2012 Election Season

[Dantius]

I was originally going to title this thread "Strange men lying in Internet forums distributing opinions is no basis for a system of government!" but the title was too long and UBB wouldn't accept it.

 

A continuation thread for the political discussion in the What have you been reading recently? thread.

[Actaeon]

I appreciate the reference anyway. Do you have a specific topic, or are we simply responding to the assertion of eight political camps and the odd alliances they make?

 

(The disucussion reminds me of multi-party system in many countries, except that we've convinced ourselves that there are only two ways to look at politics.)

[JamesMighty]

Originally Posted By: Actaeon

(The disucussion reminds me of multi-party system in many countries, except that we've convinced ourselves that there are only two ways to look at politics.)

I agree with the multi-party system, and how we only look at politics two ways

[Kelandon]

From the other thread:

Originally Posted By: Lilith

Originally Posted By: Dantius

Plus, you know, all the progressive things he's done. Stances on gay marriage, healthcare reform, Dodd-Frank, DADT, etc.

 

his healthcare reform plan is hardly "progressive"; it does a few good things but it also hands roughly half a trillion dollars to private insurance companies. republicans have been pushing for something like it for literally decades. they only started opposing it when a democrat started to support it

Conservative! Dantius surely meant that the health care reform was in the column of conservative things that Obama has done. Because any other description of it — a market solution to a social problem — would be ludicrous. And Dantius would never be ludicrous.

[Dantius]

Originally Posted By: ξ

From the other thread:

Originally Posted By: Lilith

Originally Posted By: Dantius

Plus, you know, all the progressive things he's done. Stances on gay marriage, healthcare reform, Dodd-Frank, DADT, etc.

his healthcare reform plan is hardly "progressive"; it does a few good things but it also hands roughly half a trillion dollars to private insurance companies. republicans have been pushing for something like it for literally decades. they only started opposing it when a democrat started to support it

Conservative! Dantius surely meant that the health care reform was in the column of conservative things that Obama has done. Because any other description of it — a market solution to a social problem — would be ludicrous. And Dantius would never be ludicrous.

Are you suggesting that the Republican party would oppose a plan they developed in one of heir think tanks, tested in states under conservative governors, supported as an alternative to Clinton's plan in the 90's, and that is perfectly consistent with their ideology with such vitriol? Clearly, you are being the ludicrous one here.

In all seriousness, the fact that any legislation was pushed through is amazing. While it is legitimate to complain that it didn't go far enough (frankly, a single payer system would be more efficient overall and preferable for me at least), I would certainly say that attempting, and succeeding, at making serious strides towards fixing one of the biggest social (and the biggest fiscal) issue with government is certainly a progressive achievement.

[Slawbug]

Obama's stance on gay marriage (and DADT) is also a great example of how he's _not_ a progressive. While those were things progressives were in favor of, Obama refused to touch them until they attained a critical mass of popular support. I think the threshold for him is about 51% -- which, to be fair, is lower than it might be for some other centrists -- but Obama remains a pragmatist and a centrist.

[keira]

Because, you know, supporting gay marriage isn't normally something that would ruin your political career.

 

Shame on Obama waiting until he thought me might not lose his job over it.

[Slawbug]

A distinction needs to be made between the policy and the motivation. The policy of the health care plan fits traditional American conservatism. The motivation fits the dictionary definition of progressive.

[Slawbug]

To be clear, I wasn't maligning Obama, just describing what has modus operandi seems to be.

 

The list of politicians I like is very short, certainly shorter than that List.

[Cairo Jim]

The list of my favourite politicians looks like this:

 

 

 

 

No, I'm not using invisible ink.

[Callie]

yay more bloated bureaucracy

[Juan Carlo]

Originally Posted By: HOUSE of S

but Obama remains a pragmatist and a centrist.

So true. It always boggles my mind when I hear people call him a socialist or talk like he's some sort of extreme liberal. Have they not been paying attention to what he's actually done (or not done)? He is one of the most "Conservative" presidents we've ever had--and I don't mean "conservative" in terms of ideology (he's definitely not an ideological conservative), but rather in demeanor. He's actually proven to be pretty reluctant when it comes to making sweeping changes of any sort. Even the health care bill, his one big action in his first term, was so diluted and compromised from his original vision (which itself was a diluted and compromised version of Hilary's plan that the Obama campaign mainly embraced during the primaries just to appeal to moderates and distinguish himself from her) that I'm not sure how anyone could call it radical in anyway (it's basically just the Romney plan, after all).

He's to the right of every DFL president we've had in the past half century and has proven himself willing to compromise on just about everything. Although I actually think the dirty little secret that the smarter portions of the GOP establishment realize (but will never admit openly) is that Obama isn't really all that bad for the GOP. It's only the conservative talk radio/cable news factions that make him out to be a villain, but that's really just motivated by ratings. Unfortunately, though, talk radio and cable news seems to be the main motivating force these days in the conservative movement in America. The William Buckleys of the last century are gone, replaced by idiot talk radio sorts who are really more motivated by creating sensational headlines for ratings than they are motivated by any sort of rational commitment to conservativism as a viable political ideology. You could dismiss this as harmless entertainment (and at it's heart stuff like Sean Hannity, Glenn Beck, Rush Limbaugh, et al really are primarily entertainment and theatrics rather than any sort of intelligent political discourse), but unfortunately this type of thinking and style of discourse is coming to define the conservative movement in the 21st century. We are already seeing the effects of this via the tea party movement (which is basically stubbornly committed to a bastardized, overly simplified, sound-bite friendly version of conservativism which ignores reality at all costs for the sake of a wrongheaded commitment to ideological purity), and if the rational portions of the the GOP (which do exist) don't nip it in the bud I think the party could end up disintegrating or morphing into something truly terrifying. While the DFL has wisely kept the Occupy Wallstreet movement at arm's length, the GOP rather foolishly courted the Tea Party movement for votes and gave them too much power, which has had a lot of unintentional consequences for them. We already saw a lot of tension between the old guard and the newer, crazier, grass roots elements during the GOP primary when the GOP establishment very nearly lost control of the party entirely, so it will be interesting to see what happens going forward. Right now the GOP seems to be motivated enough by Obama hate to keep an uneven alliance until November. But if Romney loses I think a very bloody civil war could break out within the party, and if the more unreasonable elements ultimately win, it could be bad for everyone--conservative and liberal alike.

[Callie]

I'm surprised nobody has mentioned his administration's absurd number of deportations. He recently pretended to be liberal on the issue out of political expediency.

 

Oh, and drug policy. He's very right wing on the issue. Typical politician hypocrisy: I smoked pot and got away with it so now I need to raid your houses with SWAT teams and terrify your families in order to prevent you from smoking pot.

 

Edit: I could bring up a plethora of other reasons that he isn't liberal but I don't feel like writing and essay on a Monday night after work.

[Dantius]

Originally Posted By: Excalibur

Oh, and drug policy. He's very right wing on the issue. Typical politician hypocrisy: I smoked pot and got away with it so now I need to raid your houses with SWAT teams and terrify your families in order to prevent you from smoking pot.

Yes, god forbid someone change their mind on a subject as they grow older and look at the more complete picture.

And how dare Obama try and stop an illegal activity that funnels millions of dollars to drug cartels a few miles south of the border that are then used to horrifically murder people? I have the freedom to indirectly decapitate Mexicans if I want to- it's practicably in the Constitution! This is fascism, pure and simple!

[Dikiyoba]

Originally Posted By: Dantius

...an activity that funnels millions of dollars to drug cartels a few miles south of the border that are then used to horrifically murder people?

You mean the war on drugs, right? We'd have a better shot at crippling the cartels by legalizing (or at least looking the other way in certain cases, if you can't stand the idea of legalization) so that the price of drugs go down and the cartels can no longer make a profit off of smuggling them. Especially with marijauna, which is ridiculously easy to grow in the United States.

Dikiyoba.

[Dantius]

Originally Posted By: Dikiyoba

You mean the war on drugs, right? We'd have a better shot at crippling the cartels by legalizing (or at least looking the other way in certain cases, if you can't stand the idea of legalization) so that the price of drugs go down and the cartels can no longer make a profit off of smuggling them. Especially with marijauna, which is ridiculously easy to grow in the United States.

Dikiyoba.

Oh, I agree with decriminalization. I just think that it's a bad idea to simply "look the other way" because a lot of people don't like the law. If something is illegal, and that's causing problems, it should be decriminalized. Until that happens, it is still illegal and the law should still apply. Also, whining that someone is punishing you for breaking the law (see also: piracy) doesn't really help your case.

[Callie]

Originally Posted By: Dantius

Originally Posted By: Excalibur

Oh, and drug policy. He's very right wing on the issue. Typical politician hypocrisy: I smoked pot and got away with it so now I need to raid your houses with SWAT teams and terrify your families in order to prevent you from smoking pot.

Yes, god forbid someone change their mind on a subject as they grow older and look at the more complete picture.

And how dare Obama try and stop an illegal activity that funnels millions of dollars to drug cartels a few miles south of the border that are then used to horrifically murder people? I have the freedom to indirectly decapitate Mexicans if I want to- it's practicably in the Constitution! This is fascism, pure and simple!

Legal marijuana dispensaries and farmers are totally funding drug cartels.

[Dikiyoba]

Originally Posted By: Dantius

It is eminently possible to fix Mexico without decriminalization.

True. But between NAFTA and a shared border, the US has a lot more influence on Mexico now. Maybe decriminalizing certain drugs in the US will help Mexico; maybe it won't.

In either case, since I don't forsee legalization in the US suddenly making Mexico's situation worse, I'm more focused on the benefits for the United States. Drastically lower incarceration rates, for starters, and hopefully less gang activity. Oh, and the drug cartels are currently in the US running marijauna farms on National Park lands, so hopefully legalizing marijauna would cut down on that.

Dikiyoba.

[Slawbug]

This is another one of those issues, like gay marriage, that has a huge opinion divide by age and is just waiting for the generations to move on a bit more. You can already see the scales beginning to tip towards decriminalization on local and state levels. I'd say this is just a year or two behind national gay marriage, which -- though it may still be a ways off -- now looks pretty inevitable.

[The Ratt]

Going to a school were marijuana is widely accepted (I think the only reason it's against school policy is because it's technically illegal and also a fire hazard), and drinking is common, I find marijuana and alcohol to be pretty similar. Mild, and moderate use generally doesn't affect a person that much, but people who are heavy users suffer much more.

 

Also, from what I understand, determining if someone is above the legal limit is very difficult because of how long marijuana stays in your system.

[VCH]

An Obama loss would do wonder for my American stocks—not that a Republican president would be any better at sorting things out. In the end everybody just needs to work off a hell of a lot of debt and there's nothing the government can do to help besides adding more debt to the government's books, which isn't really help at all in the long run.

[Goldengirl]

This issue of Mexico and the war on drugs folds into a larger issue in which Obama has shown rightist trends. And, to offer a brief two-cents on the situation in Mexico, the PAN lost the (very) recent presidential election due to escalating violence from the cartels and the failure of a policy of total war against the cartels. The PRI, which dominated Mexico as a one-party state since 1929, is now back in power. Given the PRI's history of corruption, this may mean that a critical opportunity for the United State to give Mexico huge benefits in the war on drugs may have been lost.

 

His foreign policy, in large part, has shown a continued application of the same sort of ideas Bush was lambasted for. Sure, he has withdrawn combat troops from Iraq, and sure, he is soon to do the same for Afghanistan. However, he's just been shifting the violence into different, more covert forms that aren't as visible to the peaceniks in the Democratic base. Continuing aerial drone strikes and operations from Yemen to Pakistan kill innocent civilians and US citizens who were essentially executed without due process. He hasn't even closed Guantanamo Bay, which could be done solely under his executive powers without Congress being able to prevent him.

 

Politicians aren't perfect, and I realize that. Obama has done good domestically, although there is a lot more that could have been done. I recognize that he has had his hands tied by Congress on a lot of issues, and that his tendency toward bipartisanship, while looking good, has also made him make a lot of concessions. However, when it comes to foreign policy, a liberal he is not.

 

EDIT: As for the debt, that's an issue I could also rant about at length, but I'll save it for now. Suffice to say, I'd rather see the government deal with substantive issues - such as economic growth, foreign policy, the environment, and social policy - than cripple itself with austerity. Just because the Tea Party managed to demonize debt doesn't mean that we need to be cutting off our fiscal policy tools when we still haven't seen full economic recovery.

[VCH]

You also can't borrow your way out of a recession. I agree that the US shouldn't put the brakes on spending when it comes to important things, and the "bailout" of the banks and AIG was necessary, and by the way has largely been repaid with interest, but another rate cut by Bernanke (basically impossible) or another round of quantitative easing isn't going to get people to spend; that will require people feeling like they actually have the cash to spare in the first place. Mr Bernanke has no bullets left, and this thing is just going to have to fix itself, like it always does, and by the way sort of is (slowly), if you consider the latest housing data.

 

 

[Cairo Jim]

It seems like fixing debt is insurmountable, when all that is done about it is paying one debt with another.

[Randomizer]

Originally Posted By: Cairo Jim

It seems like fixing debt is insurmountable, when all that is done about it is paying one debt with another.

The debt went down under Clinton until we were finally running a budget surplus. Then the Republicans got into power and decided to spend like mad to buy voters. Drunken sailors objected to the comparison since they didn't spend borrowed money.

It's possible if you don't cut taxes without revenues going up. Republicans forget it wasn't the Reagan tax cuts that raised revenue, but the booming stock market where day traders were paying taxes as ordinary income rates that are much higher than capital gains rates.

[Slawbug]

Citations please?

 

I'm not disagreeing with you necessarily, but having inflammatory partisan rhetoric WITHOUT facts to back it up is the fastest way for these threads to go in the toilet. Therefore: citations please?

[Dire Hobbit]

We can't deal with the drug issues (and others) because we've bought into the idea that if something isn't illegal we should be able to make a 'business' out of it.

 

Same with prostitution (even more controversial). The obvious solution is to decriminalize but not enforce contracts.

But we've had 30 years of neoliberalism so the moment we decriminalize we'd get some [censored] heal instituting de facto sex slavery and calling it freedom.

 

 

[Kelandon]

Originally Posted By: Dantius

Oh, I agree with decriminalization. I just think that it's a bad idea to simply "look the other way" because a lot of people don't like the law. If something is illegal, and that's causing problems, it should be decriminalized. Until that happens, it is still illegal and the law should still apply.

You might naively think so, but it doesn't quite work this way. There's a thing called "prosecutorial discretion." So many crimes get committed that it's impossible to prosecute them all with the limited resources that we have, and frankly, many of them don't need to be prosecuted to the full extent of the law, because American criminal penalties are absurdly high. This means that prosecutors get to choose which crimes to go after and which ones to ignore. Prosecutors are part of the executive branch, which is generally in charge of enforcing the laws, and the president is the head of the executive branch. Every president's job is to decide enforcement priorities (always, no matter who's in office). So Obama does have a choice whether to, say, crack down on California's medical marijuana dispensaries or not; if he doesn't, it's not that he's flouting the law, but that he's decided that other things are more important. If he does, then he's prioritizing this.

And he has. Which means that he's prioritizing this. Which is probably the worst call he's made, as far as policy, in his first term.

Originally Posted By: Randomizer

Originally Posted By: Cairo Jim

It seems like fixing debt is insurmountable, when all that is done about it is paying one debt with another.

The debt went down under Clinton until we were finally running a budget surplus. Then the Republicans got into power and decided to spend like mad to buy voters. Drunken sailors objected to the comparison since they didn't spend borrowed money.

Terms! Terms! The deficit went down under Clinton. The national debt has not gone down, in absolute dollars, since the Eisenhower administration. At the end of the Clinton administration, there was a budget surplus, but we didn't use it to pay down the debt. You can see that, e.g., here.

Bringing the short-term deficit down is more of a party trick than it is sound fiscal policy. The U.S. is still paying incredibly low interest rates on its debt, because it's still the safest place to put your money. We've never really defaulted on our debt (other than a few blips here and there), and we're never going to, unless the Tea Party takes over. So we can continue to borrow almost for free, without any limit in the near future.

Also, there's no expectation that we ever pay the debt down to near zero. There's no reason to. As long as the interest payments are not so excessive that they take over too much of our budget, the debt is unimportant. It's only when the interest payments begin to eat up so much money that we can't put that money towards other things that really need it that the debt becomes a problem. And we're not even close to that yet.

However, if we don't get the long-term fiscal problems in order, then we're in trouble, especially if we can't get some solid growth out of the economy, too. Borrowing some amount one year isn't really a problem, but borrowing that same amount ten or twenty years in a row with minimal growth is a problem. That's the sort of thing that makes interest payments eat up too much of the budget, which could lead to a default, which could be really bad.

Short of that, I haven't heard any reasonable articulation as to why we should care about the debt. It's mostly irrelevant, at least in the short term.

[Dantius]

Originally Posted By: VCH

You also can't borrow your way out of a recession. I agree that the US shouldn't put the brakes on spending when it comes to important things, and the "bailout" of the banks and AIG was necessary, and by the way has largely been repaid with interest, but another rate cut by Bernanke (basically impossible) or another round of quantitative easing isn't going to get people to spend; that will require people feeling like they actually have the cash to spare in the first place. Mr Bernanke has no bullets left, and this thing is just going to have to fix itself, like it always does, and by the way sort of is (slowly), if you consider the latest housing data.

Ugh. There are several things wrong with this post. Let me try to do a quick sketch of what they are. Not going to bother to grab citations right now, but they are there, and I can provide them if you'd like.

1. The US is not, technically speaking, in a recession. We're in a very, very anemic recovery that is almost a depression that's being caused by vast deleveraging by both businesses and consumers: everybody's so focused on paying of their debts that they aren't spending. While this may seem like a good thing, it's very bad: after all,if nobody's spending, then nobody's buying, and so it actually becomes harder for people to pay off debt than it would be if they didn't focus on paying it off in he first place.

2. However, the US gov't doesn't really "borrow" in the conventional sense, since it isn't obligated to pay down its bills like a company or individual, and it (this is crucial) has its own central bank. Current yield spreads on US bonds are lower than inflation because of the vast demand for them, meaning that investor are essentially paying the US to borrow from them (rather than the other way around). However, even if investors were to totally stop buying US bonds, the Fed could simply step in and finance the debt for us, meaning that the US is unconstrained by debt- no matter how much we have, we can always create more.

3. The US is, however, constrained by inflation. While we could theoretically simply eliminate taxes and pay for all government programs by printing money, that would create inflation, which would hurt our citizens and be bad. HOWEVER, under current market conditions, over 10% of our workforce is unemployed or serously underemployed, so aggressive monetary policy wouldn't drive inflation up as high as it normally would, and it's very arguably better that inflation kicks up at least a point or two to incentivize spending.

4. This brings me to my second point: While the nominal Federal funds rate is, IIRC, 25 basis points, it is eminently possibly to "cut" the real rate further and push it into the negative by printing more money or carrying out another round of QE to drive up inflation. This would have the dual effect of both decreasing the absolute burden of debt on consumers and businesses, and also by incentivizing long-term investment by those parties with cash to burn (which there are quite a few of, both large corporations and wealthy individuals). A fellow by the name of, believe it or not, Ben Bernanke argued around a decade ago that Japan's Central Bank should have done exactly this, and they were suffering from the exact same problem we are today (liquidity trap caused by deleveraging and exacerbated by interest rates that were effectively zero), so it's not like this is some crazy political theory.

5. Statements like "this thing is just going to have to fix itself" are liquidationist in nature, and that is a school of thought that should have died out sometime during the Great Depression. Even Milton Friedman, hardly a radical leftist economist, came out strongly against it.

tl;dr: GDP = [Consumption] + [investment] + [Net exports] + [Government Spending]. The first three can't be fixed beyond minor tweaks, and current conditions are letting the US borrow money for a steal. There is absolutely no non-political reason that the Government shouldn't step in and try and fix things now, full stop. It is eminently possible to borrow and spend out way out of this almost-depression, and it is in everyone's best interests that we do so.

[Kelandon]

This is a rant that Paul Krugman does on an almost weekly basis in the New York Times at this point (in between his "WTF Europe" rants and a few other pet topics).

 

I've tried to find sensible criticism of the argument, and while I can find complete nonsense, I can't find something that seems rational and contrary to his fundamental message. It seems like we figured out what to do about this around 80 years ago. So why aren't we doing it?

[Goldengirl]

Originally Posted By: ξ

This is a rant that Paul Krugman does on an almost weekly basis in the New York Times at this point (in between his "WTF Europe" rants and a few other pet topics).

Thank you, and thank Dantius, for stating more eloquently and clearly my viewpoint on the economy currently, and debt in specific, than I would have ever been able to.

As for the reason that we haven't learned, I'd say that economics is counterintuitive. Or rather, macroeconomics operates under different rules than microeconomics. People are far more familiar with microeconomics, being microeconomic agents, and as such would expect the same rules to work on a larger scale. It's a shame that economics courses aren't more widely taught.

[The Ratt]

Originally Posted By: ξ

It seems like we figured out what to do about this around 80 years ago. So why aren't we doing it?

If it involves raising taxes at all, that's probably why, there are a surprising number of people that think all taxes are bad taxes. Otherwise, no idea.

[Student of Trinity]

There's still something somehow compelling about the down-homey insistence that 'America can't keep leaving beyond its means', and so on. It's not really that simple, of course, but macro-economics is disturbingly abstract. One has the feeling that everything it teaches may work well as long as it works, but that there's nothing whatever to stop it from suddenly collapsing, someday, if things get Bad.

 

I'm still waiting to read a really lucid reduction of economics to solid first principles. I'm pretty sure it can be done, though not with much predictive power, because wavering human psychology is bound to be one of the first principles.

 

Already there are a few basic facts that can be emphasized to show that the down-homey view can't be the whole story. One is that a government can print money. Another is that whenever someone spends a dollar, somebody else earns a dollar — and goes out and spends it. So the hundred dollars that I spend today ultimately ends up buying several hundred dollars worth of goods; and if I don't spend it, then that's several hundred dollars worth of goods that stay on store shelves, somewhere. Then there's the fact that if I borrow a hundred dollars and spend it, the rest of the long chain of purchases made with that money is just the same as if I had earned the money originally.

 

These are all basic things that nobody has to think about in balancing their own checkbooks, but that make big picture economics radically different from individual profit and loss.

[Dantius]

Originally Posted By: Student of Trinity

I'm still waiting to read a really lucid reduction of economics to solid first principles. I'm pretty sure it can be done, though not with much predictive power, because wavering human psychology is bound to be one of the first principles.

Reducing economics to first principles is really only a shade above trying to do that to psychology: humans are just too unpredictable to do it well; and there are so many conflicting theories that each have some predictive validity that trying to pick out from each what, exactly, makes that particular subtheory valid and assembling them into a valid theoretical framework is simply impossible.

Plus, there's the added fact that you can't "experiment" per se in economics, all you have is case studies. It's not like you can politely request the German government to please target inflation to 4.5% per year until 2015 to see what effect that would have on fixing the Eurozone- the only "experiments" you could do are what is already being done, which in many cases isn't at all what you need to learn about.

[Student of Trinity]

Maybe; but I have a hunch we could do a big step better than we're doing now. For instance, most of the theories I've heard of seem to be like Aristotelian physics. You look at how things are now, and that's supposed to tell you immediately how things are going to change. But I think that human perception of how things are is itself a big factor, and it always lags. So in effect there is inertia in economics, and a more Newtonian approach would probably be better — second order dynamics rather than first. As I tell my students, the real content of Newton's Laws was only one thing, but it was huge: that the laws of nature are about accelerations.

 

That is of course not to say that we'll ever predict the economy like the motion of a satellite. But framing everything in second order terms is a basic conceptual change that can make a qualitative difference. Or you could go higher order still. At some point, you're just adding unlimited fudge factors, but I think that there might be a disproportionate amount of explanatory power to be gained by going one or two orders further.

[Randomizer]

You don't have a proper control group to test economic theories against.

[Student of Trinity]

Right. But the same is true for astronomy. You can't conduct experiments on stars at all. There is, however, a huge amount of data, enough to test your theories pretty stringently — once you've got theories good enough that they can bear any comparison with the data at all. Economics doesn't show us thousands of classes of millions of virtually identical stars, but I think something ought to be possible in the way of theory testing, especially as the quality of economic data improves.

[Kelandon]

Originally Posted By: Student of Trinity

Maybe; but I have a hunch we could do a big step better than we're doing now. For instance, most of the theories I've heard of seem to be like Aristotelian physics. You look at how things are now, and that's supposed to tell you immediately how things are going to change. But I think that human perception of how things are is itself a big factor, and it always lags. So in effect there is inertia in economics, and a more Newtonian approach would probably be better — second order dynamics rather than first. As I tell my students, the real content of Newton's Laws was only one thing, but it was huge: that the laws of nature are about accelerations.

That is of course not to say that we'll ever predict the economy like the motion of a satellite. But framing everything in second order terms is a basic conceptual change that can make a qualitative difference. Or you could go higher order still. At some point, you're just adding unlimited fudge factors, but I think that there might be a disproportionate amount of explanatory power to be gained by going one or two orders further.

What, exactly, would this mean for economics? It sounds good, I guess, but the literal analogy (talking about rates of change rather than current values) is already a significant part of economics.

[Slawbug]

I play a lot of German-style board games. It's pretty common in the more complicated of these games to have a lot of different stuff, "intermediate resources" I'll call them, that you can accrue in various ways, and that you need to use in order to win; but in the end, winning just depends on a "final resource" -- normally, victory points -- and the intermediate resources themselves are not valuable.

 

In thinking about these games, my general tactic is to try and flatten these game-ological pathways and look at what is most efficient in raw numbers, from converting whatever the "input resource" is -- often, player turns or actions -- to the final resource.

 

For example, lately I've been playing Le Havre, which offers many intermediate resources and pathways to victory points. On one turn, I might be able to simply pick up some francs to gain 5 points; or use resources of some value to build a building of greater value, for a net gain of 8 points; or I might try a more complicated chain of actions. I can visit the Colliery for 4 Coal, the Cokery to convert Coal to Coke, the Ironworks to get 4 Iron using a Coke, the Steelworks to convert Iron to Steel using some Coke, and finally the Shipping Lane, using the last Coke to sell the Steel for 8 francs each. That's a final gain of 32 francs, which sounds huge, but it actually took 5 turns to get, so I really earned about 6 or 7 francs per turn -- making the process (in this simplified example) less lucrative than constructing that building.

 

I don't have any formal training in economics, so I tend to try and look at economic systems in these terms. Money is solely an intermediate resource. The input resource is really people doing work that contributes to a society in any way, and the final resource is positive effects of society (of the work that others do) reaching appropriate individual members.

 

Money is one of the main systems that is used to map the input resource to targets (and often, other intermediate processes) in such a way that the final resource is successfully created. Money is used both to help people seek the products of work that will result in this final resource being realized, and also to create more of the input resource by encouraging people to do work. Money is pretty effective at both of these tasks, but it can't do everything. It is a (more or less) necessary, but not a sufficient condition for an individual to be able to perform contributional work and thus constitute an input resource; and there are many, many times where money simply is not in the right place at the right time to secure certain final resources -- and other times where money is simply not able to secure a final resource because you need some other intermediate resource (e.g., feeling loved) to do the job.

 

I'm curious what people with better grounding in the discipline think of this view.

[Dintiradan]

Hmm, except that the Game of Economics doesn't end when the deck runs out, or when we complete a certain number of rounds. The game goes on indefinitely, so there is no 'final' resource. (If we do want to model the economy, it should be with something like a Markov Decision Process, not a finite game tree. Easy, right?)

 

I do understand what you're getting at, just saying that the analogy is less than perfect (unless you're talking about short-term goals rather than long term survival).

 

 

Something that's always bothered me in discussions about federal debt -- bear in mind, I'm a complete layperson here. I understand why people say it's in a country's best interest to perpetually run a deficit. But in any lending situation, there are always two parties, the borrower, and the lender. Now, are there any situations where the number of willing lenders could decrease in the future? Or, to put it in other words, any situations where lending to the federal government becomes less desirable? It seems to me -- again, someone completely unversed in macroeconomics -- that the theory is a number of agents interacting with a static environment. Thing is, the actions of the agents can change the environment; look at stock market crashes. And it seems to me that when you have agents as large as the States, the impact of the environment is even larger.

 

I dunno, maybe I'm just paranoid, or missing something obvious, but it's something I've never seen directly addressed when people talk about perpetual deficits.

[Slawbug]

There is no 'final' resource in that sense because there is no final accounting of scores, absolutely. That word does not apply. But I don't think the analogy requires a definite end. Let's just call it the 'output resource' instead. Obviously the 'output resource' in our case is not so flat or simple as 'victory points', but can we use it as an abstraction?

[Student of Trinity]

My hopes for a more powerful economics are indeed along Slarty's lines. A lot of the concepts of economics, including money, seem to me to be intermediate resources, as Slarty calls them. The ultimate bottom line seems to be mainly that people get out of bed and put in X hours of hard work. Or at least, that's one final resource.

 

In principle a government could find it had no willing lenders at all. Before that point, people will lend to it only at a sufficiently high rate of interest — and that interest rate creeps up, as people begin to worry more about the government maybe repudiating its debts, or inflating its currency to the point where its bonds become worthless.

[Dantius]

Originally Posted By: Student of Trinity

In principle a government could find it had no willing lenders at all. Before that point, people will lend to it only at a sufficiently high rate of interest — and that interest rate creeps up, as people begin to worry more about the government maybe repudiating its debts, or inflating its currency to the point where its bonds become worthless.

Yes and no. This is, again, simply not something that could possibly happen if a country has its own central bank, ala the US, UK, Japan, etc. Even if literally no one would willingly purchase government debt, the central bank could simply credit funds to member banks conditional on their purchase of debt, in effect "buying" government debt through the banks as middlemen.

However, for some reason, a vast swath of the economic activity in the world, namely the Eurozone, cannot do this- although they have a central bank, the bank is not willing/able to infinitely subsidize government borrowing the way it has in (to use the textbook case) Japan. This leads to stuff where, instead of simply having the Fed magically create trillions of dollars to prop up banks, the Spanish government has to come up with those funds out of tax revenues- which is a really sucky thing for them.

[Student of Trinity]

Right. In principle a modern government could in fact just print legal tender. It could pay all its civil servants, for instance, with little vouchers, whose holders are legally entitled to take any good or service they want, from anybody in the country, as long as they hand over a certain number of vouchers in exchange. If somebody doesn't want to give over a new car, say, to a civil servant, merely in return for a pile of vouchers, then the cops will show up and haul the car dealer to jail.

 

In effect this would just mean getting back to the days before money was invented. By which I don't mean the bartering that went on between, say, neighboring farmers. I mean the command economy, where the lord just took his share of the harvest, and if the peasants tried to hold out on him, his knights killed a few peasants.

 

But of course this voucher system is exactly what we actually do have, now. That's what money is. The big difference is that, whereas the peasant who forked over half his crop to the lord's overseer got nothing at all for it, the car dealer who has to give away his best floor model for a heap of vouchers does at least get the vouchers. He can take some of those vouchers down the street to the bar, and use them to get the bartender to give him a beer to drown his sorrows. If the bartender doesn't want to give beer for vouchers, the bartender will go to jail. So it all has a silver lining for the car dealer. And for the bartender. And so on. In fact it all just works.

 

Actually there is one more huge difference between legal tender fiat money and command: the car dealer gets to say, though only in advance, how many vouchers the car costs. If car dealers get to feeling that there are a lot of vouchers around, they'll start asking for more for their cars. Maybe then the government starts issuing more vouchers to its employees. Pretty soon a person has to already have a pick-up truck, just to carry the mountain of bills they need in order to buy a car. In this sense the government does not have the power to print car-buying, though if it wants it can get into a race with car dealers, seeing whether it can print money faster than the dealers can raise their prices. This situation seems to actually happen, somewhere in the world, every generation or so.

 

The absurd stage at which it is physically difficult to carry enough banknotes to buy basic necessities never lasts long. Something breaks. But the net effect is not necessarily all bad. It destroys some people, financially — everyone whose income was fixed in terms of the original currency. But it saves others — everyone whose debts were fixed in terms of the original currency. Since debt seems to be becoming a widespread problem, I've read predictions that the whole first world may be heading for a bout of hyperinflation. Nobody will exactly choose it deliberately, but the invisible hand of our collective self-interest may bring it on, regardless.

 

Invest in goods of durable value. One of my colleagues is thinking of stockpiling sugar.

[Randomizer]

I can't remember at the moment the African country that was undergoing hyperinflation so that it kept having to print new currency to replace the stacks of old currency. The rebel opposition tried to get the European companies that supplied the paper needed for the currency to stop so that the government would collapse. The inability to print money would effectively cripple the government.

 

Of course in the West money is transferred electronically so it doesn't even need to be physically printed to exist. Everyone accepts that as long as a record exists the money is there.

[Lilith]

Originally Posted By: Student of Trinity

If the bartender doesn't want to give beer for vouchers, the bartender will go to jail.

That's... not how money works. If you refuse customers' business arbitrarily, you might get fired, but in general it's not illegal to do so. A price tag is not a binding offer of contract: in legal terms, it's only an invitation to treat, which basically means that it's saying "hey, if you offer to pay this amount of money I might sell you this car".

The only thing that's special about legal tender is that you're required to accept it as payment for a debt.

[Student of Trinity]

If you drink the beer, then the bartender is not allowed to demand payment in gold, or anything else, to settle your tab. He has to accept your dollars. But yes, I suppose a bartender, or a car dealer, could decline to set prices for sale in dollars, but instead offer only to trade items for given amounts of gold. Or of sugar.

 

What happens if two people agree to a contract whereby one owes the other a debt payable in sugar? Does the legal tender clause allow the debtor to pay in dollars instead? Or does such a contract not count as a debt?

[Randomizer]

Originally Posted By: Student of Trinity

What happens if two people agree to a contract whereby one owes the other a debt payable in sugar? Does the legal tender clause allow the debtor to pay in dollars instead? Or does such a contract not count as a debt?

It's called a future's contract. The commodities market has a few dozen different contracts were payment is made for a future delivery of a material. You probably can get almost any type of payment if both sides agree in advance.

There are some legal restrictions on debt payments. You can refuse payment if the payment is over $50 in cents. Also some people try to get out of payment by offering an extremely large value bill and demanding change for a small debt.

[Lilith]

Originally Posted By: Student of Trinity

What happens if two people agree to a contract whereby one owes the other a debt payable in sugar? Does the legal tender clause allow the debtor to pay in dollars instead? Or does such a contract not count as a debt?

Well, that'd essentially be treated the same as a contract to deliver a certain amount of sugar by a given date, which isn't such an unusual thing. If you were unable or unwilling to fulfil the contract to the other party's satisfaction and the matter went to court, you usually wouldn't be required by the court to deliver the sugar: that would be an order of specific performance, which is generally only granted under fairly restricted circumstances (usually when the goods in dispute are something unique, like a specific parcel of land or a work of art). Instead, you'd have to pay monetary damages. So in the end, yes, the other party would probably have to accept legal tender in lieu of sugar if you stubbornly refused to hand the sugar over. But you might have to pay more than the value of the sugar, if not having the sugar caused a financial loss to the other party. (On the other hand, you can't generally be put in jail for being unable to pay, as long as you weren't intending to defraud anyone.)

The Wikipedia article on legal tender does a pretty good job of answering your questions about when exactly legal tender has to be accepted.

[Tyranicus]

Originally Posted By: Randomizer

I can't remember at the moment the African country that was undergoing hyperinflation so that it kept having to print new currency to replace the stacks of old currency. The rebel opposition tried to get the European companies that supplied the paper needed for the currency to stop so that the government would collapse. The inability to print money would effectively cripple the government.

Zimbabwe.