shown us is the fallacy of the invisible hand, the benefits of greed and the dangers of short term economic strategies.
Nevertheless, your last sentence shows that you have some social conscience. Usually liberals such as your self defend tax cuts for the rich in order to give them "incentives" to invest and create more wealth. Which is true, they just keep it all to themselves.
And who is going to provide the money needed for your public spendings, Wyrm?
More deficit spending will only increase pressure on those who are still able to be productive, which in turn, will only make things worse in the long run.
More deficit spending will only increase pressure on those who are still able to be productive, which in turn, will only make things worse in the long run.
# posted by : 5/3/09 18:03
: 5/3/09 18:03
ASCE (American Society of Civil Engineers) estimates that $1.6 trillion is needed over a five-year period to bring the nation's infrastructure to a good condition. As of 2009.
This is what blind reliance in tax cuts has done to us. Keeping taxes lower is a good idea. Taxes that are too high are regressive. But Taxes that are too low cause government to let the basics slide. US public school infrastructure is even worse off than our highways.
This is the problem with the simple view. It always leaves out complex things that will cause effects you never thought about.
The GI generation kept taxes moderate and mostly focused spending on things that were important. The Baby Boomers focused on generating wealth because it would trickle down. Thats just delusional and naive. Businesses are in business to make money not build up countries and workers. It is in thier best interest to pay the least for the most. Without oversight they will always follow greed because its what thier shareholders demand.
Now we are Trillions behind in infrastructure spending, Medicaid and Social Security will come due for 10's of trillions soon. Our rural hospital infrastructure is crumbling, only 1/3 of the nation has broadband. And the list goes on and on.
The debt coming is so big the financial meltdown is small in comparison. Its the same thing that happens to people that max out a dozen credit cards, take out a balloon mortgage and buy 2 really big expensive cars and eat out every night on the salary of a middle class worker.
Tax cuts would have helped in the early 80's if we'd cut spending.
Now we are screwed and we'll have to cut spending raise taxes and accept that what we called an acceptable quality of life is done for at least a few decades if not half a century.
This is what blind reliance in tax cuts has done to us. Keeping taxes lower is a good idea. Taxes that are too high are regressive. But Taxes that are too low cause government to let the basics slide. US public school infrastructure is even worse off than our highways.
This is the problem with the simple view. It always leaves out complex things that will cause effects you never thought about.
The GI generation kept taxes moderate and mostly focused spending on things that were important. The Baby Boomers focused on generating wealth because it would trickle down. Thats just delusional and naive. Businesses are in business to make money not build up countries and workers. It is in thier best interest to pay the least for the most. Without oversight they will always follow greed because its what thier shareholders demand.
Now we are Trillions behind in infrastructure spending, Medicaid and Social Security will come due for 10's of trillions soon. Our rural hospital infrastructure is crumbling, only 1/3 of the nation has broadband. And the list goes on and on.
The debt coming is so big the financial meltdown is small in comparison. Its the same thing that happens to people that max out a dozen credit cards, take out a balloon mortgage and buy 2 really big expensive cars and eat out every night on the salary of a middle class worker.
Tax cuts would have helped in the early 80's if we'd cut spending.
Now we are screwed and we'll have to cut spending raise taxes and accept that what we called an acceptable quality of life is done for at least a few decades if not half a century.
"And who is going to provide the money needed for your public spendings, Wyrm?"
Where does the cash for bailing out AIG and banks in general come? Aren't you shocked by that one?
The fucking double standard...
Liberals are proficient with doublethink. In the same conversation they will berate Hugo Chavez and Venezuela but praise the Chinese Communist Party and China.
Where does the cash for bailing out AIG and banks in general come? Aren't you shocked by that one?
The fucking double standard...
Liberals are proficient with doublethink. In the same conversation they will berate Hugo Chavez and Venezuela but praise the Chinese Communist Party and China.
Where did I mention being in favor of the bailout? I'll just ignore your ad hominem nonsense for the sake of the discussion.
# posted by : 5/3/09 18:25
: 5/3/09 18:25
You didn't mentioned anything, just trolled a bit. We are waiting for your suggestion, as Tobold asked from the readers.
It's getting tiresome to point out all the inconsistencies, double standards and empiric-free assumptions that liberal and also Austrian economists have in their theories. "If reality is not explained by our model then reality must be wrong."
Sigh, it looks like we have a few Libertopians lurking here. For the European readers who may not know much about this fringe, evangelical political movement (which seems to have found fertile ground in the United States for some reason), I would recommend starting here:
http://world.std.com/~mhuben/libindex.html, follow the link on the page: A Non-Libertarian FAQ.
It provides a good introduction (along with a rock solid debunking) of Libertarian economic and social philosophy.
On a side note: I really enjoy your excellent Blog Tobold, I especially enjoy your posts that deal with economics as it applies to MMORPGs. I'm an amateur economist myself.
http://world.std.com/~mhuben/libindex.html, follow the link on the page: A Non-Libertarian FAQ.
It provides a good introduction (along with a rock solid debunking) of Libertarian economic and social philosophy.
On a side note: I really enjoy your excellent Blog Tobold, I especially enjoy your posts that deal with economics as it applies to MMORPGs. I'm an amateur economist myself.
The thing about economic issues i find the most annoying is the fact that EVERYONE has the big answer. it's easy for someone to say "well if we did it this way... everything would be ok!" BULL. It's easy to make a claim that no one will ever test, in the end without the aid of history we cannot say what will work in our current state of economic woe. We DO however have to do something. I believe as long as we keep trying, and stop all the negativity for any plan that isn't our own, we might stand a chance of survival. Good luck to us all, because we are all in this together, the whole world :P seriously.
The thing about economic issues i find the most annoying is the fact that EVERYONE has the big answer. it's easy for someone to say "well if we did it this way... everything would be ok!" BULL.
This is the impression I get as well. The more I read about economics, finance, etc., the more I get annoyed with people who have no business being as sure of anything as they tend ot act.
Sigh, it looks like we have a few Libertopians lurking here. For the European readers who may not know much about this fringe, evangelical political movement (which seems to have found fertile ground in the United States for some reason), I would recommend starting here
I wouldn't call libertarians in general "evangelical, fringe", etc. groups. Keep in mind that people in the U.S. is generally more opposed to government involvement in the economy than people in a lot of Europian countries, and that libertarians are an extension of that.
Though of course, like all political viewpoints, it does attract a lot of nutty people, especially on the internet. (They were quite common on some forums I was on about a year/few years ago.)
This is the impression I get as well. The more I read about economics, finance, etc., the more I get annoyed with people who have no business being as sure of anything as they tend ot act.
Sigh, it looks like we have a few Libertopians lurking here. For the European readers who may not know much about this fringe, evangelical political movement (which seems to have found fertile ground in the United States for some reason), I would recommend starting here
I wouldn't call libertarians in general "evangelical, fringe", etc. groups. Keep in mind that people in the U.S. is generally more opposed to government involvement in the economy than people in a lot of Europian countries, and that libertarians are an extension of that.
Though of course, like all political viewpoints, it does attract a lot of nutty people, especially on the internet. (They were quite common on some forums I was on about a year/few years ago.)
Read Freakenomics IMHO. Learned more about economics in a few hours of reading that book than a few semesters of economics.
"Economic stimulus can prevent the recurrence of the worst events of the Great Depression, the long unemployment lines and soup kitchens. It cannot finance everybody living beyond their means."
I'd certainly agree with the second of those sentences, Tobold. Whether it's possible to prevent mass unemployment remains to be seen. Although possible in principle, getting the amount of stimulus right is incredibly tricky given the imperfect information available to decision-makers. Too little and the economy still tanks, too much and you have runaway inflation. I think we all have to hope we live in the country whose central bank guesses right. I suspect many of them will guess wrong, not because they are idiots, but because they're acting on such poor information.
I'd certainly agree with the second of those sentences, Tobold. Whether it's possible to prevent mass unemployment remains to be seen. Although possible in principle, getting the amount of stimulus right is incredibly tricky given the imperfect information available to decision-makers. Too little and the economy still tanks, too much and you have runaway inflation. I think we all have to hope we live in the country whose central bank guesses right. I suspect many of them will guess wrong, not because they are idiots, but because they're acting on such poor information.
The government has a role to play in attempting to stop another "Great Depression" type of scenario where unemployment skyrockets and credit dries up.
Hoover chose to do very little, because he believed he did not have the power to interfere with the economy. Roosevelt did. While Roosevelt's New Deal didn't stop the Depression in its tracks, it did put people to work...which means it kept people eating and providing shelter to their families. Only the great public works project of WW2 got the US out of the Depression. While its understandable to not want to reward the people who created the crisis, whether it be bankers, corporations, private home buyers...if something is not done to protect the infrastructure of our economy, than worse things can happen. Shoring up banks and providing help for homeowners is one way to stop the economy from going into a free-fall.
With the government providing tax payer money to pay for it, there should be many restrictions on how the money is used. No bonuses for banks who accept money. For homeowners, debt counseling or something similar so that they can get a handle on what it is they can and cannot afford.
Other projects should be funded, such as "clean energy", which is on the brink of becoming sustainable and affordable. Increase the technology to make it a viable energy source, and you create both manufacturing jobs here in the US, as well as service jobs of both menial and highly-skilled types to support it. Repairing the infrastructure of the country, like repairing bridges so they don't fall down over rivers, repairing highways, and all the other infrastructury-esqu things will get people to work...but it will also benefit everyone in the country if roads, bridges, buildings, public education, etc, is in working order.
Universal healthcare could also help the economy. Imagine if every day Americans were able to go to the hospital or doctor because they need to...not just because they can afford it. Imagine if Americans were allowed to live in a country where everyone's health was a priority. Less sickness and injury festering in workers. Less medical bills that can, by themselves, bankrupt an otherwise solvent individual or family. Some people may say that now isn't the time for universal healthcare...and I would argue the exact opposite...now is when its needed most.
Hoover chose to do very little, because he believed he did not have the power to interfere with the economy. Roosevelt did. While Roosevelt's New Deal didn't stop the Depression in its tracks, it did put people to work...which means it kept people eating and providing shelter to their families. Only the great public works project of WW2 got the US out of the Depression. While its understandable to not want to reward the people who created the crisis, whether it be bankers, corporations, private home buyers...if something is not done to protect the infrastructure of our economy, than worse things can happen. Shoring up banks and providing help for homeowners is one way to stop the economy from going into a free-fall.
With the government providing tax payer money to pay for it, there should be many restrictions on how the money is used. No bonuses for banks who accept money. For homeowners, debt counseling or something similar so that they can get a handle on what it is they can and cannot afford.
Other projects should be funded, such as "clean energy", which is on the brink of becoming sustainable and affordable. Increase the technology to make it a viable energy source, and you create both manufacturing jobs here in the US, as well as service jobs of both menial and highly-skilled types to support it. Repairing the infrastructure of the country, like repairing bridges so they don't fall down over rivers, repairing highways, and all the other infrastructury-esqu things will get people to work...but it will also benefit everyone in the country if roads, bridges, buildings, public education, etc, is in working order.
Universal healthcare could also help the economy. Imagine if every day Americans were able to go to the hospital or doctor because they need to...not just because they can afford it. Imagine if Americans were allowed to live in a country where everyone's health was a priority. Less sickness and injury festering in workers. Less medical bills that can, by themselves, bankrupt an otherwise solvent individual or family. Some people may say that now isn't the time for universal healthcare...and I would argue the exact opposite...now is when its needed most.
It's getting tiresome to point out all the inconsistencies, double standards and empiric-free assumptions that liberal and also Austrian economists have in their theories. "If reality is not explained by our model then reality must be wrong."
Amen. The thing I hate the most about both the chicago school, and the austrian school (Which I find even more absurd, although less people worth taken seriously actually support it, so it is less important to refute) is that their models of the economy very frequently do not mesh with...well, reality. ESPECIALLY from a macro perspective, though they still have problems with micro. It seems clear to me that the modern-day supporters of liberal economic schools already know what conclusion they want, and they are happy to create assumptions that produce those conclusions, regardless of how real those assumptions are.
More deficit spending will only increase pressure on those who are still able to be productive, which in turn, will only make things worse in the long run.
If you are implying that deficit spending means higher taxes...then, well, you obviously don't understand deficit spending. The government is not like a household, and it doesn't need to pay back the principal on borrowed money. It only pays back the interest. That 10 trillion in debt? The interest only takes up 8% of the budget. That means that another trillion is pretty much a drop in the bucket. You wouldn't need to increases taxes a single cent on anyone, just shift the budget around (Hopefully away from defense spending).
Amen. The thing I hate the most about both the chicago school, and the austrian school (Which I find even more absurd, although less people worth taken seriously actually support it, so it is less important to refute) is that their models of the economy very frequently do not mesh with...well, reality. ESPECIALLY from a macro perspective, though they still have problems with micro. It seems clear to me that the modern-day supporters of liberal economic schools already know what conclusion they want, and they are happy to create assumptions that produce those conclusions, regardless of how real those assumptions are.
More deficit spending will only increase pressure on those who are still able to be productive, which in turn, will only make things worse in the long run.
If you are implying that deficit spending means higher taxes...then, well, you obviously don't understand deficit spending. The government is not like a household, and it doesn't need to pay back the principal on borrowed money. It only pays back the interest. That 10 trillion in debt? The interest only takes up 8% of the budget. That means that another trillion is pretty much a drop in the bucket. You wouldn't need to increases taxes a single cent on anyone, just shift the budget around (Hopefully away from defense spending).
The government doesn't produce anything. Giving it more power to spend just undermines those who do produce, whether it's Gekkos or grunts. It's not the government's job to save us from ourselves, certainly not by using our resources.
Put another way, it's not Big Brother who will save the economy, it's the guy who gets up off his own butt, lives within his means, and goes and fills that pothole himself.
Put another way, it's not Big Brother who will save the economy, it's the guy who gets up off his own butt, lives within his means, and goes and fills that pothole himself.
@n1ck I suggest you actually look at how poor socialized health care actually is in Canada and Sweden. The waiting lists are nothing short of horrendous for basic medical procedures. The real issue with the health care industry is the lack of regulation. Costs are ridiculously high for just about anything. I had a kidney infection recently and just for an hour and a half of the docter's time, a prescription for some antibiotics, a lab test to help with the diagnosis, and one run through a CT scan the cost was over $6000. Hospitals do the same thing colleges are doing. You can't really choose not to get education or medical care, they have you cornered and they know it. They all charge and spend like crazy in an effort to be the "best".
I do however like what you said about clean energy and infrastructure. I view these as important issues that should be worked on, but I don't think they should be funded using deficit spending. The long term effects of all this spending are going to be a nightmare.
At everyone advocating massive spending, you are all aware of some of the goverments main strategies of paying off their debts, right? One of the main methods is simply to drive up inflation by creating more money, hence they can pay off their debts "cheaper" than the value of the money they were loaned. It allows the government to pay off their debts, but it really hurts american citizens. They're also particularily fond of trying to sell a lot of bonds. Many of these are bought up by foreign investors, hardly a help for our economy.
I'm not advocating the goverment taking a laizze-faire (sp?) approach, but I do think the government should be spending less than they are, and that any bailout money needs to be carefully managed to make sure it's not just wasted.
I do however like what you said about clean energy and infrastructure. I view these as important issues that should be worked on, but I don't think they should be funded using deficit spending. The long term effects of all this spending are going to be a nightmare.
At everyone advocating massive spending, you are all aware of some of the goverments main strategies of paying off their debts, right? One of the main methods is simply to drive up inflation by creating more money, hence they can pay off their debts "cheaper" than the value of the money they were loaned. It allows the government to pay off their debts, but it really hurts american citizens. They're also particularily fond of trying to sell a lot of bonds. Many of these are bought up by foreign investors, hardly a help for our economy.
I'm not advocating the goverment taking a laizze-faire (sp?) approach, but I do think the government should be spending less than they are, and that any bailout money needs to be carefully managed to make sure it's not just wasted.
"Put another way, it's not Big Brother who will save the economy, it's the guy who gets up off his own butt, lives within his means, and goes and fills that pothole himself."
Who is paying that man to get off his butt and fill the pothole? Jesus? His neighbor? His boss in the IT department? Potholes are a burden to everyone who drives, regardless of whether you drive over the pothole. It should be fixed with the public's money.
Government doesn't produce anything, but they have the biggest budget to give people who do produce things money. Student loans. Tax breaks for industries that actually produce. Grants for research. To say the government can't spend money for the benefit of everyone is just naive. Its whether the government can do so effectively and efficiently.
Does anyone really think that the best thing to do is just ignore the mess, let the same people who made the mistakes leading up to this continue make the big decisions? Maybe 15 years from now it will work itself out, after much strife. Or the government can try to increase liquidity and credit so that people who should get loans should still be able to get them, while heavily regulating the banks who take from the public trough.
To try to argue that one economic theory is "better" than another rather irrelevant at this point. I'm only speaking as a US citizen, but look at how much it costs us to play empire. Hundreds of billions of dollars are spent each year to have a military that is capable of destroying the earth, or small countries...and we aren't able to plunder the countries of their natural resources like empires of the past. Rome, Persia, Britain...all took what they wanted to prop up their military and the costs of expanding their power. The US on the other hand doesn't...at least not as visibly. We "own" Iraq and gas prices still went up. Meanwhile China manufactures everything we buy, taking our jobs because the chinese are willing to work for less money than it takes to pay a US worker.
Which economic theory states that spending 40% of your budget on a military that doesn't plunder wealth from other countries will slowly bankrupt that country? Thats the theory I'd pay attention to, as its based on reality.
Who is paying that man to get off his butt and fill the pothole? Jesus? His neighbor? His boss in the IT department? Potholes are a burden to everyone who drives, regardless of whether you drive over the pothole. It should be fixed with the public's money.
Government doesn't produce anything, but they have the biggest budget to give people who do produce things money. Student loans. Tax breaks for industries that actually produce. Grants for research. To say the government can't spend money for the benefit of everyone is just naive. Its whether the government can do so effectively and efficiently.
Does anyone really think that the best thing to do is just ignore the mess, let the same people who made the mistakes leading up to this continue make the big decisions? Maybe 15 years from now it will work itself out, after much strife. Or the government can try to increase liquidity and credit so that people who should get loans should still be able to get them, while heavily regulating the banks who take from the public trough.
To try to argue that one economic theory is "better" than another rather irrelevant at this point. I'm only speaking as a US citizen, but look at how much it costs us to play empire. Hundreds of billions of dollars are spent each year to have a military that is capable of destroying the earth, or small countries...and we aren't able to plunder the countries of their natural resources like empires of the past. Rome, Persia, Britain...all took what they wanted to prop up their military and the costs of expanding their power. The US on the other hand doesn't...at least not as visibly. We "own" Iraq and gas prices still went up. Meanwhile China manufactures everything we buy, taking our jobs because the chinese are willing to work for less money than it takes to pay a US worker.
Which economic theory states that spending 40% of your budget on a military that doesn't plunder wealth from other countries will slowly bankrupt that country? Thats the theory I'd pay attention to, as its based on reality.
[i]The government is not like a household, and it doesn't need to pay back the principal on borrowed money.[/i]
That's correct. It's the productive people that are paying for it, through inflation. Creating money does not create wealth. All it does is disrupt the economy.
That's correct. It's the productive people that are paying for it, through inflation. Creating money does not create wealth. All it does is disrupt the economy.
# posted by : 6/3/09 00:27
: 6/3/09 00:27
No, you are simply wrong. It doesn't create any inflation, as it isn't increasing the money supply, it is borrowing from other countries and corporations through t-bills and t-bonds.
Pointing to other countries who tried to increase the money supply to pay back debt is silly. A country like Zimbabwe owes thousands of times what it's GDP is. This isn't even remotely true in the US. Again, just saying that the federal government behaves in a certain way does not actually make it true, and in this case libertarians are wrong. As long as you keep federal debt below a certain amount above GDP, there is no problem with deficit spending at all. It won't create a crisis down the road.
Pointing to other countries who tried to increase the money supply to pay back debt is silly. A country like Zimbabwe owes thousands of times what it's GDP is. This isn't even remotely true in the US. Again, just saying that the federal government behaves in a certain way does not actually make it true, and in this case libertarians are wrong. As long as you keep federal debt below a certain amount above GDP, there is no problem with deficit spending at all. It won't create a crisis down the road.
"The waiting lists are nothing short of horrendous for basic medical procedures."
Blatant lie. The waiting lists are only based on the urgency of the medical procedure in question. Urgent cases will get priority.
And if you don't like to wait you can always go to the private sector and get yourself insured. Mixed systems are the best.
People can have their private insurance which is completely deductible (in some coutries) from the taxes they pay and at least poor people don't have to die when the money runs out.
Some, like Tesh, live in a la-la land where they are certain that EVERY poor person in the planet is poor because he/she is lazy. It simply doesn't work like that, and those people, who often work their asses off, deserve to be treated in sickness regardless of their income.
As I said before, if you're going to be oh so liberal (in the european sense), i vote not to pay for police forces. I own several guns and can take care of myself and my family. So it isn't fair i should pay for your protection. Of course i don't really mean this, but the reasoning is there.
In conlcusion, people are as liberal as the size of their wallets. And the most hardcore libertarian/liberal will become a die hard statist if he falls on hard times. Me? I just think that healthcare is one of the pillars that make society desirable. Without it, you can all go ***k yourselves and I will go to the mountains. No offense.
Blatant lie. The waiting lists are only based on the urgency of the medical procedure in question. Urgent cases will get priority.
And if you don't like to wait you can always go to the private sector and get yourself insured. Mixed systems are the best.
People can have their private insurance which is completely deductible (in some coutries) from the taxes they pay and at least poor people don't have to die when the money runs out.
Some, like Tesh, live in a la-la land where they are certain that EVERY poor person in the planet is poor because he/she is lazy. It simply doesn't work like that, and those people, who often work their asses off, deserve to be treated in sickness regardless of their income.
As I said before, if you're going to be oh so liberal (in the european sense), i vote not to pay for police forces. I own several guns and can take care of myself and my family. So it isn't fair i should pay for your protection. Of course i don't really mean this, but the reasoning is there.
In conlcusion, people are as liberal as the size of their wallets. And the most hardcore libertarian/liberal will become a die hard statist if he falls on hard times. Me? I just think that healthcare is one of the pillars that make society desirable. Without it, you can all go ***k yourselves and I will go to the mountains. No offense.
People can have their private insurance which is completely deductible (in some coutries) from the taxes they pay and at least poor people don't have to die when the money runs out.
I was actually watching one of George Lakoff's lecture on how both conservatives and progressive's think and he goes over that. Conservatives tend to think that poor people are poor because they don't have discipline, and they link discipline with morality. As such, the poor are not only poor, but they are immoral people. It's a long but INCREDIBLY interesting lecture.
http://www.youtube.com/watch?v=5f9R9MtkpqM
I was actually watching one of George Lakoff's lecture on how both conservatives and progressive's think and he goes over that. Conservatives tend to think that poor people are poor because they don't have discipline, and they link discipline with morality. As such, the poor are not only poor, but they are immoral people. It's a long but INCREDIBLY interesting lecture.
http://www.youtube.com/watch?v=5f9R9MtkpqM
I'm not really a Keynesian, but there are a lot better projects than digging ditches and filling them in. For example, North America could really use a new, modernized electrical grid. If Keynesian economics is right, a project like that could jumpstart the economy. If Keynesian economics is wrong, oh well, we have a new grid, which will pretty useful on its own. Or something like building a bunch of nuclear power plants. We can always use more energy.
Keynesian Economics got discredited somewhat in the 1970's with the unwelcome appearance of stagflation. But there's a school of thought that since that was largely caused by the oil crisis, it doesn't actually invalidate Keynesian economics, it just demonstrates that there are problems with external causes that can't necessarily be solved by pulling internal levers to try to trade off inflation against unemployment.
Just remember that government liabilities are shifting money from the poor to the rich in the end. Which usually is only acceptable if you get some incentive mechanism out of it (i.e. the richer working harder). I am all for renovating schools and highways etc. Just don't do it like Japan and remember that the schools you build for the poor kids will have to be paid later by the poor people in form of interest rates.
God: I suggest you actually look at how poor socialized health care actually is in Canada and Sweden. The waiting lists are nothing short of horrendous for basic medical procedures.
Ironic, I live in the Netherlands and we also have a sociolized system, by Amercan standards anyway. I became ill last year. I went to my general practitioner in the morning and he wanted me to get a chest x-ray. He actually called the hostpital while I was sitting there and schudeled it for me. I got that x-ray the afternoon of the same day. Want to know what I paid extra, outside my own insurance (wich is 90 euros per month), for it? Absolutely nothing. Fortunately for me it turned out to be minor. If it had turned out I had cancer though and would have needed a lot more treatements, it still wouldn't have cost me a dime extra. I would not need to worry about whether or not I could have afforded it, nor about waitinglists at all.
For the record: France has the best health care in the world and it is 100% sociolized.
Dillon: Keep in mind that people in the U.S. is generally more opposed to government involvement in the economy than people in a lot of Europian countries, and that libertarians are an extension of that.
This is true. The coverment in The Netherlands for example is a lot more involved than the US goverment. Allthough this is point of discussion here as well, it does provide a lot more security for the Dutch citizens. Our infrastructure, health care and public schools are all in good shapes because we pay the goverment to take care of it. When you pay taxes you are supposed to get something back for it. You pay so that the goverment can pay the citizens back in the form of public services that benifits the people. So off course, our goverment does not spend 40% on defense.
Ironic, I live in the Netherlands and we also have a sociolized system, by Amercan standards anyway. I became ill last year. I went to my general practitioner in the morning and he wanted me to get a chest x-ray. He actually called the hostpital while I was sitting there and schudeled it for me. I got that x-ray the afternoon of the same day. Want to know what I paid extra, outside my own insurance (wich is 90 euros per month), for it? Absolutely nothing. Fortunately for me it turned out to be minor. If it had turned out I had cancer though and would have needed a lot more treatements, it still wouldn't have cost me a dime extra. I would not need to worry about whether or not I could have afforded it, nor about waitinglists at all.
For the record: France has the best health care in the world and it is 100% sociolized.
Dillon: Keep in mind that people in the U.S. is generally more opposed to government involvement in the economy than people in a lot of Europian countries, and that libertarians are an extension of that.
This is true. The coverment in The Netherlands for example is a lot more involved than the US goverment. Allthough this is point of discussion here as well, it does provide a lot more security for the Dutch citizens. Our infrastructure, health care and public schools are all in good shapes because we pay the goverment to take care of it. When you pay taxes you are supposed to get something back for it. You pay so that the goverment can pay the citizens back in the form of public services that benifits the people. So off course, our goverment does not spend 40% on defense.
*That is, in an economic crisis like today I support the proposal of John Maynard Keynes that the government should pay people to dig holes and then fill them up. Or, even better, build schools and highways.*
Interesting you mention this. Saw a documentary yesterday about Iran. One inhabitant showing the highway that was built by the government... with 11 lanes. One for donkeys, bicycles, peasants, two for trucks, a few for cars...
I do think we overdid government employment in Belgium. 17% of our employees work for the government. None of those jobs are adding much to the economy, they all have to be supported by people working in the business sector.
Interesting you mention this. Saw a documentary yesterday about Iran. One inhabitant showing the highway that was built by the government... with 11 lanes. One for donkeys, bicycles, peasants, two for trucks, a few for cars...
I do think we overdid government employment in Belgium. 17% of our employees work for the government. None of those jobs are adding much to the economy, they all have to be supported by people working in the business sector.
@Enkhil
Although I am not a dutch citizen (yet) I also live in the Netherlands. In my country of origin I hated paying taxes because you could not see where they went. Our infrastructures are crap and our taxes just support both the virtually bankrupt public companies but also the "private" sector. Yes, our capitalists are so when avoiding regulations but they are very keen on grants and subsidies from the state.
Here in the Netherlands I pay much more taxes but I pay them gladly. I am very thankful that this country welcomed me and my family and we are proud to contribute to it's prosperity and advancement.
Although I am not a dutch citizen (yet) I also live in the Netherlands. In my country of origin I hated paying taxes because you could not see where they went. Our infrastructures are crap and our taxes just support both the virtually bankrupt public companies but also the "private" sector. Yes, our capitalists are so when avoiding regulations but they are very keen on grants and subsidies from the state.
Here in the Netherlands I pay much more taxes but I pay them gladly. I am very thankful that this country welcomed me and my family and we are proud to contribute to it's prosperity and advancement.
@Wyrm
Glad to hear it and welcome to our flat and rainy little country :)
What you mentioned is a pretty fundamental difference in how people can look at taxes. When I was over in the US for a while I noticed that most people consider money they pay in taxes as "wasted". Money they pay and never see a dime back from. Most people had different reasons why they resoned that way and most of them seemed valid.
As a European this feels strange though, because aren't taxes supposed be a sort investment? You are paying for something and you should get something back for that.
Glad to hear it and welcome to our flat and rainy little country :)
What you mentioned is a pretty fundamental difference in how people can look at taxes. When I was over in the US for a while I noticed that most people consider money they pay in taxes as "wasted". Money they pay and never see a dime back from. Most people had different reasons why they resoned that way and most of them seemed valid.
As a European this feels strange though, because aren't taxes supposed be a sort investment? You are paying for something and you should get something back for that.
I disagree with much of this post. In supporting the unemployed without extreme amounts of regulation, you simply propagate the welfare state, draining money from those who produce and spend and giving it to those who spend without producing. Sheer consumption without production does NOT stimulate the economy in any meaningful way, since that money finds its way right back into the same pockets and the only byproducts are heat and landfill.
I agree that the government should provide jobs if it is able, but only MEANINGFUL, productive jobs. Digging holes and being paid for it produces nothing, and the money paid for doing such jobs stimulates nothing.
And to all of you advocating socialized healthcare and the like, just remember, any attempt at collectivizing skill or labor INEVITABLY leads to a shortage of those things, a decrease in quality of all good actually produced and an eventual state of totalitarianism because the moment the whims of the community are placed above the rights of the individual, the individual loses his value and right to life, completely and utterly. Socialized healthcare will only work as a front. If you do not compensate providers adequately, you will lose. I promise, you will lose.
I agree that the government should provide jobs if it is able, but only MEANINGFUL, productive jobs. Digging holes and being paid for it produces nothing, and the money paid for doing such jobs stimulates nothing.
And to all of you advocating socialized healthcare and the like, just remember, any attempt at collectivizing skill or labor INEVITABLY leads to a shortage of those things, a decrease in quality of all good actually produced and an eventual state of totalitarianism because the moment the whims of the community are placed above the rights of the individual, the individual loses his value and right to life, completely and utterly. Socialized healthcare will only work as a front. If you do not compensate providers adequately, you will lose. I promise, you will lose.
"And to all of you advocating socialized healthcare and the like, just remember, any attempt at collectivizing skill or labor INEVITABLY leads to a shortage of those things, a decrease in quality of all good actually produced and an eventual state of totalitarianism because the moment the whims of the community are placed above the rights of the individual, the individual loses his value and right to life, completely and utterly. Socialized healthcare will only work as a front. If you do not compensate providers adequately, you will lose. I promise, you will lose."
Pure ideology masked as facts. There is more than enough empirical evidence to disprove this affirmation. This is nothing more than a global trollism perpetrated by the chicago and austrian school and the likes. You caN CAPITALIZE AS MUch as you want but reality disproves your theory.
Pure ideology masked as facts. There is more than enough empirical evidence to disprove this affirmation. This is nothing more than a global trollism perpetrated by the chicago and austrian school and the likes. You caN CAPITALIZE AS MUch as you want but reality disproves your theory.
The problems we face in the US are driven by factors that no one here has yet to discuss. When people leave the workforce due to retirement, downsizing, outsourcing, or what have you, there are holes in the system that need to be filled with a sense of urgency. Also, the US cannot maintain its usage of writing blank checks to "stimulate" or "bailout" things in the future. With a population approaching 305+ million people, our standard of living cannot be maintained by the current system, and with the continuing shift to a global marketplace the US will find itself in a position of being held accountable for its internal accounting practices....much to the dismay of those pulling the actual strings.
"Pure ideology masked as facts. There is more than enough empirical evidence to disprove this affirmation. This is nothing more than a global trollism perpetrated by the chicago and austrian school and the likes. You caN CAPITALIZE AS MUch as you want but reality disproves your theory."
All right, you can say that all you want. I come from a family of healthcare providers: physicians and supplementary alike, and they are extremely good at what they do. My father is one of the best obstetricians in his state, and has a demand for his services far higher than he can possibly provide. Obama is threatening to ruin him with his current plans. He is threatening to compel my father to provide healthcare without compensation. He wants to tax him into oblivion. What do you think having his income slashed into a fourth of what it was will do to the quality of his work? Do you honestly think it's going to remain the same? Being forced to work "for the good of the community" as dictated by a man thousands of miles away? Noticed I used the word "dictated," because that's exactly what is going to happen.
There is just as much empirical evidence in the blood of thousands of anti-collectivists and innocents throughout history to prove that your theory, that socialism is the answer, is utter shit. Socialism in this country will result in oppression, violence, and eventual revolution. I can guarantee you that much. I wish I knew you in real life so I could say "I told you so" in about 40 years.
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All right, you can say that all you want. I come from a family of healthcare providers: physicians and supplementary alike, and they are extremely good at what they do. My father is one of the best obstetricians in his state, and has a demand for his services far higher than he can possibly provide. Obama is threatening to ruin him with his current plans. He is threatening to compel my father to provide healthcare without compensation. He wants to tax him into oblivion. What do you think having his income slashed into a fourth of what it was will do to the quality of his work? Do you honestly think it's going to remain the same? Being forced to work "for the good of the community" as dictated by a man thousands of miles away? Noticed I used the word "dictated," because that's exactly what is going to happen.
There is just as much empirical evidence in the blood of thousands of anti-collectivists and innocents throughout history to prove that your theory, that socialism is the answer, is utter shit. Socialism in this country will result in oppression, violence, and eventual revolution. I can guarantee you that much. I wish I knew you in real life so I could say "I told you so" in about 40 years.
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