OT: Rating the President

[orev_saara]

Wow, this thread is poppin again! I had some things to say to older Posts, but the moment has passed on most of them. A couple of quick resopnses before my statements:

I'm afraid that there ARE sweat shops in the US. I will grant that they are less common here than in many places. I forgot my other response.

One thing I would like to throw on this debate is my take on the fundamental purpose of government. I think that many people don't think enough about what "govern" really implies. Government is a form of oppression.

Hear me out: The whole nature of government is that it prevents people from doing what they would do without it and compels people to do what they would not without it. The only real differences in policy involve who does the oppressing and who is on the business end of it. And, of course, the severity of the oppression.

Taxes are oppressive. They are also a necessary evil if we are to have government, which everyone who doesn't want to live in Somalia accepts as a necessary evil. Some of these people don't realize that they want to live in Somalia So who gets taxed and how much? Obviously that depends on what services people want. Clearly, current tax revenues are insufficient to pay for current services. So, we run a deficit. I'd like to point out that running a deficit is not necessarily bad. See, I have studied economics To the point, low taxes and deficit spending are thought of by many economists as beneficial in times of economic downturn like today. Going to war without huge public support and spending gobs of that money on defense and diplomacy are not such good ideas.

On the question of which services to provide, people will disagree (duh). But there are a few things that I feel like I should point out. Several of the folks posting here have pointed out that there is no moral obligation for anyone to take care of anyone else and do not lie when they say it. There are, however, practical concerns. Those who have the highest proportion of wealth may control most of our nation's policy-making institutions, governmental and economical, but we middle-class types are the ones who drive the economy. Or at least, we should be. There are more of us, aren't there? It doesn't make good sense to expect someone who makes $40k/yr to pay the same fraction of his income as someone who makes $300k/yr. Unless, of course, we want to remove most of our social services, which some would like to see. This is a viable model, but not for very long. History has shown that nations with extreme disparity of wealth often get in trouble from it. I'm not saying that we would have a revolution, not anytime soon, but those who are concerned with posterity might want to think about it.

If I were inclined to lie to you, I could provide some very good statistics from all sorts of reliable sources, backing up my claims. I actually am a statistician, and I know how all of that goes But I don't want to trick anyone. I confess that I am a bleeding-heart liberal, and an egg-headed intellectual to boot, so I tend to feel that the poorer end of the scale is getting screwed. I also tend to want to help those people, because I don't like to see people get screwed. But I'm not worried. I'll just do my thing, and that's enough for me.
I was going to say more, but this is a long post already, and the rest gets almost mystical, so never mind. Have a nice day, everybody.

By the way, it seems like the conservatives in this thread tend to outrank the liberals. Does this have some hidden meaning, or is it mere coincidence? Maybe I should do some sort of study...

[ February 11, 2003, 06:23: Message edited by: orev_saara ]

[orev_saara]

Oh, I remembered! I agree with Fyron that saving can become problematic if spending gets low, but we should remember that conspicuous consumption is one of our basic cultural values today, so it might balance out.

Or not.

[Fian]

While I can see how extreme savings can be bad for an economy, an extreme lack of savings is also bad. Currently American society spends more than they make. This is possible due there being money in banks to borrow (probably due to excessive savings in the past, plus foreign investment). If spending exceeds savings for a long period of time, one would expect that eventually the money in banks would run out, abruptly forcing an end to spending. This would be cause an abrupt end to spending, preventing future investment in infrastructure and new businesses, resulting in a major depression in an economy. A lack of savings would also result in a weak civilization unable to fight an extended war (one reason why WW1 and WW2 Lasted so long was because the European nations had a deep reserve of money, plus the Americans were also willing to lend money to European nations as well). On the other hand, a society with a high emphasis on savings would have a constant drag on their economy, never fully achieving their potential when it comes to economic output. I have never heard of civilization collapse due to excessive savings, but I suppose it is in theory possible, maybe driven by a threat of war.

One thing that I dislike about the presentation of economic theories in the classroom (my wife is currently taking an economic course) is that they tend to present truth in the form of black versus white. Spending is good. Saving is bad. I believe it would be better to look at economics as a series of competing forces that must be kept in balance. Encouraging spending is good, yet a certain level of savings is necessary as well. During economic good times, savings should slightly exceed debt spending. During economic bad times, savings should be slightly lower than debt spending. Can anyone disagree with this?

[dogscoff]

In response to:

By the way, it seems like the conservatives in this thread tend to outrank the liberals. Does this have some hidden meaning, or is it mere coincidence? Maybe I should do some sort of study...

look at the first few sentences of this.

[orev_saara]

Heehee... hey, wait! I'm an egomaniacal totalitarian whatever, and I... oh, yeah.

To Fian: The amount of money in the country is far from fixed. In fact, the vast majority of money doesn't even really exist. It's just ones and zeroes in computers. The actual amount of money increases all the time, so it isn't actually necessary for banks to have all of that borrowed money in reserve somewhere. Money has become almost completely abstracted.

Sigh... if only financial math weren't so Damned boring I could be rolling in dough right now with the rest of the actuaries...

[Fyron]

Fian:

No. Banks make more money by SPENDING it! They buy interest by loaning money out to people. They then loan out the money they make on interest, to make even more money. If people didn't spend more money than they make, and therefore have to borrow it from banks, and just saved all that they made in bank accounts, the banks could not make as much money, and so would loan out less at higher rates, and those that would have borrowed could not afford to borrow any money. As long as people are spending money, banks won't run out of it.

[ February 11, 2003, 20:21: Message edited by: Imperator Fyron ]

[Fian]

"No. Banks make more money by SPENDING it! They buy interest by loaning money out to people. They then loan out the money they make on interest, to make even more money. If people didn't spend more money than they make, and therefore have to borrow it from banks, and just saved all that they made in bank accounts, the banks could not make as much money, and so would loan out less at higher rates, and those that would have borrowed could not afford to borrow any money. As long as people are spending money, banks won't run out of it."

Wow, I didn't realize what I was talking about was viewed as so controversial. Question one: How do banks get money that they can loan in the first place? Someone chose to deposit it in the bank. What if no one ever deposited money into a bank, how much money would the bank have to loan to the spenders? 0. If a bank has 1 million dollars, and 100 people want to borrow that million dollars, who will the bank lend the money to? The person willing to pay the highest interest rate for it (or if the rates are regulated, maybe they will hide the extra money in "fees" that they charge). If 10 banks have 1 million dollars, and only one person is interested in borrowing it, what interest rate will the person pay? The lowest rate offered by a bank.

Based on the above comments, banks need people to save in order for them to exist. If there is too little money saved, interest rates will be pushed higher due to competition (supply versus demand). If there is too much money, interest rates will be pushed lower (supply versus demand). Greenspan setting interest rates confuses the matter, but I am sure that feedback from banks in regards to their supply does affect the decisions that he makes as well. If people should be encouraged to borrow more so that they will spend more, why does Greenspan ever raise interest rates? The reason is that the rate of spending needs to be balanced, not overdone.

"Banks make more money by SPENDING it!"
If you consider a person depositing money into a bank which is then loaned out to another person as "spending." Then I would agree that "spending" is good. I recommend more people "spend" their money by depositing it in a bank.

"If people didn't spend more money than they make, and therefore have to borrow it from banks, and just saved all that they made in bank accounts, the banks could not make as much money"
I agree that if everyone saved and no one borrowed, then there would be an economic problem. They key here is balance. Saving versus spending must be kept in balance.

"As long as people are spending money, banks won't run out of it."
I am not sure about this, but I don't believe that the interest that banks earn on their money is lent back out in the market. Most of the interest made is paid out to those who deposited their money in the banks, staff/equipment who run the bank, and shareholders who own the bank. The rest of the profit could in theory be deposited back into the bank, but I have doubts about that keeping pace with inflation/growth of the economy. If inflation or the economy grows faster than people save, you will eventually run into a point where the banks don't have enough reserves to satisfy all of the loan requests resulting in higher inflation.