4 ms·

The proverbial "Swabian Housewive" comes to mind. States, governments and economies don't work like your household budget.

by hef19898 3y ago

bluetomcat 3y ago
Without all the financial abstractions and acronyms, they ultimately work like that. A household is a micro-economy that's connected to the outside world. The productive working members contribute to the well-being of the household. The children, the elderly or the disabled require spending and support. The home needs spending in order to keep it a safe and comfortable environment.
- pavlov 3y ago
  That's like saying a human and an amoeba are basically the same because one is a micro-organism and the other is, well, also an organism. They've both got inputs and outputs within an ecology! Surely the rest is an implementation detail... A psychologist doesn't learn anything useful from studying amoebas. A macroeconomist can't apply lessons from individual household economics either.
- Pamar 3y ago
  I think this is a gross oversimplification. Let's say that a place like, say France, maps to a family of six (Mother and Father, 2 children, 2 elders) living in an apartment on the second floor of a 5-floors/ten apartments building. - Can France "extract" the tiles from the bathroom and sell it to Switzerland on floor 4th? - Can France tax movement across the section of hallway directly outside their door? Who takes care of enforcing this, and protect "our sacred hallway section" from expansionistic Germany on the other side of the stairs? - How do the two working adults in the household make sure that a portion of their income will be invested in order to sustain them when they are too old to work? - The daughter is 16 - will she be forced to emigrate to the 3rd floor when she reaches working age? - How is she supposed to send some money back home? maybe Switzerland can help, but of course they will get a share of it for the service...
  - mejutoco 3y ago
    I think there are things in common and others not. For analogies, like models, I guess there is no right or wrong, only useful. Some of your examples indeed do not work with the analogy. Others might. For instance, that daughter who is 16 might babysit somebody‘s children for a payment and buy some shein clothes with it, instead of getting money from her parents. Or France can definitely sell their used washing machine to Swiss students on floor 4th, who might pay a bit to not rent a van. In some countries living blocks split cleaning common areas between neighbours, and replacing lightbulbs or painting the common areas provokes heated arguments at neighbours meetings, not unlike some EU decisions. These are just examples. I agree with your point. I just do not agree it is generally wrong unless we talk about a specific example. You provide a few where indeed it is wrong.
    - Pamar 3y ago
      My point is this: if you make a 1-inch model of a cruise ship (real length, ~1000 feet) and put it in a water tank which is approx. 120 feet in length (1/12000 of the distance between Rome and the eastern coast of Sardinia) you can then make your ship model move at a decent speed just by dropping tiny quantities of liquid soap right behind the stern. How much soap do you need to replicate the effect with a real boat? The different scales (not only in terms of space/number of inhabitants, but also in terms of time) at which a household operates, compared with even the tiniest nation (Vatican City: 19 km2, 510 inhabitants, >1000 years of "life") invalidates any attempt to try to derive anything useful from the household model, precisely like the soap experiment I described above.
      - mejutoco 3y ago
        I agree with you and the examples you mention. At the same time I am not disappointed that the model/analogy does not work in all cases. That does not mean it is not illuminating in others. Following your example (kind of, with planes). Dont people use wind tunnels to test aerodynamics of planes? Miniature planes/boats might be useful to detect design flaws early on. In that sense you can derive useful things from that model. The same model of a small boat will be useless to decide the route, the weather, or the electronics on board.
Am4TIfIsER0ppos 3y ago
Yeah they work like a criminal's household budget. They steal every cent of income they have and when that isn't enough (because they are spendthrifts) they counterfeit more.
thriftwy 3y ago
I would not overstate their complexity. State economy is different from your household budget but its understanding is well within the abilities of an average college graduate. The problem is that most of economy experts are in fact snake oil salesmen so they work hard to undermine that understanding while pushing their own agenda. The fact that there are still schools of though that call for abolition of all tariffs and subsidies as inherently bad for economy is telling. That's the economy variant of belief in perpetuum mobile.
- helboi4 3y ago
  Can you (or anyone else) recommend reading materials for me to understand 1) how state economy actually works 2) what austerity actually is and why it does/doesn't work? As someone who was a little kid in 2008 austerity is just a mean tory boogyman that made my life more miserable and required everyone to treat people who needed social welfare subhuman but I don't really understand what the actual thinking was behind it.
  - thriftwy 3y ago
    Unfortunately I am not aware of such a source.
    - helboi4 3y ago
      I don't need a source for all of these points in one place. Just if you have something on any of them.
actionfromafar 3y ago
I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so. Whatever you do, it won't affect the world very much. For behemoths, very much not like a househould budget, because whatever you do influences the world a lot.
- moooo99 3y ago
  > I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so. The size isn’t that relevant. The degree of the autonomy over one’s monetary and fiscal policy is much more important. It certainly applies to big economies like the US. But it also applies for other economies that issue their own currency. At least it does for goods that are produced domestically
  - riffraff 3y ago
    But the degree of autonomy is influenced by size. For example, if the US and Eurozone decide to increase their interest rates this causes capital to fly from smaller countries with an independent currency, which causes their currency to devalue, which (generally) causes inflation, which forces them to increase their interest rate. Yeah it should not have an effect on locally produced goods, but unless you're both an industrial and an energy power house you are going to import a lot of stuff so you still get inflation.

The proverbial "Swabian Housewive" comes to mind. States, governments and economies don't work like your household budget.

bluetomcat 3y ago

Without all the financial abstractions and acronyms, they ultimately work like that. A household is a micro-economy that's connected to the outside world. The productive working members contribute to the well-being of the household. The children, the elderly or the disabled require spending and support. The home needs spending in order to keep it a safe and comfortable environment.

pavlov 3y ago
That's like saying a human and an amoeba are basically the same because one is a micro-organism and the other is, well, also an organism. They've both got inputs and outputs within an ecology! Surely the rest is an implementation detail... A psychologist doesn't learn anything useful from studying amoebas. A macroeconomist can't apply lessons from individual household economics either.
Pamar 3y ago
I think this is a gross oversimplification. Let's say that a place like, say France, maps to a family of six (Mother and Father, 2 children, 2 elders) living in an apartment on the second floor of a 5-floors/ten apartments building. - Can France "extract" the tiles from the bathroom and sell it to Switzerland on floor 4th? - Can France tax movement across the section of hallway directly outside their door? Who takes care of enforcing this, and protect "our sacred hallway section" from expansionistic Germany on the other side of the stairs? - How do the two working adults in the household make sure that a portion of their income will be invested in order to sustain them when they are too old to work? - The daughter is 16 - will she be forced to emigrate to the 3rd floor when she reaches working age? - How is she supposed to send some money back home? maybe Switzerland can help, but of course they will get a share of it for the service...
- mejutoco 3y ago
  I think there are things in common and others not. For analogies, like models, I guess there is no right or wrong, only useful. Some of your examples indeed do not work with the analogy. Others might. For instance, that daughter who is 16 might babysit somebody‘s children for a payment and buy some shein clothes with it, instead of getting money from her parents. Or France can definitely sell their used washing machine to Swiss students on floor 4th, who might pay a bit to not rent a van. In some countries living blocks split cleaning common areas between neighbours, and replacing lightbulbs or painting the common areas provokes heated arguments at neighbours meetings, not unlike some EU decisions. These are just examples. I agree with your point. I just do not agree it is generally wrong unless we talk about a specific example. You provide a few where indeed it is wrong.
  - Pamar 3y ago
    My point is this: if you make a 1-inch model of a cruise ship (real length, ~1000 feet) and put it in a water tank which is approx. 120 feet in length (1/12000 of the distance between Rome and the eastern coast of Sardinia) you can then make your ship model move at a decent speed just by dropping tiny quantities of liquid soap right behind the stern. How much soap do you need to replicate the effect with a real boat? The different scales (not only in terms of space/number of inhabitants, but also in terms of time) at which a household operates, compared with even the tiniest nation (Vatican City: 19 km2, 510 inhabitants, >1000 years of "life") invalidates any attempt to try to derive anything useful from the household model, precisely like the soap experiment I described above.
    - mejutoco 3y ago
      I agree with you and the examples you mention. At the same time I am not disappointed that the model/analogy does not work in all cases. That does not mean it is not illuminating in others. Following your example (kind of, with planes). Dont people use wind tunnels to test aerodynamics of planes? Miniature planes/boats might be useful to detect design flaws early on. In that sense you can derive useful things from that model. The same model of a small boat will be useless to decide the route, the weather, or the electronics on board.

Am4TIfIsER0ppos 3y ago

Yeah they work like a criminal's household budget. They steal every cent of income they have and when that isn't enough (because they are spendthrifts) they counterfeit more.

thriftwy 3y ago

I would not overstate their complexity. State economy is different from your household budget but its understanding is well within the abilities of an average college graduate. The problem is that most of economy experts are in fact snake oil salesmen so they work hard to undermine that understanding while pushing their own agenda. The fact that there are still schools of though that call for abolition of all tariffs and subsidies as inherently bad for economy is telling. That's the economy variant of belief in perpetuum mobile.

helboi4 3y ago
Can you (or anyone else) recommend reading materials for me to understand 1) how state economy actually works 2) what austerity actually is and why it does/doesn't work? As someone who was a little kid in 2008 austerity is just a mean tory boogyman that made my life more miserable and required everyone to treat people who needed social welfare subhuman but I don't really understand what the actual thinking was behind it.
- thriftwy 3y ago
  Unfortunately I am not aware of such a source.
  - helboi4 3y ago
    I don't need a source for all of these points in one place. Just if you have something on any of them.

actionfromafar 3y ago

I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so. Whatever you do, it won't affect the world very much. For behemoths, very much not like a househould budget, because whatever you do influences the world a lot.

moooo99 3y ago
> I'd say, the smaller the country is, the more it does work like you househould budgets. Very small countries using somebody else's currency, works very much so. The size isn’t that relevant. The degree of the autonomy over one’s monetary and fiscal policy is much more important. It certainly applies to big economies like the US. But it also applies for other economies that issue their own currency. At least it does for goods that are produced domestically
- riffraff 3y ago
  But the degree of autonomy is influenced by size. For example, if the US and Eurozone decide to increase their interest rates this causes capital to fly from smaller countries with an independent currency, which causes their currency to devalue, which (generally) causes inflation, which forces them to increase their interest rate. Yeah it should not have an effect on locally produced goods, but unless you're both an industrial and an energy power house you are going to import a lot of stuff so you still get inflation.