How the hell are we going to pay for this?

[Spamature]

The right has a lot of nerve when it comes to lamenting about debt. It's has taken over 30 yrs of Republican tax policy and military to get us into this situation. It will probably take 40 yrs of sane tax and military policy to undo it. But it won't be undone until realize this and give up on the delusion that you can run a First World Western govt on the cheap.

 

[trapdoor]

Your argument boils down to this: if any part of an economy rests upon the ideas of a former economist then any changes to that economists programs in favor of another one are immaterial to claiming that the economy resoundingly reflects the previous one. If your point is that some of what Keynes advised is still in practice then I grant you that in much the same spirit as we still consider Newtons theories correct even though Einstein corrected him in many areas. You excel at the art of making a very small point the main point in your argument. If I were to believe what you said against my statement then I would have to ignore the Reagan Revolution, the economic transformation of a regulated economy based upon decades of success into a more laissez faire market place. The amount of deregulation that has occured in almost every sector since Friedmans ideas took hold is obvious to anyone with any grasp of our history. By stating that all fiscal policy is de facto a Keynsian policy you completely ignored the essence of what Keynes advised. You only use fiscal policy to correct low demand and a stagnant economy during a crisis. You do not continue that after the crisis is over, in fact, you return to a debt repayment policy once the tide has turned. Any economy that is unconcerned with fairness is an economy that is destined to lead to poverty for the masses. The government is the only institution that can protect us from powerful private interests. This has been true since Caesar made himself a dictator, it is still true today. The line in the sand for us as a nation is how best to share the income generated by our collective efforts to insure peace, provide for happiness and promote the general welfare of the people. Not some of the people, all of the people. This is what the last election was about. It was a referendum on your ideas and our ideas. Your ideas lost. They have lost in every advanced nation on earth in most areas of debate. When your ideas win a small victory, they result in the shit storm we saw in Chile, Argentina, Russia and now in the UK. Iceland and Ireland got it right. They kicked the philosophically devout free marketers out on their asses and protected the common man. You can argue this specific point until you are blue in the face but your argument will fall upon dead ears. No one is buying your historical revisionism any longer Trap.

Jeez, Wools. If you can't learn to use the forum's quote button, at least learn to use your computer's "return" key. This reads like one long sentence written by someone on speed.

Now, I'll try.

Your argument boils down to this: if any part of an economy rests upon the ideas of a former economist then any changes to that economists programs in favor of another one are immaterial to claiming that the economy resoundingly reflects the previous one. If your point is that some of what Keynes advised is still in practice then I grant you that in much the same spirit as we still consider Newtons theories correct even though Einstein corrected him in many areas.

More of Keynes is in practice than Friedman over the period you describe. Reagan, Bush 1 and Clinton all had Keynesian programs in play. In fact, there has been no time since the New Deal that such programs have not been a key part of the United States government and a large part of U.S. expenditures. Show me how Keynesian spending went away significantly over the 30 years you cited (presumably 1980 to 2010).

You excel at the art of making a very small point the main point in your argument.

I excel, to the extent that I do, at ignoring the extraneous. God is in the details.

If I were to believe what you said against my statement then I would have to ignore the Reagan Revolution, the economic transformation of a regulated economy based upon decades of success into a more laissez faire market place.

Ah, but Keynes didn't necessarily believe in free-market controls. He believed in counter-cyclical government spending. His general theory, as published in "The General Theory of Employment, Interest, and Money" has little to do with market regulation, which he saw a secondary to other forms of governmental market intervention.

By stating that all fiscal policy is de facto a Keynsian policy you completely ignored the essence of what Keynes advised. You only use fiscal policy to correct low demand and a stagnant economy during a crisis.

I haven't said that, and I'm reluctant to respond as I would be defending a position I haven't taken. What I have said is that our government retained its Keynesian spending throughout the 30 years you define as the practice of Friedman's policies. Friedman is defined only via a lessening of (some) regulations during that period, not via a loss of Keynesian policies nor much of a reduction in stimulatory spending, or counter cyclical spending.

You only use fiscal policy to correct low demand and a stagnant economy during a crisis. You do not continue that after the crisis is over, in fact, you return to a debt repayment policy once the tide has turned.

Then why has the U.S. not returned to debt reduction at any time since WWII? The answer to that is obvious, we have retained Keynesian programs absent a Keynesian crisis throughout most of that period.

The government is the only institution that can protect us from powerful private interests.

If the government can subdue powerful private interests, think of how much power it then has to subdue the private interests of those without power. You want an interventionist government that "does good." I want a government with less power to do harm. The two goals are almost mutually exclusive.

The line in the sand for us as a nation is how best to share the income generated by our collective efforts to insure peace, provide for happiness and promote the general welfare of the people. Not some of the people, all of the people. This is what the last election was about. It was a referendum on your ideas and our ideas.

If this was the case (and I doubt it, I think it was much more akin to a Roman dictator giving bread and circuses to the masses), then it wasn't much of a referendum. Democrat (if you prefer Keynesian) policies were rejected by nearly half the voting public. Ignore them at your peril, politically speaking.

And where is it written into our system of government's rulebook that our government is about sharing the prosperity of individuals with other individuals? That's really what you're talking about here. You speak broadly of "our collective efforts" but for the most part "we" don't have "collective efforts." We have our individual careers and jobs and have to exercise our own abilities and utilities for our own ends.

When your ideas win a small victory, they result in the shit storm we saw in Chile, Argentina, Russia and now in the UK. Iceland and Ireland got it right. They kicked the philosophically devout free marketers out on their asses and protected the common man.

It is laughable to compare the U.S. with dictatorships, controlled economies, criminocracies and third world nations. If Ireland, and Iceland, "got it right" it isn't reflected in their current economies. I have not provided any revision to history. None.

 

[trapdoor]

Wrong on the math of Fiscal Multipliers. Consider:

• GDP = $100 Billion, Government spending = $20 Billion, Private sector == $80 Billion
• Economic crash of 9% GDP = all in Private Sector (ie Private Sector drops to $71 Billion)
  1. We do no stimulus spending, And GDP recovers at 2.6%.
  
  Below are 4 charts of three options:
  
  1. No stimulus but no cuts in governemnt spending
  2. No stimulus and Govt runs a Balanced Budget
  3. Gov runs balanced budget, but no stimulus
  4. Gov runs a 2% GDP deficit and kickes economy to a growth rate of 3% (realistically you'd see more like a 3.1% growth)
  5. Gov runs a 4% GDP deficit (Defense FM of 0.5) and kicks economy to a growth rate of 3% (realistically you'd see more like a 3.1% growth)
  
  Notice how the stimulus one creats 5.2% net more wealth than the No Deficits and even the "no cuts but no Stimulus" generates 2.4% more wealth.
  
  Note also that this is a realtively simple model, the reality is that GDP growth would FALL EVEN MORE as governemtn cut spending and grow even faster as the economy takes off
  
  Bottom line IN A RECOVER Stimulus spending works So to your point about an FM of 0.5 "sucking out of the economy"... Notice that under the FM of 0.5 model, the DEBT grows dramatically more - because its an INEFFICIENT stimulus, but because there is no other Demand that it is competing with - there still is a Stimulative effect ( 0.5 x $1 = $0.5 > 2.0 x $0 == $0 )
  

  No Stimulus but no cuts
  	Gov Spend	Private Sector Spend	GDP	Gov Rev. @ 20% GDP	Growth Rate	Govmt Deficit
  Base	20	80	100.00	20.00		0.00
  Post Crash	20	72	91.00	18.20	2.60%	-1.80
  Year 1	20	72	93.37	18.67	2.60%	-1.33
  Year 2	20	72	95.79	19.16	2.60%	-0.84
  Year 3	20	72	98.28	19.66	2.60%	-0.34
  Year 4	20	72	100.84	20.17	2.60%	0.17
  Year 5	20	72	103.46	20.69	2.60%	0.69
  	Net Wealth		582.74		Net Debt	-3.45
  Gov Runs Balanced budget no Stimulus
  	Gov Spend	Private Sector Spend	GDP	Gov Rev. @ 20% GDP	Growth Rate	Govmt Deficit
  Base	20	80	100.00	20.00		0.00
  Post Crash	17.80	72	89.80	17.96	2.60%	0.16
  Year 1	17.96	72	92.13	18.43	2.60%	0.47
  Year 2	18.43	72	94.53	18.91	2.60%	0.48
  Year 3	18.91	72	96.99	19.40	2.60%	0.49
  Year 4	19.40	72	99.51	19.90	2.60%	0.50
  Year 5	19.90	72	102.10	20.42	2.60%	0.52
  	Net Wealth		575.06	115.01	Net Debt	2.62
  Gov runs a 2% deficit stimulus with FM of 2.0 and pushes growth rate to 3%
  	Gov Spend	Private Sector Spend	GDP	Gov Rev. @ 20% GDP	Growth Rate	Govmt Deficit
  Base	20	80	100.00	20.00		0.00
  Post Crash	22.00	72	94.00	18.80	2.60%	-3.20
  Year 1	22.00	72	96.44	19.29	3.00%	-2.71
  Year 2	22.00	72	99.34	19.87	3.00%	-2.13
  Year 3	20.00	72	102.32	20.46	3.00%	0.46
  Year 4	20.00	72	105.39	21.08	3.00%	1.08
  Year 5	20.00	72	108.55	21.71	3.00%	1.71
  	Net Wealth		606.03	121.21	Net Debt	-4.79
  Gov runs a 8% deficit stimulus with an FM of 0.5 and pushes growth rate to 3%
  	Gov Spend	Private Sector Spend	GDP	Gov Rev. @ 20% GDP	Growth Rate	Govmt Deficit
  Base	20	80	100.00	20.00		0.00
  Post Crash	28.00	72	94.00	18.80	2.60%	-9.20
  Year 1	28.00	72	96.44	19.29	3.00%	-8.71
  Year 2	28.00	72	99.34	19.87	3.00%	-8.13
  Year 3	20.00	72	102.32	20.46	3.00%	0.46
  Year 4	20.00	72	105.39	21.08	3.00%	1.08
  Year 5	20.00	72	108.55	21.71	3.00%	1.71
  	Net Wealth		606.03	121.21	Net Debt	-22.79

• 
  
  Degs -- I'm sorry, something is screwy with your tables, and the columns don't line up in any way that I can make sense of (I think it's another software thing at my end). I don't think your numbers can explain how a $1 spent for a bolt in a bridge is different from the same dollar spent on the same bolt if it goes into a tank or the deck of a ship. Any theory that doesn't account for that difference is flawed.

 

[degsme]

Degs -- I'm sorry, something is screwy with your tables, and the columns don't line up in any way that I can make sense of (I think it's another software thing at my end). I don't think your numbers can explain how a $1 spent for a bolt in a bridge is different from the same dollar spent on the same bolt if it goes into a tank or the deck of a ship. Any theory that doesn't account for that difference is flawed.

I've explained this before, as have economists on both sides of the aisle. A combination of

• DoD Procurement standards (that bolt in Stores is slated for a mudflap on a truck but MIGHT be needed for a tank, so you set it to Tank Standards)
• Security clearances and procedures involved in all steps of the process (a favourite way to mine for force strength is by looking at theings like nuts and bolts)
• and the need to have fairly massive reserve stores (which have very high Opportunity Costs) as opposed to the Just In Time supply chain of infrastructure construction

are but three fo the most clear and obvious factors.

That's why there are $120 toilet seats on B52 airplanes, when in the private sector they cost $30. That's a 4x markup, for a product of the same functionality. Thus the DoD spend has a lower velocity of money.

Its basic monetary economics. Until you understand that, its hard to have an informed discussion with you.


And to put it to your earlier question about Stimulative spending. Lets put the price of the toilet seat on a Boeing plan at say $40. So that we have a FM comparison of 0.5 (DoD) and 1.5 (Private/Public sector infrastructure spending).

Both seats get ordered from the same manufacturer. They are identical. So that means that

• the amount of time the line workers spend making it is the same.
  • So their salaries are the same
    • so they spend in the local marketplace the same
      • So their contirbution to GDP Expansion is the same
• The amount of machinery wear and tear is the same
  • So their Machinery vendor incomes are the same
    • so they spend in the local marketplace the same
      • So their contirbution to GDP Expansion is the same
• The raw materials inputs are the same
  • So their materials vendors income are the same
    • so they spend in the local marketplace the same
      • So their contirbution to GDP Expansion is the same
• etc. etc.

So in each case the contribution to GDP expansion is roughly the same - but since the COST differential (which is absorbed in the increased costs associated with security, procurement and stores keepin) is HIGHER for the DoD spend. Hence for $1 spent on the DoD plane, vs. say the chartered 737 for the WH Media flying with the POTUS - you have a 3:1 diferential in the impact on the broader economy. (now obviously the Real World processes are more complex and its no just about a toilet seat, it is IN THE AGGREGATE)

I really don't see what is so hard to understand about this?

Spend money on Defense and you grow your GDP at a rate less than the private sectore assuming it is investing
Spend money on Domestic spending and you grow your GDP at a rate HIGHER than the defense spending.

so in a DEMAND SLUMP - where the private sector is not investing - your choice is

• do nothing - in which case you crawl your way out of the slump and have dramatically reduced wealth production
• Spend on DoD which addresses the Demand Slump faster than doing nothing but runs up astronomical costs
• Spend on Domestic spending which addresses the Demand Slump even faster (ith has broader reach into the Economy) and runs up LOWER costs

the latter two options create more wealth faster than doing nothing, but only the third option does ite with economic efficiency.

 

[trapdoor]

I've explained this before, as have economists on both sides of the aisle. A combination of

• 
  [

  *]DoD Procurement standards (that bolt in Stores is slated for a mudflap on a truck but MIGHT be needed for a tank, so you set it to Tank Standards)

  And that is an out-of-date view of procurement standards. The military today, save for special applications such as aircraft, uses off-the-shelf materials. If GM uses a 9/16 bolt on a 350 engine, so does the Army.
  
  

  [*]Security clearances and procedures involved in all steps of the process (a favourite way to mine for force strength is by looking at theings like nuts and bolts)

  And there simply is no such thing. The Army buys bolts from a commercial vendor in huge quantities, and the security chain comes in force after the purchase (again, save for special cases).
  

  [*]and the need to have fairly massive reserve stores (which have very high Opportunity Costs) as opposed to the Just In Time supply chain of infrastructure construction

  And that is no different for bridge building than it is for tank building, because of ongoing bridge maintenance. The government doesn't use "just in time" for most things (although Lean Six Sigma has brought that concept to government manufacturing at the federal level, but manufacturing isn't "in the field" usage).
  
  
  

  are but three fo the most clear and obvious factors.

  They're obvious, and they're obviously untrue.
  

  That's why there are $120 toilet seats on B52 airplanes, when in the private sector they cost $30. That's a 4x markup, for a product of the same functionality. Thus the DoD spend has a lower velocity of money.

  And again, your information is out of date. Proxmire's report on the expensive toilet seat happened 30, almost 35, years ago.
  

  Its basic monetary economics. Until you understand that, its hard to have an informed discussion with you.

  I have an understanding of monetary economics from my own time in college studying the same, but you don't have a concomitant knowledge of the military, and your statements about its practices and procedures in the real world of 2012 are simply wrong. Degs, I don't mean this personally, but you don't know what the hell you're talking about, which means it's impossible to have an informed discussion with you (you are also broadly blinded by your obvious hatred for the military, its activities, and anyone who might serve today, or tomorrow, or who has ever served in the past).
  
  

  And to put it to your earlier question about Stimulative spending. Lets put the price of the toilet seat on a Boeing plan at say $40. So that we have a FM comparison of 0.5 (DoD) and 1.5 (Private/Public sector infrastructure spending).

  Can you show that right now, today, the military is spending more for the seat than it would spend if it were say, United Airlines? No, you cannot. That means the mathematical argument is largely moot. A dollar spent by the military is no different than a dollar spent by any other government agency, and is very little different from a dollar spent by yourself, or by United Airlines.
  
  Both seats get ordered from the same manufacturer. They are identical. So that means that
  
  
  

  So in each case the contribution to GDP expansion is roughly the same - but since the COST differential (which is absorbed in the increased costs associated with security, procurement and stores keepin) is HIGHER for the DoD spend. Hence for $1 spent on the DoD plane, vs. say the chartered 737 for the WH Media flying with the POTUS - you have a 3:1 diferential in the impact on the broader economy. (now obviously the Real World processes are more complex and its no just about a toilet seat, it is IN THE AGGREGATE)

  If the military still made such over-the-top purchases (and again, it doesn't) the cost differential of the additional military requirements are still accounted for in the GDP, because the government pays more for the seat -- the extra security costs, the extra "MILSPEC" costs, etc., are accounted for by the government spending more for the product. Thus the GDP isn't reduced by the government activity. And this applies in the broader military activity, too.
  
  
  

  I really don't see what is so hard to understand about this?
  
  Spend money on Defense and you grow your GDP at a rate less than the private sectore assuming it is investing
  Spend money on Domestic spending and you grow your GDP at a rate HIGHER than the defense spending.

  But that is only true if, as you say, the dollars used on military spending do not account for any higher costs engaged in the process.
  
  so in a DEMAND SLUMP - where the private sector is not investing - your choice is
  
  • 
    

    [*]do nothing - in which case you crawl your way out of the slump and have dramatically reduced wealth production

    But it ensures that the market is operating under its own power and is not artificially stimulated by government spending.
    
    

    [*]Spend on DoD which addresses the Demand Slump faster than doing nothing but runs up astronomical costs

    Which may work, of course, and has the additional benefit of being fully sanctioned by the U.S. Constitution.
    
    

    [*]Spend on Domestic spending which addresses the Demand Slump even faster (ith has broader reach into the Economy) and runs up LOWER costs

    Which theoretically works, but is not sanctioned by the U.S. Constitution (at least there's no specific authority for it -- its one actual case where "general welfare" might apply, depending on how the spending itself is used).
    
    
    

    the latter two options create more wealth faster than doing nothing, but only the third option does ite with economic efficiency.

    Neither option creates wealth. The government doesn't create wealth, as all of the funding for the government must be created elsewhere, and then given to the government via taxation.

 

[degsme]

Notice that I pointed out how even Off the Shelf componentry ends up costing more. I've been involvedin bidding on DoD contracts Trap. It costs more fot the same stuff. It really does.

And you are wrong about bridge building. Maintenance stores in infrastructure are based on MTBF numbers. In the military they are based on actual hostile fire numbers. Sorry there is no comparison here.

Look you are trying to argue around singleton examples of why the military does not cost more. Except ALL OF THE RESEARCH including that of conservative economists SHOWS THAT IT DOES.

do nothing - in which case you crawl your way out of the slump and have dramatically reduced wealth production

But it ensures that the market is operating under its own power and is not artificially stimulated by government spending

That's only true if the government does not exist. Because without government there is no private property there is no market there is only really might makes right your notion is fundamentally an anarchist dream. We've tried this approach for the first 100 or so years of the economy and IT WORKED WORSE. Less net wealth creation, more frequent crashes and a less vibrant economy and it was no more "real" or less "artificial".

Spend on DoD which addresses the Demand Slump faster than doing nothing but runs up astronomical costs

Which may work, of course, and has the additional benefit of being fully sanctioned by the U.S. Constitution.

It works but it runs up huge costs. and ICC and General Welfare are also fully sanctioned by The US Constitution, as is the disposition of US Assets in any way the Lege deems fit (absent intrusions into explicitly protected rights). So you have no claim here

[quote

Spend on Domestic spending which addresses the Demand Slump even faster (ith has broader reach into the Economy) and runs up LOWER costs

Which theoretically works, but is not sanctioned by the U.S. Constitution[/quote]
Nothing theoretic about it. It is what we have done for the last 120+ years and in the process decreased the frequency of crashes by a factor of 3 and shortened the average recover by a factor of 8. That's not theory THAT IS PRACTICAL EXPERIENCE

As for Constitution, disposition of Federal Assets is a plenary power as Jefferson asserted in 1789 shortly after the ratifiction of the Bill of rights.

The government doesn't create wealth,

That is an ideological mantra that has no connection to the empirical world. Wealth is created when the net output of the economic system is greater than the inputs. The source of the inputs does not matter per se. What matters is purely Opportunity cost. And we know from research that certain forms of taxation create GDP growth in excess of what the opportunity cost is in the private sector.

So this notion that Government Cannot create wealth simply because it uses taxes as funding instead of fees. is just econometric nonsense

 

[Bluedog]

We hear all about the $16 Trillion dollars in debt that our country is in, but the much larger problem and the one that our politicians and citizens do not want to talk about honestly is the $80 Trillion Dollars in Unfunded Liabilities at the federal level.

We have those in congress such as Dick Durbin and Chuck Schumer who will not even let this be discussed in all the unegotiations that we currently hear about going on with the debt crisis that this government created.


We hear so much about raising the taxes on the upper percent, but what so many fail to understand is that we are obligated to around $7 Trillion dollars a year on average just to cover our obligations from pensions to Medicare and Social Security and that is just going up as the baby boomer generation hits full stride in retiring.

It will not happen today because no one in politics has the guts to do so because they are all too worried about getting reelected, but at some point economics catches up to politics and we are on the verge of crossing the Rubicon now and in the near future.

Read more: http://MinuteMenNews.com/2012/12/16-trillion-in-debt-but-80-trillion-in-unfunded-liabilities/#ixzz2DpG1B9ht

I don't think we will in my opinion. Much easier for our elected officials to keep punting responsibility down the line.

 

[trapdoor]

]Notice that I pointed out how even Off the Shelf componentry ends up costing more. I've been involvedin bidding on DoD contracts Trap. It costs more fot the same stuff. It really does.

No, you didn't "point it out" you inferred it, and you are wrong. If anything, the military usually gets lower prices as contractors jump on government spending contracts that include discounts (for example, as a federal employee, I can get a break on the purchase of a PC by buying via a government contractor. So can you, if you're a contractor who has received a contract from the government). It doesn't cost more for the same stuff, it really doesn't.

And you are wrong about bridge building. Maintenance stores in infrastructure are based on MTBF numbers. In the military they are based on actual hostile fire numbers. Sorry there is no comparison here.

It doesn't matter Degs. A bolt is a bolt and a dollar is a dollar.

Look you are trying to argue around singleton examples of why the military does not cost more. Except ALL OF THE RESEARCH including that of conservative economists SHOWS THAT IT DOES.

Degs, I'm responding to you, and you provided not only a singleton example, but a singleton example of 30 years ago.

That's only true if the government does not exist. Because without government there is no private property there is no market there is only really might makes right your notion is fundamentally an anarchist dream. We've tried this approach for the first 100 or so years of the economy and IT WORKED WORSE. Less net wealth creation, more frequent crashes and a less vibrant economy and it was no more "real" or less "artificial".

No, the government still exists, it just takes less role in business. What was the government's role in the NYSE in, say 1870? There wasn't any SEC then. That "it worked worse" implies a basis for comparison -- it worked worse than what? Than things work today? That's arguable. RISKS were higher then. Risk is not always a bad thing.

It works but it runs up huge costs. and ICC and General Welfare are also fully sanctioned by The US Constitution, as is the disposition of US Assets in any way the Lege deems fit (absent intrusions into explicitly protected rights). So you have no claim here

All government spending is associated with high costs, whether that is buying a tank or issuing EBT cards. General welfare is NOT sanctioned powers, Degs. It is provided as part of a sentence that comes before a colon, after which there is a list of the sanctioned powers -- it is the reason for the sanctioned powers, not a power itself. This Construct is seen throughout the Constitution "This is why we're doing something... (Preamble) This is what we're doing...(Article I).

Nothing theoretic about it. It is what we have done for the last 120+ years and in the process decreased the frequency of crashes by a factor of 3 and shortened the average recover by a factor of 8. That's not theory THAT IS PRACTICAL EXPERIENCE

Degs -- I'm sorry, but that is a canard, a prevarication -- an outright lie. The US GOVERNMENT did not take part in ECONOMIC STIMULUS SPENDING 120 years ago. Nor did it do so 110 years ago, nor did it do so 90 years ago. In the 1930, it began doing so, quite probably after J.M. Keynes famously mailed his book to FDR (but before the two had their face-to-face meeting). You are, again, attempting to rewrite history to suit your own mental model of how the U.S. government interacts with the economy.

As for Constitution, disposition of Federal Assets is a plenary power as Jefferson asserted in 1789 shortly after the ratifiction of the Bill of rights.

True, but not relevant.

That is an ideological mantra that has no connection to the empirical world.

Degs -- if it is merely ideology, answer this simple question. What is the source of government funding?

So this notion that Government Cannot create wealth simply because it uses taxes as funding instead of fees. is just econometric nonsense

No. The government's total funding comes from wealth created by others -- by you, me, and Paul Allen. It takes wealth, it does not create it it.

 

[Woolleybugger]

Keynes never advocated excessive spending in times of economic prosperity. He said to pay down the debts incurred during economic turmoil. You are arguing the every budget which has more spending than revenue is a Keynsian play. Hogwash. What really happened is that supply side economic tax policy resulted in massive deficits. The increase in spending was ideologically based by right wing defense hawks trying to stoke up fear to justify a massive defense industry and a foreign policy based upon imperialism. Friedmans ideas were advanced and accepted as the de facto economic standard for the last thirty years by almost everyone in a position of power. Rare were the Kenysians during this period proven by Greenspans famous admission that we are all Keynesians now. You cannot seriously be arguing that the prudent banking scheme set up by Keynes after WW2 was kept intact after the inflation of the late 70s. This is historical revisionism of the foulest sort. I was an adult during that period, a college student living with my economics Professor and believe me, Friedman was GOD during the late 70s and early 80s. Keynes was almost banished from economics theory for at least 20 odd years. Even now folks like you use his theory to deflect responsibility for massive right wing economic experimentation with tax policy, deregulation and unfettered capitalism. You are making the incredible claim that Friedman was not the key economist in the world from the day Thatcher got elected. You want to know what should have been a Keynesian policy? No Bush tax cuts, no increases in the defense, no unpaid wars and a determination to pay down the debt during the Bush 2 era. That did not happen. What happened instead is a fraud upon the people based upon a hodge podge of economic mismanagement dominated by a few concepts Milton loved to sell. Free markets, deregulation, lower taxes and reduced fiscal policy corrections were his ideas. The GOP did not have the guts to adopt everything Milton wanted because unlike a military junta, they had to get the consent of the governed. So, they lied, they cheated and they misused our trust to completely [Unwelcome language removed] our nation up. You want to know the big difference between the left and the right during the last 30 years? We wanted to raise taxes to pay for the shit we wanted. The right wanted the same shit but refused to pay for it.

 

[degsme]

Military does not get lower prices. No more so than any large contract buyer. Sure you can get a PC discount as a Federal employee, and a Microsoft, or Google, or Apple or even a Walmart exec can as well. One of my son's works in a hardware store chain as he finishes his degreee - he gets huge discounts on building supplies. Nothign new there. I got a lot of my sailing "ropes" from a buddy who worked on a trawler. They use Dyneema string and rope for their nets.

There is nothing special about the military in this matter. Profit margins are profit margins. If I can't make my ROI in my federal contract, I put my money in the market and vice versa. The bottom line though is that for DEFENSE RELATED contracting, the process is slower, more regulated, and more secure - and hence LESS ECONOMETRICALLY EFFICIENT than the domestic part of the Federal Government.

So no a Bolt is not a Bolt. A bolt that costs a Dollar to the Domestic side of the government costs $3 to the Defense side LOADED COST (that includes stores, procurement procedures etc). But as you point out the econometric VALUE of that bolt is $1.

look if you cannot understand why there are different fiscal multipliers for different types of activities that still accquire the same end product, I don't know where to go from that.

All government spending is associated with high costs

Simply Factually WRONG There is no Econometric Data to support this claim and quite a bit to refute it.

Degs -- I'm sorry, but that is a canard, a prevarication -- an outright lie. The US GOVERNMENT did not take part in ECONOMIC STIMULUS SPENDING 120 years ago. Nor did it do so 110 years ago, nor did it do so 90 years ago

Wrong. The history tells the story. That 120 some odd years ago The Government had to PARTNER WITH JP Morgan to do the Stimulus spending does not change that it was Government policy that drove the process and that ultimately it was a loan of gold by Morgan TO THE GOVERNMENT so that THE GOVERNMENT COULD ISSUE MORE BONDS and SPEND MORE, that ended that panic.

And it did so 90 years ago. and in every downturn hence.

As for Constitution, disposition of Federal Assets is a plenary power as Jefferson asserted in 1789 shortly after the ratifiction of the Bill of rights.

True, but not relevant.

Sure it is. Jefferson is one of the "founding Fathers". And his view AT THE TIME OF THE RATIFICATION was that General Welfare allowed the Lege to dispose of Federal Assets in a plenary manner. Thus Stimulus spending - which is simply a way of disposing of Federal Assets, is a plenary power of Congress.

That is an ideological mantra that has no connection to the empirical world

. Degs -- if it is merely ideology, answer this simple question. What is the source of government funding?

either from the printing press or taxes. That has no bearing on whether or not that spending CREATES Wealth.

No. The government's total funding comes from wealth created by others -- by you, me, and Paul Allen. It takes wealth, it does not create it it.

Then you don't understand either what "wealth creation" means, or how economics works. This is simply factually wrong.

There is no difference in "wealth creation" by say a nurse working in the private or public sectors. Both CREATE value (wealth) that did not exist prior to their actions. Whether that is compensated by a promise of labor by an employee somewhere or the promise of labor by a taxpayer someplace else is not relevant to whether or not that act created some amount of wealth.

 

[Cotton2226]

yeah right! but, don't ask the rich for any monies... take it from the "littl guy!" Tennessee boy, Democrats agree with cutting spending... not an issue.

 

[Queen Titania]

''Oh, what utter nonsense. Thatcher did nothing to dismantle the English safety net, a fact so obvious that it almost bears no discussion. After Thatcher had "broken" the social contract, English still had nationalized medicine, college stipends, etc. And as for a "free market paradise," England may have once resembled that, but not at any time after the administration of Clement Attlee.''

Goddess of the Toilet Margret Thatcher did not do what !!!!!

That evil stupid humorless power hungry old bitch, who, rather oddly I find, has as did Reagan lost her marbles, completely and utterly devastated every single nook and cranny of this Nation.

Actually it was a shame that the Transport had ever been Nationalized. It is Private again though but It had ran far better before nationalization, not now and it is outrageously expensive and doesn't work well but as for the NHS, it might look OK from the outside but it ain't. She privatized it in all but name. She broke the powerful Matrons Union which was the glue of the NHS, along with every other Union closed almost all the Mines, Mills, Steel Works, Factories, Ship Builders, and on and on every thing closed down breaking up communities even more................Sold off social housing, closed down Mental Hospital and Doss Houses, throwing vunerable people out on the streets, allowed beautiful old buildings, whole streets often to be knocked down construction business was good £ in her time, closed down Technical colleges ......Oh the list of her destruction is never ending and still it isn't done ............... She didn't even understand half of what she put into practice. I used to travel First Class, back and forth from Europe for most of her reign, once on the train from Dover I talked to a young woman who was something to do Rivers, before Goddess of the Toilet each River had one authority, Thatch cut all the Rivers up into sections so that meant there was in fact No authority ...so it was and still is with everything she touched .................. Education had already been tampered with by both Parties but under her the awful box ticking 'ignorance agenda' began when Gov set the curriculum and ect

She made us a very unhappy people and we still are .......

This is who should have been PM ........ instead of her I meant( (Micheal Foot ( socialist ) said of him and us that his not becoming PM was his and the Nations greatest tragedy. )

http://www.princeton.edu/~sondhi/nonphysics/writings/powell.pdf

And she bought in 'stop and search, and it became illegal to have more than two people speaking on the street together and on and on .....

I didn't mean to interruped .....sorry, it is an intersting discussions I just couldn't let Goddess Thatch pass Reagan and she took us down the wrong path.

 

[trapdoor]

Blather.

 

[trapdoor]

Keynes never advocated excessive spending in times of economic prosperity. He said to pay down the debts incurred during economic turmoil. You are arguing the every budget which has more spending than revenue is a Keynsian play.

No, I am arguing that programs such as those put in place via the New Deal and the Great Society are Keynesian in nature and have been continuously in place since FDR's administration. Other than the National Recovery Act (and its downstream applications such as the Civil Conservation Corps) can you name a program from New Deal or Great Society that has disappeared? Of have these bureaucracies perhaps grown since their creation? (there's an answer to both these questions, but I fear you won't find it palatable). Keynes did indeed call for paying down debt in good times. When did we do that?

You cannot seriously be arguing that the prudent banking scheme set up by Keynes after WW2 was kept intact after the inflation of the late 70s.

If Keynes ideas on prudent banking had actually worked, we wouldn't have seen the sky-high interest rates that obtained during the Carter administration. Should we continue down a bad course if another course is available?

This is historical revisionism of the foulest sort. I was an adult during that period, a college student living with my economics Professor and believe me, Friedman was GOD during the late 70s and early 80s.

I was a young adult during the same period, graduating from high school and going to college in the fall of 1981 (albeit I was more on-my-own dime and had no economics professor to provide my housing). Friedman was seen as breaking stagflation. That didn't make him GOD, or anywhere near deity, but it did see some changes to government spending. But I repeat, what Keynesian programs that preexisted the era failed to survive it?

Keynes was almost banished from economics theory for at least 20 odd years. Even now folks like you use his theory to deflect responsibility for massive right wing economic experimentation with tax policy, deregulation and unfettered capitalism.

Because the last time we experimented in this way was in the '70s. The 1870s.

You want to know what should have been a Keynesian policy? No Bush tax cuts, no increases in the defense, no unpaid wars and a determination to pay down the debt during the Bush 2 era.

Whether it is the product of Keynes or Friedman, what is the appropriate legal response for a U.S. government in possession of a surplus?

 

[trapdoor]

Military does not get lower prices. No more so than any large contract buyer. Sure you can get a PC discount as a Federal employee, and a Microsoft, or Google, or Apple or even a Walmart exec can as well. One of my son's works in a hardware store chain as he finishes his degreee - he gets huge discounts on building supplies. Nothign new there. I got a lot of my sailing "ropes" from a buddy who worked on a trawler. They use Dyneema string and rope for their nets.

As with any major organization, the government seeks bidders, and accepts the lowest bidder. It doesn't pay higher prices, it pays bulk prices. When I spoke of "getting a discount" I basically used the wrong words. The government has contracts with multiple computer suppliers on a low-bid basis. As a federal employee, I can go to a website and buy a computer at the contract price, which is generally well below the retail price, because the contract is let to the low bidder. I'm not talking about going to Best-Buy and getting a federal employees discount.

So no a Bolt is not a Bolt. A bolt that costs a Dollar to the Domestic side of the government costs $3 to the Defense side LOADED COST (that includes stores, procurement procedures etc). But as you point out the econometric VALUE of that bolt is $1.

Simply untrue.

Simply Factually WRONG There is no Econometric Data to support this claim and quite a bit to refute it.

I actuallys somewhat agree with you that there are loaded costs -- all government spending comes with the loaded cost of the government overhead, the administrative bureaucracy. It is not as efficient as the spending from your own bank account, and as a result, it costs more.

Wrong. The history tells the story. That 120 some odd years ago The Government had to PARTNER WITH JP Morgan to do the Stimulus spending does not change that it was Government policy that drove the process and that ultimately it was a loan of gold by Morgan TO THE GOVERNMENT so that THE GOVERNMENT COULD ISSUE MORE BONDS and SPEND MORE, that ended that panic.

There WAS NOT ANY PARTNERSHIP with J.P. Morgan. In the past you've said there were bonds issued by the state of New York, and even THAT isn't true -- but if it were, it would still not be STIMULUS SPENDING BY THE U.S. GOVERNMENT. There were no bonds issued.

And it did so 90 years ago. and in every downturn hence.

Nor was there any federal government spending 90 years ago. Even in 1929, vested interests of private investors tried to forestall the crash via privately funded efforts (particularly head of Bank of America). They failed, and that failure led to the interventionist spending that has obtained over the last 80 years. That is simply the historical record, even though you don't like it.

Sure it is. Jefferson is one of the "founding Fathers". And his view AT THE TIME OF THE RATIFICATION was that General Welfare allowed the Lege to dispose of Federal Assets in a plenary manner. Thus Stimulus spending - which is simply a way of disposing of Federal Assets, is a plenary power of Congress.

He was talking about the selling of real property (ships, real estate, etc.) not picking economic winners and losers via so-called stimulus spending.

Since you don't accept that all government funding comes from taxation, and taxation is the wealth created by individuals, not by the government, I'm not certain how to go ahead in the conversation. Government spending can only take wealth from someone, and distribute it elsewhere. Government doesn't make profits.

 

[degsme]

The government does not always get multiple bidders. And the part of the government that is the least likely to get multiple bidders is... Defense. That is ONE of the factors that drives the Fiscal Multiplier of Defense Spending UP (the example of the "no Bid" KBR contract for field services in Iraq is one such example). There are lots of reasons for this but the fact remains that this is one factor. Similarly, a public bid RFP may not necessarily get more than one bidder: I sat in on some training for how to work on government RFPs. And while the "anti-earmark" legislation has precluded that sort of favouritism from showing up in the Appropriations Legislation itself - once the appropriation is made, there is a bunch of "qualifications" regulations that are written by the Congressional staff. And this "qualifications" set of regs can be constructed to essentially pre-select a particular vendor. Nowhere is this more common than Defense Appropriatiations. This essentiall elevates the "barrier to entry" for all the vendors other than the pre-selected one. And that one can then charge more for that same service.

Bottom line is defense spending - for a host of reasons - is less econometrically efficient than any other part of the government

So in Defense Spending, "a bolt is not a bolt". it invarialby costs 2x-3x more than in the domestic side of spending. And no , not all government spending comes particularly laded with adminstrative bureaucracy. Engaging with ANY LARGE VENDOR comes laden withthat. In fact one of the ways Walmart keeps its own operational costs down is by pushing out a lot of those buraucratic costs onto their vendors. Many a company has gone bust thinking it just scored big by being selected as a Walmart Vendor, only to find out that the administrative requirement costs eat up MORE THAN their profit margin.

There WAS NOT ANY PARTNERSHIP with J.P. Morgan.

When the POTUS goes to JP Morgan and asks him specifically to help and step in by lending NYS the gold - that is a partnership. WRONG.

And STIMULUS SPENDING is an Econometric concept. The reason it is "government spending" even in the JP Morgan case, is that JP Morgan received the "full faith and credit" guarantess by the Feds that he would be paid back.

It is STIMULUS SPENDING. And it is precisely the cumbersome mechanism of this "partnership" approach then and in 1907 that lead to the creation of the Federal Reserve: The economic outcome was very succesful, but the unreliability of going to the private sector for the funding was considered TOO RISKY for the future. And hence The Federal Reseve Bank was created to provide the means for The Government to do this themselves.

He [Jefferson] was talking about the selling of real property (ships, real estate, etc.) not picking economic winners and losers via so-called stimulus spending

So modern economics has expanded the scope of what is understood. So what?

Since you don't accept that all government funding comes from taxation,

Where have I sead that?

taxation is the wealth created by individuals, not by the government, I'm not certain how to go ahead in the conversation.

Prehaps you should read some economics. Read up on the defintiion of what wealth is. How it is created.

 

[degsme]

No, I am arguing that programs such as those put in place via the New Deal and the Great Society are Keynesian in nature and have been continuously in place since FDR's administration.

They are in particular segments of the economy. And have worked quite well. Yes and?

. Keynes did indeed call for paying down debt in good times. When did we do that?

Under the previous Democratic Administration. And the one before that.... Hmm odd that.

If Keynes ideas on prudent banking had actually worked, we wouldn't have seen the sky-high interest rates that obtained during the Carter administration.

Um why not? The interest rates during Carter were the result of commodity price shocks. Which has nothing to do with banking. Nor did "Friedman break stagflation". Volker did. And he did it by driving interest rates up and holding them there despite reactive market fluctuations. This then caused an actual recesion that we used Keynsian stimulus to make our way out of and restart a more normal economy at a higher commodity price meta-stability point

Whether it is the product of Keynes or Friedman, what is the appropriate legal response for a U.S. government in possession of a surplus?

Depends on the source of the surplus and whether or not there is National Debt.

If there is National Debt, cutting taxes is not the solution.

 

[trapdoor]

The government does not always get multiple bidders

.

Federal agencies are required by law to seek the lowest and best bidders unless there is a sole-source for a given product.

And the part of the government that is the least likely to get multiple bidders is... Defense. That is ONE of the factors that drives the Fiscal Multiplier of Defense Spending UP (the example of the "no Bid" KBR contract for field services in Iraq is one such example).

The frankly appalling lack of a bid process in that deal could only be somewhat justified by something that Defense can argue in wartime -- that there is no time to do anything else (I find it interesting yo haven't called out the similar no-bid actions done in the last four years).

Similarly, a public bid RFP may not necessarily get more than one bidder: I sat in on some training for how to work on government RFPs. And while the "anti-earmark" legislation has precluded that sort of favouritism from showing up in the Appropriations Legislation itself - once the appropriation is made, there is a bunch of "qualifications" regulations that are written by the Congressional staff. And this "qualifications" set of regs can be constructed to essentially pre-select a particular vendor. Nowhere is this more common than Defense Appropriatiations. This essentiall elevates the "barrier to entry" for all the vendors other than the pre-selected one. And that one can then charge more for that same service.

And that is no different than a sweetheart deal between a major corporation and a minor company, where the CEOs know each other. As such, it's no different in practice for the government than it is for private sector -- save for the overhead costs of government bureaucracy.

Bottom line is defense spending - for a host of reasons - is less econometrically efficient than any other part of the government

Bottom line, government spending is less efficient than private sector spending for reasons of overhead.

So in Defense Spending, "a bolt is not a bolt". it invarialby costs 2x-3x more than in the domestic side of spending.

Show a single example. You can't. You once could, but you can't today. At most, overhead might add a few pennies to the price of a product, not a doubling or tripling of the product's price. That is what you'd find with the old "cost-plus" contracts that the military no longer is allowed to use.

When the POTUS goes to JP Morgan and asks him specifically to help and step in by lending NYS the gold - that is a partnership. WRONG.

J.P. Morgan DID NOT lend money to the state of New York in the Wall Street Panic of 1907. You keep saying that, but it isn't true. The state of New York did not issue bonds to alleviate that panic. And even if both of those things HAD happened -- they ARE NOT federal stimulus spending. It doesn't matter if the request to Morgan came from Theodore Roosevelt or Theodore Dreyser, Morgan's money was not acquired via taxation of American citizens. It was not government money, it was not government spending, it was private sector funding and private sector spending, and no set of circumlocutions can make the two the same thing.

So modern economics has expanded the scope of what is understood. So what?

No, once again we ignore the actual language of the Constitution in favor of a new "interpretation." The constitution simiply means whatever we, today, decide it to mean. Raise the Jolly Roger and do as you please, Uncle Sam.

Where have I sead that?

Above, where you said the government could create wealth via a printing press, you were saying that government funding comes from something other than taxation.

Prehaps you should read some economics. Read up on the defintiion of what wealth is. How it is created.

I know what wealth is, both in the real and in the technical term. It can't be created by taking it from someone else. The government doesn't make profits.

 

[trapdoor]

They are in particular segments of the economy. And have worked quite well. Yes and?

And that means that Wool's contention that Friedman replaced Keynes as the primary doctrine for American governmental spending is nonsense.

Under the previous Democratic Administration. And the one before that.... Hmm odd that.

Wrong. We had a short term predicted budget surplus. It was not applied to paying down the debt.

Um why not? The interest rates during Carter were the result of commodity price shocks. Which has nothing to do with banking.

The commodity price shocks were the result of rapid inflation, which caused the banks to raise interest rates. That would have something to do with banking.

Nor did "Friedman break stagflation". Volker did.

Using what was perceived as Friedman's policies.

Depends on the source of the surplus and whether or not there is National Debt.

A government surplus has only one source, Degs.

 

[degsme]

The DoD is exempt from competitive bidding rules in many situations. Go look it up. And it is not just "war time" there have been numerous situations where contracts have been awarded to "a strategic contractor" just so that they can "remain a viable business". And the reason given is the strategic nature of another of their products

Bottom line is defense spending - for a host of reasons - is less econometrically efficient than any other part of the government

Bottom line, government spending is less efficient than private sector spending for reasons of overhead.

No the Bottom line is DEFENSE SPENDING IS LESS EFFICIENT THAN PRIVATE SECTOR SPENDING

But this is not true for Civillian sector spending. Simply not true. The data shows this to be the case.

Now as to 1907 Panic - You are correct that Morgan was not PRIMARY in this stimulus funding http://eh.net/encyclopedia/article/moen.panic.1907 it was the NY Clearinghouse Association that was the largest funder of this stimulus (but Morgan and the Federal Government were also http://american-business.org/2646-panic-of-1907.html) and engaged in "Quantitative Easing" - though it actually was QE2 - QE1 having been the artificial support of Knickerbocker Bank's cashflow. And like with Lehman, allowing Knickerbocker to fail caused the panic that caused the crash. the NY Clearinghouse Association issued over $110 Mill in what essentially amounts to TARP (ie Cash for troubled/illiquid assets).

All this is classic Keynesian stimulus on the monetary side. That only some of it was done by The Government is irrelevant.

So in Defense Spending, "a bolt is not a bolt". it invarialby costs 2x-3x more than in the domestic side of spending.

Show a single example. You can't. You once could, but you can't today[/quote] Sure I can. The price of an HP Supedome installed at DoD Healthcare is higher than on Private sector sice. I cannot prove this to you because that would require my giving you access to confidential bidding docs I no longer have access to myself, but I can assure you that is the case.

So modern economics has expanded the scope of what is understood. So what?

No, once again we ignore the actual language of the Constitution in favor of a new "interpretation."

Not hardly. Again the point of my Jefferson quote was that disposition of Federal Assets is a plenary power of Congress. And somethig that is a Plenary Power is not limited to just the particulars that Jefferson was enumerating but is in fact P L E N A R Y. There is no new Constitutional "interpretation" here. It is simply the exercise of a plenary power.

POLITICALLY and IDEOLOGICALLY you have a beef with this, but you have no constitutional case to make. That the government choose a particular time (a crash and recovery) to engage in a larger scale distributive disposition of Federal Assets is not relevant to Congress's plenary authority of the disposition of Federal AssetsB

Above, where you said the government could create wealth via a printing press, you were saying that government funding comes from something other than taxation.

True. And that's part of a fully sovereign government's authorty. Sorry I didn't realize you were questioning that.

I know what wealth is,

You clearly do not since you claim Government cannot create it. And yet the incontrovertible evidence is there that it can.

It can't be created by taking it from someone else

Then you don't understand what wealth is. You are associating wealth with ownership. That's not wealth. Not econometrically.