Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[Felch]

The problem there is that you're ignoring the difference between quantity and quality. "Free markets" require an awful lot of regulation to maintain.

Absolutely. I'm not one to confuse the gangster economy of Post-Soviet Russia with a free market. In order for a market to be free, the state must be strong enough to enforce contracts and protect the people from greedy and corrupt organizations. The problem right now is that we have a government that is cracking down on cancer-patients who smoke weed, and ignoring the bank executives who pull down massive bonuses while the shareholders get shafted.

I'm okay with regulation, it just needs to be sensible (i.e. pro-market) and well enforced.

Again, you focus on quantity distinction and ignore quality altogether. West German and South Korean governments were fairly active in their own economies, they didn't suck at it like the commies.

Germany and South Korea both have heavy ties between the governments and industry, far more so than I would like. I used them as examples because they helpfully control for social and cultural factors and demonstrate failures of excessive governmental involvement.

I believe Libertarians are all anarchists because the American spectrum is shifted way to the right of where it should be. You can make arguments that are sensible in theory, but in practice if you identify yourself as a Libertarian you would take those arguments to what I consider extreme conclusions. Don't get me wrong Republicans are far too right-wing at this point for my taste, and Democrats are... well, somewhat incompetent. They didn't put up a reasonable fight during the Bush years, and now they seem to be blowing the leadership bit too. If not for the two party system, I'd hope they would also lose.

Well, we're not all anarchists. Some of us are just opposed to the intrusiveness of the modern state, and want to see the excesses rolled back. Like with everything else there's a range of opinions, and unfortunately the extremists tend to get the most attention.

But we would invariably assign different values to the costs and the benefits. You would like the tax rate to be lower, no doubt and would value being able to cut programs and give money back higher than say, me.

We certainly have a difference of opinion. The difference is that I don't agree with confiscating a chunk of your paycheck in order to finance my agenda, while you seem to think that it is your moral duty to take a chunk of what I earn and spend it on government programs. I'd prefer if the one not taking anybody's money was given the benefit of the doubt. That's all.

Much the same way, but as mentioned above, the disagreements would come in the details. It all comes in how we value the benefits, and I don't just mean the intangibles like security, environmental protection, etc. I mean, how much is a job worth?

A job is worth what somebody is willing to pay to keep you working. If you're not doing anything useful, you don't deserve to be paid.

Full employment is not a goal that I subscribe to. I'd rather sit on my ass and let robots do the working.

I think Japan did a whole lot of other things post WWII, and its wages were very low. I think if you get rid of the MIC in this country without a plan, you're just going to lose those jobs and never see any benefits. There's nothing that says that resources have to be fully utilized.

There's very little benefit to the MIC right now. And you don't need a plan to get the economy going. Just leave people alone, and trust them to do the right thing. You'd be amazed at the ability of individuals to manage their own affairs, once you quit treating them like children.

You cut jobs to give money to people who aren't going to spend it all. Even if they did, you lose jobs now for a the possibility of jobs later. In the meantime, the loss of jobs accelerates the vicious cycle we're in. Moreover, I don't trust the current government to actually give the tax cuts to the poor.

People shouldn't spend all the money they get. They should save it in banks or invest in into equity markets. Then the money can be lent or spent on capital improvements in industry. The consumption based economy is what brought us to this catastrophe, and we need to think differently or it'll just keep happening again and again.

[Kidlicious]

Accurate is an adjective. According to dictionary.com it means, "free from error or defect; consistent with a standard, rule, or model; precise; exact." Thanks for the question.

You haven't answered my question. Perhaps you didn't understand. I don't understand what your post has to do with what I said. The word "accurate" is particularly queer.

[Victor Galis]

Absolutely. I'm not one to confuse the gangster economy of Post-Soviet Russia with a free market. In order for a market to be free, the state must be strong enough to enforce contracts and protect the people from greedy and corrupt organizations. The problem right now is that we have a government that is cracking down on cancer-patients who smoke weed, and ignoring the bank executives who pull down massive bonuses while the shareholders get shafted.

Oh, I fully agree with that. The problem there though is that the free-market ideologues seem to forget that many people are dishonest, and given the chance would lie, cheat, and steal until they get caught. These people have taken control of the government and deregulated what needs to stay regulated and banned things which should probably only be heavily regulated. (I prefer stiff taxes to outright bans for things like pot and tobacco.)

I'm okay with regulation, it just needs to be sensible (i.e. pro-market) and well enforced.

We might have a problem with terminology here. Usually when Republicans say pro-market they mean: let the fat cats screw everyone else. If by pro-market you mean: conducive to encouraging mutually beneficial trade where neither buyer or seller gets screwed, then I agree. (By not getting screwed I mean things like actually getting what they think they're getting, not being at the mercy of monopolies, etc.)

Germany and South Korea both have heavy ties between the governments and industry, far more so than I would like. I used them as examples because they helpfully control for social and cultural factors and demonstrate failures of excessive governmental involvement.

I disagree on that assessment. I think what they show is precisely that the government can be stupid or it can be smart. Realistically, it's a bit of both. The US government dropped the ball big time keeping an eye on Wall Street. It's also probably too heavy-handed in the War on Drugs. So all governments can both over- and under-regulate in different areas at the same time.

Well, we're not all anarchists. Some of us are just opposed to the intrusiveness of the modern state, and want to see the excesses rolled back. Like with everything else there's a range of opinions, and unfortunately the extremists tend to get the most attention.

Another problem is that certain phrases become euphemisms for particular policies, and it becomes difficult to have a reasonable debate. See my point about pro-market.

We certainly have a difference of opinion. The difference is that I don't agree with confiscating a chunk of your paycheck in order to finance my agenda, while you seem to think that it is your moral duty to take a chunk of what I earn and spend it on government programs. I'd prefer if the one not taking anybody's money was given the benefit of the doubt. That's all.

That's pretty obvious. I believe the modern state can only work if its adequately financed and forcing everyone to pay taxes is the best way to do that. I also agree that some of the money could be better spent; however, now is not the time to cut things that provide jobs. I think the government should run surpluses to pay down the debt in good times and deficits to stimulate the economy in bad.

A job is worth what somebody is willing to pay to keep you working. If you're not doing anything useful, you don't deserve to be paid.

The problem then is if you have unemployed people, they're not buying things, which leads to other people being unemployed.

Full employment is not a goal that I subscribe to. I'd rather sit on my ass and let robots do the working.

I would too, but the fat cats wouldn't let us get away with it. I personally think a 35 hour work week would solve a lot of the current unemployment problems if it were properly enforced. I mean we get ever more productive, yet we don't work any less. Granted some of this leads to owning more stuff, but there really isn't a choice between materialistic acquisition or more free time.

There's very little benefit to the MIC right now. And you don't need a plan to get the economy going. Just leave people alone, and trust them to do the right thing. You'd be amazed at the ability of individuals to manage their own affairs, once you quit treating them like children.

It's not about not trusting individuals to do the right thing, it's about believing that if individuals do what's best for them, the country gets screwed. Right now, saving more, consuming less is the "right" thing to do for most individuals. Doing that further depresses our economy though. The right thing would be to keep spending and stimulate the economy, but you don't want to be the only sucker that does that while everyone else pays down their debts.

It's a problem of externalities. Governments need to encourage behaviour that is good for society, but not compensated at the individual level.

People shouldn't spend all the money they get. They should save it in banks or invest in into equity markets. Then the money can be lent or spent on capital improvements in industry. The consumption based economy is what brought us to this catastrophe, and we need to think differently or it'll just keep happening again and again.

Part of our problem is that we allowed the Chinese others to save for us. The rewards for saving should have gone up if the supply of savings were very low and the demand for capital investments was very high. Instead we imported a lot of cheap money from abroad. Until the Chinese stop saving so much or being heavily indebted carries a heavier stigma here, I don't see the situation improving.

I would like to see the tax deductions for mortgages go. Subsidizing debt isn't helping either.

[Arrian]

I would like to see the tax deductions for mortgages go

This, like any other reversal of a long running policy, would have to be done slowly. Done quickly (hey presto, no more deductions) and you will cause a lot of disruption, and furthermore I don't think it's fair to yank people around like that. Are tax deductions for mortgages a good idea? Frankly, I'm not sure and I'm beginning to believe the answer may be no. But we've been running that particular incentive for a long time now, and people have responded accordingly. Doing an abrupt about-face would be bad. I could absorb that particular hit. Many others could not.

-Arrian

[Victor Galis]

This, like any other reversal of a long running policy, would have to be done slowly. Done quickly (hey presto, no more deductions) and you will cause a lot of disruption, and furthermore I don't think it's fair to yank people around like that. Are tax deductions for mortgages a good idea? Frankly, I'm not sure and I'm beginning to believe the answer may be no. But we've been running that particular incentive for a long time now, and people have responded accordingly. Doing an abrupt about-face would be bad. I could absorb that particular hit. Many others could not.

-Arrian

True. Now's not the time to kick housing prices down even lower. Though you could pass the law now and have it kick in gradually in a few years. This would give people advanced notice.

I guess part of it is my dislike of this over-glorification of home ownership and suburbanization. (I put that right up there with the MIC.)

[Arrian]

I think there is something to be said for homeownership (ownership in general, though - which would include owning apartments in NYC). Suburbanization isn't necessarily the same thing.

Of course, I live 21 miles from work and I ****ing LOVE my big house with almost 6 acres of land. So I'm not exactly gonna moralize about this, ya know?

-Arrian

[Felch]

Shifting over to a land tax, which especially punishes owners of vacant properties in urban areas, might be another policy that could curb suburban sprawl.

[Victor Galis]

I think there is something to be said for homeownership (ownership in general, though - which would include owning apartments in NYC). Suburbanization isn't necessarily the same thing.

Of course, I live 21 miles from work and I ****ing LOVE my big house with almost 6 acres of land. So I'm not exactly gonna moralize about this, ya know?

-Arrian

I guess I just don't see the benefits of losing hours each day commuting, not to mention the studies that show home ownership increases unemployment (by reducing labour mobility).

[Arrian]

My commute is 30 minutes 1-way. When I had an apartment, I had a 15-minute commute until my job got moved, after which I would've had a 30-45 minute commute if I'd stayed. I ended up moving in with my then gf, now wife, and had a 30 minute commute. So for me, moving out to the country didn't change my commute.

Now, it's true that if I rented an apartment in Hartford, I could have a 5 minute walk for a commute. But I don't want to live in Hartford. Full stop.

-Arrian

[Victor Galis]

My commute is 30 minutes 1-way. When I had an apartment, I had a 15-minute commute until my job got moved, after which I would've had a 30-45 minute commute if I'd stayed. I ended up moving in with my then gf, now wife, and had a 30 minute commute. So for me, moving out to the country didn't change my commute.

I guess I assumed 21 miles would take longer.

Now, it's true that if I rented an apartment in Hartford, I could have a 5 minute walk for a commute. But I don't want to live in Hartford. Full stop.

-Arrian

I used to have a 5 minute commute when I lived in Montreal, it was wonderful. Of course, Montreal > Hartford.

[Felch]

We might have a problem with terminology here. Usually when Republicans say pro-market they mean: let the fat cats screw everyone else. If by pro-market you mean: conducive to encouraging mutually beneficial trade where neither buyer or seller gets screwed, then I agree. (By not getting screwed I mean things like actually getting what they think they're getting, not being at the mercy of monopolies, etc.)

I'd say a recent event that really upset me was how bank executives were awarding themselves bonuses while the shareholders were watching their investments become worthless. While it's easy to try and score populist points and consider the shareholders to be fat cats, the reality is that many of the losers were middle-class investors with money in their 401(k)s, state and corporate pension funds, and charitable trusts. So a regulation that would make sense to me would be something to strengthen the rights of shareholders versus executives.

Let me reemphasize. I'm pro-market because I believe that markets are good for the average person. Once the market is corrupted and ceases to provide for the general populace, it loses its legitimacy. Monopolies are an example of this corruption, and I oppose them.

That's pretty obvious. I believe the modern state can only work if its adequately financed and forcing everyone to pay taxes is the best way to do that. I also agree that some of the money could be better spent; however, now is not the time to cut things that provide jobs. I think the government should run surpluses to pay down the debt in good times and deficits to stimulate the economy in bad.

I'm not against taxation or financing the government, but I do support a different method. How do you feel about a Georgist Land Tax?

The problem then is if you have unemployed people, they're not buying things, which leads to other people being unemployed.

That's true. My concern is over the long term viability of our economy. I think that the MIC is parasitic, and needs to be trimmed back.

I would too, but the fat cats wouldn't let us get away with it. I personally think a 35 hour work week would solve a lot of the current unemployment problems if it were properly enforced. I mean we get ever more productive, yet we don't work any less. Granted some of this leads to owning more stuff, but there really isn't a choice between materialistic acquisition or more free time.

It's especially silly when you consider how much time people spend at work not actually working. Like us, cruising Apolyton.

One problem though with limiting work weeks is that it really only helps low-skill industries. If a certain skill is in short supply and is slow to train new people (like medicine), it doesn't help anybody to choke off the availability of labor.

It's not about not trusting individuals to do the right thing, it's about believing that if individuals do what's best for them, the country gets screwed. Right now, saving more, consuming less is the "right" thing to do for most individuals. Doing that further depresses our economy though. The right thing would be to keep spending and stimulate the economy, but you don't want to be the only sucker that does that while everyone else pays down their debts.

It's a problem of externalities. Governments need to encourage behaviour that is good for society, but not compensated at the individual level.

I don't think people saving money would hurt the economy. I think that we have too much dependence on the retail sector in the United States (and the west in general). Basing your economy on borrowing from China to buy Chinese made goods is not very sound.

Now what do we shift to after a retail economy? That I don't know.

Part of our problem is that we allowed the Chinese others to save for us. The rewards for saving should have gone up if the supply of savings were very low and the demand for capital investments was very high. Instead we imported a lot of cheap money from abroad. Until the Chinese stop saving so much or being heavily indebted carries a heavier stigma here, I don't see the situation improving.

I would like to see the tax deductions for mortgages go. Subsidizing debt isn't helping either.

Very true.

[Arrian]

How do you feel about a Georgist Land Tax?

The basic idea being that owning unimproved land would be prohibitively expensive? So if you're a landowner out in the country somewhere, you have to sell your land (or at least subdivide it) to people willing to build stuff on it. How does this help matters, exactly?

Perhaps I'm confused. It's late in the day and my brain is fried.

-Arrian

[Victor Galis]

I'd say a recent event that really upset me was how bank executives were awarding themselves bonuses while the shareholders were watching their investments become worthless. While it's easy to try and score populist points and consider the shareholders to be fat cats, the reality is that many of the losers were middle-class investors with money in their 401(k)s, state and corporate pension funds, and charitable trusts. So a regulation that would make sense to me would be something to strengthen the rights of shareholders versus executives.

That's absolutely needed in any case. Firstly, the executives are given bonuses based on really short-term objectives. A huge part of the reason we're in this mess, is they have a strong financial incentive to sacrifice long-term health of the company for a quick profit today. That leads to high-risk behaviour because they know they'll be gone/super rich before the **** hits the fan. Only the long-term shareholders and employees suffer.

Secondly, executive compensation has gotten to ridiculous levels. I'm not sure anything justifies them.

More later, have to go for the moment...

[Whoha]

The basic idea being that owning unimproved land would be prohibitively expensive? So if you're a landowner out in the country somewhere, you have to sell your land (or at least subdivide it) to people willing to build stuff on it. How does this help matters, exactly?

Perhaps I'm confused. It's late in the day and my brain is fried.

-Arrian

To his credit he specified urban property. I still oppose such an idea however.

[Felch]

The basic idea being that owning unimproved land would be prohibitively expensive? So if you're a landowner out in the country somewhere, you have to sell your land (or at least subdivide it) to people willing to build stuff on it. How does this help matters, exactly?

Perhaps I'm confused. It's late in the day and my brain is fried.

-Arrian

It's based on the value of the land. The value of the land is in turn influenced by things like location, roads, and access to utilities (gas lines, electricity, etc.) It is not related to the value of anything built on the land, so you pay the same amount to have a productive factory or office building as you do to have an empty lot. Therefore, land owners are encouraged to put land to economically useful purposes.

Land out in the country is of much lower value than vacant lots in a city. By encouraging the use and redevelopment of brownfields, you diminish suburban sprawl. Owners of large tracts of land in the country would feel a nasty pinch, but using that land for farming, or renting it out for recreation would offset the expense.

It's actually not a crazy idea. It just seems crazy because it's unfamiliar.