There are many reasons why someone being tens of thousands of dollars in debt for a degree in Women's Studies is symptomatic of the problems with higher education, or indeed all of education, in the United States. This goes beyond the problem of trying to steal the cause by emulating the effect and is actually a problem with education itself.
The biggest problem with higher education is that it is trying to achieve conflicting purposes. Some say that higher education is for enrichment and enlightenment, to teach people how to think and to create a broadened perspective. If that is true, then a higher education is a luxury item, and not one that a person should go into debt for at all. The more expensive the luxury item, the more people who cannot afford expensive luxury items should not purchase education. It is horribly politically incorrect to think of education as a luxury for the rich though.
On the other hand, if education is supposed to train one for a career, then again there is no reason why a person should go tens of thousands of dollars into debt for a Women’s Studies degree. If the purpose is to train for a career, then there is something horribly wrong with the educational priorities demonstrated in the United States today. Many people talk about the need for STEM, but the discussion on campus is typically about strengthening the position of the multi-cultural departments.
Even on a typical campus not overrun by multi-culturalism, when the curriculum is being developed each department lobbies to increase their share of the core requirements. It takes a firm hand by the college administration to hold down the core requirements to that they do not overwhelm the course load required by the student of the college. Each of these additions to the required courses hearkens back to the purpose of college being enlightenment instead of applicable to a career. Assuming the purpose is to apply to a career, the enlightenment purpose tends to seep back in over time, increasing the cost.
Assuming again that the purpose is to train for a career, the many people taking the enlightenment and enrichment courses are competing for class space and allocated funds, taking funds away from career oriented courses of study and raising the price for those who would directly benefit from being in college. Both the philosophy major and the engineering major have to take Freshman English, and there are only so many seats in the class. That raises the price of college for the engineering major who is a perfect example of the second potential purpose of education.
One does not need to major in science to have a directly applicable career coming out of college. A typical junior college includes many departments not offered in a typical four year college that train in many trades. At a four year college there are departments that include various aspects of finance, education, or interpreting, as examples of immediately applicable majors.
Then, as John Taylor Gatto has pointed out, there is a third purpose to education as it is set up today, also conflicting. It is to train people to accept the governmental system that exists today and to make obedient workers. That has potential to overlap with the purpose of training for a career but conflicts grossly with the purpose of enlightenment.
Combine all of these with the progressive effort to capture the cause by emulating the effect, a cargo-cult mentality with what makes one successful, and the cost of education can only climb absurdly so that even those who do manage to cut through the nonsense and are sensible enough to major in something that can be applied, even they can no longer afford college. The cargo-cult mentality, hoping to make everyone successful, will result in nobody being successful.
Showing posts with label debt. Show all posts
Showing posts with label debt. Show all posts
Friday, March 28, 2014
Saturday, December 08, 2012
Fiscal Cliff Theater
As the fiscal cliff looms, there is intense debate in Washington about striking a deal to avert the automatic spending cuts and automatic tax increases that will go into effect otherwise. The debate has boiled down to an increase of a few percentage points of tax on the top two percentage points of income owners. The Republicans claim to want to maintain the current tax rates on all income earners, and the Democrats claim to want to maintain the current tax rates on the bottom ninety eight percent of income earners. The offer from the Democrats is that if this tax increase is granted, then there will be unspecified spending cuts at some future date.
Both sides are lying so badly that it is surprising anyone is able to take their claims seriously. It is even surprising that the major media outlets, paid to believe the claims of politicians, are able to do their job and keep the American public sufficiently worried.
According to Wikipedia for the 2012 Federal budget, the combined federal outlays were $3.795 Trillion and the combined federal revenues were $2.469 Trillion, leaving a deficit total federal deficit of $1.327 Trillion. There appears to include off budget spending. That means that tax revenue accounted for 65% of the total spending.
If the goal is to balance he budget, which is what is being claimed, then there are three options. Using the figures from 2012, analysis of these three options reveals the lies coming from both sides of the debate.
The first option is to raise taxes sufficiently to balance the budget. This means raising taxes by a significant amount on everyone, not just a few percentage points on the rich. Anyone who proposes merely raising taxes on the rich as a solution is lying. Anyone who proposes raising those taxes just a few percentage points as a solution is lying. President Obama is telling the truth about his desire to raise taxes on the top two percent, but lying when he claims that this will have any impact on the budget deficit. The total tax burden would have to be increased by 54% to cover spending. There is no way to increase tax revenue by that amount by increasing taxes only on the rich, even if there is a top rate of 100% on income over $250,000. All taxes would have to go up, which means personal and corporate income taxes and tariffs and excise taxes, and the personal taxes would have to be raised on all brackets. There is some room to try to juggle the burden away from lower incomes and towards higher incomes, but not much, meaning that even lower income earners will feel the effect.
The second option is to cut spending sufficiently to balance the budget. Spending will have to be cut by 35%. This means real cuts, not "Washington cuts." This is where the Republicans are shown to be lying to the American public. Every cut proposed is a reduction in the rate of increase, a “Washington cut”. Moreover, these cuts are delayed in implementation, a second lie by the Republicans. It has often happened in the past that a budget deal would be made with front loaded tax increases and several years later there would be accompanying spending cuts. Every time that deal was allegedly made the spending cuts did not happen. Only one person in the Senate proposed a budget with real cuts, and his cuts only came to $500 billion, and he admitted that his cuts did not go far enough. The rest of the political class thought he was crazy and instead looked at the Ryan budget, with no actual cuts, and talked about what a fiscal hawk Representative Paul Ryan was.
The third option is a combination of tax increases and spending cuts. Meeting half-way this means increasing tax revenue to 82% of 2012 expenditures and reducing spending to 82% of 2012 expenditures. This would require a total revenue increase of 26%. It will be easier for those who favor taxing the rich for the crime of being rich to be able to adjust the burden away from the lower incomes, but it will still be necessary to increase taxes on the middle class as well as excise taxes and tariffs. Spending cuts also have some interesting implications as this will require a total spending cut of 18%.
Social Security, unemployment, and labor are 34% of the budget. Medicare and health are 24% of the budget. The military is 18% of the budget. Debt financing are 7% of the budget. Food and Agriculture, Veterans Benefits, Transportation, Education, Housing and Community, International Affairs, Energy and Environment, Science, and Government (everything else) are 18%. If a policy of peace were to be adopted, the military budget can be cut in half easily, saving 9% and leaving another 9% to cut. Perhaps a percentage point can be cut from "everything else." That leaves 8% remaining to cut, which means that either Social Security or Medicare will have to be cut, perhaps both. Any plan which doesn’t include cutting Social Security or Medicare is not an honest plan.
Nobody in Washington is discussing anything close to any of those three proposals, except for Senator Rand Paul. Therefore nobody in Washington except for him is doing anything about the crisis that the Fiscal Cliff discussion was supposed to try to avert.
Both sides are lying so badly that it is surprising anyone is able to take their claims seriously. It is even surprising that the major media outlets, paid to believe the claims of politicians, are able to do their job and keep the American public sufficiently worried.
According to Wikipedia for the 2012 Federal budget, the combined federal outlays were $3.795 Trillion and the combined federal revenues were $2.469 Trillion, leaving a deficit total federal deficit of $1.327 Trillion. There appears to include off budget spending. That means that tax revenue accounted for 65% of the total spending.
If the goal is to balance he budget, which is what is being claimed, then there are three options. Using the figures from 2012, analysis of these three options reveals the lies coming from both sides of the debate.
The first option is to raise taxes sufficiently to balance the budget. This means raising taxes by a significant amount on everyone, not just a few percentage points on the rich. Anyone who proposes merely raising taxes on the rich as a solution is lying. Anyone who proposes raising those taxes just a few percentage points as a solution is lying. President Obama is telling the truth about his desire to raise taxes on the top two percent, but lying when he claims that this will have any impact on the budget deficit. The total tax burden would have to be increased by 54% to cover spending. There is no way to increase tax revenue by that amount by increasing taxes only on the rich, even if there is a top rate of 100% on income over $250,000. All taxes would have to go up, which means personal and corporate income taxes and tariffs and excise taxes, and the personal taxes would have to be raised on all brackets. There is some room to try to juggle the burden away from lower incomes and towards higher incomes, but not much, meaning that even lower income earners will feel the effect.
The second option is to cut spending sufficiently to balance the budget. Spending will have to be cut by 35%. This means real cuts, not "Washington cuts." This is where the Republicans are shown to be lying to the American public. Every cut proposed is a reduction in the rate of increase, a “Washington cut”. Moreover, these cuts are delayed in implementation, a second lie by the Republicans. It has often happened in the past that a budget deal would be made with front loaded tax increases and several years later there would be accompanying spending cuts. Every time that deal was allegedly made the spending cuts did not happen. Only one person in the Senate proposed a budget with real cuts, and his cuts only came to $500 billion, and he admitted that his cuts did not go far enough. The rest of the political class thought he was crazy and instead looked at the Ryan budget, with no actual cuts, and talked about what a fiscal hawk Representative Paul Ryan was.
The third option is a combination of tax increases and spending cuts. Meeting half-way this means increasing tax revenue to 82% of 2012 expenditures and reducing spending to 82% of 2012 expenditures. This would require a total revenue increase of 26%. It will be easier for those who favor taxing the rich for the crime of being rich to be able to adjust the burden away from the lower incomes, but it will still be necessary to increase taxes on the middle class as well as excise taxes and tariffs. Spending cuts also have some interesting implications as this will require a total spending cut of 18%.
Social Security, unemployment, and labor are 34% of the budget. Medicare and health are 24% of the budget. The military is 18% of the budget. Debt financing are 7% of the budget. Food and Agriculture, Veterans Benefits, Transportation, Education, Housing and Community, International Affairs, Energy and Environment, Science, and Government (everything else) are 18%. If a policy of peace were to be adopted, the military budget can be cut in half easily, saving 9% and leaving another 9% to cut. Perhaps a percentage point can be cut from "everything else." That leaves 8% remaining to cut, which means that either Social Security or Medicare will have to be cut, perhaps both. Any plan which doesn’t include cutting Social Security or Medicare is not an honest plan.
Nobody in Washington is discussing anything close to any of those three proposals, except for Senator Rand Paul. Therefore nobody in Washington except for him is doing anything about the crisis that the Fiscal Cliff discussion was supposed to try to avert.
Friday, July 29, 2011
Eliminate the Debt Ceiling
The official position of the Libertarian Party is to say "No" to raising the debt limit. It is a perfectly sensible position, because the alternative is the destruction of the dollar through inflation, and then hyper-inflation. The federal government is going to have to adopt austerity measures someday, whether by choice or by circumstance inflicted on the country. Of all the major party presidential candidates, only Ron Paul and Gary Johnson have spoken about the need to bring the finances of the government under control, and have spoken about how if the hard choices aren’t made now they will be made for the country later.
The problem is, the sane voices won't be heard. The Keynesians and Monetarists who control fiscal and monetary policy in the government will never accept that anything should actually be cut, other than a few token items of window-dressing. Their plan is to keep raising the debt limit every time it is reached. The entire show is Kabuki Theater because the Congress and the President know that the voters are actually watching this time and actually demanding that something be dome about the excessive spending.
But they do not believe in restraint. So perhaps the opposite approach should be taken on the debt ceiling issue. Give them exactly what they want, but give them more of what they want than what they are asking for. Eliminate the debt ceiling. Pass the necessary legislation to tie all government debt issuances to the budget, so that the Department of the Treasury can automatically sell debt as needed when needed without any restraint other than the budget passed by congress.
As crazy as that idea sounds, it has some advantages. The first is that, since sane voices are not able to engineer austerity measures directly, this would be a way to engineer them sooner rather than later, perhaps avoiding the final stage of hyperinflation. Although the Keynesians and Monetarists will never understand it, eliminating the limit entirely will signal to lenders that the United States government has no intention of getting spending under control and therefore is not a good risk for lending. This will cause the austerity measures to start sooner rather then after hyperinflation ruins the country.
Another benefit is that it ends what is a side-show, albeit a side-show that is much closer to the real issue than those in charge would like. Even after two congressmen in a row have resigned over sexual misconduct issues the attention of the public is still on excessive spending. Since the public is actually watching the government instead of the tabloids the debt limit is what is being debated instead of the actual imbalance. A "ten year plan," reminiscent of Soviet five year plans, is introduced with back-loaded spending cuts, and the public isn't buying it. Tax increases, which will eventually be necessary, are proposed without actual cuts, and the public isn't buying it. So everyone in Washington is debating the debt limit, and how the government will shut down without an increase to the debt limit. Eliminating the debt limit will force discussion on the budget instead of on an artificial self-imposed limit.
Although it would be disaster, there is a disaster coming anyway. So perhaps the best thing is to be intentionally wrong so that when the San Sebastian Mines are seized, the truth about them is laid bare for the world to see.
The problem is, the sane voices won't be heard. The Keynesians and Monetarists who control fiscal and monetary policy in the government will never accept that anything should actually be cut, other than a few token items of window-dressing. Their plan is to keep raising the debt limit every time it is reached. The entire show is Kabuki Theater because the Congress and the President know that the voters are actually watching this time and actually demanding that something be dome about the excessive spending.
But they do not believe in restraint. So perhaps the opposite approach should be taken on the debt ceiling issue. Give them exactly what they want, but give them more of what they want than what they are asking for. Eliminate the debt ceiling. Pass the necessary legislation to tie all government debt issuances to the budget, so that the Department of the Treasury can automatically sell debt as needed when needed without any restraint other than the budget passed by congress.
As crazy as that idea sounds, it has some advantages. The first is that, since sane voices are not able to engineer austerity measures directly, this would be a way to engineer them sooner rather than later, perhaps avoiding the final stage of hyperinflation. Although the Keynesians and Monetarists will never understand it, eliminating the limit entirely will signal to lenders that the United States government has no intention of getting spending under control and therefore is not a good risk for lending. This will cause the austerity measures to start sooner rather then after hyperinflation ruins the country.
Another benefit is that it ends what is a side-show, albeit a side-show that is much closer to the real issue than those in charge would like. Even after two congressmen in a row have resigned over sexual misconduct issues the attention of the public is still on excessive spending. Since the public is actually watching the government instead of the tabloids the debt limit is what is being debated instead of the actual imbalance. A "ten year plan," reminiscent of Soviet five year plans, is introduced with back-loaded spending cuts, and the public isn't buying it. Tax increases, which will eventually be necessary, are proposed without actual cuts, and the public isn't buying it. So everyone in Washington is debating the debt limit, and how the government will shut down without an increase to the debt limit. Eliminating the debt limit will force discussion on the budget instead of on an artificial self-imposed limit.
Although it would be disaster, there is a disaster coming anyway. So perhaps the best thing is to be intentionally wrong so that when the San Sebastian Mines are seized, the truth about them is laid bare for the world to see.
Wednesday, January 26, 2011
Balancing the Budget
It is still possible to avoid the budgetary collapse of the federal, state, and local governments. All it would take is politicians of courage and integrity, which is why it is unavoidable that this country will experience said budgetary collapse.
Saving government budgets will require a mix of both tax increases and spending cuts, but it will have to be different from all former mixes of tax increases and spending cuts. In the past the governments would offer the people a deal, wherein taxes are raised now and three years down the road the spending cuts would kick in. Democrats would make this offer, promising to reverse course and cut spending. Republicans would make a big show about how they are reluctantly accepting the deal, because they want to vote for tax increases but want to tell their constituents that they do not want to vote for tax increases. Three years later, everything is changed and the spending cuts do not happen. Some people have forgotten the deal. Republicans act shocked that the Democrats betrayed them. Sometimes there are some minor reductions in the rate of increase.
A real effort to balance the budget would by necessity include real spending cuts. The whole dollar amount of the budget would have to be smaller than the whole dollar amount the previous year. It would not be inflation adjusted dollars, it must be nominal dollars.
A second point would be to refuse the phony deal of "taxes now and cuts later." Any effort to balance the budget based on a combination of tax increases and spending cuts must have spending cuts come first. Politicians are loathe to cut spending, and always look for an excuse not to. By putting it first, and not implementing any tax increases until spending is cut forces them to act in a responsible manner in spite of their own wishes.
A third point of difference between a real effort to balance the budget and phony past attempts at reform would be the ratio of tax increases to spending cuts. In past deals, the alleged rate would be dollar for dollar, one dollar of tax increases for one dollar of spending cuts, although the cuts never actually materialized. In order to balance the budgets now, it would require probably about twelve dollars of cuts for every dollar of increased taxes, perhaps more. A ratio of twelve-to-one is a good place to start though, considering the need to pay off the enormous accumulated debt. Government spending is currently about 30% of GDP, and taxes are currently about 18% of GDP; impelementing a twelve-to-one ratio will result in 18% for spending and 19% for taxes, a small but real surplus.
Admittedly, for those who have grown dependent on government, cuts of that magnitude would be painful. And for those who actually pay the taxes, even that much more of a tax increase would also be painful. For the former there is little cause for sympathy, but the latter will eventually see a benefit. As the debt is actually reduced the value of the dollar will increase, giving the country the relief of a much needed deflation. Unlike the phony investments by government, this would be an investment that would eventually pay off.
This would require great personal courage on the part of elected officials; they would have to make the tough choices and take responsibility for their decisions. That is why the budgets will collapse instead. It is important to offer this advice, although it will never be followed, because an accusation often hurled at libertarians is that they do nothing but criticize and never offer any suggestions. Libertarians do offer plenty of suggestions, but most libertarian suggestions are anathema to statists and thus "don't count."
Saving government budgets will require a mix of both tax increases and spending cuts, but it will have to be different from all former mixes of tax increases and spending cuts. In the past the governments would offer the people a deal, wherein taxes are raised now and three years down the road the spending cuts would kick in. Democrats would make this offer, promising to reverse course and cut spending. Republicans would make a big show about how they are reluctantly accepting the deal, because they want to vote for tax increases but want to tell their constituents that they do not want to vote for tax increases. Three years later, everything is changed and the spending cuts do not happen. Some people have forgotten the deal. Republicans act shocked that the Democrats betrayed them. Sometimes there are some minor reductions in the rate of increase.
A real effort to balance the budget would by necessity include real spending cuts. The whole dollar amount of the budget would have to be smaller than the whole dollar amount the previous year. It would not be inflation adjusted dollars, it must be nominal dollars.
A second point would be to refuse the phony deal of "taxes now and cuts later." Any effort to balance the budget based on a combination of tax increases and spending cuts must have spending cuts come first. Politicians are loathe to cut spending, and always look for an excuse not to. By putting it first, and not implementing any tax increases until spending is cut forces them to act in a responsible manner in spite of their own wishes.
A third point of difference between a real effort to balance the budget and phony past attempts at reform would be the ratio of tax increases to spending cuts. In past deals, the alleged rate would be dollar for dollar, one dollar of tax increases for one dollar of spending cuts, although the cuts never actually materialized. In order to balance the budgets now, it would require probably about twelve dollars of cuts for every dollar of increased taxes, perhaps more. A ratio of twelve-to-one is a good place to start though, considering the need to pay off the enormous accumulated debt. Government spending is currently about 30% of GDP, and taxes are currently about 18% of GDP; impelementing a twelve-to-one ratio will result in 18% for spending and 19% for taxes, a small but real surplus.
Admittedly, for those who have grown dependent on government, cuts of that magnitude would be painful. And for those who actually pay the taxes, even that much more of a tax increase would also be painful. For the former there is little cause for sympathy, but the latter will eventually see a benefit. As the debt is actually reduced the value of the dollar will increase, giving the country the relief of a much needed deflation. Unlike the phony investments by government, this would be an investment that would eventually pay off.
This would require great personal courage on the part of elected officials; they would have to make the tough choices and take responsibility for their decisions. That is why the budgets will collapse instead. It is important to offer this advice, although it will never be followed, because an accusation often hurled at libertarians is that they do nothing but criticize and never offer any suggestions. Libertarians do offer plenty of suggestions, but most libertarian suggestions are anathema to statists and thus "don't count."
Thursday, October 21, 2010
Debt to GDP
Government debt as a percentage of GDP is a popular measurement to determine if a government is spending too much, with various "thresholds" given for when the debt gets too excessive. Unfortunately it is not a good measure in itself.
The first problem is with the items being measured. GDP is measured with the formula "Y = C + I + G + ( X - M )", or GDP is equal to consumption plus investment plus government spending plus exports minus imports. Although there are many criticisms of GDP the worst is that it includes government spending as a positive component.
Government spending is, at best, a transfer instead of an actual investment or consumption. A measure of the GDP that leaves that out would be "Y = C + I + X - M". But given that there’s inefficiency in the process, every government dollar spent is actually a drain on the economy. They Keynesian "multiplier effect" is a myth unsubstantiated by actual results. To measure the full effect of GDP would be to subtract government spending, giving "Y = C + I + X - M - G".
The other part of the ratio, the debt, is also a problem. The government debt is not a stationary target, but is moving, which means to get an effective measurement includes the deficits. That means government spending is on both sides of the ratio. Increasing government spending will increase both GDP and Debt, making all ratio measurements unreliable.
The second problem is that debt to GDP is used to measure a government's ability to repay the government debt. That implies that the government has a claim on the GDP of a country, which implies that the government has a claim on the whole of the wealth of a country. Any attempt to claim that wealth in an effort to pay off the debt would destroy the economy and deplete the wealth of the country.
Third, given that both parts are moving targets, an 'improving' ratio doesn't necessarily show any greater or lesser responsibility on the part of politicians. If the debt increases slower than the GDP climbs, or if the debt decreases but the GDP decreases by a smaller amount, the result is the appearance of improvement. Reverse the ratios and it gives the appearance of economic degradation. In the first half of each example, debt increased. In the second half of each example, the GDP declined. None of those are good, but two of them give the appearance of a better economy.
Fourth, the measures can be manipulated. Take a country with a debt to GDP ratio far in excess of 100%, such as 130% or higher. That country's government can use the central bank to monetize the debt and borrow money a thousand times more than owed before, such as a country that owes trillions can create quadrillions. The government can then spend the money. That would surely alter the GDP equation, with G increasing by an exponential amount while C, I, X, and M trend towards zero, leaving Y increasing while basically equaling G. Debt would also be basically equal to the newly created money, leading to a debt to GDP ratio of approximately 100%. By those who favor debt to GDP as a measure, that leads to the conclusion that the economy of that country has improved, while any objective measure would show hyperinflation and the collapse of the economy.
There really is little use in debt as a percentage of GDP. It doesn't measure what it is supposed to measure, it is very prone to manipulation, and its components aren't very as reliable as one would desire in an economic measure.
The first problem is with the items being measured. GDP is measured with the formula "Y = C + I + G + ( X - M )", or GDP is equal to consumption plus investment plus government spending plus exports minus imports. Although there are many criticisms of GDP the worst is that it includes government spending as a positive component.
Government spending is, at best, a transfer instead of an actual investment or consumption. A measure of the GDP that leaves that out would be "Y = C + I + X - M". But given that there’s inefficiency in the process, every government dollar spent is actually a drain on the economy. They Keynesian "multiplier effect" is a myth unsubstantiated by actual results. To measure the full effect of GDP would be to subtract government spending, giving "Y = C + I + X - M - G".
The other part of the ratio, the debt, is also a problem. The government debt is not a stationary target, but is moving, which means to get an effective measurement includes the deficits. That means government spending is on both sides of the ratio. Increasing government spending will increase both GDP and Debt, making all ratio measurements unreliable.
The second problem is that debt to GDP is used to measure a government's ability to repay the government debt. That implies that the government has a claim on the GDP of a country, which implies that the government has a claim on the whole of the wealth of a country. Any attempt to claim that wealth in an effort to pay off the debt would destroy the economy and deplete the wealth of the country.
Third, given that both parts are moving targets, an 'improving' ratio doesn't necessarily show any greater or lesser responsibility on the part of politicians. If the debt increases slower than the GDP climbs, or if the debt decreases but the GDP decreases by a smaller amount, the result is the appearance of improvement. Reverse the ratios and it gives the appearance of economic degradation. In the first half of each example, debt increased. In the second half of each example, the GDP declined. None of those are good, but two of them give the appearance of a better economy.
Fourth, the measures can be manipulated. Take a country with a debt to GDP ratio far in excess of 100%, such as 130% or higher. That country's government can use the central bank to monetize the debt and borrow money a thousand times more than owed before, such as a country that owes trillions can create quadrillions. The government can then spend the money. That would surely alter the GDP equation, with G increasing by an exponential amount while C, I, X, and M trend towards zero, leaving Y increasing while basically equaling G. Debt would also be basically equal to the newly created money, leading to a debt to GDP ratio of approximately 100%. By those who favor debt to GDP as a measure, that leads to the conclusion that the economy of that country has improved, while any objective measure would show hyperinflation and the collapse of the economy.
There really is little use in debt as a percentage of GDP. It doesn't measure what it is supposed to measure, it is very prone to manipulation, and its components aren't very as reliable as one would desire in an economic measure.
Friday, May 15, 2009
What Recovery?
The economic news this year was already going to be bad. Those who did foresee hard times last year also foresaw that this year would have a commercial real estate bust. Those who own strip malls still have to pay the mortgage, even if there are no stores renting space in the strip mall. The commercial real estate bust is on top of the continuing residential real estate bust. But now it appears that matters are going to get much worse.
Some people appear to think that the economy is recovering. Stocks are up somewhat and therefore everything should be better soon. This is according to officials in the Treasury and the Federal Reserve, the very same officials who failed to see the recession coming in the first place.
If a bucket has a hole in the bottom, it will eventually drain of whatever is in the bucket. But if water is added to the bucket at a faster rate than the hole can drain it the water level in the bucket will, for a while, rise. Bush and Obama, through their stimulus packages, have pumped so much money into the economy that the bubble has partially re-inflated in spite of it deflating just as much as before.
What has instead happened is an increase in debt of unprecedented scale. The end result is that when this trickles through the economy prices will skyrocket. This is the leading indicator of severe inflation.
But while that would be bad news on its own, the government has decided that stricter rules are needed for credit cards to prevent the raising of rates or the lowering of available credit for those who have them.
Any act of lending is a risk, which is one of the reasons lenders charge interest. If it becomes impossible to recoup the risk of lending, such lending will cease. It’s already the case that payday loans are under heavy fire. This will shutter the other means of short term unsecured debt that people have access to. This is not to suggest that debt is a good thing, especially in the current economic environment, but responsible use of debt and short term loans will be hurt by the attacks on payday loans and credit cards.
Combine that with the proposed Employee Free Choice Act and a new mercantilist pro-America policy coming from the White House it becomes apparent that this year the United States is in for a very rough time.
It is no wonder that the administrators of the Social Security Trust Fund recently announced that they are foreseeing trouble.
Some people appear to think that the economy is recovering. Stocks are up somewhat and therefore everything should be better soon. This is according to officials in the Treasury and the Federal Reserve, the very same officials who failed to see the recession coming in the first place.
If a bucket has a hole in the bottom, it will eventually drain of whatever is in the bucket. But if water is added to the bucket at a faster rate than the hole can drain it the water level in the bucket will, for a while, rise. Bush and Obama, through their stimulus packages, have pumped so much money into the economy that the bubble has partially re-inflated in spite of it deflating just as much as before.
What has instead happened is an increase in debt of unprecedented scale. The end result is that when this trickles through the economy prices will skyrocket. This is the leading indicator of severe inflation.
But while that would be bad news on its own, the government has decided that stricter rules are needed for credit cards to prevent the raising of rates or the lowering of available credit for those who have them.
Any act of lending is a risk, which is one of the reasons lenders charge interest. If it becomes impossible to recoup the risk of lending, such lending will cease. It’s already the case that payday loans are under heavy fire. This will shutter the other means of short term unsecured debt that people have access to. This is not to suggest that debt is a good thing, especially in the current economic environment, but responsible use of debt and short term loans will be hurt by the attacks on payday loans and credit cards.
Combine that with the proposed Employee Free Choice Act and a new mercantilist pro-America policy coming from the White House it becomes apparent that this year the United States is in for a very rough time.
It is no wonder that the administrators of the Social Security Trust Fund recently announced that they are foreseeing trouble.
Thursday, February 12, 2009
Partial Reneg of the National Debt
Although debt repudiation is slowly becoming a topic outside of libertarian circles, one could make the counter-argument that people are responsible for the debt because the government that accrued it is the government elected by the people.
One could counter argue that the politicians in power weren't the one supported, and therefore the person who voted against the politician in power isn't liable. There are two different, and contradictory, counterarguments used against that. First, by voting at all, the person agrees to the outcome. Second, by not voting, the person agrees to the outcome. It is the deadly double-bind of democratic statism used to ensnare all who dare dissent by showing that they agree.
In truth the debt is owed by the politicians, past and present, who voted for it. But as they not only will never be held accountable, and they cannot afford it, they also insist the rest of us owe the debt, let us examine taking them at their word.
For some of the following calculations, both of those are going to be assumed to be true, in spite of the fact that they contradict each other. It is a common practice to say that the debt, divided by the population, gives us the share of debt owed by each person in this country. Given that debt, the following figures are the result.
Those figures are crooked. They hold people liable for debt accrued before people could vote, or before people were even born. Whether by voting or by not voting a person gives consent, it is impossible to give or withhold consent when a person is not able to vote, whether by virtue of age or not yet existing.
A more honest figure would include the debt accrued only during that term, and dividing it up among the population in various ways. Using term debt (debt accumulated during the term of the president) instead of national debt (debt accumulated by all previous presidents) and dividing it up among the population in various ways different results emerge.
Using the assumption that both the contradictory arguments are true, that all eligible voters are responsible, then dividing up the debt of each term by the eligible voters of each term yeilds the following results.
Thus someone who only able to vote in the 2004 election is only to be held liable for the $7,360.68 of debt accumulated during that term, while someone who was able to vote for the first time in 1992 is to be held liable for $24,052.37 of the debt. Those who are not able to vote are not liable for any of it, which should come as a relief to anyone under the age of eighteen.
If that is too broad, and only those who actually registered to vote are counted a different outcome is the result.
Thus someone who was only registered to vote in the 2004 election is only to be held liable for the $9,316.94 of debt accumulated during that term, while someone who was registered to vote since 1992 is to be held liable for $31,959.29 of the debt.
Finally if you only count those who voted, there is yet another outcome.
Thus someone who first voted in the 2004 election is only to be held liable for the $13,316.99 of debt accumulated during that term, while someone who was registered to vote since 1992 is to be held liable for $45234.88 of the debt.
These all operate on the principle that there can be no taxation without representation.
While the these calculations do increase the debt per person on older voters all fo them hold younger voters to be not responsible for taxes levied without their representation. Assuming an average age of 40, enabling a person to cast their first vote in the race between Dukakis and Bush, that gives an of age debt of $32,052.48, a registered debt of $43,529.53, and a voted debt of $61,199.16.
But they also leave one third of the debt unaccountable. One third of the debt is owed by absolutely nobody.
Even further and more advanced calculation would also reveal that a good share of the older debts are not owed by anybody, because some who voted for older presidents have died and therefore so has their share. So the 232.52, 368.72, or 368.72 owed by each person who could be held accountable in the election of Kennedy isn't shifted from those who have died to those who haven't, but is instead to be written off as the debtor is deceased.
This does make an excellent argument for not voting and not registering to vote when the system itself is corrupt. It is also very sad that two thirds of the national debt occured within most peoples lifetimes, and that is true in both regular and constant dollars.
Of course the best argument is that the debt actually belongs to those who accrued it, the Senators and Representatives who voted for it and the Presidents who signed for it. Let the debt be divided up amongst the gang of 540.
One could counter argue that the politicians in power weren't the one supported, and therefore the person who voted against the politician in power isn't liable. There are two different, and contradictory, counterarguments used against that. First, by voting at all, the person agrees to the outcome. Second, by not voting, the person agrees to the outcome. It is the deadly double-bind of democratic statism used to ensnare all who dare dissent by showing that they agree.
In truth the debt is owed by the politicians, past and present, who voted for it. But as they not only will never be held accountable, and they cannot afford it, they also insist the rest of us owe the debt, let us examine taking them at their word.
For some of the following calculations, both of those are going to be assumed to be true, in spite of the fact that they contradict each other. It is a common practice to say that the debt, divided by the population, gives us the share of debt owed by each person in this country. Given that debt, the following figures are the result.
| President | Debt | Population | Share |
| Kennedy / Johnson | 311,712,899,257.30 | 180,671,158 | 1,725.31 |
| Johnson | 347,578,406,425.88 | 191,888,791 | 1,811.35 |
| Nixon | 427,260,460,940.50 | 200,706,052 | 2,128.79 |
| Nixon / Ford | 620,433,000,000.00 | 209,896,021 | 2,955.91 |
| Carter | 907,701,000,000.00 | 218,035,164 | 4,163.09 |
| Reagan Term 1 | 1,572,266,000,000.00 | 227,224,681 | 6,919.43 |
| Reagan Term 2 | 2,602,377,701,041.16 | 235,824,902 | 11,035.21 |
| Bush Sr | 4,064,620,655,521.66 | 244,498,982 | 6,624.28 |
| Clinton Term 1 | 5,224,810,939,135.73 | 254,994,517 | 20,489.90 |
| Clinton Term 2 | 5,674,178,209,886.86 | 265,189,794 | 21,396.67 |
| Bush Jr Term 1 | 7,379,052,696,330.32 | 281,421,906 | 26,220.61 |
| Bush Jr Term 2 | 9,007,653,372,262.48 | 293,655,404 | 30,674.23 |
Those figures are crooked. They hold people liable for debt accrued before people could vote, or before people were even born. Whether by voting or by not voting a person gives consent, it is impossible to give or withhold consent when a person is not able to vote, whether by virtue of age or not yet existing.
A more honest figure would include the debt accrued only during that term, and dividing it up among the population in various ways. Using term debt (debt accumulated during the term of the president) instead of national debt (debt accumulated by all previous presidents) and dividing it up among the population in various ways different results emerge.
Using the assumption that both the contradictory arguments are true, that all eligible voters are responsible, then dividing up the debt of each term by the eligible voters of each term yeilds the following results.
| President | Term Debt | Share by Voting Age |
| Kennedy / Johnson | 25,382,138,408.93 | 232.52 |
| Johnson | 35,865,507,168.58 | 314.36 |
| Nixon | 79,682,054,514.62 | 662.21 |
| Nixon / Ford | 193,172,539,059.50 | 1,372.20 |
| Carter | 287,268,000,000.00 | 1,886.08 |
| Reagan Term 1 | 664,565,000,000.00 | 4,037.53 |
| Reagan Term 2 | 1,030,111,701,041.16 | 5,904.37 |
| Bush Sr | 1,462,242,954,480.50 | 8,000.10 |
| Clinton Term 1 | 1,160,190,283,614.07 | 6,121.44 |
| Clinton Term 2 | 449,367,270,751.13 | 2,286.73 |
| Bush Jr Term 1 | 1,704,874,486,443.46 | 8,283.53 |
| Bush Jr Term 2 | 1,628,600,675,932.16 | 7,360.68 |
Thus someone who only able to vote in the 2004 election is only to be held liable for the $7,360.68 of debt accumulated during that term, while someone who was able to vote for the first time in 1992 is to be held liable for $24,052.37 of the debt. Those who are not able to vote are not liable for any of it, which should come as a relief to anyone under the age of eighteen.
If that is too broad, and only those who actually registered to vote are counted a different outcome is the result.
| President | Term Debt | By Registered |
| Kennedy / Johnson | 25,382,138,408.93 | 391.50 |
| Johnson | 35,865,507,168.58 | 486.54 |
| Nixon | 79,682,054,514.62 | 975.80 |
| Nixon / Ford | 193,172,539,059.50 | 1,984.75 |
| Carter | 287,268,000,000.00 | 2,734.90 |
| Reagan Term 1 | 664,565,000,000.00 | 5,878.83 |
| Reagan Term 2 | 1,030,111,701,041.16 | 8,297.27 |
| Bush Sr | 1,462,242,954,480.50 | 11,570.24 |
| Clinton Term 1 | 1,160,190,283,614.07 | 8,669.71 |
| Clinton Term 2 | 449,367,270,751.13 | 3,073.40 |
| Bush Jr Term 1 | 1,704,874,486,443.46 | 10,899.25 |
| Bush Jr Term 2 | 1,628,600,675,932.16 | 9,316.94 |
Thus someone who was only registered to vote in the 2004 election is only to be held liable for the $9,316.94 of debt accumulated during that term, while someone who was registered to vote since 1992 is to be held liable for $31,959.29 of the debt.
Finally if you only count those who voted, there is yet another outcome.
| President | Term Debt | By Voted |
| Kennedy / Johnson | 25,382,138,408.93 | 368.72 |
| Johnson | 35,865,507,168.58 | 507.69 |
| Nixon | 79,682,054,514.62 | 1,088.38 |
| Nixon / Ford | 193,172,539,059.50 | 2,485.54 |
| Carter | 287,268,000,000.00 | 3,522.35 |
| Reagan Term 1 | 664,565,000,000.00 | 7,681.48 |
| Reagan Term 2 | 1,030,111,701,041.16 | 11,117.99 |
| Bush Sr | 1,462,242,954,480.50 | 15,964.28 |
| Clinton Term 1 | 1,160,190,283,614.07 | 11,112.39 |
| Clinton Term 2 | 449,367,270,751.13 | 4,658.76 |
| Bush Jr Term 1 | 1,704,874,486,443.46 | 16,146.74 |
| Bush Jr Term 2 | 1,628,600,675,932.16 | 13,316.99 |
Thus someone who first voted in the 2004 election is only to be held liable for the $13,316.99 of debt accumulated during that term, while someone who was registered to vote since 1992 is to be held liable for $45234.88 of the debt.
These all operate on the principle that there can be no taxation without representation.
While the these calculations do increase the debt per person on older voters all fo them hold younger voters to be not responsible for taxes levied without their representation. Assuming an average age of 40, enabling a person to cast their first vote in the race between Dukakis and Bush, that gives an of age debt of $32,052.48, a registered debt of $43,529.53, and a voted debt of $61,199.16.
But they also leave one third of the debt unaccountable. One third of the debt is owed by absolutely nobody.
Even further and more advanced calculation would also reveal that a good share of the older debts are not owed by anybody, because some who voted for older presidents have died and therefore so has their share. So the 232.52, 368.72, or 368.72 owed by each person who could be held accountable in the election of Kennedy isn't shifted from those who have died to those who haven't, but is instead to be written off as the debtor is deceased.
This does make an excellent argument for not voting and not registering to vote when the system itself is corrupt. It is also very sad that two thirds of the national debt occured within most peoples lifetimes, and that is true in both regular and constant dollars.
Of course the best argument is that the debt actually belongs to those who accrued it, the Senators and Representatives who voted for it and the Presidents who signed for it. Let the debt be divided up amongst the gang of 540.
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