Posted on 02/01/2010 6:33:06 PM PST by raptor22
Competitiveness: The latest index of economic freedom shows America falling fast, being ranked for the first time as "mostly free." We've fallen behind Canada, and it's look out below.
Our accelerating descent into a command-and-control economy with government pulling the strings is taking its toll.
The Heritage Foundation's 2010 index of leading economic indicators shows that the land of the free is only mostly free, falling to eighth in the world from sixth last year, now sandwiched between Canada and Denmark.
That Canada, long considered a bastion of socialized medicine, is ranked as economically freer may surprise some. But our neighbor to the north has at least been trying to develop its domestic energy reserves, from hydroelectric to natural gas to oil extracted from its tar sands. Energy is the lifeblood of a free economy.
We have shackled our domestic energy producers with environmental regulations, leaving vast pools of energy lying offshore and in the ground. We regulate what you can build, where you can build it, even how. Endangered critters rank above equally endangered entrepreneurs. Climate change is more important than the business climate.
(Excerpt) Read more at investors.com ...
I bet that is exactly how discussion regarding debt went at General Motors and the UAW went as well.
In fact!!!!
I have personally had conversation EXACTLY like that with ex girlfriends over their credit card balances!!!
omg, we are in deep shit.
Ha! Let me guess . . . “The point is, again, and again—I’ll say it slowly, OK—you are trying to build an enemy or a spectre out of the concept of debt, which for a woman is different than debt for an individual or a man.”
Ditto that...
The universal response is along this line:
“I’d like to pay for things with cash but I can’t afford to.”
“I’d like to pay more than the minimum monthly payment but I can’t afford to.”
It’s called self delusion. If you start to break through their delusion and get close to making themselves see what they are saying and doing, they lose their temper.
THEY. WILL. NOT. LOOK. IN. THE. MIRROR.
if you try to force them, they will defend themselves...with violence. They will literally hate you.
It is a sickness and our government has it.
Late mortgages are not gross mortgage loan losses, which are running 2.4% of loan books - and last I checked, mortgage rates were slightly north of 2.4%, like, over twice that.
CD rates for savers will rise when people pay their mortgages again. Banks being middlemen, will make money regardless. They were only in danger while their loan losses had risen but their funding costs had not yet fallen, and that is over.
It is an ordinary recession, meaning inventory rebuilds and capital spending by business lead out of it. As always. Unemployment typically peaks 6 to 12 months after recovery has begun, in GDP terms. GDP began growing again last summer, and 2/3rds of the ground lost in the recession has already been made good, in output terms.
"But oh, my pinky hurts!" Tough toenails. Whiny spoiled brats, without a scrap of graditude for the highest standard of living on earth, disgust me and are not conservatives.
You do not need to like this for it to be true.
Yes in the long run it is better for private enterprise to allocate capital. But somebody is going to take the risks necessary to get the economy moving, and if they won't, then the feds will.
The deficit plus active monetary ease (entirely temporary on the latter score, BTW, and over in October of 2008) allowed every other actor in the system to reduce their credit risks and their leverage. Enough so that risk appetites have returned.
It is entirely normal that the government supports financial markets at the bottom of the cycle. It always has, always. Back to the dawn of financial capitalism in Holland in the 1600s.
None of that is wrecked. Does that mean we needed the stimulus package, no. Health care giveaways, certainly not. Energy taxes, not at all. Higher taxes generally, not wanted. But keeping the banks open, letting tax receipts fall well below spending, and active monetary policy were all required and entirely called for.
Stop attacking the effective instruments of the American state and start making distinctions where they are actually needed, between actions that do not help and those that have. You will find, if you ever bother to look, that the working ones have all been advocated by expert professionals and were seconded by the Bush administration, and they have in common - not a whiff of populism. While all the crap added since has in common - hatred of finance and the rich, and an attempt to punish it, to benefit main street *deadbeats* who are the ones who actually welshed.
And the clown here, is you.
No we don't have a "serious cash flow problem". Americans earn $14 trillion a year. $1.8 trillion of that is income from their capital assets - rent, dividends and interest. Interest on "past borrowing binges" are paid to the productive savers who provided the capital, and are the opposite of useless expenditure. The original spending might have been a waste, but the repayment isn't. In fact, the tendency of interest is to oppose large scale redistribution of the kind you decry. Welfare queens have remarkably small bond portfolios.
But none of that makes simply moving money from pocket A to pocket B into the loss and destruction and evaporation of that money or value. There is a beneficiary of every dime of health care spending, and a producer earning that dime, as well. All of them playing the game as it has been structured by all the market players. Pretending that spending in one industry is a waste or a loss, while say gambling or prostitution or cigarette manufacturing or loud lawn ornaments, are just dandy, is simply beyond silly.
Other men use their freedom any way they like, and they often make a hash of it. That is simply freedom.
When did so called conservatives become such flaming radical hysterics? It used to be that a sense of proportion was a conservative trait. Level heads, feet on the ground. You are all raving like madmen, in comparison. And over what? A recession that lasted 9 months and shaved 3% off GDP, 2/3rds of it already recovered. One lost election.
Get a freaking grip, people. We earn out of this, no problem, and the left loses power after showing they don't know how to govern, as usual. But the hysterics act is not making you-all look like a sober replacement, let me tell you.
Go look in the mirror if you want to see arrogant.
“But none of that makes simply moving money from pocket A to pocket B into the loss and destruction and evaporation of that money or value. There is a beneficiary of every dime of health care spending, and a producer earning that dime, as well.”
This is completely inconsistent with your earlier statements on this thread about how value is created and how markets allocate resources efficiently. The fact is that if misguided subsidies result in us demanding $2.5 trillion in health care resources that we individually value at only $2 trillion, $500 billion of society’s resources have been wasted, i.e., they could have been put to much more valuable use. The fact that this $500 billion provided income to someone misses the point. At the margin, what these individuals were paid to do was worth nothing (that’s the definition of waste). According to your logic, every single loony government scheme ranging from agricultural subsidies to $24,000 cash for clunkers entails no waste since they all result from political decisions that can be reversed at any time.
“All of them playing the game as it has been structured by all the market players.”
There is a fundamental difference between MARKET outcomes that result from purely voluntary exchanges and POLITICAL outcomes that result from the government being able to force you to pay taxes to subsidize activities you don’t value etc.
“Pretending that spending in one industry is a waste or a loss, while say gambling or prostitution or cigarette manufacturing or loud lawn ornaments, are just dandy, is simply beyond silly.”
I explained earlier that I have no problem with purely VOLUNTARY choices. It’s when government intervenes to distort choices through subsidies or regulations that we end up with sizable misallocation of resources. In the absence of vigilance by citizens, the risk is that we’ll all end up working most of our lives for what government wants us to do rather than what we want to do.
The whole point of the rest of your post was to describe how income redistribution is neutral to the greater society. This sounds good in theory but has always proven to be false. Communist societies have a lower standard of living for almost all their "citizens" while capitalistic societies have a higher standard of living for all thier citizens. Government transfer of wealth (communism) always hurts the society it is inflicted upon.
Your previous posts used the term "loss" without defining the scope. Loss to society or loss to the individual. It is obvious that a transfer from one individual to another is ALWAYS a loss to the "donor" individual. He no longer has his assets.
It is less obvious, but equally true, that a forcible transer from one individual to another is a loss for society. Communism never works. (The negative incentives of communism cannot be overcome. Remove the profit motive and people no longer work.)
Sorry but the second half of your statement is false. A large portion of my taxes are forcibly transferred from me and NOTHING is transferred to me in return. I get no benefit from them whatsoever.
(I don't quite get what you are trying to say in the first half. It may or may not also be false. please reword it more clearly)
I explained earlier that I have no problem with purely VOLUNTARY choices. It’s when government intervenes to distort choices through subsidies or regulations that we end up with sizable misallocation of resources.
Such as welfare. The billions of dollars we've poured into social entitlement programs has resulted in no gain for the country. We now have more lazy, useless, poor instead of less. We have more inner city crime (and it's associated costs), more illegitimate children being raised as welfare meal tickets (with those increased associated costs) etc. etc. etc. Welfare programs have done NOTHING to improve the standard of life in this country.
The wealth transfer was a near total loss. Neither the taxpayer nor the welfare class has been improved by these billions of dollars spent.
In the absence of vigilance by citizens, the risk is that we’ll all end up working most of our lives for what government wants us to do rather than what we want to do.
And that would definitely be a loss!
If social security were abolished tomorrow, would Americans being poorer? No. Would they be vastly richer because they didn't have to pay social security contributions? No. They might be marginally richer by much smaller amounts in the long run. But neither the one entry view of social security as an income-asset, nor the one entry view of social security as tax-cost, accurately reflects its impact on our wealth or income, or the effects of any change in it.
Because it is a transfer, and merely moves money from pocket A to pocket B.
Therefore, an "unfunded liability" to pay for it, is no net charge against our net worth or future incomes. By the same token, it gives future retirees nothing they couldn't just as easily get for themselves through a private pension system - which would in fact be marginally (but only marginally) superior.
You are free to use that marginal superiority to argue to the American people that all middle class entitlements should be eliminated tomorrow. They won't listen, largely because they don't understand this, but you can try. I'd be in favor of that outcome, but don't expect it anytime soon.
And no, when a subsidy causes more to be spent on a category of goods or services than a free market would spend on them, the entire excess demand is not completely lost. That is the proposition you are maintaining and it is false, economically. There is a marginal reduction in total wealth that probably amounts to a few percent of the sum diverted, the marginal return to additional demand in the subsidized sector being lower than in other fields, but only by smidgens for the first excess dollar, and so on.
And voluntary choices of *voters* are also voluntary choices. We live in a republic, not a libertarian market-run anarchy. You can advise the people, but they are sovereign, and if they want to subsidize industry A or pet cause B at some lost marginal, they can and they will. No, it does not portend immediate ruin. No, everything spent on it is not deducted from national income as useless.
Economics is not a straightjacket demanding that people do exactly X. It advises on the costs of free choices of both economic and political actors. Fairly, impartially, without tendentious spin. Let alone preying on people's economic ignorance to present as outright losses what are only transfers.
If social security and medicare and medicaid were abolished tomorrow, would the net worth of the US population change in any way thereby? No.
Does either add a scrap of value to anything? No.
Do both at the margin and in the long run, involve some loss of efficiency and incentive? Sure. But nothing like the destruction of $1.35 trillion a year, which is the amount spent on them.
Does the prospect of spending that sum every year and the amount rising every year with inflation plus, mean that the American people are bankrupt? No, because they aren't paying that sum to Martians.
Stop deliberately confusing people about the differences between the effects of transfer and transfer accounting, and outright expense or immediate loss.
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