The Gaming Den

So anyway we're in a recession right now, but the value of the dollar is also plunging because of debt/budget concerns.

Halting spending would make the problem worse, obviously, so it looks like our only alternative is to raise taxes.

Lago PARANOIA wrote:Halting spending would make the problem worse, obviously,

Okay, not to detract from your main point, because yes, taxes are going to go up, but just had to mention: whoa. Whoa. Um. Not actually obvious. I for one would feel much better if - oh, what's a round number - a trillion dollars got slashed off the annual government budget, for example.

And just where are we supposed to trim the trillion dollars?

Why would taxes have to go up? Do you think the GDP isn't ever going to grow again?

Or, do you mean, 'taxes should probably return to the rates they were in 1960?'

-Crissa

Gelare wrote:

Lago PARANOIA wrote:Halting spending would make the problem worse, obviously,

Okay, not to detract from your main point, because yes, taxes are going to go up, but just had to mention: whoa. Whoa. Um. Not actually obvious. I for one would feel much better if - oh, what's a round number - a trillion dollars got slashed off the annual government budget, for example.

Why?

We're in a global savings glut. How is reducing government investment supposed to help anything? At this point, the government should be paying people to dig holes and fill them up again, if only to use up desired savings and put more money into desired spending.

-Username17

Personally, I am hoping that the government will attempt to get out of this by just printing more and more money. When inflation skyrockets my debt won't be nearly so bad.

The government itself is somewhat reliant on that as well.

The US has been running a growing debt for ages -taxes have to go up no matter how you slice it, even if you slash spending.

Lago PARANOIA wrote:And just where are we supposed to trim the trillion dollars?

Well, you could get rid of the entire "stimulus" package, for example. Or make the extraordinarily necessary cuts to entitlement programs that will bankrupt countries as the workforce ages and retires. But it was not really my intention to go into specifics, just to say that it's not obvious that we can't reduce spending.

Crissa wrote:Why would taxes have to go up? Do you think the GDP isn't ever going to grow again?

The thing is, Lago said that taxes have to go up. And that is, as you acknowledge here, ambiguous. What he meant, of course, is that tax revenues have to go up, which we can do a whole ton of different ways. GDP growth definitely helps that, yes, but the federal budget just grew way faster than GDP, so that won't be able to do the whole thing. Generally it is done by either increasing the taxes on the top 49% or the bottom 49%, so that the ruling party can stay in power, and as Barack Obama has correctly noted, the top 49% have more money to take.

@Frank: I hear your digging holes and filling them back in and raise you a helicopter drop, blanketing places with cash; but really, I just can't help but notice that government spending never goes down, and that is straight up a Bad Thing (TM). I have no problem with government spending going up sometimes if it also goes down sometimes, but it does not.

Gelare wrote:I just can't help but notice that government spending never goes down, and that is straight up a Bad Thing (TM). I have no problem with government spending going up sometimes if it also goes down sometimes, but it does not.

I can't help but want to relate that to the way budgets are run. If a government agency doesn't use all the money they've been allocated, their budget gets cut the next year, so there's no impetus to save money, just spend it. If they received a guarantee of the same budget next year, that would probably help. If they received a bonus equal to half the money they saved (and the rest would go back to the gov), that might end up even better.

Gelare, you're talking like Niall Ferguson again. And that just makes you incredibly hard to take seriously. Eliminate expansionary spending? Are you seriously taking the Treasury View and then ramping it backwards to be even more out of touch? This is a recession. A huge, fucking titanic recession. And there is an excess of desired savings even at 0% interest. Failing to do deficit spending is grossly irresponsible.

But beyond that, why would we ever want to drop government spending in the abstract? Progress happens because of competition of ideas and incentives for improvement. And you know what? The private sector doesn't always provide those. But the democratic process does. Now, the democratic process can take years to provide those stimuli, but it does provide them. And the private sector doesn't in any industry which is a natural monopoly. Nor does it provide them in any industry that becomes a monopoly or oligopoly, natural or otherwise. Having the government take over sections of our economy which are naturally monopolistic like health care, water distribution, and telecommunications would increase government spending tremendously and permanently. And it would be a good thing.

Now there are a lot of times when government spending goes up and should come down again. If you build a bridge or an aircraft carrier the budget for maintaining those things really ought to be much smaller than the budget for building them in the first place. And the rest of the money should be pocketed by other departments. And in the ultimate sense, one of the departments is (or should be) "paying off debts." But to say that in the abstract government spending should drop, that's just crazy. The most successful countries on Earth have huge government expenditures. If you choose your government budget wisely, it can and should be tremendous.

-Username17

Fear not, Frank, I've got no misconceptions about a balanced budget amendment or any nonsense like that, you and I both fully acknowledge that deficit spending is sometimes the right move. But starting with your second paragraph, we have wildly differing views on empirical matters.

FrankTrollman wrote:Progress happens because of competition of ideas and incentives for improvement. And you know what? The private sector doesn't always provide those. But the democratic process does. Now, the democratic process can take years to provide those stimuli, but it does provide them. And the private sector doesn't in any industry which is a natural monopoly.

The private sector doesn't always provide the efficient levels of incentives, this is indisputable. Environmental regulation is, for example, extremely necessary. But that's an externality problem, which is different from monopolization. Monopolists, natural or otherwise, absolutely have incentive to innovate and improve, because by doing so they can convince more people to buy their products - the same thing that drives innovation even in perfectly competitive markets. Yes, the monopolist is gouging their customers, and we should all hope they get some competition, but to say there's no private incentive for improvement in industries which are monopolies is straight up false.

It is further my contention that the democratic process, as it is currently practiced in countries like the United States, is highly corrupt and inefficient. Tremendously, grossly so. Voters, by and large, don't have the technical expertise to know which proposals are good ones, and they don't have the political expertise to discern which politicians are beneficial to the country and which are not, so instead they vote for the candidate that's taller. And that's fucked up. It does not result in good policy, and that is what I have a problem with.

Don't get me wrong, there's plenty of perfectly good things the government can do with its spending. It can take control of naturally monopolistic industries, for example, and if it can do so well, that represents a permanent and justified (and massive) government expenditure that I have no problem with. However, it appears to me that you think government is more competent than I think it is. Which one of us is right is really an empirical question at this point, and if I'm wrong that's all there is to it. But I don't think I am.

shau wrote:Personally, I am hoping that the government will attempt to get out of this by just printing more and more money. When inflation skyrockets my debt won't be nearly so bad.

And I, as a person who has no debt whatsoever, would be very sad.

Caedrus wrote:

shau wrote:Personally, I am hoping that the government will attempt to get out of this by just printing more and more money. When inflation skyrockets my debt won't be nearly so bad.

And I, as a person who has no debt whatsoever, would be very sad.

There's still time! Quickly, go buy another house!

Econ question:
So, when you buy a government bond, you get a piece of paper that you can trade (like money, in some cases, except that you can't use it in immediate transactions), which will eventually be returned for real money. In return, the government gets your money, and spends it.

This means that the money supply has, essentially, doubled, if people are willing to trade the bond for the money you bought it for.

So if the government just literally prints a stack of bills and sends them to you in a briefcase, or just changes a number in their bank records and gives you a check against that, they aren't actually increasing the (relative) money supply by as much as when they sold the bond.

So what makes the latter so much worse than the former, in terms of causing inflation?

IGTN wrote:Econ question:
So, when you buy a government bond, you get a piece of paper that you can trade (like money, in some cases, except that you can't use it in immediate transactions), which will eventually be returned for real money. In return, the government gets your money, and spends it.

This means that the money supply has, essentially, doubled, if people are willing to trade the bond for the money you bought it for.

So if the government just literally prints a stack of bills and sends them to you in a briefcase, or just changes a number in their bank records and gives you a check against that, they aren't actually increasing the (relative) money supply by as much as when they sold the bond.

So what makes the latter so much worse than the former, in terms of causing inflation?

The first presumes that the actual wealth of the nation has increased to the extent that it can afford to pay you more (because the government will have more total dollars), while the second maps a more dollars to the same amount of wealth.

Let me restate this, to point out where my confusion is.

Case 0 (this one's new): You take money M, and use it to buy goods G. The system has 1M money and 1G goods.

Case 1: You take money M, and use it to buy a government bond worth M. The government takes your M and uses it to buy goods G. The system now has 2M money (the original and the bond), and 1G goods.

Case 2: You take money M, and buy a government bond worth M. The government buys goods G. They then send you a freshly-printed briefcase of M + interest to pay off the bond. The system now has 2M + interest money for 1G goods.

Basically, if a bond can be banked like money and sold for near-face value, how is creating new regular money actually worse than issuing a bond? In both cases involving debt, twice the amount of money maps to the same goods as in Case 0. The bond is transferable, you can put it your bank and pull out a loan on it (which does bring new money into existence), so you can get they money before it's paid back.

Am I not tracking a money source correctly?

Maj wrote:I can't help but want to relate that to the way budgets are run. If a government agency doesn't use all the money they've been allocated, their budget gets cut the next year, so there's no impetus to save money, just spend it. If they received a guarantee of the same budget next year, that would probably help. If they received a bonus equal to half the money they saved (and the rest would go back to the gov), that might end up even better.

Thats how it works here too, theres a rush to spend the rest of the budget in the last few months of the financial year. Now while our section used it to set up a virtualisation environment that delivers net savings in every area and improves our service I'm sure there are departments who buy really sweet leather chairs instead.

Gelare wrote:It is further my contention that the democratic process, as it is currently practiced in countries like the United States, is highly corrupt and inefficient. Tremendously, grossly so. Voters, by and large, don't have the technical expertise to know which proposals are good ones, and they don't have the political expertise to discern which politicians are beneficial to the country and which are not, so instead they vote for the candidate that's taller. And that's fucked up. It does not result in good policy, and that is what I have a problem with.

Corporations don't care if a proposal is good for the country or not - they only care if it is good for their bottom line. And they couldn't care less how capable a politician is so long as their votes are bought and paid for. In fact, much of the corruption that you chastise democratic governments for being plagued with is being fueled by corporate cash.

And corporate "efficiency" is only good if the people running a corporate are actually competent. Otherwise, all that extra efficiency just allows them to run their company into the ground with lightning speed. And if a corporation that is "too big to fail" screws up too badly and decimates the global economy, then we have to prop them up with corporate bailouts lest our entire economy collapses.

Thankfully, these bailout programs are NOT like socialism. Not at all. Because, you know, rich people are getting the money. Not poor people. And thank god, because the "little people" are little better then fucking orcs.

Gelare wrote:However, it appears to me that you think government is more competent than I think it is.

I'd rather trust an well-meaning but somewhat flawed government with important issues then a greedy corporation that is willing to do anything that they can get away with to pad their profit margin. Unless you have an alternative between these two choices, I'm going to go with the guys that I can vote out of office as opposed to the ones that I have no control over at all whatsoever.

I've seen plenty of the "useful fools" of various unpalatable and insane political movements preaching the "democracy sucks because everyone is an idiot like me/didn't agree with my insanity" line but this...

Gelare wrote:so instead they vote for the candidate that's taller. And that's fucked up.

...is just plain silly.

I mean how did we, in the typical democracy "like that", here in Australia elect...

The guy on the left of this picture instead of the guy on the right.

Then chuck the him (now on the right of this picture) for the guy on the left.

Edit: Hell, for that matter how did the same shorter guy who won the last picture now in the left of this picture lose an election to the guy copping a feel in the middle of it?

AND then went on to lose leadership of his party to the tallest guy of all who then promptly lost the election from the first picture?

HELL what about these guys?

And also the guys in the middle here?

Oh yeah and...

Which one of us is right is really an empirical question at this point, and if I'm wrong that's all there is to it. But I don't think I am.

...it IS an empirical question, and the results are in. You are wrong, wrong, wrong and wrong and the real world reflects this.

More democratic, socialist and regulationist nations are wealthier, healthier and happier. Undemocratic, capitalist and unregulated nations are CRAP and are MORE crap the more they swing in that direction.

I mean heck to not know that you'd have to not live in the real world at all.

Gelare wrote:Monopolists, natural or otherwise, absolutely have incentive to innovate and improve, because by doing so they can convince more people to buy their products - the same thing that drives innovation even in perfectly competitive markets. Yes, the monopolist is gouging their customers, and we should all hope they get some competition, but to say there's no private incentive for improvement in industries which are monopolies is straight up false.

Wait a minute. You just discounted the entire argument against government economic activity. The entire argument against straight communism is that non-competitive markets are disincentivized towards progress. If you don't accept that argument, then we should all put on red stars and nationalize everything tomorrow. Because putting everything under the banner of non-profit inherently makes it more efficient because profit equals waste.

I was just making an argument for increased government activity with caveats. By pulling the rugs out from the caveats you don't destroy the case for increased government intervention - you destroy the arguments for ever stopping the increases in government intervention.

---

A corporation is a government. A government which is not even theoretically subject to the desires and ideals of the people who depend upon it for services and supplies, but a government nonetheless. The British East India Company had four soldiers for every accountant, and until they lost the War of 1857 in India they had a larger army than the United Kingdom.

The fact that lands were being conquered by the "private enterprise" of the British East India Company rather than by the "government enterprise" of the Royal Scottish Guard is completely meaningless to the people being conquered and to the efficiency of the behavior in an economic sense. Now structurally I would say that privately funded armies are very dangerous. From a theoretical standpoint they are in an adversarial relationship not only with their enemies on the field, but with the people they are fighting on behalf of. And empirically, the kinds of disasters you might predict from such a setup have happened enough to validate any fears you might have.

But the same argument can be made against all private enterprise. You don't want a structurally adversarial relationship with the people who are getting meat or milk to you. That's incredibly dangerous. You want them to be at least theoretically on your side. The argument in favor of having private enterprise at all is that competition of ideas is an engine of progress. An engine of progress that is worth taking the risk associated with the fact that the consumer is an adversary of the people who prepare their food. A risk that in turn can be minimized by putting the government (who is nominally on the side of the consumer) in as a watchdog over all competing food sources.

However, if we discount the progressive advantages of competition, then we apparently are getting nothing whatever for the increased risk associated with having necessary services provided by adversarial governments whose actual job it is to extort as much out of society as possible for the services they provide. And if that were true, we should shut down private enterprise in general. I'm not willing to go that far, but I cannot see a counterargument available in your world view.

-Username17

It could be worse

Gelare wrote:

Caedrus wrote:

shau wrote:Personally, I am hoping that the government will attempt to get out of this by just printing more and more money. When inflation skyrockets my debt won't be nearly so bad.

And I, as a person who has no debt whatsoever, would be very sad.

There's still time! Quickly, go buy another house!