The Economy • Hacker News Board

Re: The Economy

#121

Post by DINKDINK » Mon, Jun 30, 2014, 7:59 PM UTC

moblahbl4hblah wrote: post #6

The defense budget has gotten smaller as a total percentage of the economy since WWII, but the economy was smaller and the entire country was mobilized. We currently spend over a trillion dollars a year on defense and intelligence. "Entitlements" are not the problem.I love how they are entitlements even though you pay for them...in fact, let's start calling it the social safety net instead. The main problem is that t…

The problem with entitlements/social safety net programs (how ever you want to spin it) is that they're policies that are predicated on the old generation being funded by a larger younger generation. That's policy that isn't fault tolerant to population decreases nor medical black swans.

Re: The Economy

#122

Post by rmc » Mon, Jun 30, 2014, 8:00 PM UTC

gautambay wrote: post #43

sama wrote: post #22

Earlier quoted context omitted.

oops, i accidentally published an earlier draft. i added a bit more of my thinking here--my sense is that it would probably lead to less waste than current systems. i'm also not sure it's the right approach, but i haven't heard any better ideas yet.

i prefer universal essential services (healthcare, education, etc.) over a guaranteed basic income. with basic income, you run the risk that the receivers spend it on shiny objects (especially in an economy like ours with rampant consumerism) instead of things that benefit them and their families long-term. of course, what constitutes "essential services" can be the subject of a lengthy debate.

i prefer universal essential services (healthcare, education, etc.) over a guaranteed basic income.

What about countries in Europe that have that, and yet aren't doing great?

Re: The Economy

#123

Post by adventured » Mon, Jun 30, 2014, 8:00 PM UTC

TheCowboy wrote: post #75

tdees40 wrote: post #24

I'm not clear on how any of this will lead to a recession. Why will high Debt-to-GDP or government spending send the economy into a recession? Q1 GDP numbers were clearly affected by dismal weather (although still bad), but labor markets are improving markedly, and there are reasons for optimism. I don't see this as a very convincing bear case. For the bull case, see this post, from a guy who's been right about every…

I think the responses you're getting are ignoring the key question: How will high debt-to-GDP or government spending send the economy into a recession? Many have been forecasting complete collapse and hyperinflation for these reasons, and it hasn't materialized. It seems there is something flawed with the models people are trying to use to make their economic forecasts, or their reasoning doesn't apply to this situat…

The sole reason the US avoided disaster - temporarily - from occurring due to the massive increase in public debt, is the Fed began buying the radical majority of the government's debt after China let up on its buying.

When you have to rely on your central bank to fund your government's debt burdens with magic fiat, you're in a perpetual downward spiral scenario already. These are the good years, the deficit is set to explode dramatically higher again soon, and there will be nobody to buy except the Fed.

Who else can eat $500b to $1t per year in junk paper? China can't afford it any longer (having just taken on a mountain of debt the past five years). Japan hasn't been able to afford it for a very long time, they can't even afford their own debt.

Now it's merely a question of time. The Fed is pulling its programs because it can't sustain them any longer without running inflation through the roof. They know the US economy is weak, they see the data that led to the -3% GDP print. It's not like we're producing 500,000 full-time jobs and 200,000 manufacturing jobs per month.

Re: The Economy

#124

Post by dragonwriter » Mon, Jun 30, 2014, 8:00 PM UTC

argumentum wrote: post #104

tdees40 wrote: post #24

I'm not clear on how any of this will lead to a recession. Why will high Debt-to-GDP or government spending send the economy into a recession? Q1 GDP numbers were clearly affected by dismal weather (although still bad), but labor markets are improving markedly, and there are reasons for optimism. I don't see this as a very convincing bear case. For the bull case, see this post, from a guy who's been right about every…

A recession is two consecutive quarters of negative gdp growth. So if the economy shrinks this quarter we are, by definition, in a recession.

> A recession is two consecutive quarters of negative gdp growth.

That's a common rule of thumb, and apparently (per Wikipedia) the official definition in all states in the EU. But the US is not the EU, and the closest thing to an official definition in the US is that a recession exists whenever the Business Cycle Dating Committee of the National Bureau of Economics Research decides that a recession exists.

Re: The Economy

#125

Post by dnautics » Mon, Jun 30, 2014, 8:00 PM UTC

api wrote: post #20

I have gradually become convinced by mountains of evidence from many quarters that the Keynesians are right-- we are in a demand constrained economy. One of the problems I think is that economists and politicos tend to always be fighting the last war. In the late 1970s to early 1980s -- the last time the economy seemed this systemically bleak -- the problem was insufficient capital available for investment combined w…

I take a very very dim view of Keynsianism prescriptions, although their analysis may be correct (sometimes).

Let's agree that we're in a demand constrained economy (I am not sure but it may be the case).

1) Why should you believe that governments are good at readjusting the economy to "unconstrain" it from demand? From Halliburton/Iraq to Solyndra to Fisker to 38Studios (https://en.wikipedia.org/wiki/38_Studios) to Telacu (http://capoliticalnews.com/2014/02/21/construction-firm-tela...), time and time again, we see governments at all levels (local to federal) reallocate funds to cronies instead of in the "interest of the public".

2) Why should we do anything to stoke demand, at all? Doesn't consumerism and the impact it has on the environment (among other aspects of society)? Why should we presume that there is a 'correct' amount of consumption that society ought to engage in? How does one measure it, and why should we be incentivising individuals to abandon what they think is right for them based on their localized information?

Re: The Economy

#126

Post by [deleted] » Mon, Jun 30, 2014, 8:01 PM UTC

zenogais wrote: post #26

fokinsean wrote: post #13

Does anyone think we are heading towards an economic collapse?

Seeing as how "natural economic growth" is not infinitely sustainable (I'm operating under the assumptions that there are finite quantities of natural resources and human ingenuity is not infinite and infallible). It's probabilistically inevitable.

[deleted]

Re: The Economy

#127

Post by crassus » Mon, Jun 30, 2014, 8:02 PM UTC

klunger wrote: post #7

He just suggested a basic income for everybody. I just wanted to point this out in case people missed it when skimming.

Basic income is a potentially unlimited liability without any government control over fertility. If the needs of the portion of the population that are net consumers grow quicker than the surplus from net producers, an economic apocalypse happens sooner or later.

In a world of dysgenic fertility, this is guaranteed[1].

[1] http://charltonteaching.blogspot.com/2014/06/dysgenics-is-mo...

Re: The Economy

#128

Post by [deleted] » Mon, Jun 30, 2014, 8:02 PM UTC

roc wrote: post #103

gautambay wrote: post #43

Earlier quoted context omitted.

i prefer universal essential services (healthcare, education, etc.) over a guaranteed basic income. with basic income, you run the risk that the receivers spend it on shiny objects (especially in an economy like ours with rampant consumerism) instead of things that benefit them and their families long-term. of course, what constitutes "essential services" can be the subject of a lengthy debate.

> "i prefer universal essential services (healthcare, education, etc.) over a guaranteed basic income." If we believe in the market's ability to efficiently find the path forward, identifying "essential services", even if it were possible, is wasteful at best and more likely counter-productive over time. Twenty years ago we'd have locked in home phone service and missed internet. 10 years ago we might have locked in…

[deleted]

Re: The Economy

#129

Post by timr » Mon, Jun 30, 2014, 8:03 PM UTC

ef4 wrote: post #85

gautambay wrote: post #43

Earlier quoted context omitted.

i prefer universal essential services (healthcare, education, etc.) over a guaranteed basic income. with basic income, you run the risk that the receivers spend it on shiny objects (especially in an economy like ours with rampant consumerism) instead of things that benefit them and their families long-term. of course, what constitutes "essential services" can be the subject of a lengthy debate.

Ah, the classic paternalistic argument. It's deeply appealing to many people's preconceptions. But a growing body of experimental results call it into question. When you actually conduct the experiment -- a randomized controlled trial where you give some poor people cash and others in-kind services, the cash group outperforms.

For those asking, here are some links that will start you down the path to reading all about said research:

http://www.npr.org/blogs/money/2013/10/25/240590433/what-hap...

http://freakonomics.com/2013/06/04/should-we-all-just-give-c...

http://freakonomics.com/2013/09/26/would-a-big-bucket-of-cas...

http://freakonomics.com/2013/11/27/fighting-poverty-with-act...

http://poverty-action.org/project/0522

I'm glad I could help Google That For You.

Re: The Economy

#130

Post by Shivetya » Mon, Jun 30, 2014, 8:03 PM UTC

You would think with all the social spending we do that things would be better by now for people in this category but its not really. There needs to be a concerted effort to reduce the number of assistance programs to a single digit number so that funds are not lost to paying the workers to administer the programs. There are thousands of assistance programs just at the Federal level, sure that is not an ideal way of getting help to those in need.