What If The Federal Government Was An Average Household?
larrycheng.com
larrycheng.com
How many households are legally able to levy taxes? How many households are legally able to print their own money? How many households can borrow money at interest rates as low as the U.S. government can, because their money is a global-standard reserve currency?
The fed isn't even much like a state government, to say nothing of a household.
This isn't to say that all the debt that has accrued over the last year is good -- it certainly isn't
Well, it's not good in the sense that it's always bad to have to take emergency measures. But, given the alternative -- an even deeper economic cratering than we have now -- accruing debt has been, and is, the right thing to do.
Indeed, the stimulus has so far apparently managed to help stop the recession and produce modest economic growth, but unemployment remains ghastly high. We need more stimulus. Bring on the debt! That's what the federal government's emergency powers are for.
http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thou...
Committing the economy to heavy debt loads for the long-term future by writing new entitlements is not the kind of deficit spending that most economists think work, though.
But writing laws until you're so bogged down in promises that nobody can pay for anything is even more crazy than an unpopular war or two, which causes debt spending for a short time and then subsides.
Each generation has a choice in leaders and a decision to make when it comes to using violence. But mandates and entitlements take that choice away from future generations, spending all the money based on things the previous generation thought were a good idea. Not only is the amount of money much greater, it's a different animal entirely.
You say that so casually; I think the word war is like the word God, it slips right past something in peoples minds that it shouldn't. The slaughter and murder of innocent people shouldn't be so easily shrugged off, and I'm perfectly happy handcuffing future generations from the ability to make war easily. Were our policy on wars different, we wouldn't be having problems paying for the other stuff.
All I'm saying is that each generation should make it's own choices about spending money, and that increased debts are appropriate for short-term recovery of the economy in recession.
The next generation may not find it can pay for, say, pensions for people living from 60 until an average age of 100. But war spending will always find a way. That's the nature of wars -- they are deemed more important than other things, including social programs.
Look at it this way -- increased debt load means an increased chance of war, as non-violent options are not available due to restricted amounts of money and the only way to access that money is through a national emergency. Please forgive the example, but I think its apt: the nazis, after all, were the nationlist socialist party, not the free enterprise gang. They took control over all industry and turned it into a war machine. This was based on a movement for better social justice, but it easily transformed into a monstrosity. So your idea that somehow you can cripple the economy and prevent wars has not shown itself true in history. In fact, the reverse seems more true.
As for the next generation, please, we're all bound by the decisions of previous generations all the way back to the founders; that's just how it is. They can kill any entitlement we enact, so no, I don't feel for them. We should be responsible, and only enact entitlements we can afford, but if cut back on the wars, we can afford a hell of a lot.
They can, but in practice they do not. In practice politicians who mention killing entitlements do not get elected. Politicians know this, and willingly set up "booby traps" -- entitlements that nobody will ever oppose yet cannot be sustained. That's because it gets them elected in the short term, and who cares what happens in the long term?
Of course war occurs, but that won't always be true, and we should strive to not need it.
We should strive to avoid the use of violence when it is not absolutely necessary. Unfortunately for your position, there has never, ever been a period when violence was not necessary somewhere in the world. Now perhaps by working to avoid each individual war we eventually get rid of war altogether, but I find that logic very tenuous. Looking at all the reasons for war, none of them have gone away or lessened at all over the course of thousands of years. In fact, from looking at history it appears there are times when armed conflict is the best moral choice a society can make.
So I find your position laudable, yet misguided both on its goals and means to achieve them. I also wish that no innocents would ever get harmed, but I wouldn't run up the debt in an effort to prevent this from happening. To me it seems misguided and doomed to a horrible failure involving just the thing you seek to avoid.
I agree, however I think we make the choice for war far more often than is morally necessary. We don't seem to draw the line at morals, but at whether it's financially beneficial for us. It feels like war has become America's most exported product.
So I find your position laudable, yet misguided both on its goals and means to achieve them.
I think you need to re-read what I said, you seem to be going off on a staw-man of your own creation. I merely mention that it'd be great if we could no longer afford war. I was arguing against war, not for using entitlements to pursue the goal of eliminating war.
Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index....
I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else.
That's debatable. For example, Moody's Economy believes otherwise (see page 9 of http://www.economy.com/mark-zandi/documents/Economic_Stimulu...).
Now, I'm not saying one or the other is correct (I know enough to know I don't have the tools to judge), but you say this as a statement of fact when it's not a settled question at all.
> Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.....
Yes, and so do tax cuts. In the US, we have a menagerie of various taxes and exceptions and brackets, etc., and it's very easy to tweak it to benefit special interests, like we have many times in the past. That doesn't invalidate the idea of passing tax cuts just like earmarks don't invalidate the idea of government spending.
> I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else.
I'm not advocating for the deficit, but just because you like the analogy doesn't make correct. Likening a household's budget to the United States' budget is like likening a photon to a race-car: any similarities there are are very shallow, and you're likely to come away with huge misconceptions.
This is actually precisely why I hate seeing economics articles on social news sites: it's a lot of propagation of (often wrong) ideas within a community of people with insufficient knowledge to be able to sort the good from the bad.
I really wish we'd just stick to what we're good at, rather than getting into the subject of macroeconomics and politics around here.
I've said it before: I don't think any topics should be off-limits as long as people can reasonably discuss them. In fact, I think it's a test of a community to see what it can productively discuss and what it can't.
Startups are full of people acting under intense pressure with incomplete information. As such, these topics are just little baby toys, artificial constructs of arguments that have little real impact on people's lives. Being able to have reasonable conversations about emotional and important things with incomplete information is something we should all strive for, not something we should be afraid of.
I don't see how this is a problem with my argument. I didn't claim that we should only discuss things about which we have complete information, I was instead suggesting that this community is so information-poor on this subject that we lack the tools to separate right from wrong or reasonable from unreasonable. I was also objecting to the claim of opinion as fact, which I find misleads (usually unintentionally, as often these opinions are believed to be fact).
And to be clear, I'm not talking about us not being steeped in theoretical economics, but rather that most of us couldn't answer questions which have factual, discoverable answers, such as how modern banking works, how money is created, what the role and powers of the Federal Reserve are, etc. These are questions with real, factual answers, but the way these things work is often incredibly complex and counterintuitive, and cannot be gleaned from a couple hours with an introductory book or Wikipedia.
And in case I'm coming across as being condescending, I'd just like to say that I don't consider myself to be an economist and I don't think it's reasonable for anyone to be an expert at everything.
"I've said it before: I don't think any topics should be off-limits as long as people can reasonably discuss them."
Agreed, and I have seen very few reasonable discussions of economics around here.
"Startups are full of people acting under intense pressure with incomplete information. As such, these topics are just little baby toys, artificial constructs of arguments that have little real impact on people's lives."
So, we may as well be debating how many angels can dance on the head of a pin.
"Being able to have reasonable conversations about emotional and important things with incomplete information is something we should all strive for, not something we should be afraid of."
And forming or refining beliefs in the absence of information is something we should be afraid of, not strive for.
I think this gets to the heart of our differences. I don't know things, so I ask people. Or I take up positions which others can criticize. As part of a discussion, I learn more. If modern banking practices are germane, educate me on them.
You, I think, seem to feel that there is some threshold of knowledge that one must reach in order to talk reasonably about something. I, on the other hand, acknowledge that more information is better than less, but that doesn't give me the freedom to not act on things. I learn by both conversing and experimentation.
There is a concept called "strong opinions, weakly held" You might want to look into it.
As a side note, the internet is full of folks spouting off about things they know little about. So is life. Democracy is built on the concept of average voters voting on policies about complicated matters. Either learn to deal with these topics as part and parcel of community life or prepare to be frustrated a lot.
"There is a concept called 'strong opinions, weakly held' You might want to look into it."
These are fine methods of learning when you're surrounded by people significantly more knowledgeable than yourself. The problem is precisely the situation I was discussing: when you don't have a critical mass of knowledgeable people, it's the blind leading the blind, and thanks to the Dunning-Krueger effect, it's unlikely that you'll be able to tell who among the chorus of voices knows what they're talking about, and may even have trouble recognizing that you're going down the wrong path.
"As a side note, the internet is full of folks spouting off about things they know little about. So is life. Democracy is built on the concept of average voters voting on policies about complicated matters."
And direct democracy isn't terribly prevalent. Representative democracy, however, is based on electing representatives who are either themselves more knowledgeable or who can talk to (or employ) those who are on a whole range of subjects. And even on this count, I would argue we generally need to work on finding ways around our biases to make better selections.
"Either learn to deal with these topics as part and parcel of community life or prepare to be frustrated a lot."
You think my options are "live with it" or "be frustrated?" I choose the third option, to advocate for improvement, to advocate for greater education where it makes sense in the public sphere (such as economics), and to advocate for systems of government that are more resistant to direct action on matters that are likely to be adversely affected by common misunderstandings.
Then you've chosen my second choice, living with it. Advocating for improvement is exercising your options to participate in the conversation, even if your participation only amounts to acknowledging our collective lack of knowledge.
Isn't it great that reasonable people can discuss things that are complicated? Think of how many intractable problems have been solved because people were too stupid not to know they were insolvable?
Expertise is easy -- you can rent it when you need it. Highly-effective teams working tough problems are not easy. It's perfectly legitimate to say something along the lines of "hey, we're sadly lacking in knowledge here, and here are the steps we should take to improve things" but that is a just another form of participation.
This, by the way, is precisely why it is so difficult for us to "rent" certain expertise when you need it: non-technical people have a hard time hiring a good programmer because they don't have a basis to judge programmers off of. As it turns out, the guy who can talk the most convincingly is often not the person who is the most knowledgeable or skilled.
An aside:
"Then you've chosen my second choice, living with it."
That's ridiculous. The idiomatic phrase "live with it" means that you put up with or endure it. It is pretty much the opposite of working to change something. By your logic, "be frustrated" would also be "living with it" as anything short of killing myself or becoming a hermit would. This is just being obtuse.