4 ms·

The problem is that Governments aren't households. This isn't to say that all the debt that has accrued over the last year is good -- it certainly isn't, but th

by bcl 17y ago

The problem is that Governments aren't households. This isn't to say that all the debt that has accrued over the last year is good -- it certainly isn't, but these kinds of analogies really are meaningless.

mechanical_fish 17y ago
Worse than meaningless: Actively misleading. How many households are legally able to levy taxes? How many households are legally able to print their own money? How many households can borrow money at interest rates as low as the U.S. government can, because their money is a global-standard reserve currency? The fed isn't even much like a state government, to say nothing of a household. This isn't to say that all the debt that has accrued over the last year is good -- it certainly isn't Well, it's not good in the sense that it's always bad to have to take emergency measures. But, given the alternative -- an even deeper economic cratering than we have now -- accruing debt has been, and is, the right thing to do. Indeed, the stimulus has so far apparently managed to help stop the recession and produce modest economic growth, but unemployment remains ghastly high. We need more stimulus. Bring on the debt! That's what the federal government's emergency powers are for. http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thoughts-3rd-quarter-edition/ http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thou...
- DanielBMarkham 17y ago
  Bring on the short-term debt. Committing the economy to heavy debt loads for the long-term future by writing new entitlements is not the kind of deficit spending that most economists think work, though.
  - gnaritas 17y ago
    Better to spend on entitlements than wars. It'd be great if we were eventually forced to stop warmongering because we simply couldn't afford it anymore.
    - DanielBMarkham 17y ago
      So elect people who won't use violence for any reason. But writing laws until you're so bogged down in promises that nobody can pay for anything is even more crazy than an unpopular war or two, which causes debt spending for a short time and then subsides. Each generation has a choice in leaders and a decision to make when it comes to using violence. But mandates and entitlements take that choice away from future generations, spending all the money based on things the previous generation thought were a good idea. Not only is the amount of money much greater, it's a different animal entirely.
      - gnaritas 17y ago
        > than an unpopular war or two, which causes debt spending for a short time and then subsides. You say that so casually; I think the word war is like the word God, it slips right past something in peoples minds that it shouldn't. The slaughter and murder of innocent people shouldn't be so easily shrugged off, and I'm perfectly happy handcuffing future generations from the ability to make war easily. Were our policy on wars different, we wouldn't be having problems paying for the other stuff.
        DanielBMarkham 17y ago
        I don't know how much sorrow and despair you think appropriate. You seem to be making an moral and emotional case. I simply observe that wars occur and have occurred for all of human history. All I'm saying is that each generation should make it's own choices about spending money, and that increased debts are appropriate for short-term recovery of the economy in recession. The next generation may not find it can pay for, say, pensions for people living from 60 until an average age of 100. But war spending will always find a way. That's the nature of wars -- they are deemed more important than other things, including social programs. Look at it this way -- increased debt load means an increased chance of war, as non-violent options are not available due to restricted amounts of money and the only way to access that money is through a national emergency. Please forgive the example, but I think its apt: the nazis, after all, were the nationlist socialist party, not the free enterprise gang. They took control over all industry and turned it into a war machine. This was based on a movement for better social justice, but it easily transformed into a monstrosity. So your idea that somehow you can cripple the economy and prevent wars has not shown itself true in history. In fact, the reverse seems more true.
- kevinholesh 17y ago
  Government spending does improve the economy, but not as much as tax cuts do. If you give money back to the market, it is guaranteed to be spent efficiently. Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.html http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.... I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else.
  - bendotc 17y ago
    > Government spending does improve the economy, but not as much as tax cuts do. If you give money back to the market, it is guaranteed to be spent efficiently. That's debatable. For example, Moody's Economy believes otherwise (see page 9 of http://www.economy.com/mark-zandi/documents/Economic_Stimulus_House_Plan_012109.pdf http://www.economy.com/mark-zandi/documents/Economic_Stimulu...). Now, I'm not saying one or the other is correct (I know enough to know I don't have the tools to judge), but you say this as a statement of fact when it's not a settled question at all. > Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index... http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index..... Yes, and so do tax cuts. In the US, we have a menagerie of various taxes and exceptions and brackets, etc., and it's very easy to tweak it to benefit special interests, like we have many times in the past. That doesn't invalidate the idea of passing tax cuts just like earmarks don't invalidate the idea of government spending. > I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else. I'm not advocating for the deficit, but just because you like the analogy doesn't make correct. Likening a household's budget to the United States' budget is like likening a photon to a race-car: any similarities there are are very shallow, and you're likely to come away with huge misconceptions. This is actually precisely why I hate seeing economics articles on social news sites: it's a lot of propagation of (often wrong) ideas within a community of people with insufficient knowledge to be able to sort the good from the bad. I really wish we'd just stick to what we're good at, rather than getting into the subject of macroeconomics and politics around here.

by bcl 17y ago

mechanical_fish 17y ago

Worse than meaningless: Actively misleading. How many households are legally able to levy taxes? How many households are legally able to print their own money? How many households can borrow money at interest rates as low as the U.S. government can, because their money is a global-standard reserve currency? The fed isn't even much like a state government, to say nothing of a household. This isn't to say that all the debt that has accrued over the last year is good -- it certainly isn't Well, it's not good in the sense that it's always bad to have to take emergency measures. But, given the alternative -- an even deeper economic cratering than we have now -- accruing debt has been, and is, the right thing to do. Indeed, the stimulus has so far apparently managed to help stop the recession and produce modest economic growth, but unemployment remains ghastly high. We need more stimulus. Bring on the debt! That's what the federal government's emergency powers are for. http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thoughts-3rd-quarter-edition/ http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thou...

DanielBMarkham 17y ago
Bring on the short-term debt. Committing the economy to heavy debt loads for the long-term future by writing new entitlements is not the kind of deficit spending that most economists think work, though.
- gnaritas 17y ago
  Better to spend on entitlements than wars. It'd be great if we were eventually forced to stop warmongering because we simply couldn't afford it anymore.
  - DanielBMarkham 17y ago
    So elect people who won't use violence for any reason. But writing laws until you're so bogged down in promises that nobody can pay for anything is even more crazy than an unpopular war or two, which causes debt spending for a short time and then subsides. Each generation has a choice in leaders and a decision to make when it comes to using violence. But mandates and entitlements take that choice away from future generations, spending all the money based on things the previous generation thought were a good idea. Not only is the amount of money much greater, it's a different animal entirely.
    - gnaritas 17y ago
      > than an unpopular war or two, which causes debt spending for a short time and then subsides. You say that so casually; I think the word war is like the word God, it slips right past something in peoples minds that it shouldn't. The slaughter and murder of innocent people shouldn't be so easily shrugged off, and I'm perfectly happy handcuffing future generations from the ability to make war easily. Were our policy on wars different, we wouldn't be having problems paying for the other stuff.
      - DanielBMarkham 17y ago
        I don't know how much sorrow and despair you think appropriate. You seem to be making an moral and emotional case. I simply observe that wars occur and have occurred for all of human history. All I'm saying is that each generation should make it's own choices about spending money, and that increased debts are appropriate for short-term recovery of the economy in recession. The next generation may not find it can pay for, say, pensions for people living from 60 until an average age of 100. But war spending will always find a way. That's the nature of wars -- they are deemed more important than other things, including social programs. Look at it this way -- increased debt load means an increased chance of war, as non-violent options are not available due to restricted amounts of money and the only way to access that money is through a national emergency. Please forgive the example, but I think its apt: the nazis, after all, were the nationlist socialist party, not the free enterprise gang. They took control over all industry and turned it into a war machine. This was based on a movement for better social justice, but it easily transformed into a monstrosity. So your idea that somehow you can cripple the economy and prevent wars has not shown itself true in history. In fact, the reverse seems more true.
kevinholesh 17y ago
Government spending does improve the economy, but not as much as tax cuts do. If you give money back to the market, it is guaranteed to be spent efficiently. Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.html http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.... I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else.
- bendotc 17y ago
  > Government spending does improve the economy, but not as much as tax cuts do. If you give money back to the market, it is guaranteed to be spent efficiently. That's debatable. For example, Moody's Economy believes otherwise (see page 9 of http://www.economy.com/mark-zandi/documents/Economic_Stimulus_House_Plan_012109.pdf http://www.economy.com/mark-zandi/documents/Economic_Stimulu...). Now, I'm not saying one or the other is correct (I know enough to know I don't have the tools to judge), but you say this as a statement of fact when it's not a settled question at all. > Government spending involves special interests (spending that benefits a small amount of people at the expense of everyone) and incurs some wasteful spending. Example: John Murtha airport http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index... http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index..... Yes, and so do tax cuts. In the US, we have a menagerie of various taxes and exceptions and brackets, etc., and it's very easy to tweak it to benefit special interests, like we have many times in the past. That doesn't invalidate the idea of passing tax cuts just like earmarks don't invalidate the idea of government spending. > I thought the article was good in comparing a household (something everyone can compare to) to a government made up of the people. No household could ever keep up that deficit without forcefully taking money from someone else. I'm not advocating for the deficit, but just because you like the analogy doesn't make correct. Likening a household's budget to the United States' budget is like likening a photon to a race-car: any similarities there are are very shallow, and you're likely to come away with huge misconceptions. This is actually precisely why I hate seeing economics articles on social news sites: it's a lot of propagation of (often wrong) ideas within a community of people with insufficient knowledge to be able to sort the good from the bad. I really wish we'd just stick to what we're good at, rather than getting into the subject of macroeconomics and politics around here.