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Comment by lsc | Hacker News Reader

>First, you're ignoring the basic difference between expenditure and investment. When the government spends a dollar on healthcare, that may be an "investment" in an abstract sense, but the government is not directly getting that money back. In budgetary terms, it's expenditure

What does healthcare do for people of working age? It allows us to work more and more effectively, to make more money and either consume fewer subsides or to pay more taxes.

Good healthcare means more and more effective workers.

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The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare. The government can book a mortgage-backed security it purchased as an asset that offsets the purchase price of the asset.

Now, I think that universal healthcare certainly provides benefits that make it worthwhile, just as the bailout provided financial stability benefits that made it worthwhile. But those things are in the benefits column. I'm talking about how much an accountant would say that a government program cost.

> The government cannot book the projected increased tax revenues from a healthier populace as an asset that offsets the money it paid to provide healthcare.

From an MMT perspective, the government (any one using it's own fiat currency) creates and destroys money rather than spending and receiving it, even if it pretends otherwise in an outdated effort to ape a commodity-/representational-money system.

So, viewed that way, it really has no need for such an asset.

> Now, it is true that money spent on universal healthcare isn't being lit on fire--the government and the people gain some benefit from it. But that's in the benefit column, not the cost column.

In the cost column is a reduction in private healthcare costs exceeding the I crease in public expenditures, as shown in every analysis (including ones from hostile sources), so if the government raised taxes so as to leave private taxpayers in the same position as they would be in with status quo policy, net government outflow would be reduced without any adverse impact on taxpayers.

> From an MMT perspective, the government (any one using it's own fiat currency) creates and destroys money rather than spending and receiving it, even if it pretends otherwise in an outdated effort to ape a commodity-/representational-money system.

Even under that view, you can still see a difference. Spending $1 trillion in healthcare requires the government to create $1 trillion permanently. Spending it to purchase mortgage backed securities that are eventually sold or mature requires creating that $1 trillion only temporarily (while the asset is held).

So, I mostly agree on the costs of the '08 bailout, there's a lot of cases where problems of too much leverage become easy to solve if you have enough reserves, and my understanding was that the fundamental problem of '08 was too much leverage causing a downward spiral where everyone was forced to sell into that spiral. The private sector solution would have been to let that spiral go down much, much further before recovery; that would have caused a lot more pain and misery (and if we compare to past panics, probably wouldn't have made the resulting economy that much healthier) - The government is in a unique position because it credibly has infinite reserves and therefore can set a price floor (I mean, houses fundamentally have real value. People can live in them. but leverage can force the private sector to dramatically undervalue those real assets due to a lack of liquidity.)

Buffett's investment during the time were an example of what the private sector can do (and my opinion, as a shareholder of brk.b, who is otherwise not a finance expert, is that the man wasn't nearly greedy enough when others were fearful, but even berkshire doesn't have unlimited reserves.)

I think the big mistake of '08 was 'bailout with insufficient regulation' - if the government does need to do a bailout, that bailout should come with rules to prevent that sort of thing from happening again, and I think that there wasn't enough of that rule making after the '08 crisis.

I was just making a more general statement about the role of government in response to what I thought you were implying by pointing out the differences between how an investment in a failing company (that then doesn't fail because of your money) is accounted for differently than an investment in another person's health or education, even if the latter may net more.

In general I think the government should mostly stick with things that the private sector can't do well. The private sector is really bad at investing in things like healthcare and education for the poor that make people go from being net consumers to net producers. Government should largely focus on the things that government can do effectively but that the private sector can't do effectively. Usually this means providing services to the indigent and providing regulation (not direct ownership) of markets. But there are obviously exceptions, and I agree that '08 was one of those, it was a market failure that was big enough that the private sector couldn't really handle it, and I think direct interference was a net positive, even if I think the government could have done a much better job of it.

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