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On August 20 2012 08:34 xDaunt wrote:Show nested quote +On August 20 2012 08:14 Souma wrote:
Why do you think governments were formed in the first place? To protect its citizens. Now, how many citizens are you actually protecting by saying money = speech? 1% of people hold 40% of wealth, 10% of people hold 80% of wealth. You do the math. And it's okay if they manipulate our government because 90% of citizens are supposed to be virtuous while the rich pull in the reins?
That. Is. Ridiculous. Rights are rights, regardless of whom you are.
So regardless of "whom" and when you are, you have to believe in the same 18th century liberal bourgeois ideas of "rights"?
No thanks. I'd rather live in this century
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On August 20 2012 08:38 Souma wrote:
I also thought that rights were supposed to be equal and treat everyone fairly. I guess the founding fathers never took massive income inequality to mind.
Of course not, they lived in a slave society...
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On August 20 2012 02:12 JonnyBNoHo wrote:Show nested quote +On August 19 2012 17:13 paralleluniverse wrote:On August 19 2012 17:11 Chriscras wrote:On August 19 2012 16:41 aksfjh wrote:On August 19 2012 16:11 Kenpachi wrote:
a friend of mine said he prefers Romney because Ryan has a good economic plan. i havent been really paying all that much attention to this election because i predict Obama to win with ease but what exactly is this plan that he proposed? It cuts a ton of spending and cuts a ton in taxes at the same time. Supposedly, fiscally responsible, but the tax cuts being proposed end up nullifying any savings (and then some) of the cuts to government. Theoretically, couldn't the tax cuts stimulate the US economy? Did the Bush tax cuts simulate the economy? http://krugman.blogs.nytimes.com/2012/08/16/whats-in-the-ryan-plan/ Yes they did, just not very much. Obama's fiscal policy has stimulated the economy too, just not very much as well. For whatever reason the usual Keynesian fixes don't seem to be working too well. Personally I think there's just too much debt in the economy and so trying to blow the debt bubble bigger just isn't working this time around.
Now you're just making things up.
And even if you were correct, that for some reason, when there's high debt, stimulus magically stops working, who's fault is that? Who built up all that debt?
There's so much stimulus that public employment and infrastructure spending (which you've confused with housing construction) is falling to unprecedented levels. You're solution is to declare that there's too much stimulus in the face of falling indicators that stimulus should have boosted. It was not just small by these economic measures, but also compared to the size of other successful stimulus packages like in China, South Korea and Australia. Also, looking at government spending as a % of GDP is a bad indicator because GDP is down due to the recession.
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On August 20 2012 08:58 paralleluniverse wrote:Show nested quote +On August 20 2012 02:12 JonnyBNoHo wrote:On August 19 2012 17:13 paralleluniverse wrote:On August 19 2012 17:11 Chriscras wrote:On August 19 2012 16:41 aksfjh wrote:On August 19 2012 16:11 Kenpachi wrote:
a friend of mine said he prefers Romney because Ryan has a good economic plan. i havent been really paying all that much attention to this election because i predict Obama to win with ease but what exactly is this plan that he proposed? It cuts a ton of spending and cuts a ton in taxes at the same time. Supposedly, fiscally responsible, but the tax cuts being proposed end up nullifying any savings (and then some) of the cuts to government. Theoretically, couldn't the tax cuts stimulate the US economy? Did the Bush tax cuts simulate the economy? http://krugman.blogs.nytimes.com/2012/08/16/whats-in-the-ryan-plan/ Yes they did, just not very much. Obama's fiscal policy has stimulated the economy too, just not very much as well. For whatever reason the usual Keynesian fixes don't seem to be working too well. Personally I think there's just too much debt in the economy and so trying to blow the debt bubble bigger just isn't working this time around. Now you're just making things up. And even if you were correct, that for some reason, when there's high debt, stimulus magically stops working, who's fault is that? Who built up all that debt? There's so much stimulus that public employment and infrastructure spending (which you've confused with housing construction) is falling to unprecedented levels. You're solution is to declare that there's too much stimulus in the face of falling indicators that stimulus should have boosted. It was not just small by these economic measures, but also compared to the size of other successful stimulus packages like in China, South Korea and Australia. Also, looking at government spending as a % of GDP is a bad indicator because GDP is down due to the recession.
I'm not making things up. Debt grew a bit large.
![[image loading]](http://media.economist.com/sites/default/files/gallery/extended/RO-UNITEDSTATES.png)
Source
I also posted a bit back some research that points to deficit spending being less effective following a debt crisis.
I don't understand your logic that the stimulus wasn't / isn't large because it could have been bigger. Those aren't mutually exclusive descriptors. It was both large and could have been bigger. Yes China's was bigger, but much of it was malinvestment that has lead to their economy slowing down now. So I don't view that as a recipe for long-term success. Nor do I view bad spending as a worth while tradeoff between more economic activity now and less later.
Using government spending as a % of GDP should be fine since real GDP has surpassed the pre-recession peak.
I don't see why you are so opposed to redirecting poor quality government spending to better uses - the main thing I was advocating for.
If you want to disagree, fine. Just don't be a dick about it and post crap like "now you're just making things up."
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GDP is still below per capita peaks of 2007. You can't just use government spending as a percentage of GDP while economic indicators show that we are underperforming in potential/expected GDP. Government spending should reflect changes in population, GDP, and inflation.
Also, that graph is misleading because consumer debt is greatly different than government and corporate debt.
And you've brought up that research before, but I'm not sure you understand the implications of it or the assumptions they're making.
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On August 20 2012 08:38 Souma wrote:
I suppose that's the biggest difference between us in this debate. You throw your faith blindly behind rights. I'm more of an analyze-the-status-quo kinda guy.
I also thought that rights were supposed to be equal and treat everyone fairly. I guess the founding fathers never took massive income inequality to mind.
Equality under the law gets to be a tricky concept when you take shifting tide of public opinion. Maybe the status quo today really makes it look like $1 million dollars is plenty, and now we have the right to take away every dime you made over it. Next year, $800,000 dollars is that level, because the poor were all crying out, and there's this one disabled guy that has earned minimum wage for his entire life. You see, rights get trod on when legal protections on them are flimsy or nonexistent. Private property rights being generally chief amongst these, but further on free speech, assembly, arms, and imprisonment.
Consider again, people in the drafting of the constitution had real fears about what the national government could do, and how their lives may be less free because of it. Why not have just federal government and no state governments. It's confusing with who manages which government program. My representatives live in Washington D.C. most of their time; how will they stay apprised of the concerns of me as a Californian when all their buddies are in the federal seat?
The natural progress of government is to encroach on what the people originally assumed were rights to them, but can be written out of existance with the stroke of the pen. That IS why the bill of rights was formed originally and that IS why it's important that they are not interpreted out of existence, much as the tenth amendment has been in today's age. If laws are subject to the whims of current society, then they are nothing but good suggestions and carry no weight. It wasn't too long ago when the laws were interpreted to mean blacks had no rights and equal protections under the laws was not violated when separate facilities were given for whites and blacks. What protects you today may not do so tomorrow if you lose out in the next election and national opinion. Some rights are fundamental to good governance and deserve to be carefully weighed when those opposed to them pass laws. There is nothing new to factions striving to deprive essential rights because they disagree with what you do with them!
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On August 20 2012 07:59 kwizach wrote:Show nested quote +On August 20 2012 07:17 Danglars wrote:
I'll weigh in a little on the topic of "Corporations are people and Money isn't speech."
I hear often about raising taxes on corporations and stopping money from entering politics, buying elections. But you can't raise taxes on corporations. Yes you can. That's why they're corporations in the first place - to distinguish them from the people running them.
What he's saying is you can't raise taxes on corporations and businesses because they pass the cost of those tax increases on to the consumer every time in order to maintain safe margins. The consumer pays for the tax increase in the form of an increased cost of goods. In this way (taxes only!) they're effectively just a collection agency for the government.
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On August 20 2012 10:53 aksfjh wrote:
GDP is still below per capita peaks of 2007. You can't just use government spending as a percentage of GDP while economic indicators show that we are underperforming in potential/expected GDP. Government spending should reflect changes in population, GDP, and inflation.
Also, that graph is misleading because consumer debt is greatly different than government and corporate debt.
And you've brought up that research before, but I'm not sure you understand the implications of it or the assumptions they're making.
I find it to be a stretch to say that the government is practicing austerity when spending is high relative to GDP, deficits are high relative to GDP and real total government spending is at an all time high.
I'm not sure why the graph would be misleading. I was talking about debt in the economy as a whole, so I don't see why I shouldn't post a graph involving debt in all sectors of the economy. Heck the article you linked to stated that one thing wrong with the economy was that it had too much debt in it and the graph it showed included household, business and government debt too.
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On August 20 2012 11:28 Budmandude wrote:Show nested quote +On August 20 2012 07:59 kwizach wrote:On August 20 2012 07:17 Danglars wrote:
I'll weigh in a little on the topic of "Corporations are people and Money isn't speech."
I hear often about raising taxes on corporations and stopping money from entering politics, buying elections. But you can't raise taxes on corporations. Yes you can. That's why they're corporations in the first place - to distinguish them from the people running them. What he's saying is you can't raise taxes on corporations and businesses because they pass the cost of those tax increases on to the consumer every time in order to maintain safe margins. The consumer pays for the tax increase in the form of an increased cost of goods. In this way (taxes only!) they're effectively just a collection agency for the government.
Except that's a much too simplistic analysis because the tax burden does not reverberate entirely (or, sometimes, at all), on the price paid by the consumer, the wage of the worker, and/or the shareholder. To try to equate a corporation being taxed to a direct tax on people is fallacious.
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Canada11272 Posts
On August 20 2012 07:31 xDaunt wrote:Show nested quote +On August 20 2012 07:24 Souma wrote:
If you see the Constitution as sacrosanct then you do not truly understand the Constitution. And once again, money = speech is a Supreme Court mandate, not a Constitutional right. Um, the Supreme Court is the body who determines what Constitutional rights are through its "mandates." Citizens United was expressly a Constitutional rights case. Show nested quote +What you're basically saying is, "It's okay for us to spend as much as we want to swing the election in our favor. We'll try to convince you with senseless propaganda, twisted rhetoric, and even outright lies, but [i]you[/] have to still be virtuous enough to see through all of that. It's not our fault if you fall for our strategies conducted by many professionals hired to cause humans to act in certain ways. It's entirely your fault if you fall for our trap." Crudely, yes. Show nested quote + Instead of trying to implement fair(er) and more efficient elections, it's so much more convenient to blame it on the masses. Convenience has nothing to do with it. It's the governing philosophy upon which the country was founded. You may want to go re-read history if you're not familiar with it.
But doesn't that seem rather contrary to representative democracy? And before you say US is a Republic, not a democracy, doesn't that so-called freedom to spend endless amounts of money push the US more towards an Oligarchy? I don't even understand the purpose of Super Pacs anymore. If they aren't coordinating then, it actually muddies the message of the politician because has to keep begging them to take down all these extremely crude and insensitive attacks. And if they are coordinating, then it becomes a sneaky way to fire out all your dirty arguments and then retreat to plausible deniability. "I can't control super pacs." Either way it seems a lose lose and swinging the election more and more to the playground of the rich.
Heck the fact that from primary to election takes two years is ridiculous for the amount of time and money spent on changing on the government. And this is coming from a country that supposedly loves small government and hates wasteful spending.
A good portion of the Commonwealth countries inherited an Upper House made up of rich landlords and the colonial equivalents of aristocrats. The Upper House was originally designed keep the rabble of democracy in check. Who knows what the masses will come up with. I feel like giving corporations and unions absolute freedom to spend as much money as they please is several steps back into that old way of thinking, giving the rich new ways to curtail democracy. Which is why I bring up Oligarchy.
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People voluntarily collect money to advertise a political candidate or opinion or discredit another idea or candidate, this can influence elections, therefor the government must stop it.
I don't understand the logic there... voluntarily spreading your ideas is a threat to democracy?
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On August 20 2012 12:05 Falling wrote:Show nested quote +On August 20 2012 07:31 xDaunt wrote:On August 20 2012 07:24 Souma wrote:
If you see the Constitution as sacrosanct then you do not truly understand the Constitution. And once again, money = speech is a Supreme Court mandate, not a Constitutional right. Um, the Supreme Court is the body who determines what Constitutional rights are through its "mandates." Citizens United was expressly a Constitutional rights case. What you're basically saying is, "It's okay for us to spend as much as we want to swing the election in our favor. We'll try to convince you with senseless propaganda, twisted rhetoric, and even outright lies, but [i]you[/] have to still be virtuous enough to see through all of that. It's not our fault if you fall for our strategies conducted by many professionals hired to cause humans to act in certain ways. It's entirely your fault if you fall for our trap." Crudely, yes. Instead of trying to implement fair(er) and more efficient elections, it's so much more convenient to blame it on the masses. Convenience has nothing to do with it. It's the governing philosophy upon which the country was founded. You may want to go re-read history if you're not familiar with it. But doesn't that seem rather contrary to representative democracy? And before you say US is a Republic, not a democracy, doesn't that so-called freedom to spend endless amounts of money push the US more towards an Oligarchy? I don't even understand the purpose of Super Pacs anymore. If they aren't coordinating then, it actually muddies the message of the politician because has to keep begging them to take down all these extremely crude and insensitive attacks. And if they are coordinating, then it becomes a sneaky way to fire out all your dirty arguments and then retreat to plausible deniability. "I can't control super pacs." Either way it seems a lose lose and swinging the election more and more to the playground of the rich. Heck the fact that from primary to election takes two years is ridiculous for the amount of time and money spent on changing on the government. And this is coming from a country that supposedly loves small government and hates wasteful spending. A good portion of the Commonwealth countries inherited an Upper House made up of rich landlords and the colonial equivalents of aristocrats. The Upper House was originally designed keep the rabble of democracy in check. Who knows what the masses will come up with. I feel like giving corporations and unions absolute freedom to spend as much money as they please is several steps back into that old way of thinking, giving the rich new ways to curtail democracy. Which is why I bring up Oligarchy.
All of these concerns are founded upon the premise that the wealthy, Super Pacs, and corporations are buying elections to the exclusion of all others. I don't really think that's the case. Do they exert influence? Absolutely. But what about all of the other special interest groups that politicians bow to? Unions? The elderly? Welfare recipients? Small business owners? Environmental groups? Jews? Hispanics? Blacks? The military? You could make a never-ending list of these groups. Politicians need their support and make promises to all of them. Money isn't the end all, be all in politics.
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On August 20 2012 11:45 JonnyBNoHo wrote:Show nested quote +On August 20 2012 10:53 aksfjh wrote:
GDP is still below per capita peaks of 2007. You can't just use government spending as a percentage of GDP while economic indicators show that we are underperforming in potential/expected GDP. Government spending should reflect changes in population, GDP, and inflation.
Also, that graph is misleading because consumer debt is greatly different than government and corporate debt.
And you've brought up that research before, but I'm not sure you understand the implications of it or the assumptions they're making. I find it to be a stretch to say that the government is practicing austerity when spending is high relative to GDP, deficits are high relative to GDP and real total government spending is at an all time high. I'm not sure why the graph would be misleading. I was talking about debt in the economy as a whole, so I don't see why I shouldn't post a graph involving debt in all sectors of the economy. Heck the article you linked to stated that one thing wrong with the economy was that it had too much debt in it and the graph it showed included household, business and government debt too.
Again, consumer debt is much different than corporate and government debt. Guess what people do... THEY DIE! That means, more or less, that they are expected to balance their accounts at some point, and aren't able to take on as high of debt.
For governments and corporations, repayment isn't as large as a concern as continual payment. They have a ton of tools they can use to obtain lower rates and repay their debt. You must have not actually read the article I linked, because it makes the same point.
More specifically—and here's the critical point—you reduce the debt that is crippling the productive part of the economy. This is the part that creates most of the jobs, prosperity, and wealth. It is also the part that pays for the rest of the economy. That part is the private sector.
What debt is crippling the private sector?
Consumer debt. The household mortgages, credit cards, student loans, and other obligations that are forcing consumers to save and pay down debts instead of spend. Consumers still account for about 70% of the spending in the US economy, and that spending is now constrained. (See chart below—click for larger).
(Consumer spending was also artificially boosted for 25 years by the debt binge, so there's no way we're going back to that era. And we shouldn't strive to).
Households are still in debt up to their eyeballs.
How can consumers reduce their debts?
By doing what they are doing right now:
Spending less
Saving more
Paying down debt
Restructuring debt
Defaulting
Importantly, this process takes time. And unless you're willing to just tear up the laws and contracts that have formed the basis of the country's economy for the past two centuries, there's no way to just wave a magic wand and make the debts go away.
Also importantly, this healing process has nothing to do with "restoring confidence." Or "reducing regulation." Even if you could suddenly cast a spell and make all Americans (irrationally) exuberant again, you can't solve a debt problem with more debt. Specifically, you can't reduce the amount you owe by borrowing more.
So where does that leave the economy?
It leaves the private sector, the productive engine of the economy, nursing its way back to health.
And it leaves the public sector—the government—trying to minimize the pain while the private sector heals itself.
As a reading guide, when it says,"you can't solve a debt problem with more debt," it's talking about consumer debt and the fact that we can't just go back to the way things were with household debt.
Now, certainly we have to be careful when using the government to essentially shift the burden of debt from consumers to the government, but only to the point where the debt becomes impossible to service. The thing is, yields on bonds don't just skyrocket over night. At worst, we see expansions of debt servicing by about 25%, but that's when the economy is healthy and there is a lot of alternative investments. Seeing how the entire world (except maybe Brazil?) is in or recovering from a recession, we have plenty of cushion to increase the U.S. Government Debt without much of a problem.
![[image loading]](http://static.seekingalpha.com/uploads/2010/8/16/saupload_ust10yfr1990081510.png)
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Canada11272 Posts
When people have an unequal platform to spread their ideas? When all that matters is the ideas of the rich and not the majority? When massive amounts of funding from a handful of rich and powerful of organizations starts to swing policy to protect the interests of the rich to gain and maintain political power. When the rich corporations or unions can bankroll politicians. They may be voluntarily contributing, but if what they get in exchange is a push towards an oligarchal state, then some limits may be in order. (Like a cap across the board on individual donations rather than dodging it through superpacs.)
Edit
Money may not be the end all and be all of politics, but reasonable limitations are prudent I think. On both corporations and unions. Why else were those limitations on individual donations put in the first place? Was there a concern in past American politics that the idea of superpacs are now trying to circumvent? Why else has a country like Canada almost completely shut out corporate and union dollars from their federal elections? In addition, politicians may make a lot of promises, but I suspect some of the ones they pay most attention to are the ones to whom they received donations from. Isn't your tax code a mess with exceptions due to special interest groups?
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Why shouldn't some ideas have unequal platforms? I don't particularly think Nazism deserves equal platform and I am glad nobody donates to Nazi political groups lol
It is just untrue that all that matters is rich people. There are dozens of interest groups I can name that politicians pander to, xDaunt listed a bunch of them. There aren't even that many "Rich People Issues". For every rich person you find that wants lower taxes you can find a hundred poor people who want the same thing. There are plenty of "Rich People" who donate to social democrat platforms too because they want gay marriage or whatever they are after.
Fundamentally I don't think political speech is a threat to democracy, even if I don't care about democracy. Even if I thought it were dangerous I wouldn't propose the government controlling who is allowed to say what as a solution, I would want a more educated population.
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If you accept the premise that the public is so easily manipulated and that money has such a huge influence in politics, then you can't really be pro-democracy in the first place. If people are so stupid and so easily manipulated, why should they be making the decisions for the country? When you are calling for the government to regulate the realm of ideas so that the public can make better decisions, then you are effectively negating the entire purpose of democracy, you are advocating state control under the false guise of popular control.
I personally reject this premise. And if you want evidence why, just take a look at the recent republican nominations. Compare the amount of money Perry spent, and the amount of money Santorum spent. Then look at how many votes they ended up getting. Divide the "cost per vote" for Perry and Santorum and compare... You will see that money is not as important in elections as everyone makes it out to be.
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On August 20 2012 12:05 Falling wrote:Show nested quote +On August 20 2012 07:31 xDaunt wrote:On August 20 2012 07:24 Souma wrote:
If you see the Constitution as sacrosanct then you do not truly understand the Constitution. And once again, money = speech is a Supreme Court mandate, not a Constitutional right. Um, the Supreme Court is the body who determines what Constitutional rights are through its "mandates." Citizens United was expressly a Constitutional rights case. What you're basically saying is, "It's okay for us to spend as much as we want to swing the election in our favor. We'll try to convince you with senseless propaganda, twisted rhetoric, and even outright lies, but [i]you[/] have to still be virtuous enough to see through all of that. It's not our fault if you fall for our strategies conducted by many professionals hired to cause humans to act in certain ways. It's entirely your fault if you fall for our trap." Crudely, yes. Instead of trying to implement fair(er) and more efficient elections, it's so much more convenient to blame it on the masses. Convenience has nothing to do with it. It's the governing philosophy upon which the country was founded. You may want to go re-read history if you're not familiar with it. But doesn't that seem rather contrary to representative democracy? And before you say US is a Republic, not a democracy, doesn't that so-called freedom to spend endless amounts of money push the US more towards an Oligarchy? I don't even understand the purpose of Super Pacs anymore. If they aren't coordinating then, it actually muddies the message of the politician because has to keep begging them to take down all these extremely crude and insensitive attacks. And if they are coordinating, then it becomes a sneaky way to fire out all your dirty arguments and then retreat to plausible deniability. "I can't control super pacs." Either way it seems a lose lose and swinging the election more and more to the playground of the rich. Heck the fact that from primary to election takes two years is ridiculous for the amount of time and money spent on changing on the government. And this is coming from a country that supposedly loves small government and hates wasteful spending. A good portion of the Commonwealth countries inherited an Upper House made up of rich landlords and the colonial equivalents of aristocrats. The Upper House was originally designed keep the rabble of democracy in check. Who knows what the masses will come up with. I feel like giving corporations and unions absolute freedom to spend as much money as they please is several steps back into that old way of thinking, giving the rich new ways to curtail democracy. Which is why I bring up Oligarchy.
It does and it doesn't. Both sides have good points on this issue.
Conservatives (and the Supreme Court majority) were correct to say that the government doesn't have the power to ban corporations from exercising free speech or to stop them from making political statements. Given that the New York Times is a corporation, what stops the government from shutting them down and essentially neutering the First Amendment?
Liberals (and the Supreme Court dissent) were correct to warn about the dangers of abuse with money in politics and that large corporations could lord disproportionate leverage over politicians. There's hardly a distinction in practice in the corrupting effect of donating to a pro-Obama Super PAC and donating to Obama himself.
But in terms of oligarchy, it is worth pointing that voters still ultimately wield the decision-making power in elections. One reason that people are free to talk is because people are also free to not listen. And it happens with regularity that companies will throw millions of dollars to advertise their product into every possible media and you still won't care.
However, I do share the concern that politicians can be leveraged into avoiding certain policies, often at the expense of citizens. It's a good reason to constantly limit government power, for moments like this when corporations start to worm themselves in very tightly with politicians. I find it very strange on TL that the people most concerned about corruption from corporations seem to also be people who want the government to have more power and more control over society.
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When people have an unequal platform to spread their ideas? When all that matters is the ideas of the rich and not the majority? When massive amounts of funding from a handful of rich and powerful of organizations starts to swing policy to protect the interests of the rich to gain and maintain political power. When the rich corporations or unions can bankroll politicians. They may be voluntarily contributing, but if what they get in exchange is a push towards an oligarchal state, then some limits may be in order. (Like a cap across the board on individual donations rather than dodging it through superpacs.)
Edit
Money may not be the end all and be all of politics, but reasonable limitations are prudent I think. On both corporations and unions. Why else were those limitations on individual donations put in the first place? Was there a concern in past American politics that the idea of superpacs are now trying to circumvent? Why else has a country like Canada almost completely shut out corporate and union dollars from their federal elections? In addition, politicians may make a lot of promises, but I suspect some of the ones they pay most attention to are the ones to whom they received donations from. Isn't your tax code a mess with exceptions due to special interest groups?
The primary means of combating an uneven platform for spreading ideas is precisely letting opposition mount their own advertisements from however much money they can raise to persuade voters. The politically powerful also have a vested interest in using their platform to campaign for reelection just as rich people have larger personal funds to donate for the same purpose. Unions, while not offering much freedom to their members as to where they want the funds to go (which has had some voter initiative challenges in California), are a good example of using money for political purposes. If they truly are spreading unpopular ideas, it is incumbent on the opposition to form an even bigger political collection to raise money and oppose this through running of ads and donations to campaigns.
Speaking of unequal platforms, consider the perceived liberal bias in the vast majority of mass media in the US. For those of you that think bias allegations are hogwash, imagine the scenario where major news outlets favorably reported on the political undertakings of one party, and cast every argument of the other party in a negative, jeering light. If federal laws prohibit or limit the spending of money on ads before an election, the information that the TV-viewing public receives is larges the tinctured ones filtered down through the media. Free advertising so to speak. With removed restrictions, the money may be spent on those stations deemed important to promote their views. Suddenly, a collection of biased news organizations are not the only political force allowed the freedom to operate in the weeks leading up to the election.
I really laugh at reasonable restrictions, but I really should not for the well-meaning out there that think politics may generate fair restrictions on the free spending of money. I'm a big believer in structural protections of freedom from government, as you may have gathered. The government that is tasked with presenting fair restrictions has the power to decide what's fair or not. If Congress gets a majority in House and Senate to say that $1,000 dollars a month per individual is a fair amount to spend on political ads to get their view out, then that's now the law. If they get majorities in each house to say that 50$ or $0.50 is a fair limit, then it'll be so. And what are the political motivations of the party in power to set a fair limit? Are they going to set the limit out of a detached view of fairness to all concerned or based on their own political future?
But of course! Given the chance, an incumbent would gladly choose to make his re-election campaign that much easier by limiting the voice his opponent gets! A politician may very well make promises to legislate according to the best standards of honesty, and then still possess and act on a huge conflict of interest in preventing his own unemployment by violating the promise of honesty. I'd like to highlight your section on tax code now, because once you give legislators the power to change tax rates to get desired results in personal behavior (such as retirement planning, purchase of health insurance, giving to charity*) you simultaneously give a great motivation to businesses and special interest groups to lobby the government to make their rate lower and their penalties gone. So the freedom to spend money as you want to support political candidates is essential to free speech and reasonable limitations on the spending is imprudent considering the word "reasonable" will be morphed to suit their own political self interest.
EDIT: grammar
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On August 20 2012 12:38 aksfjh wrote:Show nested quote +On August 20 2012 11:45 JonnyBNoHo wrote:On August 20 2012 10:53 aksfjh wrote:
GDP is still below per capita peaks of 2007. You can't just use government spending as a percentage of GDP while economic indicators show that we are underperforming in potential/expected GDP. Government spending should reflect changes in population, GDP, and inflation.
Also, that graph is misleading because consumer debt is greatly different than government and corporate debt.
And you've brought up that research before, but I'm not sure you understand the implications of it or the assumptions they're making. I find it to be a stretch to say that the government is practicing austerity when spending is high relative to GDP, deficits are high relative to GDP and real total government spending is at an all time high. I'm not sure why the graph would be misleading. I was talking about debt in the economy as a whole, so I don't see why I shouldn't post a graph involving debt in all sectors of the economy. Heck the article you linked to stated that one thing wrong with the economy was that it had too much debt in it and the graph it showed included household, business and government debt too. Again, consumer debt is much different than corporate and government debt. Guess what people do... THEY DIE! That means, more or less, that they are expected to balance their accounts at some point, and aren't able to take on as high of debt. For governments and corporations, repayment isn't as large as a concern as continual payment. They have a ton of tools they can use to obtain lower rates and repay their debt. You must have not actually read the article I linked, because it makes the same point. Show nested quote +More specifically—and here's the critical point—you reduce the debt that is crippling the productive part of the economy. This is the part that creates most of the jobs, prosperity, and wealth. It is also the part that pays for the rest of the economy. That part is the private sector.
What debt is crippling the private sector?
Consumer debt. The household mortgages, credit cards, student loans, and other obligations that are forcing consumers to save and pay down debts instead of spend. Consumers still account for about 70% of the spending in the US economy, and that spending is now constrained. (See chart below—click for larger).
(Consumer spending was also artificially boosted for 25 years by the debt binge, so there's no way we're going back to that era. And we shouldn't strive to).
Households are still in debt up to their eyeballs.
How can consumers reduce their debts?
By doing what they are doing right now:
Spending less
Saving more
Paying down debt
Restructuring debt
Defaulting
Importantly, this process takes time. And unless you're willing to just tear up the laws and contracts that have formed the basis of the country's economy for the past two centuries, there's no way to just wave a magic wand and make the debts go away.
Also importantly, this healing process has nothing to do with "restoring confidence." Or "reducing regulation." Even if you could suddenly cast a spell and make all Americans (irrationally) exuberant again, you can't solve a debt problem with more debt. Specifically, you can't reduce the amount you owe by borrowing more.
So where does that leave the economy?
It leaves the private sector, the productive engine of the economy, nursing its way back to health.
And it leaves the public sector—the government—trying to minimize the pain while the private sector heals itself.
As a reading guide, when it says,"you can't solve a debt problem with more debt," it's talking about consumer debt and the fact that we can't just go back to the way things were with household debt. Now, certainly we have to be careful when using the government to essentially shift the burden of debt from consumers to the government, but only to the point where the debt becomes impossible to service. The thing is, yields on bonds don't just skyrocket over night. At worst, we see expansions of debt servicing by about 25%, but that's when the economy is healthy and there is a lot of alternative investments. Seeing how the entire world (except maybe Brazil?) is in or recovering from a recession, we have plenty of cushion to increase the U.S. Government Debt without much of a problem.
For corporations high debt is a problem too. Too much debt and a company will have a debt overhang problem where new investment becomes extremely difficult.
Yes for government it is a bit different, but the added tools that government has don't come free. Low rates hurt retirees and pension funds. Having to contribute more cash to pension funds hurts the ability of corps to invest and cripples state and local budgets.
I don't disagree that the government should be trying to stimulate the economy. I also don't disagree that current debt levels are perfectly serviceable. My argument is that the debt crisis is making stimulus less effective (in general) and therefore every dollar needs to be spent with an extra amount of care. Because of that what government should do, first and foremost, is redirect spending from inefficient programs to more effective ones. And there's plenty of room for that. The ARRA alone contained plenty of spending and tax expenditures with estimated multipliers lower than 1.
As Bernanke said:
Of course, economic growth is affected not only by the levels of taxes and spending, but also by their composition and structure. I hope that, in addressing our long-term fiscal challenges, the Congress will seek reforms to the government's tax policies and spending priorities that serve not only to reduce the deficit but also to enhance the long-term growth potential of our economy--for example, by encouraging investment in physical and human capital, by promoting research and development, by providing necessary public infrastructure, and by reducing disincentives to work and to save. We cannot grow out of our fiscal imbalances, but a more productive economy would ease the tradeoffs that we face.
Source
The problem I'm seeing with deficits is that people are reacting to them in a negative way. Consumers, investors and businesses know that the deficits are unsustainable and see them as future spending cuts, tax increases or both. That's contributing to a far more cautious business environment than you would normally expect. If people saw more value in government spending, due to better spending decisions, they would not react so negatively towards them and growth would be more robust.
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EPT
