Priceless dilletantism.
TLDR: "I'm not an Economist", followed by quoting Paul Krugman.
TLDR: "I'm not an Economist", followed by quoting Paul Krugman.
So, care to actually present a counterargument or are you content to be an obnoxious blowhard?
This is a cynical and knee jerk commentary that's emblematic of the sort of middle brow dismissals we've been working to limit on HN.
For all of the competing thoughts on economics, I don't think it's a stretch to say it's enormously complicated. Even on the most cursory examination it doesn't break down to "more productivity = better economy". "Real economists" and "neo-liberals" may in fact be fucking it all up, but I'm quite certain they'd have done no better if they modeled the economy like you have.
When your world view requires that millions of highly educated, trained, and experienced people - who have pursued a rigorous, academic field of study for decades - are all simultaneously out to lunch, possibly maliciously, the onus is perhaps on you to provide more substantiation than "they're fucking it all up".
Side note: At this point I'd be very happy with HN being refocused on strictly tech/startup related posts. Every time a more general or controversial topic comes up it ends up very much like this thread. Unsubstantiated knee-jerk ad hominem. Followed by equally unsubstantiated hyperbolic cynical equip.
A large amount of bath tubs and pipes are leaking, worldwide.
I am from Brazil, we are going full double dip here ( ie: in 2009 the government went batshit crazy in allowing credit, and then we has 7% growth rate, thus year we had several months of negative growth, and banks complaining of a huge rise in defaults )
The "resource curse" is a well-studied phenomenon, and there is both symptomatic evidence and causal analysis that suggests it is starting to apply to developed countries.
The examples I have seen were focused on the finance "industry", especially in the UK, but it definitely looks applicable to other countries and the non-distribution of the "automation-dividend".
"First, families have to pay back their debt. Governments don’t — all they need to do is ensure that debt grows more slowly than their tax base."[1]
Which of course, if it isn't obvious, is, literally+legally false and figuratively BS.
[1] http://www.nytimes.com/2012/01/02/opinion/krugman-nobody-und...
You don't know what the word verb "to quote" means, nor the verb "to plagiarize".
The author of TFA did neither. There was no quote, and the family vs. nation metaphor is much older than Krugman's article.
And of course, Krugman is right, because what he says is descriptive of things that have already happened, and those things did, in fact, happen.
Now I disagree somewhat with Krugman on the importance of debt (the state having too much seems to make it defer to much to the bankers, who should be reigned in much more) , but hey, he's a Nobel-prize winning economist and I am a dude with an opinion.
-- Um, no. Its false.
The entire idea is false coming (literally) and going (figuratively).
but hey, he's a Nobel-prize winning economist...
== This is not even worth responding to.
Your evidence being? Your say-so?
"but hey, he's a Nobel-prize winning economist... == This is not even worth responding to."
If you had actually read and comprehended what I wrote, I was comparing him to myself, not to you.
But if the shoe fits...speaking of which: since you have given zero evidence for your opinion, reputation actually is the only thing we can go on...oh wait...Krugman actually did provide evidence for what he wrote, how typical of him!
"First, [PQR borrower] have to pay back their debt. [XYZ borrowes] don’t — all they need to do is ensure that debt grows more slowly than their [earnings] base."
Second, to the extent this is even "metaphorically" true, it is only trivially true. For any borrower XYZ and PQR alike, I can make the same claim. eg, A corporation can "roll-over" its debt indefinitely under this constrain (for example, GE has done this for 100 years) or not. But also so can a family/business (eg. even a home roll-over a mortgage w. home equity loan or ect...then kids inherit house, etc). But all borowers as a mechanic do this through....paying back the old debt....first and issuing new debt....so again Krugman's is literally a false (as well as misleading) statement.
First, governments have done so in the past. With this alone your point is trivially false by simple observation.
Secondly, the US government, like other governments, can change the law.
Thirdly, if you haven't noticed, governments are sort of at the top of the food chain, so they can (and do) not bother changing, but instead simply ignore the law, which they do all the time. So you have a judgement against a government, how are you going to enforce it? Ask the same government to send its own police against itself? Good luck with that. March on Argentina? BYOA - Bring Your Own Army.
Fourth, one thing that countries like the US can do that neither families nor corporations can do is inflate away their debt. This is of course one of Krugman's criticisms against the Euro: that countries there have given up this ability, and so the only way to try to get rid of the debt is so-called "austerity" measures, which aren't really working in those countries where they are being tried, as GDP drops faster than the debt and therefore the crucial debt-to-GDP ratio gets worse rather than better. Also: free entertainment in the form of riots in the street.
Fifth, as Krugman keeps pointing out, the government is not really some separate entity. Most of the debt is debt we have against ourselves, within the family, to stick with the analogy, it doesn't actually make the family poorer. Unlike, say, a mortgage.
Sixth, with the power to raise taxes, governments have a pretty secure way of ensuring their earnings base, unlike families or corporations.
Krugman is a US citizen, purporting to advise the US government. He is not in a position to advise the government to break the law. No economist is, for the very reason that Economic analysis pre-supposed the rule of law. If you throw out "obeying the law" you throw out the field of Economics, generally speaking.
Second, there is the empirical fact the the US debt is subject to being held by insitutions that are constrained by law as to holding only certain classes of securities. Your pension fund cannot hold XXX rated t-secs if they are below investment grade thresholds. So, the who would hold 17trillion of US debt after a default? Talk about too big to fail...
And furthermore, there are stronger constraints on policy set in in the constitution that prevent 'interference with contract' which generally speaking includes financial contracts. It is not the case that the government can dis-regard the Constitution and appropriate value through cynical public policy.
And just as a general point, now that you've sunken to this desperate level, take a look around at the company you are keeping? Seriously. The rule of law trumps economics. Full stop. (Ask the 2009 nobel prize winners).
Lastly, taxes as an "asset class" if you want to condier them that are a "derivative" of corporate and personal earnings (at first approximation). The are, like any derivative, dependant on the value of the underlying assets. They are therefore subject to the same constraints--ie, unless corporate earnings are infiinite, taxes-as-dervatives cannot be infiinte through logic/math.
This is all unimpressive rubbish that you put forth here. The reason I didn;t walk through all of this before is it is a waste of time even giving Krugman the attention.
Now that we've debunked the claim that Krugman's assertion is "literally" false, we can concentrate on whether it ("government debt is not like family debt") is BS.
(By the way, thanks for filling me in on taxes being a derivative of earnings; there I was using "debt-to-GDP ratios" all this time without a clue as to what those strange words meant!)
First, of course, is the question of what Krugman is advocating. Is it simply defaulting on the debt? No. In fact: "So yes, debt matters. But right now, other things matter more".
What are those other matters? Exactly the "underlying asset class" you mention. Governments can spend money on either the numerator (debt) or denominator (GDP) to improve the debt-to-GDP ratio, families rarely have that option (spending money tends to not lead to raises, unless you live in Baku).
Greece for example has tried reducing their debt by cutting spending (so far with limited success), with the side-effect of putting the economy into deep recession (+free street entertainment) and actually making the debt-to-gdp ratio much, much worse, now at 170% of GDP:
http://www.tradingeconomics.com/greece/government-debt-to-gd...
The other possibly immediate problem with debt is interest rates, but so far that just doesn't seem to be a problem, with rates sub 1%. In fact, with rates this low one might consider it negligent to not use those rates for investments with even modest ROI.
No, its literally false. You haven't "debunked" anything.
Honestly, if you don't understand any of this I cannot help you, further.
What Krugman said is literally true (he gives examples in the article, I have given others). And the actual point that he makes about the relative nature of the debt and thus the question for governments as to wether to work on the numerator or the denominator is one that you yourself brought up, unprompted.
Finally, his biggest point (AFAICT) is that this is debt that is largely internal, therefore it doesn't actually make the country poorer.
In fact, you brought up pension funds: these actually have a big problem when there isn't any "safe" government debt to invest in. Heck, they are actually starting to get into trouble now, with the yields of that government debt so incredibly low (recent emissions of Danish and German debt had negative interest rates, so you paid some money to the government for holding onto your money for a while).
Wikipedia: "Ad hominem reasoning is normally described as an informal fallacy,[2][3][4] more precisely an irrelevance."
http://en.wikipedia.org/wiki/Ad_hominem
Yep, you're right about that, too. It's really not a falacy. It's a fallacy. And also Nietzsche, not Neitszche. And devastating, not devastaing.
As to devastating ad hominems: I'd suggest they might become a trifle more devastating if you start with elementary spelling, work your way up via basic grammar ("its" vs "it's") and simple word semantics such as "quote" and "plagiarism" all the way to reading comprehension before attempting to tackle economics and philosophy.
Just sayin'
Funny how that works, right? That must be the edge case.
He also argues against straw-men such as this: Proponents of trickle-downism will argue that the little-taxed corporate executive will in fact share his wealth by spending it
(Proponents of "trickle-downism" don't claim this.)
and uses misleading definitions like this: A poor person, by contrast, needs more than he can afford.
(By this definition there are virtually no poor people in America, thus his policy prescriptions are impossible. http://www.census.gov/prod/2008pubs/h150-07.pdf )
I don't think it's the greatest article to ever hit HN, and it's almost pure politics.
I strongly suspect "everywhere else previously industrialized in the world had been largely destroyed" had a lot to do with it.