Macroeconomists have a strange view of Opportunity Cost, and Paul Krugman gives it in his column today. I have a rejoinder in my Krugman-in-Wonderland post. Not only does Krugman claim that raising taxes would have only a small effect on the rate of unemployment and economic activity, but he also employs an argument that is based upon the belief that when government is better off, so are we.
Source link: http://archive.mises.org/14901/paul-krugman-government-country-us/
Paul Krugman: Government = Country = Us
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The author seems to be scaring himself with his own straw man. Taxes and spending by the government need to roughly line up over time, or you end up with massive debt, eventually the bond market catches on, and you default. Econ 101. We can’t afford to cut taxes by $4 trillion dollars over the next ten years by extending the Bush tax cuts that have already done so much to turn the Clinton surplus into an unpreceedented deficit.
Our fiscal woes are a spending problem, not a revenue problem. The attempts by the Establishment Left in trying to pin-point the problem on supply-side tax cuts that happened years ago are insane and totally missing the point. You guys just refuse to cut anything(Also the recently elected Tea party candidates who likewise refuse to name anything that they’ll cut). Your viewpoint on the world is that all government departments are there to help the people that they say they are helping, and if there is some good you only assume that the government can do it; the only strong ideological strain of thought I see in people like you is that the government is a human variety of God that can move and plan all at it’s whim.
Under estimating tax receipts for social security does not equate to a surplus (especially at the end of a boom).
Wrong on the facts: http://www.factcheck.org/askfactcheck/during_the_clinton_administration_was_the_federal.html
Clinton produced surpluses, however you count Social Security funds.
I’ve heard this canard here several times, and may I say, I find it disappointing. To me, the power of the free market outlook at its best is that it is grounded in facts and observation; it says “This is the way people are and how they behave, rather than the way you wish they were or how you wish they would behave.”
A libertarianism that is so shoddy it need to ignore or deny the facts, be they Clinton’s surpluses or Sweden’s economic boom or anthropogenic climate change, is an embarrassment to a proud tradition of placing observed reality over ideological filters.
If GM counted employee payments into a pension fund as credits but did not count future employee pension obligations as debits, the CFO of GM would go to prison. That is the point people are making when they say that Clinton didn’t really run surpluses. Yes, in the 1990s, government revenues exceeded government spending, but a substantial portion of those revenues were already spoken for and were then re-appropriated for other purposes. If the federales had not re-appropriated Social Security funds, or if they had counted future Social Security obligations in their accounting, there would have been no surplus.
Follow the link, JEC. Your claim is false.
Actually no; follow the links within the link and discover that it’s not. Even the Financial Reports of the Federal Government don’t count liabilities as they are accrued; no government report does. And any private corporation that didn’t would find itself in hot water pretty quickly.
Your point that this sort of shady accounting didn’t begin with Clinton makes your case worse, not stronger- the government has long been engaged in systematic deception regarding its financial health.
“or if they had counted future Social Security obligations in their accounting, there would have been no surplus.”
This is the key point.
But those obligations have never been counted; there was no accounting change of that sort during the Clinton administration. So you can say, of course, that if we did the accounts in a completely unprecedented way, you can make the Clinton surpluses disappear. But that’s completely irrelevant to the fact that, under all methods of accounting that have ever actually been used, Clinton ran surpluses. Which reflects the underlying reality that Clinton increased revenues and reduced the growth of spending, with a predictable improvement in the government’s bottom line.
Robert:
If you want to see why this is wrong (and by how much it is wrong), check here:
http://www.shadowstats.com/article/federal_deficit_reality
Clinton didn’t produce anything.
1. Congress determines the budget, not the President.
2. It’s creative accounting. That stuff doesn’t get past me, former auditor, becuase anyone else out in the world attempting to claim they pulled a profit by borrowing from itself would end up bankrupting as its stock price plummets and banks call in loans.
There hasn’t been a surplus in tax reciepts over expenditures in this country since before Medicare was passed.
Again, objectively wrong. Congress does not “determine the budget.” The president submits the budget and signs it into law or rejects it.
As to your second point, no one cares what imaginary math you use. Your argument from authority (“former auditor”) and impotent bluster (“That stuff doesn’t get past me”) do nothing to change the accounting conventions used to calculate the Clinton surpluses. Between you and the CBO, the CBO wins.
Irony defined:
“Your argument from authority (“former auditor”)…”
and
“Between you and the CBO, the CBO wins.”
Hahahahaha. “My appeal to authority is better than yours.”
“Between you and the CBO, the CBO wins.”
How can the CBO “win” when their accounting standards are phony. The CBO numbers are as phony as Bernie Madoff’s returns.
You haven’t shown their accounting standards are “phony.” You’ve merely suggested another way of counting. It might be better, it might not be. All of this information is in the public domain and how you chose to put it into a bottom-line figure is a matter of taste and convention, not right or wrong.
The CBO’s accounting standards are phony. It’s called GAGAS, the Generally Accepted Government Auditing Standards. Who do you think I was an auditor for? Bingo, sucker. The CBO has a whole different set of rules and doesn’t follow GAAS or GAAP. Government accounting and accounting for everyone else are totally different animals. Things that government does is outright illegal in the private world. Our government effectively threw away 500 years of accounting practices dating back to the Italian Renaissance just because it was inconvenient to them.
The big difference in the Social Security case? The Government doesn’t follow the same pension rules. While the Government, via the IRS (and in Cost Accounting Standards if they do government work), are required to properly fund and account for pensions. Underfunded pensions require the company to immediately fund it up back to health and count it as an expense. Government made itself exempt to this rule. Government essentially runs on cash accounting, which is illegal in the corporate world. Money in less money out. Future obligations never come into account. If the United States Government was a corporation, Social Security would have caused the 1990s government to run multiple trillions in deficits to properly shore up the system. Additionally, it would outright bar Congress from “investing” in any form of government debt because pension rules ban investing any pension money back with the corporation administering it. No borrowing from itself means gigantic deficits. There was no surplus, just accounting gimmicks.
Friend, what you don’t know will fill oceans. What you do fits comfortably on an index card with room to spare.
It should be noted that the Clinton administration did not expect those surpluses and they predicted deficits during those years. But if you’re trying to imply that the Clinton administration’s spending policies were better than Bush’s, than practically every libertarian will agree with you.
Robert, it sounds like you may be making some inductive errors.
“We can’t afford to cut taxes by $4 trillion dollars over the next ten years by extending the Bush tax cuts that have already done so much to turn the Clinton surplus into an unpreceedented deficit.”
In other words, you advocate that over the government should, over the next ten years, without consent and with the threat of force, take an additional $4 Trillion from individuals. How magnanimous of you.
You’ve made that assertion before, Andrew, but have never provide the slightest hint of an argument to support the idea that the dollars, designed and produced the government, belong to individuals.
It’s also wrong to invoke the “threat of force.” Fail to pay the IRS, and you are fined or the government takes its property from you. No force. Force comes in only if you lie to the IRS or use force yourself. There’s no debtor’s prison in America.
Since I’ve only posted on this site a few times before, and never once on this topic, I’m not sure where you’ve seen me make this argument before. I guess you think replying in a way that makes it seem as though you have already dispatched with me and this line of reasoning before makes your point for you.
All dollars are owned by the governments, you say? Well, that settles it. Silly me for thinking that the payment I receive from my employer in exchange for my labor services is indeed my property, and not the property of the government.
I won’t claim to be an expert on tax law here, but I’d be willing to bet everything I have in my pocket, all 3 quarters, 2 dimes and a penny “designed and produced” by the federal government (that it so graciously allows me to keep) that there are in fact people in prison at this very moment for failure to pay taxes.
More likely, they are in prison for fraud.
Taxes legally transfer ownership of a given bit of money from you to the government. Property rights, like other rights, are limited, and one of the limitations is that all property is subject to taxation.
>>>Taxes legally transfer ownership of a given bit of money from you to the government. Property rights, like other rights, are limited, and one of the limitations is that all property is subject to taxation.
How perfectly circular.
Do I own my property, or does the government own it?
Robert’s position is that the money you used to buy that property was created by the government, so it owns all of it, or something.
Where the government got the right to create (and thus own all of the money) in the first place is, as yet, unexplained. My guess is that it has something to do with utilitarianism, or the divine right of majorities, or the social contract, or something.
Also Chris Edwards of Cato has shown that the revenue effects of the Bush tax cuts were trivial:
http://www.cato-at-liberty.org/how-big-were-the-bush-tax-cuts/
The government is not “we the people”. It is a gang of tax-eaters arrayed against the mass of taxpayers. The tax-eaters think that they (the tax-eaters) cannot afford tax cuts. But they’re fools for thinking that they can squeeze more wealth out of a tax base that is clearly in deep distress and may even be dying of over-taxation and over-regulation.
No amount of tax increases can balance a budget whose spending is what amounts to the world’s largest pyramid scheme. How else can you describe medicare and social security? Even the foreign policy of the USA resembles a pyramid scheme, in that the more that is done overseas the more it creates future, even larger security problems.
That’s just paranoid nonsense. Our elected representatives are responsive, sometimes to a disappointing degree, to the feelings and prejudices of those that elected them. People don’t like paying taxes but they do like a lot of services . . . hence the deficit.
Among the advanced economies, we have by far the lowest taxes, 28% of the GDP compared to 49% in Sweden . . . which is growing by over 6% per annum. So the idea that we are “over-taxed” is just laughable.
Healthcare requires deep and intense structural reform, that’s true. Social Security, not so much. It’s not really a budget-buster. Bush’s wars have been a giant waste of money, but assuming they wind down, defense is not going to bust the budget either.
You are welcome to believe and make the argument that lower taxes and less spending are better, but the idea that objectively speaking taxes or non-healthcare spending are out-of-control high is not supported by the facts. Compared to other rich economies today or own own tax rate historically, our taxes are really low and our social safety net really shoddy.
Any tax rate above 0 is out of control high.
Better to state it that way, as a blatantly ideological stance, than as the author does, as if our tax rates were objectively high and unsustainable.
Taxation policy is a choice, and you should be able to formulate an argument for your choice without pretending no other choice is possible.
Where do you get off calling a country which has to borrow ever-larger amounts of money a “rich economy”? None of the “rich economies” whose high taxes you evidently admire (Japan, the EU, Canada, Australia) can balance their budgets. They have high taxes, huge commitments to welfare and pensions (what you would probably call a wonderful social safety net), and they are also going broke.
There aren’t going broke nearly as fast as we are, in most cases. Britian, for example, home of free universal healthcare, a large professional civil service, and the dole, has far less debt than we do and is presently cutting spending and raising taxes, which will widen the solvency gap further.
And to answer your question, I called the economies rich, not the country or the government. Surely you’re not confusing the productive power of the economy with the government’s balance sheet? Because that would be silly.
“Britian, for example, home of free universal healthcare, a large professional civil service, and the dole, has far less debt than we do…”
Not according to the CIA’s World Factbook. By 2009 estimates, the UK ranks 22nd in public debt, the US ranks 41st.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2186rank.html?countryName=United%20States&countryCode=us®ionCode=na&rank=41#us
That’s an interesting link, thank you. I’m not sure how to reconcile it with the figures I’m finding elsewhere, which have the US gross debt at 94% of the GDP and the UK at 71%. Let me look at the figures a little more and see which set of figures is correct.
http://en.wikipedia.org/wiki/United_States_public_debt
http://www.statistics.gov.uk/cci/nugget.asp?id=206
There was a blog post recently on here regarding Sweden’s recent fast growth due to tax cuts and reduced government spending. Eitherway, their economy is not all it is “perceived” to be. Look beneath the surface and mainstream progressive media claims. Sweden is not a country to aspire to be like. I think you’re a little naive.
“when government is better off, so are we!”
“when corporations are better off, so are we!”
that’s nice. who’s this “we” everyone’s talking about?
Why doesn’t Krugman attempt to be better off and give nearly all his money to the State?
Why only “nearly all”?
the only strong ideological strain of thought I see in people like you is that the government is a human variety of God that can move and plan all at it’s whim.
I agree that the God complex is a factor, but I am not sure the higher-ups in the statist establishment really believe in their omnipotence, not even Obama, who is clearly mentally unstable. No one who is remotely rational could believe in the ability of statism to actually solve problems. The omnipotence of statistm is part of their age-old sales pitch, something that they lie easily about, to prey on the sense of fear and dependence and propensity toward fantasy that many people have. Con men depend on the greed of their victims; statists depend on their victims’ need for an all-powerful father-figure hero to rescue them.
The root problem is that statists are, at base, slave-owners.
Slavery has evolved from its primitive form of one-on-one, direct ownership. The problem with that old-fashioned form of slavery is that the slave knows who his enemy is, and so the slave has a tendency to murder his owner from time to time. Nothing is more terrifying to the owner, who wants nothing but the peace of knowing he won’t have to work for a living. It’s also very expensive to directly own slaves, since you have to beat and kill the uppity ones every now and then; who wants to do that all the time? It’s nothing but work, work, work keeping the slaves in line!
So, to make slavery less dangerous for the owners, and less expensive to maintain, slavery was transformed (along with other forms of farming and other businesses) into a corporate model. The US government is a big corporation, and its “people” are its livestock. Instead of milk and eggs and steak and bacon, we produce tax money.
We humans are even more valuable than sheep and cows and chickens and fields of crops, because we are the only livestock that enslaves itself. We fill out our own tax returns, and mail our money to them willingly. You won’t find a pig that slaughters itself, or sells the productivity of its children to bond-holders.
The trick to keeping human livestock is that it is primarily a mental game. You have to get the slave to believe he is a citizen. Free-range human farming is definitely a modern improvement to shackles. In tight confinement, humans get anxious, and productivity drops. But if you let them choose their own occupations, and just skim off the top of their productivity, many humans will not only produce vast outputs for their owners, but thank them for the privilege of being allowed to serve them.
Krugman is just the modern version of the overseer. Instead of using a whip to keep the livestock in line, the modern overseer uses lies. This is the purpose and function of the statists’ intellectual class, of which Krugman is a ranking member. In exchange for keeping the slaves placated and docile, he is rewarded with prizes, money, privilege and importance. (For a geek like him, I think it’s the importance he values most.)
” not even Obama, who is clearly mentally unstable . . .”
Pot and kettle, my friend. Pot and kettle.
There doesn’t seem to be much substance to your post other than the tired vilification of “statists.” This falls rather flat given that other than hunter-gatherers, who were the hot thing in self-government about 13,000 years ago, virtually everybody lives in a state of some sort, and accepts its aurthority, absent Osama or Timothy McVeigh and the like. So calling people “statists” is rather like calling people “oxygen-breathers.” I am, you are, we all are. Calling people “statists” conveys no information about what they believe other than the fact that they disagree with you. It’s childish name-calling.
>>>There doesn’t seem to be much substance to your post other than the tired vilification of “statists.”
Yeah, as though the mantra of “we need a safety net” is soooooooo substantive! Please, enlighten us with even more appeals to popularity! Trod out more strawmen like the hunter-gatherer/terrorist thing! Your avalanche of recycled clichés about the necessity of corporate statism just might be convincing, this time.
>>>Calling people “statists” conveys no information about what they believe other than the fact that they disagree with you.
Uh, no. It’s a description of fact — they believe in the authority of corporate statism. They believe that this organizational form, which consists of a claim of a monopoly of violence over all people inhabiting an arbitrary territory (or even those outside of it, in some cases), is moral and legitimate. They believe that it’s something other than a mafia organization, only with better tailors and a good PR department.
If you believe in ghosts and palm-reading, I’d call you a mystic. If you believe in deities, I’d call you a theist. If you believe in the legitimacy of corporate state, you’re a statist. If that label bothers you, then you really need to sack-up.
>>>It’s childish name-calling.
Calling me mentally unstable and comparing me to terrorists is supposed to be the exemplar of maturity? Of sober reasoning? What’s wrong with you? I expect you to spew a line of crap, but you can’t even maintain a consistent line of crap for more than 8 seconds.
(The reason I called Obama mentally unstable, by the way, is based on evidence, particularly his unstable childhood, which was really quite unfortunate in a lot of important ways, and naturally left him with several textbook features of adults who were abused as children. As an individual, he’s someone who would ordinarily have my compassion. I just wish he’d channel all that into something other than repressed rage and organized violence. You, however, resort to name-calling of me without knowing the first thing about me, other than the fact that I believe in principles and freedom, which threatens you for some reason.)
Phinn, you should really calm down. You must be aware that you appear emotionally if not mentally unbalanced in the hysterical rhetoric you use and the illogical, disconnected things you say. Launching a volley of poorly-justified insults at me, as well as our president, just illustrates my point.
I am perfectly calm. Thank you for your concern for my emotional well-being.
As for your assertion that my comments are so illogical that they alarm you, perhaps you would be so kind as to identify where my logic has failed. Since you neglected to identify any particular lack of rationality, I don’t know what alleged failings you are referring to. Since it took you no time at all to conclude that I am wrong, I assume you should be able to identify my supposed error with great specificity.
As for my insults, I was merely pointing out that you contradict yourself. You assert, in one breath, that maturity is good and name-calling is bad, but then you allege that I am mentally unstable and akin to two famous terrorists. I’d like for you to consider the idea that you tend to accuse others of doing the very thing that you criticize, very often within a few words of each other.
(Incidentally, I object to your propagandistic use of the term “our” president, since that term presupposes that I acknowledge the authority of the U.S. government, which I don’t.)
So, like Osama and McVeigh, you don’t acknowledge the authority of our government. So the main difference would seem to be that they act on your shared beliefs, whilst you merely sputter impotently. Yet the bond of shared hatred for the rule of law binds you together.
Oh, and Phinny? “Pefectly calm” people don’t whine hysterically about how people point out their childishness need to “sack up.” Slips like that show your true childish colors.
>>>So, like Osama and McVeigh, you don’t acknowledge the authority of our government. So the main difference would seem to be that they act on your shared beliefs, whilst you merely sputter impotently. Yet the bond of shared hatred for the rule of law binds you together.
I don’t know Osama bin Ladin’s beliefs, but I have a faint recollection that he is staunchly theocratic, and opposes the U.S. specifically but not statism generally. Likewise, although I believe there is some record of McVeigh refusing to acknowledge the authority of the U.S. government in particular, I do not know of any report of his being an anarchist generally.
So, the main difference between these men and me is that (a) they are terrorists (i.e., promote and perpetrate symbolic acts of violence in order to sway public opinion, particularly with regard to political opinion, and (b) they oppose the US government, but not statism generally.
So, they are nothing like me, obviously. I oppose symbolic acts of political violence, and I oppose statism on principled grounds, not merely wanting a different state to replace the existing ones. If anything, it’s clear that Osama bin Ladin and McVeigh are more comparable to, for example, George Washington, who violently opposed the then-existing rulers of this patch of North America, and wanted to supplant them with rulers whose dictates and political philosophies were more to his liking.
I will conclude from the fact that you have embarked on this irrelevant diversion that you are wholly unable to respond substantively.
Robert wrote: “So, like Osama and McVeigh, you don’t acknowledge the authority of our government.”
It would make a lot more sense to say: “Like Osama and McVeigh, Robert and the so-called government do not recognize others’ right of self-ownership, and believe they have the right to coerce them with violence.”
So calling people “statists” is rather like calling people “oxygen-breathers.”
Epic Fail: We cannot exist without oxygen, but we can do just fine without a state. We cannot choose to breathe methane, but we can choose to abandon unprovoked violence against each other – and we should!
Nice try on the hunter-gatherer thing too: statists always try to take credit for human progress. The fact that they are an impediment to voluntary cooperation, and hence an impediment to progress never occurs to them.
Anyway, you should not be insulted by “name calling” if you really believe the state not to be evil, you should take it as a compliment.
Epic reading comphrension fail: Vlad does not understand what an analogy is. Sad.
Second point: what evidence can you offer that “we can do just fine without a state”? Historically, in a case of non-statehood, you either have hunter-gatherers living in very small groups, or you have a breakdown of the state’s authority, like during the Russian Civil War or the French Revolution. And people hardly did “just fine” in that violent chaos.
It would seem your family resemblance to Marx is showing. He too thought people could do without a state, which would wither away. Like religious fanatics, economic fanatics seems strangely oblivious to all they have in common with fanatics on the other side.
I understand your analogy fine – your compare that over which we have no choice to that which we do and imply they are the same. Fail.
Perhaps my second point could be put better: the state murders without remorse, hundreds of millions in the last century, and we could hardly do worse.
Nice you noticed my surname – want to guess the fraction of my Dad’s family that encountered “the corporate state” in the 30′s and 40′s and lived? Hint: it was less than half.
Robert,
You say, “Historically, in a case of non-statehood, you either have hunter-gatherers living in very small groups, or you have a breakdown of the state’s authority”.
Would you please elaborate further on that?
The jewish people didn’t have a state “to call their own” for about 2000 years;
The gypsies never had a state – and I don`t recall ever hearing them fight for one.
Yet, both groups were (and in many parts of the world, still are) persecuted… by states!
statism: The practice or doctrine of giving a centralized government control over economic planning and policy.
statist: An advocate of statism.
I don’t know why you think that this definition is ambiguous or want to conflate it with the idea of living within or tolerating a state. If you believe that government intervention in the economy and government provisision of social services is a desirable social good, you are a statist. If you believe that a government’s powers should be strictly controlled and limited to defense and legal provision (a “necessary evil”), you are a minarchist. If you believe that government should be abolished completely, you are an anarchist.
I like that definition you give first — but it’s not the one being used commonly on this blog. Most of the people throwing around the word “statist” seem to be using it as a term of abuse to describe anyone who is not an anarchist.
You illustrate the confusion with the claim that people who support the provision of social services by the government are “statists.” But that, of course, is neither an example of economic policy nor centralized planning.
Yes, in addition to knowing what a statist is, there exists an almost anticlimactic a priori distrust of them on this site. Therefore what? As to the above it is both an example of economic policy AND centralized plannning, by definition. How awkward for you.
Yet they don’t use the word correctly . . . therefore unless you can read their minds, I think we must presume that their ignorance in print reflects actual ignorance of the concept.
So you don’t know what central planning or economic policy are? How sad. I suggest you take an economics class . . . by which I mean a real one, at an actual university.
So people can’t learn that 2+2=4 unless it’s approved by the government, eh?
WHO doesn’t use the word correctly? Maybe quoting someone and explaining why they didn’t use it correctly (sounds EXCITING!!), who THEY are, why it even matters here, and why you seem to display a certain pedomorphism and nearly autistic social IQ. How embarrassing for you.
Granted, everyone who got into graduate school or even manages to keep public drooling to an acceptable minimum (~100ml/day) knows what central planning and economic policy are vs. what they are not, apparently they’re up for grabs again. Whee! Again, what you described is, by definition and because I said so due mostly to, well, not missing any chromosomes, both. I’ll take the burden of proof and pics of your college degree or it didn’t happen….by which I mean a real one, at an actual university.
Robert wrote:
“provision of social services by the government . . . is neither an example of economic policy nor centralized planning.”
So congratulations to Robert on the stupidest thing ever posted.
And what makes you think anyone is misusing the word “Statist?”
Do you advocate the Gangster-State or don’t you? It’s a pretty simple word.
I think the definition of statism may be a bit off here. I don’t object to “giving a centralized government control…”. The problem is that control is not given, it is taken. The definition would be more accurately something like “The practice or doctrine of centralized government taking control of economic planning or policy by coercive violence.”
Force against others is the salient issue. The statist advocates state – and in the final analysis his own – control over me. This is why the statist is vilified on this site, and rightly so.
Even a caveman does economics better than Krugman: http://jesus-on-taxes.com/ON_PAUL_KRUGMAN.html
Robert
This is a furphy: “Clinton produced surpluses, however you count Social Security funds.”
You’ve had your silly claim rebutted several times now and yet you continue to argue by insistence. Repeating your fibs over and over again does not make them correct.
Sione
Sione:
“Clinton produced surpluses, however you count Social Security funds.”
Perhaps Robert is referring to agricultural product surpluses due to DOA price floors!
Your advertisements are boring. Say something of substance when you post here.
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