DOGE's government cuts may hurt business, companies warn investors | Hacker News Reader

DOGE's government cuts may hurt business, companies warn investors

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I'm looking for predictive economic models out in the open. I want to see the underlying assumptions and experiment. I'm not even picky about the kind of model: it could be a relatively simple linear regression model, a systems dynamics model, a complex simulation, or anything in-between. I just want models to a focal point of discussion rather than some poorly-explained textual interpretation.

I know... I'm asking for too much... this is usually proprietary stuff, so people are reluctant to share. But I want to live in a world where sensible people can compare models of what might happen. We don't have to necessarily agree on the assumptions or results. But we could at least be open about why we predict various outcomes. That would be better foundation that how we do things now, which is really embarrassing for a world with our capabilities.

Eventually, I want to live in a world where we have sensible discussions about our predictions and about which outcomes are more and less favorable.

P.S. If you are building a product or startup doing this, let me know. Or let everyone know. I built a product in this general area many years ago, but I didn't find product-market fit. Anyhow, I just want modeling tools like this to exist; I don't care who makes them.

P.P.S. I'm very intentionally not bringing in my political philosophy nor level of personal concern here. To be open, I am personally affected, as are many of my friends, but I want to find some kind of common ground that doesn't make this about my particular take on the overall situation.

I mean there’s some fed ones. Two are

- GDPNow if you want shorter term: https://www.atlantafed.org/cqer/research/gdpnow

- DSGE if you want longer term: https://www.newyorkfed.org/research/policy/dsge#/overview

Eia also publishes their models.

GDP is such a deeply flawed metric of measuring human welfare.

It’s an aggregate measure and doesn’t tell the distribution of wealth amongst nation.

Also, it’s a metric that was sort of useful in the 1950s and during wartime when this country manufactured goods. Now it’s all unclear in this modern economy. It doesn’t take into proper account of services, quality of care, quality of life.

It doesn’t even take into account _losses_ that may occur. Such as a natural disaster. Sure, in a post disaster GDP goes up because region is rebuilding. But the losses due to disaster are not figured into GDP.

It’s a broken metric. Stop using this as an indicator of economic health and human welfare.

edit; never heard of DSGE but yet again looks like yet another flawed “model” that assumes a level of “equilibrium” and seems to have been birthed out of the pseudoscience known as neoclassical (and orthodox) economics.

What you say has a lot of truth. And yet, these kinds of models are still useful, provided a broader range of models is also available and socialized.

This touches on a key point: just because we can predict something doesn’t mean we should optimize for it. Still, being aware of consequences is useful: perhaps we want to satisfice under various constraints.

I don’t disagree with this criticism, but it also illustrates a common pattern where modelers tend to attack each other’s work. This criticism is somewhat inevitable because all models are flawed in some way, and reasonable people can disagree on how to best apply them.

But a bigger problem is the lack of a variety of models to choose from and compare.

My suggestion? If we want to encourage more models to exist in the world, we should use a mixture of (1) criticizing models (like above); (2) pointing to existing alternative models; (3) building new models; (4) writing up specific comparisons of models; (5) showing how to make models; (6) writing up successful case studies. And lots more.

> I just want models to a focal point of discussion rather than some poorly-explained textual interpretation.

Do we have any economic models which managed to predict any non-obvious, relevant things?

I think my concern here would be people weighting their ideas/opinions far too much on mathematical models that may, or may not represent the complex economic reality.

We already see this with people arguing with near 100% confidence of X happening because of Y and Z…in a vacuum.

I want to see something similar to what you’re asking, don’t get me wrong. But the underbelly of that is a broken clock being right twice a day and far too much weight and decision making being put into some model that doesn’t actually reflect reality

The solution to a bad model is more models :). I'm joking but serious. "All models are wrong, but some are useful."

Although also responsive, the solution to incorrectly applying models _isn't_ to get more models, it's to understand the mistakes being made in applying them.

True. I'll add a few points:

- Statistically, more models tends to be better (in the same sense that more information is better) under the assumption that people can tell better from worse.

- I like how you talk about _applying_ models instead of _using_ models. It is an easy one word change that (to me at least) emphasizes the choice points of: (a) selecting the model; (b) selecting parameters; (c) interpretation.

- All models (by definition) are unrealistic in some way. If a model operates at a useful level of abstraction, inaccuracies at lower levels may be acceptable. In fact, such inaccuracies may be the key to making the model tractable and efficient.

I don't have any insights on specific models that are "out there", but I'll share one tidbit you might find of interest if you're not already familiar with it. Douglas Hubbard's "Applied Information Economics"[1] is a methodology that could probably be applied to doing what you're asking for. Is it the only such methodology? Almost certainly not. Is it the best? I really don't know, as I think the scope of what you're looking at goes a little beyond what Doug originally intended for AIE. But it could potentially still be applied there, I think.

[1]: https://hubbardresearch.com/about/applied-information-econom...

Thanks. From the linked page I only see a marketing page that sells the general ideas. It looks like the common pattern where a consultancy sells their expertise, perhaps with a differentiating advantage that their analysis is backed by a quantitative model that has been refined over time. I don’t know how they work, but they probably custom build or tailor their in-house model and provide the results and interpretation to clients.

Maybe they even allow clients to play around with the model directly, but I wouldn’t bet on it. I’m guessing they gate access to it via consulting fees. One wouldn’t want a client to “misinterpret” the model, would we? :P

Furthermore, the idea of open sourcing their base model isn’t probably something that they would consider; it is likely perceived as incompatible with their business model.

There's no "model" there, just a methodology. Hubbard does consulting and sells books, that's how he monetizes this as far as I know. His book How to Measure Anything[1] lays out the core ideas in sufficient detail for somebody to implement the basic idea. A used copy could be acquired for < $10 if one were interested in learning more.

[1]: https://www.amazon.com/How-Measure-Anything-Intangibles-Busi...

> predictive economic models

Not possible with this neoclassical economy we live in. It’s an ongoing grift that has been ongoing for _decades_ which has allowed for irrational thinking to prevail, for wealth and success to be focused into a select group, and for multibillion dollar corporations to be bailed out when their own decisions drive the company to the ground. Privatize the profits, socialize the losses.

I get your point of view. But I'm intentionally trying to focus on prediction.

There are ways to track ownership of entities and relationships. There are ways to quantify how contracts are awarded, the results, and the impacts. These are complex models, but they can give insight into the dynamics.

A follow up idea: Don’t forget we modelers are still in a phase that might be characterized as “shifting mindsets”. The capability to model is getting steadily better, but I don’t think the practice of modeling is anywhere close to maturity nor broad diffusion.

I was hopeful ~5-10 years ago with the rise of data science, but I don’t know how much this growth corresponded with decision makers using the models both broadly and in intellectually honest ways.

There are areas where the results seem clear; e.g. advertising and product-specific decision points, such as recommendation engines.

Beyond these short-term ML applications, there are other domains where modeling is essential: weather forecasting, politics, markets, economics. But this is just the tip of the iceberg.

Here is a metric I’m interested in: what percentage of decisions are informed by quantitative models?

Aside: Before you complain that e.g. “some decisions aren’t impactful enough to warrant a model-backed approach”, let me say that I sort of agree, but… There are indeed lightweight quantitative models (or at least processes) that can track / predict when using a heavier model is worth it!

I don’t have systematic data on this; it is just a hunch, inspired by what I have heard and seen.

Why? Effective modeling provides differential advantages.

-intra-organizational diffusion: technically savvy people will rise into management.

- inter-organizational dispersion: techniques used by winners will spread across organizations and industries.

Nothing they are doing is good for business. All will suffer. Think the Military Industrial Complex can't run when agencies, the military and our allies won't be able to buy our munitions/platforms? Nope, and private business won't need it unless they can offload on to local governments at less than cost, and cities will be broke without federal funds backing them up.

Most of the bombs/munitions the US drops is from the perspective of the American worker the equivalent of digging holes in the desert.

The way to have more goods and services is to make more goods and services. Releasing people from digging holes allows us to create more wealth.

It's pretty clear the obvious objective is to cripple the economy and buy up the losers for pennies on the dollar then also use government money as the carrot to compel surviving companies and local governments to adopt policies that are favorable to administration insiders.

The new game is how much dick can you suck so someone in power smiles upon you.

This is my assessment as well. Yes, all companies feel pain, but some can survivor years of pain compared to competitors, and couple that with price increases due to tariffs.

Then in 18-24 months when everyone has resigned themselves to the price increases and the politically connected buy up struggling businesses the tariffs come off.

At which point, the cost to the business is lowered but the price increases will more or less stay, and those that have consolidated power will be in prime position to remain dominate for some time, likely decades.

It’s a giant market manipulation experiment disguised as many other actions but will ultimately culminate in consolidations of power

Step II is going to be regulatory capture. I expect to start seeing this by summer or fall

It depends on "good for who" and over what time scale.

My dominant model is this: the core of the Trump administration is most interested in remaining in power and building connections. So they do whatever works to garner favor. They are relatively unaware or unafraid of the gathering storm of legal pushback. I think they figure they can get away with a lot before it catches up to them, politically or legally. This includes taking actions that they know are illegal.

Bluntly, with their own admission, they are bringing a chainsaw to the status quo. Why? Probably because this builds power: others are beholden to them to build it back. I don't think there is much of a shared sense of "doing what is best" for the country. I view them as opportunists, hoping to ride Trump's popularity.

Around them is a coalition with a range of interests. Some are genuine believers that DOGE will bring greater long-term economic growth (i.e. GDP). Some are so ideological that no real-world scenario would prompt them to change their policy prescriptions. Some of the coalition actively wants to reduce separation of church and state. Some are willing to curtail freedom of the press.

It is a dangerous coalition because each part seems willing to let the other parts get what they want. They seem to fail to understand the importance of the rule of law and economic stability.

I wonder how many know that Silicon Valley wouldn't exist without government research. Have they studied history? I can't claim to peer into their brains. I am curious as to what various people on the inside think they are accomplishing.

It sure seems like a risky bet to ally with Trump; any allies better be ready to contort themselves to his various mercurial whims. Which parts of the coalition can get what they want and come out the other side in good shape? It seems to me they are burning the candle at both ends.

Up until now, I've been reluctantly tolerant (far from happy) with a manageable level of government inefficiency, military-industrial backscratching, political pork sharing, and insufferably inane politics -- because, put together, this seems to a relatively stable way of maintaining some semblance of a representative democracy, healthy economy, a strong entrepreneurial sector, strong national defense, and math/science research. But the current direction is far worse. I don't think economic chaos, massive privatization, blatant corruption, likely Constitutional crises, meddling with the free press, using government for political retribution of (institutions, universities, individuals), loss of confidence in SCOTUS, etc... is doing to lead the US in promising directions. A significant number of people and business are going to leave. We're losing national prestige. It is a net loss to America and the world. But a net gain to Trump and his circle, at least in the short-run.

https://archive.ph/okSlz

I thought the old teaching said that during a recession when governments want to save money, the best strategy is to increase spending in order to increase the circulation of money and stimulate the economy, and when there is a economic boom and governments can afford to increase spending, they should do the opposite in order to save money for when a recession occur. This was the somewhat paradoxical strategy that I got taught in school during my teenage years.

I don't know how true this actually is.

This is Keybesian counter-cyclic policy. It makes sense but is hard to do in practical politics.

Which is why the federal reserve was ostensibly decoupled from politics and democratic election, and designed in secret on Jackyll island so the public would not poison it.

Unfortunately as you say if you try to time the market, or centrally plan interest, you generally get it wrong and end up even worse than a floating market.

It didn't take long before we saw the effects of the great depression.

Crash the economy on the backs of a majority of workers (federal workers are large portion democrats) who didn't vote for you so interests rates / inflation goes down.

I’d be curious to see a breakdown, aren’t a lot of federal jobs in red states? Besides I’m more interested in the second order impacts, what happens when those people stop spending in their communities?

Government employees draw their money from taxes, inflation, or debt that's paid by one of the two. Stop spending is a bit of a myth, it reverts the spending to whatever productive entity in the economy it was taken from.

Huh? If you or anyone loses a job and can not find another for a few months to many there's no doubt they won't be contributing to the economy.

Government employees are funded by taxing or inflating away wealth from the productive economy. That wealth doesn't evaporate when the government employee is fired, it is instead reverts back for spending to the entities from which it came. It's in another person's pocket who themselves can fuel the local economy, not gone.

lol in ur example your saying one person out of two contributing to the economy makes the economy stronger... say what. The govt employee can no longer contribute as their job moved into the commercial sector. Which now a 2nd individual is benefiting / contributing while the former govt employee can not pay they're bills, mortgage, put any money into the economy and etc , etc.

Simple math ...Both ppl in ur example contributing to the economy makes for a strong economy.

The main argument for government employees is not that they generate more wealth spending than the private sector. If that were the case we'd just make everyone government employees.

Generally the government is worse at generating wealth (in fact, they almost entirely rely on taking wealth others could otherwise spend and then spending it themselves) to spend than the private sector. Firing a government employee who then must work in the private sector doesn't imply reduced spending on anything but the most short sighted of timelines.

That's if the govt employee finds same level of pay or better in the private sector to possibly even another job in a timely fashion. If and only then they can continue to pay their bills, mortgage and contribute to the economy. If you spend time one hacker news you will see many techies out of work not able to find another job for months or more as well the argument of the fake job listings.

I'm doubtful of your argument and the economy will go into a recession.. on Fox news Trump today wouldn't say it would or wouldn't .. not reassuring but that's what I think that's what he wants to happen ..he just won't say it outright but this plan could back fire (he's playing with fire) and cause pain to every citizen!

I think the trouble you're having in understanding here is that the government workers paycheck came from violently taking it from someone else, not from market value of generating something that can be spent.

Imagine you farm and create 200 apples, you go to the crossroads and offer them for sale, and earn $200. Someone comes along, and having themselves spent the day building a table, offers it to you for $200 and you take it. Youve both spent your earnings and even better, you now both feel better off than before. You use the table to better work on your implements for apples, generating more value and spending.

Now suppose, instead, you go to the crossroads, you sell your apples, make $200. Someone comes along, takes that $200, maybe with a badge that says 'taxman', and says "not to worry, we will give it to an employee that will spend it!."

Now maybe that employee will spend your $200 building a table for you or someone else, but he's under no economic pressure to do -- he already has your money. It's just as likely he uses it to create 30 rifle cartridges that get shot into a mountain in Afghanistan. That doesn't increase spending, it just takes what you were going to spend and spends it on something else. If you fire that person, and they're forced to now build tables, spending increases even if they are now paid less.

> Stop spending is a bit of a myth, it reverts the spending to whatever productive entity in the economy it was taken from.

It takes a while for this too happen though right, during which time there’s some “economic pain” as the euphemism goes.

Yes it takes time. There should be some temporary deflation to taxpayers though as the shit canned officials sell off their goods and houses, if the premise sister proposed is true that they go belly up on mortgage and rent.

(Original) title tastes like clickbait. This is about companies that deal in government contracts, so of course DOGE's actions may stop the flow of federal money. This excludes companies outside of the public-private complex.

> At a Morgan Stanley conference this month, Brian Robins, finance chief for San Francisco-based software maker GitLab, said GitLab is aligned with the goals of DOGE, because the company’s software tools aim to help people do more with less.

> “What the Department of Government Efficiency is trying to do is what GitLab does,” Robins said.

...well, fuck

Well of course they're going to hurt zombie companies, that's the whole point. That's literally why everyone voted for Elon Musk's DOGE.

Every company is another company's competitor and it's not fair that some companies have to compete against other companies whose profit margins are padded by taxpayer dollars... To some degree it's like being forced to subsidize one's own competitor.

so space x and Tesla are going to part with enough shares to pay back all the money they got from the public (and the growth that said money funded)?

For SpaceX, we can deduct the amount they saved which would have gone to NASA. For Tesla, we can look at foreign gov subsidies which went to foreign car companies like BYD, Toyota, etc... because it wouldn't make sense to target just Tesla... Given that governments of all nations play a key role in propping up their national auto companies.

It's really great that they have somebody looking out for the national interest at the top!

I think what they're doing is long overdue. The abuse and corruption already exposed proves it. The net savings to taxpayers far outweighs any business losses from what I've gathered.

> The abuse and corruption already exposed proves it.

I have yet to see a significant amount of this exposed.

Follow DOGE on x.com to see the $billions upon $billions redeemed for taxpayers:

https://x.com/DOGE

Reply on news.ycombinator.com