On October 10 2013 16:04 Kaitlin wrote: Default isn't necessary for interest rates to go up.
True, but it IS necessary that interest rates go up should the U.S. default, which means that anyone who claims they want to reduce debt but also doesn't want to raise the debt ceiling is an idiot, a liar, or both.
Um no, if a country continuously borrows money and then shows themselves to be unable to pay it back unless they borrow more money it is called a ponzi scheme. All ponzi schemes end with massive spikes in interest rates/devaluation of whatever the ponzi scheme is selling. No country in history has had long term success doing what you are suggesting. Interest rates reflect current demand for treasury debt. The more debt the usa compiles the greater interest rates will eventually rise to. The obvious solution is to just cut spending.
This is just flat-out wrong, as can be directly observed by looking at the current interest rates on U.S. debt (the debt is pretty much higher than it's ever been, yet the interest rates are certainly not). Also, the long-term solution to reducing debt is a healthy economy, and that doesn't come with cutting spending now.
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
On October 11 2013 04:11 Adila wrote: Pretty sure the financial ratings agencies are privately run. That didn't stop them from giving AAA ratings for junk.
Any private agency can get corrupted by the industry it is supposed to watch just as easily as government agencies.
The ratings agencies are a government sponsored oligopoly. If you or me wanted to start a ratings firm to compete with them we would not be allowed to do so by our government. Just because something is privatized does not mean it is a free market.
And it's natural for companies to consolidate in a free market. Ultimately, over a period of time, the same situation would arise either way if there is no third party to intervene.
That is not how it works. If you have a free market then the companies that gain the most market share, ratings agencies in this case, will have shown they are better than their competitors at evaluating the risk levels of financial assets. Further, in a free market if ratings agencies wrongly evaluate assets they will lose market share to agencies that were more accurate or to entrepreneurs that see an opportunity to enter the market when competition is weak.
Maybe in fantasy land free market but in reality no. As the agencies get whittled down by the "best" ones, more resources will go to them since they are "the best". This means they have more influence. This means they have more power. And you know what more power means right?
Comanies are run by people and people get corrupted by power. Else, government would be perfect and we woudln't be having this discussion.
In a free market this does not mean they have more influence or power. That only exists when you give government the power to regulate companies. Absent the regulation a company can only gain more profits by doing what its customers want it to do.
I'm sure that had to be a sarcastic joke... could not have possibly been serious with that nonsense
True, but it IS necessary that interest rates go up should the U.S. default, which means that anyone who claims they want to reduce debt but also doesn't want to raise the debt ceiling is an idiot, a liar, or both.
Um no, if a country continuously borrows money and then shows themselves to be unable to pay it back unless they borrow more money it is called a ponzi scheme. All ponzi schemes end with massive spikes in interest rates/devaluation of whatever the ponzi scheme is selling. No country in history has had long term success doing what you are suggesting. Interest rates reflect current demand for treasury debt. The more debt the usa compiles the greater interest rates will eventually rise to. The obvious solution is to just cut spending.
This is just flat-out wrong, as can be directly observed by looking at the current interest rates on U.S. debt (the debt is pretty much higher than it's ever been, yet the interest rates are certainly not). Also, the long-term solution to reducing debt is a healthy economy, and that doesn't come with cutting spending now.
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
That summarizes my issues with the ACA pretty well. If you want universal healthcare, fine. I'm a bit mixed on it, but this implementation is an exceptionally shitty half measure.
Has anyone met anyone that really wants the ACA passed funded specifically so that they, individually, can benefit? I mostly see arguments from people who want it for others or don't want it for others.
On October 11 2013 14:57 IgnE wrote: Has anyone met anyone that really wants the ACA passed funded specifically so that they, individually, can benefit? I mostly see arguments from people who want it for others or don't want it for others.
The majority of people who need it aren't the kind of people who have the luxury of spending time engaging in this kind of lively debate online.
On October 11 2013 14:57 IgnE wrote: Has anyone met anyone that really wants the ACA passed funded specifically so that they, individually, can benefit? I mostly see arguments from people who want it for others or don't want it for others.
The internet is a place where everyone one ups each other and pretends to drive feraris while dating multiple super models. Most people on the internet won't admit to not being so well off. I assure you many people use the internet and work jobs which currently don't provide health care or any actual benefits. I'm one of them, but I'm also still in college.
True, but it IS necessary that interest rates go up should the U.S. default, which means that anyone who claims they want to reduce debt but also doesn't want to raise the debt ceiling is an idiot, a liar, or both.
Um no, if a country continuously borrows money and then shows themselves to be unable to pay it back unless they borrow more money it is called a ponzi scheme. All ponzi schemes end with massive spikes in interest rates/devaluation of whatever the ponzi scheme is selling. No country in history has had long term success doing what you are suggesting. Interest rates reflect current demand for treasury debt. The more debt the usa compiles the greater interest rates will eventually rise to. The obvious solution is to just cut spending.
This is just flat-out wrong, as can be directly observed by looking at the current interest rates on U.S. debt (the debt is pretty much higher than it's ever been, yet the interest rates are certainly not). Also, the long-term solution to reducing debt is a healthy economy, and that doesn't come with cutting spending now.
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
If Democrats thought they could get enough of their own party on board with single-payer they would. The only problem is some of them don't come from safe districts. This is their step in this direction. Of course, there are some of their followers that will believe anything, particularly that the PPACA was a Republican idea or incorporated such. They are counting on people forgetting what an idiodic plan Hillarycare was back in the day, and the numerous Republican reactions (if you're intent on socialized universal health care, here's viable alternatives). It was a health credit/voucher deal ... the carrot of tax breaks instead of the legal "stick." If we're talking about replacing Medicare and Medicaid with medical insurance policies with tax breaks and vouchers, that would be a Republican idea. The mandate predates any Republican support for cursory resemblances to it, but there are enough misinformed people willing to believe that myth.
On October 10 2013 18:20 Vegetarian wrote: [quote]
Um no, if a country continuously borrows money and then shows themselves to be unable to pay it back unless they borrow more money it is called a ponzi scheme. All ponzi schemes end with massive spikes in interest rates/devaluation of whatever the ponzi scheme is selling. No country in history has had long term success doing what you are suggesting. Interest rates reflect current demand for treasury debt. The more debt the usa compiles the greater interest rates will eventually rise to. The obvious solution is to just cut spending.
This is just flat-out wrong, as can be directly observed by looking at the current interest rates on U.S. debt (the debt is pretty much higher than it's ever been, yet the interest rates are certainly not). Also, the long-term solution to reducing debt is a healthy economy, and that doesn't come with cutting spending now.
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
If Democrats thought they could get enough of their own party on board with single-payer they would. The only problem is some of them don't come from safe districts. This is their step in this direction. Of course, there are some of their followers that will believe anything, particularly that the PPACA was a Republican idea or incorporated such. They are counting on people forgetting what an idiodic plan Hillarycare was back in the day, and the numerous Republican reactions (if you're intent on socialized universal health care, here's viable alternatives). It was a health credit/voucher deal ... the carrot of tax breaks instead of the legal "stick." If we're talking about replacing Medicare and Medicaid with medical insurance policies with tax breaks and vouchers, that would be a Republican idea. The mandate predates any Republican support for cursory resemblances to it, but there are enough misinformed people willing to believe that myth.
Original idea for the ACA came from Republican suggestions in 1993 as a counter to Clinton suggestions/legislation. It's based heavily on the same system Romney implemented and supported here in my home state, and they are very similar. It's based on the notion of personal responsibility, a typically republican concept. So yeah, republican style bill.
On October 11 2013 15:15 jeremysaint wrote: if i may impose, what do you guys think of this short piece from pbs?
They have two chances to effect it? Any vote can swing due to somebody on the other party wanting the same thing they do. They are currently shooting themselves in the foot, meaning they will be in a worse position after the next election.
When in a minority you try to swing voters, not alienate them.
On October 10 2013 18:42 kwizach wrote: [quote] This is just flat-out wrong, as can be directly observed by looking at the current interest rates on U.S. debt (the debt is pretty much higher than it's ever been, yet the interest rates are certainly not). Also, the long-term solution to reducing debt is a healthy economy, and that doesn't come with cutting spending now.
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
If Democrats thought they could get enough of their own party on board with single-payer they would. The only problem is some of them don't come from safe districts. This is their step in this direction. Of course, there are some of their followers that will believe anything, particularly that the PPACA was a Republican idea or incorporated such. They are counting on people forgetting what an idiodic plan Hillarycare was back in the day, and the numerous Republican reactions (if you're intent on socialized universal health care, here's viable alternatives). It was a health credit/voucher deal ... the carrot of tax breaks instead of the legal "stick." If we're talking about replacing Medicare and Medicaid with medical insurance policies with tax breaks and vouchers, that would be a Republican idea. The mandate predates any Republican support for cursory resemblances to it, but there are enough misinformed people willing to believe that myth.
Original idea for the ACA came from Republican suggestions in 1993 as a counter to Clinton suggestions/legislation. It's based heavily on the same system Romney implemented and supported here in my home state, and they are very similar. It's based on the notion of personal responsibility, a typically republican concept. So yeah, republican style bill.
Romneycare was so against the grain of Republicans that it could only be pushed by a Republican in the deep blue Massachusetts. I grant that Romney represents a moderate wing of Republicans that agree with many of the same things as Democrats. He put on the conservative face to have a chance in the 2012 elections, but he remains the me-too Republicanism.
Vouchers and tax incentives were key to the Republican version. Obamacare makes it the law, with force of tax-penalty or penalty-tax depending on who you quote before and after the Supreme Court decision. Republicans wanted large-scale replacement of Medicare and Medicaid with this style of program. Democrats believe in one thing: Everything is in addition to currently existing welfare programs. Let's not forget that Obamacare was opposed at every term by Republicans. Let's not forget that Democrats crafted it with other Democrats behind closed doors and rammed it through without Republican support (If it was so bipartisan, why not lobby for Republican support?). It's a myth. That won't stop the Left from playing make-believe and writing news stories on it. More about the differences
On October 10 2013 16:04 Kaitlin wrote: Default isn't necessary for interest rates to go up.
True, but it IS necessary that interest rates go up should the U.S. default, which means that anyone who claims they want to reduce debt but also doesn't want to raise the debt ceiling is an idiot, a liar, or both.
Um no, if a country continuously borrows money and then shows themselves to be unable to pay it back unless they borrow more money it is called a ponzi scheme. All ponzi schemes end with massive spikes in interest rates/devaluation of whatever the ponzi scheme is selling. No country in history has had long term success doing what you are suggesting. Interest rates reflect current demand for treasury debt. The more debt the usa compiles the greater interest rates will eventually rise to. The obvious solution is to just cut spending.
Actrually, it's called a Cheeseburger Mars Volutrian N5 Quantail Fizzenburg. Oh wait, it isn't that or a Ponzi scheme...
I would say it mainly should point the more republican leaning individuals in a direction where they at least rethink their position in saying the republicans are absolutely correct with their way of negotiation.
On October 10 2013 19:15 Vegetarian wrote: [quote]
This is a pretty laughable post. I would have thought that in light of the housing bubble, as well as the nasdaq bubble that preceded it, people would recognize that current prices can sometimes be in...what are they called? BUBBLES! It should be pretty evident to anyone with half a clue that interest rates are low because the Federal Reserve is printing money to buy government bonds. They call it quantitative easing and apparently they have fooled some people. In case you still aren't following me, when the federal reserve stops subsidizing interest rates by buying bonds then interest rates will increase. And, as long as the federal reserve is printing money to buy bonds you have an equivalent amount of inflation being produced which acts to distort prices and hinder economic growth by transferring money from savers to debtors. The long-term solution to reducing the debt is pretty simple, you stop spending more money than you take in. I am not sure how your under the delusion that government spending is beneficial to economic growth.
Completely wrong. Low interest rates predated QE. Your nonsense argument about Fed keeping rates low is debunked here.
I'm not sure how you're under delusion that cutting government spending is beneficial to economic growth, since spending, government or private, creates growth. Less spending means less growth.
It never ceases to amaze me how people can be so ignorant of very recent events. Low interest rates did predate "Quantitative Easing" they did not predate a federal reserve subsidized interest rate which is the same exact thing. Since you don't seem to understand the interest rate is determined by something called supply and demand. If the Federal Reserve prints money and buys bonds to keep rates at a certain level we can see that the demand is not real. It is artificial demand that is sustainable only so long as the Fed continues to print money and create inflation. Paul Krugman's article does not debunk anything, linking to it only highlights your lack of understanding of the issue. If you can't formulate a basic argument yourself it should reveal to you your true ignorance of the topic at hand.
Further, private and government spending are not equal. There is a reason why the countries that have tried the most centralized economic planning have always experienced the lowest standards of living. Spending is not equal to growth. In order for an economy to grow you need to gain increases in efficiency so that current products or alternatives can be produced with less resources, hence economic growth. This scenario is not compatible with government spending. When the government spends money it first has to take that money from people in the private sector. The government then diverts these resources away from productive individuals that are making a profit by meeting peoples demands in a free market to government monopolies. Monopolies exist when a single entity is the sole provider of a product or service in a given market. Because government sponsored monopolies exist by government decree competition is usually illegal, or unprofitable because of subsidies to the government monopoly. This creates an environment where the government service or product provider has very little incentive to improve or lower costs of their product or service because they are faced with no competition. It should really be obvious by now but if you divert money from people who are forced to compete against each other for market share and transfer it to a government monopoly which has no competition you will achieve a lower standard of living as the resources diverted to government can never be used as efficiently as the resources left in the private sector.
I'll comment on the second part only. I feel that there is some truth in it, but only up to a certain point. Fully centralized economic planning is no doubt bad for economic development, as evidenced by the fall of USSR and many other pro-communistic regimes. However median living standards in US are quite subpar in comparison to most socialist/capitalist hybrid economies, such as Canada, Australia and a number of Western and Northern European countries.
The problem, as I see it, is that unregulated markets (as well as a markets regulated by business-bribed governments) are prone to business oligopoly or even monopoly/duopoly, which leads to high business profits only for large businesses combined with crappy services, unfair prices and low median wages. Also modern consumers are often swayed by advertisements more than by quality or price. Therefore some control by the government as well as some limited products and services provided directly by the government appear to be the best solution. The main problem with this hybrid socialist/capitalist approach is that for it to be efficient the government should be relatively independent from the big business and no too corrupt. Unfortunately the later is not always the case (hint: Greece). As for the USA, it may well not be ready for more socialism right now, not sure...
I agree that living standards are worse in the US than a lot of other seemingly socialist countries. However, I think the USA gets an unfair reputation of being a capitalist economy. Taxes are higher in the USA than in China and most other countries. USA Corporate taxes are some of the highest in the world. The government debt to GDP ratio, if you count unfunded liabilities, is the largest in the world. Regulations in the USA are so burdensome that many companies have been relocating and moving operations overseas.
I've never heard of a way that I think regulation could work other than through the invisible hand of the market. The way I see it if the government is granted the power to regulate an industry then overnight one thing will change. The companies in that industry will no longer be competing against each other solely to provide a better product or service at a better value than their competition. Regulation introduces another way for companies to gain market share through lobbying the government to use the regulatory power to their advantage or to the detriment of their competitors. The most heavily regulated industry in the USA is finance and I don't think I am alone in considering it the most corrupt industry in this country,
You say that consumers can be gullible and choose products wrongly in an unregulated market. But, government officials are no different except that they are in charge of spending other peoples money and not their own. This is also very subjective. In a free market no one can force you to buy a product or service so if someone chooses to buy a product or service they have made a determination that it is a beneficial transaction for them. Retailers also provide a check on manufacturers. Most stores are not going to want to stock faulty or contaminated products as they know they would eventually lose market share to a store that becomes known for better quality products or one that has a more favorable return policy.
Lastly, the market really does self-regulate. GMO products are not labelled by the FDA in the USA, yet there is a private company that certifies products as non gmo and puts their stamp/reputation on products they approve. http://www.nongmoproject.org/ This company and others like consumerlab.com for vitamin supplements, and consumerreports indirectly regulate industries by offering reviews and tests of products. Companies like this would lose market share or go out of business if they approved a product that was later determined to be faulty as they would lose credibility if this occurred. On the other hand if a government regulatory agency like the FDA approves a drug that later turns out be unsafe the FDA does not lose its monopoly.
I agree with what you say, and I think myself that too much government control is bad. That is however only one side of the story. I'd like to mention the other side as well.
Basically it comes down to the following. Businesses exist to please shareholders. CEOs mostly think about quarterly reports and short-term or sometimes medium-term growth. They are not concerned with gigantic negative externalities [ http://economics.fundamentalfinance.com/negative-externality.php ] and grievous long-term consequences of increasing the corporate stock value at any cost. If a CEO decides to be more socially responsible and take a bigger picture into account, then the company in his/her charge will be quickly outrun by competitors who don't care about the such matters. In the end it all comes to the Tragedy Of The Commons [ http://en.wikipedia.org/wiki/Tragedy_of_the_commons ], which can only be solved by some form of governance or regulation.
Now a good government is there not to make record profits at any cost, but to protect and help its citizens and resolve problems such as the Tragedy Of The Commons. Then in order to answer the question whether more government or less government is better or worse in a particular situation, you should first determine the level of government corruption and the extent to which this government is subject to lobbying. There are multiple examples when a big government works wonderfully as well as multiple examples when it fails miserably.
Correct, the ideal is a government which regulates and controls markets efficiently while not being subject to the whims of the businesses, but the people. Corporatism is horrendous. You want good regulations, not bloated regulations, and you want corporations to have little to no say, but you want individuals to have a say. Businesses will always make profits. You want stronger anti-trust laws, and fewer benefits tied into businesses but provided by the government. A system where health insurance is provided through businesses will be harder on small business than a single payer system would. The government should focus on forcing information equality as much as possible so consumers can make informed purchases and actually vote with their dollars. The markets function best with a watchful eye but with only truly necessary interventions. It also functions best when the government takes advantage of economies of scale to provide for the citizenry of necessities, preventing the market failures that occur. The markets are amazing for non-essentials, but suffer because the poor often lack the ability to purchase essentials.
Frankly, I'm pissed at the democrats in general for not forcing through a single payer system when they had the chance and giving up on it entirely in favor of bipartisanship (the ACA was a republican idea). And then the Republicans decided to define the ACA as a left position to fight for no health care at all. I'd prefer to scrap the whole thing and do a well designed single payer system, but the ACA is better than nothing until we can do that.
If Democrats thought they could get enough of their own party on board with single-payer they would. The only problem is some of them don't come from safe districts. This is their step in this direction. Of course, there are some of their followers that will believe anything, particularly that the PPACA was a Republican idea or incorporated such. They are counting on people forgetting what an idiodic plan Hillarycare was back in the day, and the numerous Republican reactions (if you're intent on socialized universal health care, here's viable alternatives). It was a health credit/voucher deal ... the carrot of tax breaks instead of the legal "stick." If we're talking about replacing Medicare and Medicaid with medical insurance policies with tax breaks and vouchers, that would be a Republican idea. The mandate predates any Republican support for cursory resemblances to it, but there are enough misinformed people willing to believe that myth.
Original idea for the ACA came from Republican suggestions in 1993 as a counter to Clinton suggestions/legislation. It's based heavily on the same system Romney implemented and supported here in my home state, and they are very similar. It's based on the notion of personal responsibility, a typically republican concept. So yeah, republican style bill.
Romneycare was so against the grain of Republicans that it could only be pushed by a Republican in the deep blue Massachusetts. I grant that Romney represents a moderate wing of Republicans that agree with many of the same things as Democrats. He put on the conservative face to have a chance in the 2012 elections, but he remains the me-too Republicanism.
Vouchers and tax incentives were key to the Republican version. Obamacare makes it the law, with force of tax-penalty or penalty-tax depending on who you quote before and after the Supreme Court decision. Republicans wanted large-scale replacement of Medicare and Medicaid with this style of program. Democrats believe in one thing: Everything is in addition to currently existing welfare programs. Let's not forget that Obamacare was opposed at every term by Republicans. Let's not forget that Democrats crafted it with other Democrats behind closed doors and rammed it through without Republican support (If it was so bipartisan, why not lobby for Republican support?). It's a myth. That won't stop the Left from playing make-believe and writing news stories on it. More about the differences
Interesting Heritage article. Because it is pretty much an admission that the mandate idea came from them. The only difference (second point) it claims is that the mandate be implemented by tax breaks as opposed to tax penalties (first point is fluff: it's about intention despite implementation being the same, third point is a repetition of the second point).
So is that all it takes? Change the mandate from a tax penalty to a tax break and then it's 100% OK? Because then it would be 100% identical to the implementation Heritage suggested.
More importantly, Heritage points out 100% correctly why the mandate is essential and necessary: to prevent adverse selection from collapsing the insurance market.
Here's a question for you. Rate the following on a scale of 1 to 10 (higher is better): Obamacare, single-payer healthcare, the status quo before Obamacare. Then briefly explain what you want from health reform and rate that as well.
How are you guys holding up there? Is it total anarchy and chaos? I haven't seen much info in the papers about what's going on in the US and I hope it's not because everything has gone sour over there. I think now we need strong leadership from Obama more than ever to stem the possibility of civil war and use extreme measures to keep the peace.
On October 11 2013 22:13 capu wrote: How are you guys holding up there? Is it total anarchy and chaos? I haven't seen much info in the papers about what's going on in the US and I hope it's not because everything has gone sour over there. I think now we need strong leadership from Obama more than ever to stem the possibility of civil war and use extreme measures to keep the peace.
Thanks for checking on us, it's been AWFUL so far. Yesterday I tried to look at a panda on the internet but the webcam was shut down so I couldn't! Also I was trying to figure out what the weather was like outside so I went to the National Weather Service's Website, and there was a warning saying it might not be totally up to date! What good does it do me to know the weather from 15 minutes ago!?!?!? I had to go to weather.com instead and there were adds everywhere. So many adds. I don't know how much longer we can last.
On October 11 2013 22:13 capu wrote: How are you guys holding up there? Is it total anarchy and chaos? I haven't seen much info in the papers about what's going on in the US and I hope it's not because everything has gone sour over there. I think now we need strong leadership from Obama more than ever to stem the possibility of civil war and use extreme measures to keep the peace.
The government shutdown is a misnomer. ~80% of the spending is continuing, ~60-70% of federal employees remain employed and working. Fox News' term slimdown is more accurate than shutdown. Day to day life is unaffected for the majority of the country. The longer it continues the more people will be affected, and the greater chance of slipping into nationwide recession.
On October 11 2013 16:37 NSGrendel wrote: Logic should be a mandatory subject in schools.
It is, it's called math. Too few people see that though, and sadly that involves teachers :/
Argumentative logic (Also known as philosophy) should be taught aswell. That way the American public will actually be able to both form their own opinions and evaluate others'.
EPT
