Government spending is not a zero-sum game

[ka9q]

Libertarians Conservatives often argue that the economy government spending is a zero-sum game, and that government spending it necessarily decreases everyone's standard of living.

I strongly disagree; the economy is most definitely NOT a zero sum game. The big variable is productivity. This number drops quite a bit when lots of people are out of

Comments

[ka9q]

You still don't get it. I argue that EVERY country, including ours, is and always has been inherently "socialist". They differ only in degree (the government's fraction of GNP) and nature (which socialist services the government funds). This is true even for governments that do little more than maintain an army. National defense is provided to a country's citizens as a socialist service.

I'd need much more specific definitions to answer your question. What's "productivity"? Per-capita purchasing power? Depending on who does the calculation, the US is 4th, 6th or 8th highest in the world, with countries like Luxembourg, Norway and Singapore above us. How about average life expectancy? That's a good indicator of the productivity of its health care system. The United States is 45th in the world, with most of western Europe well above us, including countries I suspect you'd classify as "socialist".

Again, what the hell is FM^2??

It's pretty funny to blame the collapse of the economy on the Democrats just because they (barely) controlled Congress for the last two years. Starting in 1980 we had 20 years of Republican presidents, including the most radical one in many generations in terms of wars started and deficits increased.

I don't think you skipped Iraq as an honest oversight, did you? We were attacked, so we had a legimate reason to invade Afghanistan, though that legitimacy extended only to attacking al Q'aeda and those parts of the government that supported them. We had no legitimate reason whatsoever to invade Iraq. And in neither country do we have the right to violate the Geneva Conventions and the Convention Against Torture. They are treaties to which the US is a party, so violations are crimes under US law as well as international law. Bush and Cheney have openly admitted to ordering those violations, so it is not hyperbole to refer to them as war criminals. They ARE war criminals.

For what it's worth, I think Obama is making a mistake by sending more troops to Afghanistan. Our job there should be strictly limited to ensuring that it isn't used as a base for further attacks on us. As intensely as I dislike the Taliban, getting rid of it just isn't our job, and we will probably fail to do it anyway.

[ka9q]

FM^2 = Fannie Mae & Freddie Mac. Per your suggestion, I looked up the Moral Hazard definition on wikipedia: "Moral hazard is the prospect that a party insulated from risk may behave differently from the way it would behave if it were fully exposed to the risk." This is consistent with my point. In a free market, if companies are exposed to risk they behave more responsibly. This massive intervention by govt removes most risk and therefor creates a situation which promotes bad behavior. In a free market - the companies should have been left to fail. The dooms day scenario our elected officials tried to convince us would happen would not have happened. Companies would be have bought and following the "impulse response" they would have self corrected to "steady state."
The war in Iraq was wrong - or at least that is my position based on the information I have. But that still does not justify your point that the "conservatives" are wrong. The last administration was a failure, and most political analysts would agree that it was a clear departure from conservative values.
Back to productivity, what would your productivity be if we take your free Q sponsored health care away, force you to pay for govt health care, and then significantly reduce your salary to the market average since because we will put in place the "fair pay doctrine".
Your point that we are already "socialist" doesn't go far, as politics isn't binary. Yes, we have "common interest" things in every nation, but there are many colors of gray. There are many of us that want to avoid this country from going to the radical left. We all pay taxes for common benefits, we don't want to pay MORE taxes and perpetuate MORE poverty. We have seen nations go this way before and we already saw where they ended up. BTW, you still have yet to name one successful socialist nation. Lets reflect on: USSR and Eastern block nations, China, Cuba, and Europe. Europe is probably half way there. How is productivity there compared to the US? Name ONE significant product/achievement that has come out of Europe in the last 40 years.

Moral Hazard

[ka9q]

Yes, that's the definition I thought it had. And, believe it or not, we are actually in violent agreement that it would have been best to let these companies fail. Since I became a *former* EV1 driver, I confess that I've kinda been looking forward to GM's eventual failure. Unfortunately, a lot of people will suffer a lot more from it than will the people who were responsible for it.

And that's precisely the problem. These companies became "too big to fail".

And why was that? Because government fell down on its job. In fact, in recent decades government, driven by economic libertarians, has been hell bent on removing every obstacle possible to anticompetitive behavior. Mergers and acquisitions have taken place at a fever pitch and antitrust law has been completely dormant, all in the supposed name of "getting government out of the way" and "letting the wisdom of the market rule".

You see, the moral hazard that got us into trouble was the moral hazard of corporate bankruptcy. It became possible to set up a corporation, establish a highly leveraged investment, and get rich if the investment paid off. But if the investment failed, then the corporation would simply declare bankruptcy and those who ran it would walk away. So much of this went on that in the end it all came down in a cascading failure.

All in the name of "unleashing the wisdom of the market", extremely complex new forms of investments were left unregulated, everyone got in on the game of gambling with other peoples' money, and the inevitable happened.

The fact is that there is a proper role for government regulation, and markets can actually be freer and more productive WITH it than without it.

Now maybe you agree that this experiment in deregulation was a failure and that a move back to greater regulation is now necessary to -- paradoxically -- make the markets more free, or at least function more like ideal free markets. So maybe we're in violent agreement.

But I'm not sure. If you oppose ANY move in that direction, you have a real problem. We've done the experiment and the results were pretty clear. So I guess your only alternative is to mischaracterize your opponents' arguments, shout "socialism" at them and hope that others find the word as yucky as you do.

I think that's where we came in. I was merely pointing out that every government since the concept was devised have ALWAYS provided socialist-like services, sometimes on a truly massive scale (as with the United States Department of Defense). So just yelling the world "socialism" over and over isn't very constructive. It would be far more constructive to discuss *WHICH* services should be provided in that manner and to what degree, and which are better provided by the market. It would also be much more constructive to discuss the degree to which governments should be involved in regulating markets, not whether such regulation is morally right or wrong or whether it again constitutes the bogeyman of "socialism".