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Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline. I personally would p

by losoq 10y ago

Unfortunately "starving the beast" doesn't seem to actually work. Low tax revenues don't lead to lower spending, just fiscal indiscipline. I personally would prefer a leaner federal state but it's not clear how to get there. http://econlog.econlib.org/archives/2013/04/starve_the_beas_1.html http://econlog.econlib.org/archives/2013/04/starve_the_beas_... https://en.wikipedia.org/wiki/Starve_the_beast#Economic_analysis https://en.wikipedia.org/wiki/Starve_the_beast#Economic_anal... https://niskanencenter.org/blog/cant-make-government-smaller/ https://niskanencenter.org/blog/cant-make-government-smaller...

RobertoG 10y ago
When I read this "starve the beast" thing, I can't avoid to ask myself where this people think the money is coming from in the first place? In order to tax, the government have to spend before.
- pas 10y ago
  There's this thing called the economy, full of private entities, all transacting throughout the year, creating wealth, expanding the money supply, generating a bit of inflation, and so on. Yes, the fiscal multiplier is important, but simple problems like corruption (regulatory capture and federal/state/county/municipality contracts to clients) and (very) unequal accumulation of wealth leading to serious power inequality seem more relevant today.
  - sooheon 10y ago
    Expanding the money supply and controlling inflation are precisely the things the Fed does (with monetary policy, the fiscal multiplier is only part of it). Re: corruption and concentration of wealth, I see no reason why government should have a monopoly on that. The 2007 crisis, and Enron before it, and countless other scandals, are evidence of the former being rampant in capitalism. The observation that without exogenous (non-capitalistic) forces, return on capital will always outpace economic growth (popularized by Piketty) is evidence of the latter.
    - pas 10y ago
      The fiscal multiplier is the US budget (public spending, funded by taxes) set by Congress, doesn't have much to do with the monetary thing. Private corruption is many orders of magnitude a smaller problem, because there the agent-principal problem is less relevant. Enron had shareholders, they were lazy, but it was their money. The voters in public elections are playing with others' money too.
      - sooheon 10y ago
        My point is that fiscal policy is only part of the influence the government has on the economy, and likely the less important part. Monetary policy has far greater consequences for inflation and money supply. How do you come the conclusion that gov't corruption is "orders of magnitude" worse? I see nothing quantitative in your reasoning. Voters in public elections are playing with others' money, as are lobbyists for corporate interests. Private corporations play with others' land sea and air regularly. It's a flawed system as a whole, agreed, but getting rid of government influence is not the answer, as that leaves the economically powerless truly and utterly powerless. And it seems you don't have an answer to the accumulation of capital. Left to its own devices, any capitalistic system will concentrate and grow wealth at a faster rate than economic growth. This is why a countervailing force is necessary, whether in revolution or governance. edit re the agent principal problem: you forget the vast majority of people who are too poor to be shareholders or board members anywhere. The only shares anyone is guaranteed in society (in theory) is the equal and inalienable share in governance amounting to 1 vote. I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought.
        RobertoG 10y ago
        " I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought." That would be just business as usual. In most countries and until very recently, only the owners of property were allowed to vote. We forget that 'natural state' of things to our own danger.
  - RobertoG 10y ago
    "There's this thing called the economy, full of private entities,[..]" Sure, but in order to interact, private entities, use money, that it's backed and come from the government. If you "starve the beast" you could discover that it's all of us who are feeding from its blood. That's not so strange, because, after all, the beast is all of us.
- branchless 10y ago
  Oh dear oh dear. Private banks create money. If only it were state lead.
  - RobertoG 10y ago
    Sure, but there is money and there is money. Banks create an asset in their balance, but they create a liability at the same time. Only governments spending create net financial assets in the economy (that is not the same that real assets, of course). https://fernandonogueiracosta.files.wordpress.com/2011/08/cullen-roche-mmt-understanding-the-modern-monetary-system.pdf https://fernandonogueiracosta.files.wordpress.com/2011/08/cu... (If it's too long, see 'vertical transactions')
    - andyspicer 10y ago
      Don't cryptocurrencies break that model? They are financial assets in the economy that are not created or presently controlled by governments.
      - RobertoG 10y ago
        It depends on your definition of money. From my point of view, cryptocurrencies are financial assets but not money. They are not an IOU (https://en.wikipedia.org/wiki/IOU https://en.wikipedia.org/wiki/IOU). Government money is a IOU because you are promised that it (and only it) will be accepted as a payment by the state. Anyway, state money can never be totally replaced at least that the government accept payment taxes in the new currency. And why people would start using other currency if they have to get the official currency for taxes payment?
        branchless 10y ago
        Agreed. Acceptance for tax payment is what imbues money with value.
        RobertoG 10y ago
ep103 10y ago
Starve the beast has never been about making federal agencies work better. Its been about creating a path to privatization
- webXL 10y ago
  They can work better, or they can work for what we can afford (our collective value of them). Washington is in a constant struggle to make sure we get neither.
webXL 10y ago
I think that's backwards. Fiscal indiscipline leads to not lowering spending when there are lower revenues. You get there by enacting rules that make it really hard (politically damaging) for the government to spend what it does not have.

by losoq 10y ago

RobertoG 10y ago

When I read this "starve the beast" thing, I can't avoid to ask myself where this people think the money is coming from in the first place? In order to tax, the government have to spend before.

pas 10y ago
There's this thing called the economy, full of private entities, all transacting throughout the year, creating wealth, expanding the money supply, generating a bit of inflation, and so on. Yes, the fiscal multiplier is important, but simple problems like corruption (regulatory capture and federal/state/county/municipality contracts to clients) and (very) unequal accumulation of wealth leading to serious power inequality seem more relevant today.
- sooheon 10y ago
  Expanding the money supply and controlling inflation are precisely the things the Fed does (with monetary policy, the fiscal multiplier is only part of it). Re: corruption and concentration of wealth, I see no reason why government should have a monopoly on that. The 2007 crisis, and Enron before it, and countless other scandals, are evidence of the former being rampant in capitalism. The observation that without exogenous (non-capitalistic) forces, return on capital will always outpace economic growth (popularized by Piketty) is evidence of the latter.
  - pas 10y ago
    The fiscal multiplier is the US budget (public spending, funded by taxes) set by Congress, doesn't have much to do with the monetary thing. Private corruption is many orders of magnitude a smaller problem, because there the agent-principal problem is less relevant. Enron had shareholders, they were lazy, but it was their money. The voters in public elections are playing with others' money too.
    - sooheon 10y ago
      My point is that fiscal policy is only part of the influence the government has on the economy, and likely the less important part. Monetary policy has far greater consequences for inflation and money supply. How do you come the conclusion that gov't corruption is "orders of magnitude" worse? I see nothing quantitative in your reasoning. Voters in public elections are playing with others' money, as are lobbyists for corporate interests. Private corporations play with others' land sea and air regularly. It's a flawed system as a whole, agreed, but getting rid of government influence is not the answer, as that leaves the economically powerless truly and utterly powerless. And it seems you don't have an answer to the accumulation of capital. Left to its own devices, any capitalistic system will concentrate and grow wealth at a faster rate than economic growth. This is why a countervailing force is necessary, whether in revolution or governance. edit re the agent principal problem: you forget the vast majority of people who are too poor to be shareholders or board members anywhere. The only shares anyone is guaranteed in society (in theory) is the equal and inalienable share in governance amounting to 1 vote. I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought.
      - RobertoG 10y ago
        " I shudder at the thought of a future America where your votes are directly proportional to your wealth, and seats on the Board of Directors of the USA are bought." That would be just business as usual. In most countries and until very recently, only the owners of property were allowed to vote. We forget that 'natural state' of things to our own danger.
- RobertoG 10y ago
  "There's this thing called the economy, full of private entities,[..]" Sure, but in order to interact, private entities, use money, that it's backed and come from the government. If you "starve the beast" you could discover that it's all of us who are feeding from its blood. That's not so strange, because, after all, the beast is all of us.
branchless 10y ago
Oh dear oh dear. Private banks create money. If only it were state lead.
- RobertoG 10y ago
  Sure, but there is money and there is money. Banks create an asset in their balance, but they create a liability at the same time. Only governments spending create net financial assets in the economy (that is not the same that real assets, of course). https://fernandonogueiracosta.files.wordpress.com/2011/08/cullen-roche-mmt-understanding-the-modern-monetary-system.pdf https://fernandonogueiracosta.files.wordpress.com/2011/08/cu... (If it's too long, see 'vertical transactions')
  - andyspicer 10y ago
    Don't cryptocurrencies break that model? They are financial assets in the economy that are not created or presently controlled by governments.
    - RobertoG 10y ago
      It depends on your definition of money. From my point of view, cryptocurrencies are financial assets but not money. They are not an IOU (https://en.wikipedia.org/wiki/IOU https://en.wikipedia.org/wiki/IOU). Government money is a IOU because you are promised that it (and only it) will be accepted as a payment by the state. Anyway, state money can never be totally replaced at least that the government accept payment taxes in the new currency. And why people would start using other currency if they have to get the official currency for taxes payment?
      - branchless 10y ago
        Agreed. Acceptance for tax payment is what imbues money with value.
        RobertoG 10y ago

ep103 10y ago

Starve the beast has never been about making federal agencies work better. Its been about creating a path to privatization

webXL 10y ago
They can work better, or they can work for what we can afford (our collective value of them). Washington is in a constant struggle to make sure we get neither.

webXL 10y ago

I think that's backwards. Fiscal indiscipline leads to not lowering spending when there are lower revenues. You get there by enacting rules that make it really hard (politically damaging) for the government to spend what it does not have.