- I disagree that the “real problem” is entitlements … the real problem is the cost of health care. We wouldn’t be having this conversation if the cost of health care entitlements weren’t rocketing into unfathomable territory. Even if we de-entitle health care, those costs will continue to grow and still be borne by someone, either by states or individuals or, in many cases, people just not getting treatment. 2) I also disagree that the Republicans have been concerned with deficits. Republicans have been concerned with taxes, and there’s a huge difference. Every step of the way, no matter the fiscal situation, their solution is always just to cut taxes. That has actually increased the deficit dramatically. The party is transparently fighting for the special interest of the moneyed class. Even if we grant the free-market orthodoxy that they pretend to espouse, their opposition to reforming exemptions, subsidies, and deductions in the tax code proves to me that they’re concerned not with deficits but with the consolidation of wealth. In short, if I have to choose who’s right I choose the Democrats, not because they’re actually right but because their position is far less scary.
Yea Kmm, I agree with you. Lots of things should be cut much more than others and many things should be expanded. I would love to increase the funding for NASA, DOE, and infrastructure. Unfortunately, that’s not politically feasible for some reason.
recycler Wrote: ------------------------------------------------------- > I recall a political science professor once > telling me that politicians don’t matter when it > comes to economic growth. Is this true? > > I tend to think he was correct. There are some > caveats such as the regulatory changes that helped > spur the most recent financial crisis but all > things considered, I do not believe that the > maneuvering of politicians has a meaningful impact > to economic growth. Politicians can make a huge difference, because 1) there are so many things that can be done to muck up economic growth, so their decision to make those decisions (often in an attempt to do good, sometimes not) does affect economic growth. 2) corruption, particularly if it works its way into the judiciary, is bad for economic growth in the long term (though, ironically, it can sometimes help in the short term if it helps large projects get approved faster). 3) Certain sectors of the economy are natural monopolies, and the decision to regulate them or not affects the availability of factors of production. 4) The choice to do countercyclical spending or not affects the depth of recessions and the long-term growth path. If you believe economies are perfectly linear systems, then there is no net positive benefit to this in the aggregate. But if you think that severe recessions erode human capital to a greater extent than shorter recessions, then this is a net positive. 5) There is a debate in economics and political science as to whether industrial policy makes sense or not. My take on the historical record is that front-running countries (UK, US) generally don’t do well with industrial policy, but that those which are trying to “catch up” can benefit from it. Virtually all of the BRICs have engaged in some type of industrial policy and are benefiting from it. However, it’s worth noting that industrial policy can create political fiefdoms and “iron triangles” that are ultimately bad for the economy. If the country can implement industrial policy without the creation of such fiefdoms, then industrial policy is often helpful. 6) Sometimes the government is the only organization large enough to amass the capital for certain critical projects like infrastructure. This is usually an issue in emerging markets more than developed ones, although the attempt to rescue the banking system is another example (my take, which is a debatable view, is that it was necessary to attempt to rescue the banking system, but that it should have been rolled into orderly bankruptcies (vs. disorderly, which would have been the “without a rescue” version) rather than banks turned into high-paying zombies). So, aside from the provision of national defense, rule-of-law, and a few critical infrastructure issues like road networks, education (possibly), and basic research (possibly), politicians generally can’t do all that much to increase GDP growth, but they can do plenty to reduce it.
numi Wrote: ------------------------------------------------------- > Palantir Wrote: > > In other words, how do we increase demand? > Devaluing the dollar is an option. > > I’d be interested in hearing more about why you > think this. On one hand, I can appreciate the fact > that some inflation is good and devaluing the > dollar could stimulate more job growth and > production in the U.S. (versus outsourcing and > exports). On the other hand, devaluing the dollar > beyond what I believe has already been a > devaluation through QE2 might only divert more > capital away from the U.S. I don’t think QE2 is a permanent devaluation, remember the bonds that the fed is buying, will eventually mature, and the money supply will contract to some extent. This is as opposed to the Fed “forgiving” the debt, which will permanently increase the money supply because it won’t be paid back. However - basically my argument for devaluing the dollar is to trigger exports by making US goods/svcs more competitive. It is difficult to see how we can try to keep a strong dollar with our trade deficit. Simply put, I see two ways of increasing demand - trigger more exports via devaluing the dollar, or ramping up government spending.
seemorr Wrote: ------------------------------------------------------- > 1) I disagree that the “real problem” is > entitlements … the real problem is the cost of > health care. We wouldn’t be having this > conversation if the cost of health care > entitlements weren’t rocketing into unfathomable > territory. Even if we de-entitle health care, > those costs will continue to grow and still be > borne by someone, either by states or individuals > or, in many cases, people just not getting > treatment. Agree that one of the problems is the rising cost of care, but entitlements are the big issue. They are sucking up the lion’s share of funding, yet not yielding the benefits. There are a number of reasons why this is increasing, but it all boils down to that we just cannot afford to give everyone the next breakthrough treatment; hence an entitlement issue. > 2) I also disagree that the Republicans have been > concerned with deficits. Republicans have been > concerned with taxes, and there’s a huge > difference. Every step of the way, no matter the > fiscal situation, their solution is always just to > cut taxes. That has actually increased the deficit > dramatically. The party is transparently fighting > for the special interest of the moneyed class. > Even if we grant the free-market orthodoxy that > they pretend to espouse, their opposition to > reforming exemptions, subsidies, and deductions in > the tax code proves to me that they’re concerned > not with deficits but with the consolidation of > wealth. You could say a similar thing about Dems: “tax and spend” and cut defense spending. They also transparently support corrupt unions that siphon off billions in tax payer dollars that often add little benefit. > In short, if I have to choose who’s right I choose > the Democrats, not because they’re actually right > but because their position is far less scary. This is where I may find some common ground with you in that you are picking the least worst option (I’d choose the Repubs), but I guess we both agree that the options just suck.
> Agree that one of the problems is the rising cost > of care, but entitlements are the big issue. They > are sucking up the lion’s share of funding, yet > not yielding the benefits. There are a number of > reasons why this is increasing, but it all boils > down to that we just cannot afford to give > everyone the next breakthrough treatment; hence an > entitlement issue. While I believe everyone should have access to the best of the best, I realize in a capitalist society it is not possible. However there are a lot of ways to tackle the healthcare cost which is without question the biggest liability we face as a nation. But there are creative ways to tackle this issue if people just stepped back and thought about things logically. For example how does it make sense to give giant subsidies to the corn industry which drives down the cost of soda and other junk food which makes people more unhealthy and drive up healthcare costs in the long run. Why not use that money to educate people about proper diet and encourage farmers to grow more fruits and vegetables, which are way too expensive compared to mcdonald’s, kfc and the like.
CFABLACKBELT Wrote: ------------------------------------------------------- > but I guess we both agree > that the options just suck. Oh well. Who is John Galt?
And while we are comforting ourselves with the simplistic notion that entitlements are the evil -lets take a crack at the defense and state dept budgets and our self appointed role at world cop and big brother - the world is changing around us and we have failed to change and re-prioritize. These outlays and the excess unneeded spending buried within them is where the money is at. And I agree that neither party platform solves the problem in front of us - each one is so wedded to its constituencies (not voters - but influence peddlers) that rationality and compromise is beginning to get very difficult to accomplish. The “two party” process has become somewhat dysfunctional but it is so deeply imbedded in our political power circles that it has become the only tool available to us.
Fixing healthcare isn’t really that difficult. The political will does not exist to make any changes. One option is to go full blown public, i.e., “Medicare for all”. The other option involves a few steps: Step 1 - Repeal the Mccarran-Ferguson Act Step 2 - Remove the barriers to interstate insurance competition. Allow insurance firms to compete across state lines. Step 3 - Remove tax benefits for employer provided healthcare and force customers to shop around and purchase their own healthcare. That’s pretty much it. Right now the system we have is neither capitalist, nor socialist, but a combination of the worst aspects of both. We know how to fix the majority of our problems. Politics is what we don’t know how to fix and that is what gets in the way of everything.
Appropriate John Galt reference. The problem with everything in America right now is basically the middle manning of everything. I think more people could afford healthcare if doctor’s didn’t have to take out $20 million insurance policies. While I’m not going to say that you do not have the right to sue a doctor who performed a poor procedure and resulted in the death/injury of a relative the compensation is sometimes out of hand. Instead of using that moment as a get rich quick time, the doctor should be disallowed from practice. This would monetarily hurt that doctor much more than any fine, because now he cannot practice. Let’s hope that would make them all be on point. What’s worse is most of the money from these cases go to the lawyer’s not even the victims. I agree with the ‘world police’ problem. We do not need to be everywhere, but we CANNOT be nowhere. I think we need to pick our spots to be influential. Right now China is buying up all influence in the West. In my opinion we should be working much more closley with SA than we do. These are the nations we should be helping, our neighbors. I really would love to see a developed Africa too. I think that our money would be better spent helping those nations develop/forming long lasting ties. I think tax cuts are the answer, not spending. The government spends money on too many organizations that do the same thing. I forget the exact facts, but it was something like 90 sponsored government agencies that promote education. Or 20 that work on eating nutritious. And many more cases of similar nonsense. The problem is politicans all get in to power on favors from people, so when it’s their time they have to repay them. Here’s a cushy job, you can promote “_________.” “Tax cuts are just to protect the rich.” - Some idiot. The middle class is really who is losing out in America. The upper class has enough to live and the lower class don’t pay taxes. America’s middle class is falling apart. Just look around your neighborhood. I think that inheritence should be taxed, but not at marginal rate at an amount similar to long term capital gains. A tax that could be cut… SHORT TERM CAPITAL GAINS. Encourage people to play the market! Get money to businesses so they can expand their operations and hire more people. Unemployment is nuts right now. The numbers are distorted because of people who got discouraged looking altogether. But my biggest peeve is career politicians. I honestly don’t believe people should be groomed for politics. I think we would do much better as a nation if we had ‘regular’ people. By regular I don’t mean any guy who watches football and drinks beer. But I do mean Americans who have demonstrated their intelligence and hard work in other arenas. Warren Buffet, Bill Gates, Steve Jobs and other great minds. People who can build things from nothing, innovate, brand things well, analyze and communicate. These people are already established, but could chose to help. I could rant about welfare and all those other ‘entitlements’ you guys are discussing, and it is a problem, but I just don’t see the point right now. Politicans will dangle some trinkets infront of a block of American voters so they can have their moment in the sun. They just want in and are buying the voters. I would love to see more focus in America go toward education. And by this I do not mean giving money to the teachers union. I think teachers shouldn’t be tenured. It promotes laziness. We all know HS teachers who should have been kicked out of there. Teachers should be paid more. It seems like we dismiss. “Those who cannot do, teach.” But if you offered competitive salary combined with the great benefits of teaching (summers off) you would see A LOT of brighter people doing it.
It’s much easier to govern your way into a recession than out of one. Honestly, the best thing the government could do is carpet bomb vacant homes. Outside of that, look for continued destruction of the USD, high unemployment, and stagnant wages.
k guys i did the math n got 74 hope this clears up everytrhing
Sweep the Leg Wrote: ------------------------------------------------------- > It’s much easier to govern your way into a > recession than out of one. True > Honestly, the best thing the government could do > is carpet bomb vacant homes. That would destroy wealth not create it. This is the broken window fallacy. > Outside of that, > look for continued destruction of the USD, high > unemployment, and stagnant wages. The reality is that a fiat currency issuer like the US has no risk of default. If we run up more deficits then interest rates will go down and not up, as in Japan’s experience. To make up for the lack of aggregate demand we need more spending, lower taxes, or both. The current debate is misguided in that it implicitly assumes the government budget is like a household budget, even though the two are polar opposites as one is a currency issuer and one is a currency user. At the current level of unemployment there are substantial resources being wasted (16m unemployed). Do you think that if we could wave a wand and those 16m people suddenly had valuable skills (doctors, lawyers, engineers) that the economy would return to full employment? No absolutely not, the problem is there is a widespread lack of demand as people are trying to pay down private sector debt that was built during the Clinton administration on the back of government surpluses. Savings = debt mathematically. The private sector cannot save on net without government deficits. Realizing this accounting identity is the first step to understanding appropriate fiscal counter-cyclical policy. Unfortunately, mainstream economists, media, and politicians are all slaves to popular opinion about these critical issues, which is consistently wrong and self-contradictory.
Dwight Wrote: ------------------------------------------------------- > Sweep the Leg Wrote: > -------------------------------------------------- > ----- > > It’s much easier to govern your way into a > > recession than out of one. > > True > > > Honestly, the best thing the government could > do > > is carpet bomb vacant homes. > > That would destroy wealth not create it. This is > the broken window fallacy. > > > Outside of that, > > look for continued destruction of the USD, high > > unemployment, and stagnant wages. > > The reality is that a fiat currency issuer like > the US has no risk of default. If we run up more > deficits then interest rates will go down and not > up, as in Japan’s experience. To make up for the > lack of aggregate demand we need more spending, > lower taxes, or both. The current debate is > misguided in that it implicitly assumes the > government budget is like a household budget, even > though the two are polar opposites as one is a > currency issuer and one is a currency user. > > At the current level of unemployment there are > substantial resources being wasted (16m > unemployed). Do you think that if we could wave a > wand and those 16m people suddenly had valuable > skills (doctors, lawyers, engineers) that the > economy would return to full employment? No > absolutely not, the problem is there is a > widespread lack of demand as people are trying to > pay down private sector debt that was built during > the Clinton administration on the back of > government surpluses. > > Savings = debt mathematically. The private sector > cannot save on net without government deficits. > Realizing this accounting identity is the first > step to understanding appropriate fiscal > counter-cyclical policy. Unfortunately, > mainstream economists, media, and politicians are > all slaves to popular opinion about these critical > issues, which is consistently wrong and > self-contradictory. There is no risk of default because we can simply print more dollars and possibly rival Zimbabwe which is probably what Obama wants because then the rich and poor will all be in the same boat. So while we have no risk of default, we do have a risk of having a worthless dollar. Look at the US Dollar index! Been getting pounded over the last decade. Where it will stop? 70, 60, 50? Or lower?
Wasn’t Obama born in Zimbabwe? IT ALL MAKES SENSE NOW!!!
^ I cant believe the tea party didn’t think of this first.
ManMythLegend Wrote: > > There is no risk of default because we can simply > print more dollars and possibly rival Zimbabwe > which is probably what Obama wants because then > the rich and poor will all be in the same boat. > > So while we have no risk of default, we do have a > risk of having a worthless dollar. Look at the US > Dollar index! Been getting pounded over the last > decade. Where it will stop? 70, 60, 50? Or > lower? The dollar won’t ever be worthless as long as it can be used to pay taxes. I will always need dollars for that or otherwise I will go to jail, as would you. Zimbabwe is a special case where the redistribution of land to political party members resulted in the destruction of about 70% of the economic capacity of Zimbabwe in a short period of time. When government spending remained the same the result was the currency lost all of its value and hyperinflation resulted. It was a case of too many dollars chasing too few goods and services. We do not have that problem today, in fact we have way too little demand for the available productive capacity of the US. I’m in favor of a weak dollar. The US runs a large trade deficit and has for many years because other countries (China) depress the value of their currencies by buying US assets so they can export. I would prefer the dollar to weaken and make the US more competitive relative to other nations.
Dwight Wrote: ------------------------------------------------------- > Savings = debt mathematically. The private sector > cannot save on net without government deficits. > Realizing this accounting identity is the first > step to understanding appropriate fiscal > counter-cyclical policy. Unfortunately, > mainstream economists, media, and politicians are > all slaves to popular opinion about these critical > issues, which is consistently wrong and > self-contradictory. please enlighten me with your proof of how saving = debt? i’ve never heard of this.
jbaldyga Wrote: ------------------------------------------------------- > please enlighten me with your proof of how saving > = debt? i’ve never heard of this. Sure. It’s double entry accounting. Every credit has a debit. Every time you spend money your account is debited and someone else’s account is credited. So your spending is someone else’s income. The net of these transactions results in one person’s debt being another person’s savings by necessity. Interest you receive on deposits does not come out of nowhere, just as interest companies pay or the government pay does not disappear, but ends up back in the pockets of people who hold Treasury bonds. When you deposit money in a savings account the bank lends out that money to someone to pay you interest. When you buy a treasury or corporate bond you lend your money out directly so you are saving in order for someone else to run a deficit. Dollars are just non-interest bearing debt. Think about the first day the government started operating. How could it spend money without taxing? People could not pay dollars without FIRST having them. The government had to spend deficits in order for people to have money to pay their taxes later. As long as the government continues to run a deficit its citizens can save on net. Mathematically the equation looks like this: GDP = C + I + G + (X – M) Where: C = consumption, I = investment, G = government spending, X = exports, M = imports Or stated differently: GDP = C + S + T Where: C = consumption, S = savings, T = taxes From there we can conclude: C + S + T = GDP = C+ I + G + (X – M) If rearranged we can see that these sectors must net to zero: (I – S) + (G – T) + (X – M) = 0 Where: (I – S) = private sector balance, (G – T) = public sector balance, (X – M) = foreign sector balance The sectors net to zero so one’s deficit spending is another ones saving. A real world example is that China has a large government budget surplus offset by the large current account balance in the US. Does that make sense?
Yep, it’s CFA Level 1 Econ.