7 ms·

A republic or democracy presupposes that the majority of representatives will get it right eventually. However, we've seen in the Roman Circus and we see now th

by johnnyg 15y ago

A republic or democracy presupposes that the majority of representatives will get it right eventually. However, we've seen in the Roman Circus and we see now that there is a weak spot to this thinking. Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. The latter faction eventually gains control to an extent that they bankrupt the whole. We are nearing that stage now. Few Republicans will oppose entitlements and both Mr. Bush and Mr. Obama are guilty of ramp ups in deficit spending. Buffett's proposal would patch this historically reoccurring weakness of representative forms of government. As hnsmurf points out, it would also create a slippery slope where no representative could be reelected if they vote for X, Y and Z policies that are not systemic threats. As our government is not responding to an issue which can literally ruin us all, it seems to me that Buffett's proposal is the lesser of two evils. Stability demands a solvent government.

JoeAltmaier 15y ago
Stability also requires a stable government. Throwing all the scoundrels out sounds good, but would probably happen (I think they are all too selfish and would play chicken down to/past the wire). Resulting in chaos at the next election - an entire elected body of unknowns with no experience.
- rsbrown 15y ago
  ... no experience in the current system, that is. This proposal would change that system dramatically. Upending congress might be tumultuous, but compared to bankrupting the nation it still counts as the lesser of two evils.
- DougWebb 15y ago
  That's the kind of revolution we're supposed to have when the government becomes corrupt. Also, it wouldn't be all at once; term overlaps ensure that there would be continuity.
  - moioci 15y ago
    Terms overlap only in the Senate; the entire House stands for re-election every two years.
    - vaughanhedges 15y ago
      Right and then one party looks to create a situation where the other party has more people who will be ineligible.
    - asnyder 15y ago
      In a house election the incumbent almost always wins. Everything is skewed towards their favor, and lets not forget modern gerrymandering, which essentially predetermines most congressional seats.
- highfreq 15y ago
  At least then they would be playing chicken with their own re-elections not the US and World economy by proxy of the debt ceiling.
cheez 15y ago
That is a brilliant summary. Not enough people make the connection to Rome in my opinion. I know it's hip to compare the US to Rome but it is actually borne out in the history. At least in my opinion. Great idea by Mr. Buffet. Similar to Brazil's balanced budget laws, btw. Next up: funny ways of counting GDP ;-)
- khafra 15y ago
  > Next up: funny ways of counting GDP ;-) "Once a social or economic measure is turned into a target for policy, it will lose any information content that had qualified it to play such a role in the first place." http://lesswrong.com/lw/1ws/the_importance_of_goodharts_law/ http://lesswrong.com/lw/1ws/the_importance_of_goodharts_law/
  - cheez 15y ago
    Sigh...
iwwr 15y ago
Don't underestimate their ability to redefine GDP or 'budget deficit'. Also, if push comes to shove, there is always the option of cranking up the printing presses (Congress can wrestle control of monetary policy if the Fed is too uncooperative).
- TomOfTTB 15y ago
  We just learned this lesson in California where voters recently passed an "on-time budget" initiative. The way it worked was Legislators didn't get paid after the budget deadline. In theory this would get them to pass a budget on time instead of drawing it out to the point of state insolvency like they did every previous year. Did it work? Of course not. They passed an absolutely fictional budget. It not only depends on California getting three times its previously anticipated tax revenue but it also depends on tax hikes that haven't been passed (passing a budget requires a majority while passing a tax increase requires a 2/3rds vote where at least a few Republicans have to sign on) Bottom line: Government can always redefine terms
  - jerf 15y ago
    One of the broadly-speaking Anglo-Saxon innovations was the idea of a government of laws, and not men. I think it's one of those "good lies"; it isn't ever true, in reality "we're all just folk" and it's always government of men, but it's very good for all members of a society globally to maintain the fiction. Unfortunately, it does require a significant fraction of the society to choose to maintain the fiction (with varying levels of awareness of the fact that it is actually fiction), and locally it advantageous for people of power to implement government of men, not laws. And in our sophistication pretty much all the intellectuals we've got busily tearing apart all the foundation that "government of laws, not men" is built on. So back to government-of-men we go. Hooray.
  - sliverstorm 15y ago
    I wonder how many legislators realized they were thinking of the taxpayers as the enemy when they did that.
  - aquark 15y ago
johngalt 15y ago
"The American republic will endure until politicians realize they can bribe the people with their own money" Alexis de Tocqueville
- streptomycin 15y ago
  That's a nice quote, but it's misattributed. http://en.wikiquote.org/wiki/Alexis_de_Tocqueville#Misattributed http://en.wikiquote.org/wiki/Alexis_de_Tocqueville#Misattrib...
  - Jd 15y ago
    There is, indeed, a most dangerous passage in the history of a democratic people. When the taste for physical gratifications among them has grown more rapidly than their education and their experience of free institutions, the time will come when men are carried away and lose all self-restraint at the sight of the new possessions they are about to obtain. In their intense and exclusive anxiety to make a fortune they lose sight of the close connection that exists between the private fortune of each and the prosperity of all. Here's a more extensive (and accurate) one.
vannevar 15y ago
Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. What makes you think that a faction that represents business interests does not also trade entitlements for votes? The real problem is that ALL factions in a democracy demonstrate the universal human tendency to take benefits today and put off obligations for the future.
- rexf 15y ago
  Business wants all upside (even when it conflicts). As discussed yesterday: http://www.nytimes.com/2011/07/06/business/economy/06leonhardt.html?partner=rss&emc=rss http://www.nytimes.com/2011/07/06/business/economy/06leonhar... The problem is that nobody has a long term sustainable point of view. Why worry about the eventual cluster#$%@ when you can stuff your pockets today?
  - pyre 15y ago
    But that's the 'free market' right? Things will work out perfect in the end because of people's self-interest. The free market tells us that it's impossible for bad things to happen.
    - e2daipi 15y ago
      Taxes, regulation, Government spending, etc are interventions in the free market.
shriphani 15y ago
This is exactly as Plato said. The republic - in action before our very eyes.
Tuna-Fish 15y ago
The pre-requisite for that to happen is an electoral system that advantages larger parties, such as fptp. I've seen enough politics in different electoral systems that I honestly believe that most of the problems prevalent in America today would really be solved with a better way to elect congressmen.
- nkassis 15y ago
  Maybe increase the number? That would make bribing effort a little harder since it would require spreading the money to more people. Wasn't the house of representative supposed to be sized in proportion with the population of the US?
  - dkokelley 15y ago
    That's how it works now. The size of Congress is a function of the population, while the Senate is a fixed 2 per state. You're correct though that a larger legislature (in terms of number of representatives) would make bribes (including political favors often used to pass unpopular legislation) more difficult, because the marginal return on each bribe is diminished.
    - ianferrel 15y ago
      No, the size of the House is fixed at 435 (see http://en.wikipedia.org/wiki/Reapportionment_Act_of_1929 http://en.wikipedia.org/wiki/Reapportionment_Act_of_1929). The apportionment of the seats to the various states is based on population, but the overall size is not.
      - dkokelley 15y ago
        You are correct. I should have said "the proportion of Congressional representation is a function of local population densities." I knew that the representative to population ratio had been shrinking, but I didn't know they had since set a fixed limit.
    - jhancock 15y ago
pnathan 15y ago
The key issue at hand is the culture. A cultural change must be effected such that everyone understands that the 'government cheese' (bread, circuses) brings the system down. Individual effort must be rewarded, and lack of effort must not be upheld. History records this over and over, providing a clear description of the effects of government cheese. Britain lost their dominance in part due to it. It was not until the communism of China was mitigated that their economy began to take off. I understand that the same thing happened with India and their socialist policies, but I am not as versed in India's history. There are heavy negative effects that come into play when large-scale growth happens. The Industrial Revolution is the history of the West's large-scale growth. It's taking place in China now too. Let us not delude ourselves that sunshine, rainbows, unicorns and world peace will suddenly come about. Futurama provides a humorous glimpse into that sort of future. People are always self-interested and selfish, in the governmental scale. While we might not like that... we always prefer better things to happen to us and our little domains.
- Meai 15y ago
  I actually agree with you somewhat although you are not saying a lot. We have to find a system where the fortune of a single person automatically contributes to the good of the whole. Capitalism is actually already surprisingly good in that regard, and that's why it has been so successful. But in the end, there will be people who are vastly more successful in any system, and we need a way to make all efforts automatically contribute to society. I don't mean taxes, because those can be controlled by a governing body and are regarded as external force. Nobody wants to pay taxes. No, we need motivators which are intrinsic to the human mind. People need to want to help. Let's not kid ourselves and think that we can just "pull ourselves together" and be nicer to each other in the future. Human nature can't be overridden by mere wishes. Capitalism works because there is nothing stronger than the motivation to provide for yourself and your family. How do we use that motivation to nurture society as a whole? I don't know. Taxes are not good enough, as we can see today, they can always be outsmarted. You can't outsmart human nature, which means billions of people struggling towards a single goal.
  - njonsson 15y ago
jeffchuber 15y ago
The rate should be a factor of GDP growth - something like when GDP is growing 3%+, they can have 0 deficit, and shrinking, up to 5%. Or just some way to save in the good times, and spend in the bad times.
- aquark 15y ago
  But imagine motivations this could introduce: you can spend more money if you stall the economy !
  - anigbrowl 15y ago
    That doesn't make sense. If the economy is humming, then revenues are higher and you can spend more money that way. Nobody in their right mind would borrow when you could get as much or more interest-free via tax revenue.
    - aquark 15y ago
      Maybe -- but getting the economy to grow to generate that revenue is a much harder problem than stalling it and then being allowed to borrow it.
phaedon 15y ago
I logged in just so I could up-vote this.
ajscherer 15y ago
Maybe I am misreading your argument, but it seems like you are saying the cause of the US deficit problem is that the faction that trades entitlements for votes has gained control of the system. If that were true, and this faction were really just concerned with entitlements, there would be an obvious solution to the deficit: raise taxes. This may be every bit as horrible as you imagine, but it wouldn't involve a debt crisis. The problem as I see it, is that the faction that trades entitlements for votes and the faction that trades tax breaks for votes are both simultaneously in control. The low taxes people win all the fights about taxes, and the high spending people win all the fights about spending. The bug in democracy that led to our deficit problem is the lack of anything to prevent us from voting to have our cake and eat it too.
- ansy 15y ago
  Tax breaks are just another form of entitlement. Tax breaks are almost worse than other government benefits. It's basically taking out interest only loans on the tax payer's behalf. Here's $500 ... Oh and by the way, that comes with $500 worth of debt with a 4% interest rate that you are going to pay forever.
  - oelewapperke 15y ago
    That's not true at all. Government loans are not traditional interest-only home loans, and they certainly don't have a fixed interest rate. It's much, much worse than that. The entitlements side (sorry, but it's definitely that side), first saw lending as a way to get their votes without the corresponding loss of spending power, where the problem of repayment was delayed until after an election. Then the entitlement side (the taxbreaks side actually tried to repay these debts) screamed that "it's not fair we have to pay it back, someone else made the loan !". And this argument was more-or-less accepted. So the principle was started to take out new debt to repay obligations of the old debt. Is this associated to a particular party ? Perhaps, but it doesn't really matter since all of this happened before WWII. Few of the politicians that first created this disaster are even alive anymore, and I believe none are still in office. You really want to know more ? Yes, it was the democrats. So government loans have the worst of all possible loans as a result : they're interest-only loans with two extra very bad properties 1) the bank can foreclose whenever it wants (by not extending a new loan at all) 2) there is a variable rate interest, which can raise ver fast (and lower, in which case the windfall is immediately spent by the entitlements side). But the problem is not particularly bad in America you know. At least, not compared to Europe. America can take something around an interest rate of around 5%, and even the worst predictions do not involve a default before 2020 or so. Europe cannot possibly hope to survive with loan interests exceeding 3% and might default this very year. Most muslim countries are much worse off than Europe, and have the big issue that sometimes 80% of their population is dependant on state support for food and water (as in, they wouldn't be able to remain alive without government opening out new debt) (in Gaza/West Bank this is 100%, but that's an exception). So don't worry : yes the US is screwed. However the only thing that really matters is who is screwed first, and that's not us. Even Europe might escape if the middle east implodes first.
gaius 15y ago
This is exactly what happened in the UK; fortunately The People came to our collective senses and booted out Gordon Brown before he could dig us any deeper into a hole. Even then it wasn't clear cut: too many voters wanted hang onto lavish, debt-fueled spending. Those same voters march through the streets now demanding raises, generous pensions, instead of doing what the sane are doing, knuckling down to repair the gaping hole in our national wealth for the good of all.

by johnnyg 15y ago

JoeAltmaier 15y ago

Stability also requires a stable government. Throwing all the scoundrels out sounds good, but would probably happen (I think they are all too selfish and would play chicken down to/past the wire). Resulting in chaos at the next election - an entire elected body of unknowns with no experience.

rsbrown 15y ago
... no experience in the current system, that is. This proposal would change that system dramatically. Upending congress might be tumultuous, but compared to bankrupting the nation it still counts as the lesser of two evils.
DougWebb 15y ago
That's the kind of revolution we're supposed to have when the government becomes corrupt. Also, it wouldn't be all at once; term overlaps ensure that there would be continuity.
- moioci 15y ago
  Terms overlap only in the Senate; the entire House stands for re-election every two years.
  - vaughanhedges 15y ago
    Right and then one party looks to create a situation where the other party has more people who will be ineligible.
  - asnyder 15y ago
    In a house election the incumbent almost always wins. Everything is skewed towards their favor, and lets not forget modern gerrymandering, which essentially predetermines most congressional seats.
highfreq 15y ago
At least then they would be playing chicken with their own re-elections not the US and World economy by proxy of the debt ceiling.

cheez 15y ago

That is a brilliant summary. Not enough people make the connection to Rome in my opinion. I know it's hip to compare the US to Rome but it is actually borne out in the history. At least in my opinion. Great idea by Mr. Buffet. Similar to Brazil's balanced budget laws, btw. Next up: funny ways of counting GDP ;-)

khafra 15y ago
> Next up: funny ways of counting GDP ;-) "Once a social or economic measure is turned into a target for policy, it will lose any information content that had qualified it to play such a role in the first place." http://lesswrong.com/lw/1ws/the_importance_of_goodharts_law/ http://lesswrong.com/lw/1ws/the_importance_of_goodharts_law/
- cheez 15y ago
  Sigh...

iwwr 15y ago

Don't underestimate their ability to redefine GDP or 'budget deficit'. Also, if push comes to shove, there is always the option of cranking up the printing presses (Congress can wrestle control of monetary policy if the Fed is too uncooperative).

TomOfTTB 15y ago
We just learned this lesson in California where voters recently passed an "on-time budget" initiative. The way it worked was Legislators didn't get paid after the budget deadline. In theory this would get them to pass a budget on time instead of drawing it out to the point of state insolvency like they did every previous year. Did it work? Of course not. They passed an absolutely fictional budget. It not only depends on California getting three times its previously anticipated tax revenue but it also depends on tax hikes that haven't been passed (passing a budget requires a majority while passing a tax increase requires a 2/3rds vote where at least a few Republicans have to sign on) Bottom line: Government can always redefine terms
- jerf 15y ago
  One of the broadly-speaking Anglo-Saxon innovations was the idea of a government of laws, and not men. I think it's one of those "good lies"; it isn't ever true, in reality "we're all just folk" and it's always government of men, but it's very good for all members of a society globally to maintain the fiction. Unfortunately, it does require a significant fraction of the society to choose to maintain the fiction (with varying levels of awareness of the fact that it is actually fiction), and locally it advantageous for people of power to implement government of men, not laws. And in our sophistication pretty much all the intellectuals we've got busily tearing apart all the foundation that "government of laws, not men" is built on. So back to government-of-men we go. Hooray.
- sliverstorm 15y ago
  I wonder how many legislators realized they were thinking of the taxpayers as the enemy when they did that.
- aquark 15y ago

johngalt 15y ago

"The American republic will endure until politicians realize they can bribe the people with their own money" Alexis de Tocqueville

streptomycin 15y ago
That's a nice quote, but it's misattributed. http://en.wikiquote.org/wiki/Alexis_de_Tocqueville#Misattributed http://en.wikiquote.org/wiki/Alexis_de_Tocqueville#Misattrib...
- Jd 15y ago
  There is, indeed, a most dangerous passage in the history of a democratic people. When the taste for physical gratifications among them has grown more rapidly than their education and their experience of free institutions, the time will come when men are carried away and lose all self-restraint at the sight of the new possessions they are about to obtain. In their intense and exclusive anxiety to make a fortune they lose sight of the close connection that exists between the private fortune of each and the prosperity of all. Here's a more extensive (and accurate) one.

vannevar 15y ago

Eventually the elected body will split into a faction that represents business interests and a faction that trades entitlements for votes. What makes you think that a faction that represents business interests does not also trade entitlements for votes? The real problem is that ALL factions in a democracy demonstrate the universal human tendency to take benefits today and put off obligations for the future.

rexf 15y ago
Business wants all upside (even when it conflicts). As discussed yesterday: http://www.nytimes.com/2011/07/06/business/economy/06leonhardt.html?partner=rss&emc=rss http://www.nytimes.com/2011/07/06/business/economy/06leonhar... The problem is that nobody has a long term sustainable point of view. Why worry about the eventual cluster#$%@ when you can stuff your pockets today?
- pyre 15y ago
  But that's the 'free market' right? Things will work out perfect in the end because of people's self-interest. The free market tells us that it's impossible for bad things to happen.
  - e2daipi 15y ago
    Taxes, regulation, Government spending, etc are interventions in the free market.

shriphani 15y ago

This is exactly as Plato said. The republic - in action before our very eyes.

Tuna-Fish 15y ago

The pre-requisite for that to happen is an electoral system that advantages larger parties, such as fptp. I've seen enough politics in different electoral systems that I honestly believe that most of the problems prevalent in America today would really be solved with a better way to elect congressmen.

nkassis 15y ago
Maybe increase the number? That would make bribing effort a little harder since it would require spreading the money to more people. Wasn't the house of representative supposed to be sized in proportion with the population of the US?
- dkokelley 15y ago
  That's how it works now. The size of Congress is a function of the population, while the Senate is a fixed 2 per state. You're correct though that a larger legislature (in terms of number of representatives) would make bribes (including political favors often used to pass unpopular legislation) more difficult, because the marginal return on each bribe is diminished.
  - ianferrel 15y ago
    No, the size of the House is fixed at 435 (see http://en.wikipedia.org/wiki/Reapportionment_Act_of_1929 http://en.wikipedia.org/wiki/Reapportionment_Act_of_1929). The apportionment of the seats to the various states is based on population, but the overall size is not.
    - dkokelley 15y ago
      You are correct. I should have said "the proportion of Congressional representation is a function of local population densities." I knew that the representative to population ratio had been shrinking, but I didn't know they had since set a fixed limit.
  - jhancock 15y ago

pnathan 15y ago

The key issue at hand is the culture. A cultural change must be effected such that everyone understands that the 'government cheese' (bread, circuses) brings the system down. Individual effort must be rewarded, and lack of effort must not be upheld. History records this over and over, providing a clear description of the effects of government cheese. Britain lost their dominance in part due to it. It was not until the communism of China was mitigated that their economy began to take off. I understand that the same thing happened with India and their socialist policies, but I am not as versed in India's history. There are heavy negative effects that come into play when large-scale growth happens. The Industrial Revolution is the history of the West's large-scale growth. It's taking place in China now too. Let us not delude ourselves that sunshine, rainbows, unicorns and world peace will suddenly come about. Futurama provides a humorous glimpse into that sort of future. People are always self-interested and selfish, in the governmental scale. While we might not like that... we always prefer better things to happen to us and our little domains.

Meai 15y ago
I actually agree with you somewhat although you are not saying a lot. We have to find a system where the fortune of a single person automatically contributes to the good of the whole. Capitalism is actually already surprisingly good in that regard, and that's why it has been so successful. But in the end, there will be people who are vastly more successful in any system, and we need a way to make all efforts automatically contribute to society. I don't mean taxes, because those can be controlled by a governing body and are regarded as external force. Nobody wants to pay taxes. No, we need motivators which are intrinsic to the human mind. People need to want to help. Let's not kid ourselves and think that we can just "pull ourselves together" and be nicer to each other in the future. Human nature can't be overridden by mere wishes. Capitalism works because there is nothing stronger than the motivation to provide for yourself and your family. How do we use that motivation to nurture society as a whole? I don't know. Taxes are not good enough, as we can see today, they can always be outsmarted. You can't outsmart human nature, which means billions of people struggling towards a single goal.
- njonsson 15y ago

jeffchuber 15y ago

The rate should be a factor of GDP growth - something like when GDP is growing 3%+, they can have 0 deficit, and shrinking, up to 5%. Or just some way to save in the good times, and spend in the bad times.

aquark 15y ago
But imagine motivations this could introduce: you can spend more money if you stall the economy !
- anigbrowl 15y ago
  That doesn't make sense. If the economy is humming, then revenues are higher and you can spend more money that way. Nobody in their right mind would borrow when you could get as much or more interest-free via tax revenue.
  - aquark 15y ago
    Maybe -- but getting the economy to grow to generate that revenue is a much harder problem than stalling it and then being allowed to borrow it.

phaedon 15y ago

I logged in just so I could up-vote this.

ajscherer 15y ago

Maybe I am misreading your argument, but it seems like you are saying the cause of the US deficit problem is that the faction that trades entitlements for votes has gained control of the system. If that were true, and this faction were really just concerned with entitlements, there would be an obvious solution to the deficit: raise taxes. This may be every bit as horrible as you imagine, but it wouldn't involve a debt crisis. The problem as I see it, is that the faction that trades entitlements for votes and the faction that trades tax breaks for votes are both simultaneously in control. The low taxes people win all the fights about taxes, and the high spending people win all the fights about spending. The bug in democracy that led to our deficit problem is the lack of anything to prevent us from voting to have our cake and eat it too.

ansy 15y ago
Tax breaks are just another form of entitlement. Tax breaks are almost worse than other government benefits. It's basically taking out interest only loans on the tax payer's behalf. Here's $500 ... Oh and by the way, that comes with $500 worth of debt with a 4% interest rate that you are going to pay forever.
- oelewapperke 15y ago
  That's not true at all. Government loans are not traditional interest-only home loans, and they certainly don't have a fixed interest rate. It's much, much worse than that. The entitlements side (sorry, but it's definitely that side), first saw lending as a way to get their votes without the corresponding loss of spending power, where the problem of repayment was delayed until after an election. Then the entitlement side (the taxbreaks side actually tried to repay these debts) screamed that "it's not fair we have to pay it back, someone else made the loan !". And this argument was more-or-less accepted. So the principle was started to take out new debt to repay obligations of the old debt. Is this associated to a particular party ? Perhaps, but it doesn't really matter since all of this happened before WWII. Few of the politicians that first created this disaster are even alive anymore, and I believe none are still in office. You really want to know more ? Yes, it was the democrats. So government loans have the worst of all possible loans as a result : they're interest-only loans with two extra very bad properties 1) the bank can foreclose whenever it wants (by not extending a new loan at all) 2) there is a variable rate interest, which can raise ver fast (and lower, in which case the windfall is immediately spent by the entitlements side). But the problem is not particularly bad in America you know. At least, not compared to Europe. America can take something around an interest rate of around 5%, and even the worst predictions do not involve a default before 2020 or so. Europe cannot possibly hope to survive with loan interests exceeding 3% and might default this very year. Most muslim countries are much worse off than Europe, and have the big issue that sometimes 80% of their population is dependant on state support for food and water (as in, they wouldn't be able to remain alive without government opening out new debt) (in Gaza/West Bank this is 100%, but that's an exception). So don't worry : yes the US is screwed. However the only thing that really matters is who is screwed first, and that's not us. Even Europe might escape if the middle east implodes first.

gaius 15y ago

This is exactly what happened in the UK; fortunately The People came to our collective senses and booted out Gordon Brown before he could dig us any deeper into a hole. Even then it wasn't clear cut: too many voters wanted hang onto lavish, debt-fueled spending. Those same voters march through the streets now demanding raises, generous pensions, instead of doing what the sane are doing, knuckling down to repair the gaping hole in our national wealth for the good of all.