Saturday, April 09, 2011

Free Candy For Everybody!

An anonymous commenter replies to my post on deficit spending:
So if the government enacted a Free Candy For Everybody policy, and over ten years built up a trillion dollars in debt buying candy from overseas and distributing it to everybody of voting age... When people come of age where they can pay taxes that go to the debt that was used to buy the candy but never got any of the candy themselves, it's exactly the same to them as if the debt had never been run up?

Thank goodness, I thought they'd either have to pay higher taxes or have fewer government services to make up the difference, at least on the debt's interest if they didn't care about paying down the principal.
It really is truly amazing how many of my outraged commenters cannot read and understand simple declarative sentences in the English language, and how economic ignoramuses such as Alonzo Fyfe and my anonymous commenter appear to lack either the desire or ability to think beyond their naive, faith-based delusions.

First of all, a trillion dollars is chump change, less than a month's GDP. It's like Dr. Evil demanding One Million Dollars. The Department of Defense has half a trillion in couch cushions at the Pentagon. If you're going to create absurd hypotheticals, at least make them scary.

It is of course possible to use deficit spending unwisely. In much the same sense, it is possible to drive a car into a crowd of pedestrians, but by itself that is not an argument that cars are inherently and universally bad, which is the argument that Fyfe makes regarding deficit spending. In the case Anonymous presents above, what is unwise is consuming a trillion dollars worth of candy; it would be just as unwise no matter how we chose to account for its consumption.

Although it is probably ludicrous to believe that there is any actual desire for a trillion more dollars worth of candy — I suspect that if the world made that much more candy, it would simply rot in warehouses and cupboards — if there were that much demand, why would we purchase it all from overseas? Are Americans suddenly unable to build factories and produce candy? It really is funny how in their hypotheticals, libtards always assume that their vaunted American Free Enterprise system suddenly turns to jelly in the face of the most trivial government action.

If there really were a trillion dollars worth of unmet desire for candy, turning that desire into demand by deficit spending would cause capitalists to build a lot of factories and hire a lot of workers to produce a metric assload of candy. Which would cause exactly what deficit spending is supposed to: stimulate additional production to move short-run aggregate supply equilibrium to the long-run aggregate supply equilibrium with aggregate demand.

Even if there were a trillion dollars of unmet desire for candy, and it turned out that American capitalists were unwilling or unable to meet that demand, why would we expect foreigners to supply it? Foreigners lack a good mechanism for collecting debt coercively. If our children believed the money had been spent unwisely, and it were not in their interest to repay their debt, it would be within their ability to repudiate the debt. Knowing this, foreigners would loan us a trillion dollars worth of candy only if they believed in was in our children's interests to pay with a trillion dollars worth of something else in the future. And if it were in our children's interests to pay the debt, how are we acting immorally by incurring it.

Macroeconomics is not that hard. No harder than evolution. Seriously, people, take Principles of Macroeconomics at your local community college, and at least try to think these issues through logically.

9 comments:

  1. Wow you're good at missing the point. Usually you drop some sophistry to defend your position, but this time you skillfully evade even awareness of what is being said. I read your first post, it was stupid. If I tell my child that he'll need to spend a tenth of his time during his working life financing the yacht I bought when he was a baby and accidentally crashed and sunk when he turned fifteen, then I've stolen a tenth of everything he could have had during his adult life. Or perhaps you think parents should be allowed to sell their children into slavery to pay off their own debts?

    The point of the analogy I made is that future generations are made to forgo benefits in favor of benefits given only to the current generation, and you go on a tirade against the specifics of a deliberately silly analogy that I chose so you couldn't pull the "well they'd still benefit from it" card. An analogue would be continuing funding what the budget designer considers exorbitant Medicare benefits for current seniors to get their votes while taking away the benefits of those who have yet to get the vote.

    Why don't you try addressing the second paragraph next time, rather than smirking to yourself about what's in the first? I swear, at least that dimwit Evanescent will acknowledge your point while he futilely flails at it.

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  2. If I tell my child that he'll need to spend a tenth of his time during his working life financing the yacht I bought when he was a baby and accidentally crashed and sunk when he turned fifteen, then I've stolen a tenth of everything he could have had during his adult life.

    If you tell your child this, if he has any sense at all, he'll say, "Fuck you, Dad, I'm not paying for shit."

    But of course, being your child, he's probably as stupid as you are.

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  3. I addressed all your points. It's not an argument that it's possible for deficit spending to be used unwisely. If the spending is not terribly unwise, then deficit spending will be stimulative. If the benefits to our children exceed the costs, they will gladly pay they debt; if it is not in their interest to do so, they have the ability to repudiate the debt. You appear to be simply outraged that I do not have sufficient faith in your dogmatic assertion to overlook the logical arguments against it.

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  4. Also, your Medicare example, although more realistic, is equally inept. Medicare spending on seniors today is supplied by adults working today, all of whom have the vote. We cannot consume in any way what has not yet been produced. Medicare spending on seniors tomorrow (today's working adults) will be supplied by adults working tomorrow (today's children); if those children, who will be working and voting, find the spending to be excessive, they are free to vote to not spend it.

    There are a lot of ways we can screw up our children's world. But debt is a social construct; it is not an element of physical reality. Therefore just incurring debt by itself is not one of the ways we can screw up our children's world.

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  5. My child can choose not to pay the debt if he decides he never wants to buy a house and wants to work at the McDonalds down the street for years before he can save up enough for the car he needs to drive to the real job he could have been doing from day one. Just like future generations can default on debt if they decide they never want to be able to sell off treasury bills again. Because as we all know, careful management of the budget will completely eliminate the possibility of events which require massive spending spikes high enough to destroy the economy if it was all made up in immediate taxation.

    As for the Medicare, I'd grant you that it was being paid for by current voters, except for outsized voting power of the senior bloc. Just because members of my cohort are dimwits doesn't mean it's morally right for me to be punished for their apathy.

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  6. Hi Larry:

    I understand - I think- your economic points (I took macro ec 20 years ago in college for 3 credits) but debt still worries me. What is happening in places like Ireland and Greece?


    Cheers
    BW

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  7. Ben, you'll have to read Krugman about Ireland and Greece; I'm not nearly as confident about international economics as I am about macroeconomics.

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  8. Anonymous (and really, you really do need to do me the courtesy of picking a handle), you need to decide if you want to support Fyfe's original argument that deficit spending is inherently and universally bad, or if you want to make the different case that deficit spending is presently being employed unwisely. This discussion is about the first point, not the second: Deficit spending, according to Fyfe, constitutes stealing, actually taking something from our children that could have otherwise used, and using it for ourselves.

    If deficit spending is inherently bad, then its completely ridiculous to condemn deficit spending on because it would compromise our children's ability to engage in deficit spending of their own.

    I'm rapidly losing patience. If you want to pick a handle (I do not require any authentication) and stick to the actual topic at hand, then I will publish and respond to your comments. Unless and until you do so, I will no longer publish your comments; if you want to anonymously discuss issues unrelated to my posts, you are free to get your own fucking blog, asshole.

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  9. Goddamn I love you Larry (in a comradely way of course).

    Unfortunately your anonymous posters has a money fetish and thus is having trouble seeing the forest for the trees. I'll admit it's taken me a surprisingly long time to work my way from it. I'd attempt to explain it to anonymous but don't have the time and fear I'd do a lousy job. It's one of those things were you have to understand the difference between what is physically real and what is socially constructed.

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Please pick a handle or moniker for your comment. It's much easier to address someone by a name or pseudonym than simply "hey you". I have the option of requiring a "hard" identity, but I don't want to turn that on... yet.

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