Chile Forum

You aren't "paying as you go" if you have to borrow or create money by printing it. Pay as you go refers to spending what you earn, not more. The expression seems to have been adjusted somewhat to fit the situation and the political climate.

Unable to even understand why those nasty, selfish, mean Republicans would not vote for a "balanced budget" bill? I mean, I do not expect agreement - but unable to even understand it? Wow.

Here's a shot at imparting a modest amount of understanding to reasonably open minds. For Democrats (and H.W. Bush style Republicans, sadly), the only way to balance the budget (if at all) is to increase taxes. Nevermind that such tax rate increases almost never result in the revenue predicted by the politicians in their fantasy world because higher taxes negatively impact economic behavior. Such people (that is, Democrats and "moderate" Republicans) never even think about the other way to lower the deficit, which is to cut spending. Put forth a bill that balances the budget with deep & immediate spending cuts and I'll bet that it would attract some Republican support. Of course, a public long used to spending beyond its means personally (something about a debt crisis....) and doing the same through its elected officials would scream bloody murder.

The simple fact is that the proposed balancing would certainly lead to higher, damaging taxes and few if any spending cuts. That is why Republicans voted against the bill. One needn't agree, but a reasonably open mind should certainly be able to grasp the idea.

John Hyre

PS: Zenth et al, dittos in re our Praetorian bureaucracy. They pass most of the laws that restrict our freedom in every way conceivable and are thoroughly unaccountable. In fact, they are harder to stamp out than cockroaches (and equally unpleasant). If Pinera makes headway in this regard (I mean more than just switching top level appointees), he has my respect and attention.

Going through the new OECD report I find it fascinating that they are lecturing Chile on raising income tax rates and spending more of their money, and implying that they should be running a deficit. Now, yes, Chile is the other extrema of not spending sufficient money (if your kids have no shoes, don't pat yourself on the back for having a big savings account ); but, chile must really piss off the rest of the OECD members as the only financially sound one amongst them, yet still gets lectured about "sustainable development" regularly.

Chilean politicians are not immune to usual foibles. Remember the fire Velasco took from his own party in re rainy day fund? With that said, Chile does seem to have a knack for making common sense decisions when it comes to economic issues and Velasco did in fact prevail. Only Nixon could go to China, only Velasco could save the copper money?

John Hyre

admin wrote:Going through the new OECD report I find it fascinating that they are lecturing Chile on raising income tax rates and spending more of their money, and implying that they should be running a deficit.

Misery loves company? Economist and historian Brian Domitrovic recently published a book and study that shows the best way to sustain growth is through lower taxes on producers and higher interest rates offered to savers -- exactly the opposite of the prescription favored by the G7 countries. You know, the ones who are currently flat-ass broke

Here is my economic thought experiment.

Perhaps a better way to look at national debt is as if you were investing in a company. Returns being happy, safe, healthy, all around well taken care of citizens, as based lined across all members of the society having equal rights ( Bill gates health care plan, offset against millions of Americans without access to health care ). Think of it as consistency of product. Are the parts truly interchangeable? Put another way, what can I do as as a citizen that all other members of the country can do (my own personal limitations aside)? For example, Bill and I could both go to a public library. We could both drive on a highway. We could both start companies. It is the all things being equal "measure of national success", what exactly is equal among the citizens and how much each and how many things in both quantity and quality are we equal in?

Another way to look at it is that a heard is only as strong as its weakest member, not its strongest. For example, how many old and sick are in a heard, I believe to be a far better measure of the overall strength of the group than measuring just for example the most successful prime males.

This would likly be a bastardized form of the Nash equilibrium (Think a Beautiful Mind for those not in to AI and Game theory):
http://en.wikipedia.org/wiki/Nash_equilibrium

So, what countries would you invest in?

Two points:

Here's MY thought experiment, also borrowing from corporations: You vote if and to the degree you buy stock, emphasis on "buy". You don't buy stock/pay taxes, you don't vote.

Second, in re WSJ editorial in re Obama budget: "Our favorite euphemism is the Administration's estimate that it can get $122.2 billion in new revenue via a "reform" of the "U.S. international tax system."

I wonder WHO they are targeting by that? Corporations for sure - perhaps expats too? But hey, it's to give all citizens nice things, regardless of what they do (or do not do) to earn such things. Equality of sharing output, but not of sharing input. Restated: To each according to need, from each according to ability. How'd that work out last time around, not so long ago?

John Hyre, Very Crotchety Today

JHyre wrote:Unable to even understand why those nasty, selfish, mean Republicans would not vote for a "balanced budget" bill? I mean, I do not expect agreement - but unable to even understand it? Wow.

Here's a shot at imparting a modest amount of understanding to reasonably open minds. For Democrats (and H.W. Bush style Republicans, sadly), the only way to balance the budget (if at all) is to increase taxes. Nevermind that such tax rate increases almost never result in the revenue predicted by the politicians in their fantasy world because higher taxes negatively impact economic behavior. Such people (that is, Democrats and "moderate" Republicans) never even think about the other way to lower the deficit, which is to cut spending. Put forth a bill that balances the budget with deep & immediate spending cuts and I'll bet that it would attract some Republican support. Of course, a public long used to spending beyond its means personally (something about a debt crisis....) and doing the same through its elected officials would scream bloody murder.

The simple fact is that the proposed balancing would certainly lead to higher, damaging taxes and few if any spending cuts. That is why Republicans voted against the bill. One needn't agree, but a reasonably open mind should certainly be able to grasp the idea.

John Hyre

For the record, I didn't say-or mean-"nasty, selfish, mean Republicans" as you stated. But thanks for the answer. It's the taxes, I should have known that. It still doesn't seem like a terrible idea to encourage a little fiscal responsibility. Dems may be "tax and spend" but "spend and don't pay for it because we can always print more money" seems like a bad idea too. And deeper immediate cuts would be nice. This just seemed like a place to start.

admin wrote:Here is my economic thought experiment.

Perhaps a better way to look at national debt is as if you were investing in a company. Returns being happy, safe, healthy, all around well taken care of citizens, as based lined across all members of the society having equal rights ( Bill gates health care plan, offset against millions of Americans without access to health care ). Think of it as consistency of product. Are the parts truly interchangeable? Put another way, what can I do as as a citizen that all other members of the country can do (my own personal limitations aside)? For example, Bill and I could both go to a public library. We could both drive on a highway. We could both start companies. It is the all things being equal "measure of national success", what exactly is equal among the citizens and how much each and how many things in both quantity and quality are we equal in?

Another way to look at it is that a heard is only as strong as its weakest member, not its strongest. For example, how many old and sick are in a heard, I believe to be a far better measure of the overall strength of the group than measuring just for example the most successful prime males.

This would likly be a bastardized form of the Nash equilibrium (Think a Beautiful Mind for those not in to AI and Game theory):
http://en.wikipedia.org/wiki/Nash_equilibrium

So, what countries would you invest in?

I love the Nash theory-the "prisoners dilemma" makes a lot of sense applied to politics, economics.

admin wrote:Going through the new OECD report I find it fascinating that they are lecturing Chile on raising income tax rates and spending more of their money, and implying that they should be running a deficit. Now, yes, Chile is the other extrema of not spending sufficient money (if your kids have no shoes, don't pat yourself on the back for having a big savings account ); but, chile must really piss off the rest of the OECD members as the only financially sound one amongst them, yet still gets lectured about "sustainable development" regularly.

Chile's surplus is commendable and as JHyre said, the farther left was not happy about the fiscal responsibility. The surplus means independence for Chile(from the World Bank, US, Venezuela, whoever). It's good for everybody.

Laura,

We can agree that "spend and print" is not a very good idea. And perhaps express equal disgust at the bipartisanship of it, Bush-Obama. Me, I'm for more partisanship at this point. OK, we may not agree on that last bit.

John Hyre

To each according to need, from each according to ability.

Here is the problem with that view of "fairness" in government taxation. that one should only pay for what they use, I guess would be the way to put it (in spite of my grumblings on the forum about the U.S. tax system).

Does Bill Gates really warrant 30 billion dollars in more reward? That is, is Bill Gates as a member of society 30 billion dollars more valuable to society? Does Bill really deserve the right to 30 billion dollars more in not only the country's resources but humanities resources than me, a kid in China, a kid in Haiti, the kid in the Bronx?

Why do I keep picking on poor Bill Gates? Because Bill is the ultimate example of a none essential human social component (or perhaps I could have picked his bridge partner), with a disproportional large allocation of resources. We got along before Bill "invented" Windows (he really did not invent it, he just sold it) , we will get along after it is gone. His contribution neither really improves human society nor does it take away from human society. Set aside any arguments over the contribution or lack of contribution of MS to the history of computing for a moment.

Perhaps to look at this from a more evolutionary Hobbesian / Darwinian analogy (not really an analogy in this context I don't believe) would help. Herds and other social animals would likly not be animals for long, if the only driving force was that the strongest gets to eat. Don't hunt, don't kill, don't eat. Don't fight, don't defend, you don't get to live. The young, the old, the slow do not get to survive. Thus, giving up the collective advantage of the group, if even the single contribution is nothing more than to be a gene carrier for the next generation. As far as humans are concerned, how much human potential are we loosing with the kid in China that can not read, write, or even get food? Was that the next Bill Gates that just died of a curable childhood illness, or was never given a chance to get an education at Harvard?

Gates, Buffett, and most of the uber-wealthy eventually give away their fortunes through foundations and other philanthropies. The problem with trying to assign a value to them as individuals, or even worse, setting up a system that limits the wealth they can accumulate, is that you naturally end up with a situation like Haiti. It's just human nature. If you cap a man's wealth at some arbitrary value, say $1M, well then don't be surprised if no one aspires to anything greater, and the vast majority of people live in thatched huts.

Whether or not one is a Christian, "Thou shalt not covet thy neighbors possessions" is an excellent moral guide. Building a political system based on envy is a bad idea, and history has proved it, repeatedly. It is easy to persuade envious others that Bill Gates <or Lady Gaga, or Alec Baldwin, or Mike Tyson, or insert "rich fool whom you do not like"> does not deserve his riches. It is quite another thing to say that a group of humans selected by raised hands, force, some guy who received a scimitar from some watery tart or <insert favorite means of choosing leaders> should be trusted to decide whether Bill Gates, Lady Gaga, etc should be deprived of their wealth, especially if such wealth was earned based on voluntary transactions. Who are we to trust with such power? If history is a guide (and it is), allowing each of us (also known as the market) to exercise freedom in making such choices (putting the "free" in "free market") maximizes both freedom and prosperity. Allowing select other humans to make that call leads to a lack of freedom and a lack of prosperity over time - it's just human nature. Power corrupts. Also, no group of human, no matter how well intentioned, has sufficient information about everything economic to beat the market (that is, economically free individuals) over time. Gates et al may not "deserve" their wealth, but allowing select others to make such decisions tends to cause major harm accross the board. As such your argument has little appeal for me.

Humans are in fact herd animals. They are also perfectly capable of choosing with whom to deal on an economic basis, individually - and tend to do a better job of the same without control from the select few. The VAST majority of humans are also capable of producing enough for sustenance, particularly if they are not permitted to seize, by force or by proxy (at the direction of the select few, however selected), that which has been produced by others. The vast majority of humans also make provision for the young, old and weak close to them without being directly forced to do so. In any event, I think that you are discussing a redistribution that is much more comprehensive than seizing a few pennies from Bill Gates to feed the tiny percentage of humanity that cannot feed itself (if free of coercion, unlike say, in Africa) and no else will voluntarily feed.

Your argument is still essentially "to each according to his needs and from each according to his abilities". You are simply adding a patina of emotion by making us unsympathetic towards the guy from whom we seize, and making us feel sorry for the tiny number of people who would die without forced beneficience. Same argument, and doomed to the same results as long as humans compose "the select" who are making the decisions. In the case of a place like the USSR, mass suffering in a direct and obvious (OK, obvious to everyone outside of the CIA and Democratic Party) manner. In the case of "bread and circuses" welfare states, mass suffering when the ponzi scheme collapses....the first, very modest tremors of which we are now feeling.

Strongly free market economies working in tandem with constitutionally limited governments selected via limited franchise are not perfect (we get Bill Gates, Lady Gaga and other excess borne of human freedom to be dumb) - just the best system tried. No emotional appeal to limit the undeserving Gates' of the world will change that historical reality.

John Hyre, Windbag

Although I think Marx was idiot, I do believe his fundamental claim that we need a better mouse trap is sound. Yes, capitalism is so far the best one we got, but I think there are some fundamental assumptions about the invisible hand theory that could use some tweaking. More exactly, what to do about the other invisible hand in the cookie jar. The most recent one that comes to mind is tattered edges of treating corporations as individuals when it comes to rewards and blaming the people when they act badly.