Voting 2008...

Because it only took Viking-Sensei three years (and the approaching end of Errant Story) to come up with a better name for "General Discussions"

Re: Voting 2008...

Postby Boss Out of Town » January 29th, 2009, 10:01 am

Sareth wrote:I am neither democrat nor republican. I'm libertarian, if that helps matters any. But I am confused a great deal about the stimulus package, as well as the bailouts.

I have a simple question I have yet to have answered.

"Where is the money coming from?"

. . . Anyone care to tell me how we're going to pay for this without undoing the very good we're trying to do?


Basically we are sacrificing long term prospects to head off an immediate crisis, like the water damage the fire department does to your house to keep the flames from burning down.

The American economy is grinding to a halt, bleeding a hundred thousand jobs each week. The credit markets have been paralyzed for months and the productive parts of the economy have been slowly shutting down for lack of credit, which means lack of customers, which means little or no profits, which means even less chance of getting credit. Right now, only the Federal government has the credit resources to get the production cycle moving again.

The company I work for produces contractor’s tools, airplanes, and helicopters. The executives have laid off 20% of our work force—they canceled their own bonuses, bless their game little hearts—and are hoping major federal infrastructure work, aid to state governments, and loans to private industry will give our customers some money to spend on tools, airplanes, and helicopters. Our contractors buy things from their suppliers, we buy things from our suppliers, everyone pays their employees wages, and money starts cycling through the economy again. It’s not much more complicated than that. If no one else has the confidence to pump the business cycle, the government has to do it, or we deflate down to a fraction of industrial capacity and twenty or thirty percent unemployment. Welcome to the Third World! By the way, we will still owe the Chinese that other four trillion dollars. Can’t pay the interest on that with a stalled economy.
History celebrates the battlefields whereon we meet our death, but scorns to speak of the plowed fields whereby we thrive; it knows the names of kings’ bastards but cannot tell us the origin of wheat. This is the way of human folly. --- Henry Fabre
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Re: Voting 2008...

Postby mindstalk » January 29th, 2009, 12:44 pm

Whee, hadn't looked at this thread before. People seem a lot more cynical/libertarian here... my other venues have been in person (Gobama!/Obama is too conservative, really), RPG.net Tangency (same), and dipping into right-wing Catholic blogs (Our Lady of Alaska Sarah Palin for 2012). I won't try responding to posts from September, though, unless people think that'd be fun.

Stimulus payment: probably borrowing. Raising the right taxes wouldn't be insane, though. As it is, taxes are being cut at low income ("low" possibly meaning into six digits), and Bush's irresponsible tax cuts on the wealth will expire some day. Taking money from those who have a lot of it but aren't spending it and running it through government programs, or giving it to people who will spend it, is quite sensible.

As for the package itself, it has two big problems: (1) not big enough and (2) probably not targetted or fast enough, though that depends on how bad things are. The tax cuts are like $15/week for the average person, and may well get saved or sent to debt cancellation. Extending/expanding food stamps, unemployment insurance, and backing state programs are great ideas: money goes to those who need it most and will spend it, with high multiplier effect, and supporting the states would prevent contraction of key programs at the worst possible time. Or things like the Kansas GOP cutting school spending by 3%, because shortchanging the education of your kids is a great way to save money in the long run. (cough) But we're probably not doing enough. And the infrastructure, while badly needed (most of ours was built 50 or 100 years ago, WW2 or the 1900 boom) might be too slow to help a normal recession... though if we're talking about Great Depression times, public works projects are just what the economist ordered.

But people like Krugman think the stimulus should be twice what it is to really help.

As for affording it, a question is whether we can afford to not do it. Japan was (is?) in a liquidity trap and recession for 10+ years. Imagine the lost productivity and tax revenues from having people lying around because your money system is broken.

Krugman's babysitting co-op model of how recessions happen may be helpful. http://www.slate.com/id/2202165/ His new book, Return to Depression Economics, is good too. Summary: the crisis isn't mysterious, it's a classic banking run on novel and unregulated forms of finance. Monetary policy has hit the limit (interest rates are zero, we really would have to print money in a big way to get any more traction), fiscal stimulus is the Keynesian backup. In a sensible world this would be turned to as easily as we expect central banks to change interest rates in response to inflation or recession, but ideology trumps reality.
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Re: Voting 2008...

Postby Boss Out of Town » January 29th, 2009, 1:25 pm

mindstalk wrote:Raising the right taxes wouldn't be insane, though. As it is, taxes are being cut at low income ("low" possibly meaning into six digits), and Bush's irresponsible tax cuts on the wealth will expire some day. Taking money from those who have a lot of it but aren't spending it and running it through government programs, or giving it to people who will spend it, is quite sensible.

I instinctively dislike politicians who promise to cut taxes: if they don't also tell you how they're balancing the budget, it's basically a scam. On the other hand, Obama's middle-class tax cut is important evidence for a point a lot of people still don't get: so much of the nation's wealth is held by the richest 2% of taxpayers that a tax cut for anyone making less than six figures is a drop in the bucket of revenue flow. Of course, all that wealth being held by a few people is helping to stress the economy: they aren't spending it, so it is only contributing to the capital cycle, not the production cycle.

I recall two examples of the ultimate in lazy-fair capitalism, 20th Century Haiti and Sicily. Both had absolutely abominable road nets. The aristocracy/plutocracy on both islands deliberately avoiding building roads. They felt that, if you gave the peasants roads, they would start demanding other things from the government. So, when the United States invaded Haiti, our Humvees were jolting down rutted mud strips between towns, alongside the $50,000 Land Rovers owned by the local landowners.
History celebrates the battlefields whereon we meet our death, but scorns to speak of the plowed fields whereby we thrive; it knows the names of kings’ bastards but cannot tell us the origin of wheat. This is the way of human folly. --- Henry Fabre
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Re: Voting 2008...

Postby mindstalk » January 29th, 2009, 1:33 pm

I visited friends in Oklahoma once. They pointed out the transition between federal and state roads, marked by smooth and washboard driving.

I used to be libertarian flirting with anarcho-capitalist. Now I'm social democratic with touches of Georgism and left-anarchism... mostly rethinking the whole nature of and justification for property ownership, especially in land, which anarchists fix with common ownership and lots of democracy, and Georgists fix with a land tax. The anarchists want to get rid of money and wages too, which sounds insane to me, and they're usually vague about how society should work. (Anarcho-capitalists at least have quite detailed plans for most issues, and openly give up on the others like defense.)

Given the last 30 years, a bit of a wealth tax doesn't strike me as out of place.
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Re: Voting 2008...

Postby Boss Out of Town » January 29th, 2009, 3:01 pm

mindstalk wrote:I visited friends in Oklahoma once. They pointed out the transition between federal and state roads, marked by smooth and washboard driving.

I used to be libertarian flirting with anarcho-capitalist. Now I'm social democratic with touches of Georgism and left-anarchism... mostly rethinking the whole nature of and justification for property ownership, especially in land, which anarchists fix with common ownership and lots of democracy, and Georgists fix with a land tax. The anarchists want to get rid of money and wages too, which sounds insane to me, and they're usually vague about how society should work. (Anarcho-capitalists at least have quite detailed plans for most issues, and openly give up on the others like defense.)

Given the last 30 years, a bit of a wealth tax doesn't strike me as out of place.

The traditional American defense against aristocracy is the estate tax. If you force large accumulated holdings to be broken up after the first generation, you don't accumulate the dead wood of inherited fortunes run by weakling or foolish heirs. American millionaires would instead set up good-sized trusts for their families, then start a foundation or a university with the bulk of their money. This, of course, was also a good way to move wealth out of fallow and back into the production cycle.
History celebrates the battlefields whereon we meet our death, but scorns to speak of the plowed fields whereby we thrive; it knows the names of kings’ bastards but cannot tell us the origin of wheat. This is the way of human folly. --- Henry Fabre
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Re: Voting 2008...

Postby Sareth » January 30th, 2009, 10:50 am

I'm less inclined to believe that modern China would deliberately trash it's own economy in order to harm us at this point. If something occurred to cause major friction between us, then, perhaps they might as a sort of first strike weapon. But currently China's moderated a good deal towards the West, and they understand that in the long term, if they play their cards right, their massive populace and resources could result in them potentially overtaking the U.S. as the world's largest economy. With all the benefits that come with that, such as being able to field a military much larger and just as well equipped as ours, and being able to essentially buy third world national governments or resources with petty cash. They're not going to throw that away on a whim just to spite us.

However, I certainly agree with you that leveraging our country to foreign powers, no matter how benign (Japan) or less than benign (China) they be. The long term future of the nation could very well be economic dominance by other nations (again, Japan and China being candidates.) So while I understand the argument that we need to accept long term harm for short term stability, I'm a little worried we're being short sighted enough to essentially be selling ourselves into a life-time of slavery just to buy a single loaf of bread when we're not actually starving yet.

Also, on the concept of taxing the top couple percent to pass on to the rest of us, I find that unconvincing. The reason being, if I was one of those 2% and my taxes were jacked up substantially, I wouldn't sit there and simply shell out the payment. I'd raise the prices on the other 98% so I could still have my nest egg. Which ultimately means that the people meant to get the benefit of the tax are the ones paying it in the first place.

But that's just me. As I've stated, I really don't know economics. I could be dead wrong about this.
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Re: Voting 2008...

Postby Boss Out of Town » January 30th, 2009, 11:40 am

Sareth wrote:I'm less inclined to believe that modern China would deliberately trash it's own economy in order to harm us at this point. If something occurred to cause major friction between us, then, perhaps they might as a sort of first strike weapon. But currently China's moderated a good deal towards the West, and they understand that in the long term, if they play their cards right, their massive populace and resources could result in them potentially overtaking the U.S. as the world's largest economy.

That's what I expect to happen, in the long run. If China's over-population crisis doesn't crush its economy, or generate an ecological disaster (or, as in World War Z, bring on the zombie apocolypse), it should become the worlds largest economic engine. It held this position for most of the last 3000 years--only the Roman Empire and Industrial Revolution Europe could ever match its relative wealth--so it is something we have to learn to live with.

It the short term, however, China is a economic claymore ready to go off in our direction. The current regime has evolved somewhat since 1949, but its basic views on Chinese foriegn policy are just as absolute as those of the early Manchu or the Han. If it can get through a situation through diplomacy or a limited military response, it will do so. However, if it feels its back is to a wall, it is perfectly willing to sacrifice the lives or happiness of a few million people to defend its notion of Chinese sovereignty. India, Vietnam, Tibet, the Soviets, the Americans, and the Koreans all have learned this hard lesson.

Here are some useful facts to use if you get into a debate about the Korean War. It is still a cliche among right-wingers that MacArthur was right about nuking or threatening to nuke China to win the war or restore Chaing Kai Shek to power on the mainland. However, the official Chinese records of that time have long been made public. While some of the Red Chinese leadership were worried about American military retaliation in 1950, Mao, who was firmly in control at the time, dismissed it. The communists had defeated the Nationalists in China without controlling any cities, and if the Americans destroyed a few like they destroyed Hiroshima and Nagasaki, they would accomplish nothing. The cities could be rebuilt after the war.
History celebrates the battlefields whereon we meet our death, but scorns to speak of the plowed fields whereby we thrive; it knows the names of kings’ bastards but cannot tell us the origin of wheat. This is the way of human folly. --- Henry Fabre
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Re: Voting 2008...

Postby mindstalk » January 30th, 2009, 1:42 pm

"raise prices"

Land tax doesn't work that way, apparently, and falls on the landlord, who can't raise rents competitively. And lots of income at this level is coming from ownership: land rent, interest on accounts or stocks and bonds -- what prices are they going to raise? -- and IP royalties. And in the extreme case of a wealth tax, you could be redistributing land and stocks from those who have a lot to those who don't have any, reducing the ability to bully the poor through economic desperation.

Oh, and in the pure free market conservatives argue we approximately have... you *can't* raise prices, because the laws of supply and demand are in charge. And if the people setting prices could make money by raising prices, why wouldn't they do that now? They don't need a "passing tax on" excuse.
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Re: Voting 2008...

Postby Sareth » January 30th, 2009, 10:56 pm

Boss Out of Town: That sounds more or less like my assessment of China, yes. If pressed, they WILL defend themselves, and who would blame them?

And yes, I certainly agree that nuking China during the Korean War would not have been an effective strategy. As you pointed out, the strength of the Chinese people was in it's massive agrarian society. Mao won the war against the nationalists by concentrating on that agrarian society, while Chang Kai Shek insisted on trying to hold the industrial centers and was simply overwhelmed. Nuking cities would have proven worthless.

These days that's changing, as China is working very aggressively to modernize. At this point, the major cities are virtually on par with many Western states (though there has been a human price tag to achieve that.) The countryside is still lagging badly. But if they can get the countryside up to speed as well, China could well become the economic power. Unless we do something to force a confrontation ("we" being the collective western powers, which in this case I am stretching the definition of to include South Korea, Japan, and Taiwan) China's not going to risk that, I think. And I don't think any of us are that stupid. It's not in any of our interests. Not even Taiwan.

Still, history has shown that stupidity has a remarkable resilience, so who knows?

Mindstalk: You just proved the point that I have no sense economically, because I didn't understand the reasoning behind any of that. I'm not saying there isn't! I'm just saying I don't get it. Heh.
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Re: Voting 2008...

Postby Boss Out of Town » January 30th, 2009, 11:55 pm

Sareth wrote:Mindstalk: You just proved the point that I have no sense economically, because I didn't understand the reasoning behind any of that. I'm not saying there isn't! I'm just saying I don't get it. Heh.

Basically he is say that a tax on the wealthy cannot be immediately passed on to anyone.

If, for instance, the owner of a hot dog stand suddenly got a fee increase for his city sidewalk license, he could make up the difference immediately by raising the prices of his hot dogs. However, what if his competitor works in a store front and doesn't have to pay this fee? If he raises the price of his hot dogs, he might be pricing himself out of business. What if his customers switch to gyros because the jump in hot dog prices offends them? He could lose more money from lost business then the license originally cost him. If there were a dozen hot dog stands in the neighborhood, all with the same fee increase, they might all agree to raise the prices of their hot dogs at the same time (price fixing, very illegal) or one of them might raise prices and others follow his lead (gas stations do this all the time) or one or more of them might absorb the cost of the license and hope to make up the difference by taking market share from the other vendors. That's the market in action.

It is also likely that most of the taxable wealth we are discussing is not generated by direct sale of goods. Many of the wealthy are nominally employees themselves, or they might be locked into contract pricing. They might be professionals whose organizations set fees, or they might derive their income from capital gains, or stock dividends, or market funds. They cannot pass on the tax increase to anyone because they have no power to sell anything to anyone!
History celebrates the battlefields whereon we meet our death, but scorns to speak of the plowed fields whereby we thrive; it knows the names of kings’ bastards but cannot tell us the origin of wheat. This is the way of human folly. --- Henry Fabre
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