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Tuesday, September 22, 2015

If the government were a person

If a friend borrowed money from you, then, when you asked to be repaid, said that he didn't have the money because he'd given it away to some foreigners, would you be a little bit angry?

If you had to pay your employees more than you get yourself, and found that those employees got health care plans, vacations, and pensions which far exceeded your own, all while working much less hard than you do, wouldn't you be a little miffed? Especially if those employees had, for all practical purposes, lifetime tenure?

If some people broke into your house to squat in an empty bedroom, and a neighbor then informed you that not only were those people who were there illegally not going to be evicted, but that you had to pay for their medical care and schooling as well, would that gall you?

If someone kept taking out new loans in your children's names, and continually got them deeper and deeper into debt, would you find that a little troublesome?

If some of your friends were targeted and killed by a couple of assassins, and someone explained what happened by telling you that it was just a peaceful demonstration about an internet video that had gotten out of control, when you found otherwise, would you ever believe anything that person told you again?

If a guy you know carelessly started a large bar fight, then recruited several neighborhood youths to finish the fight for him, and informed you that you were going to have to pay for part of it, would you be appalled?


Anonymous said...

I would like this person a lot more than I like my government.

Mark Caplan said...

Was this post aimed at reclaiming your libertarian street cred after a brief flirtation with apostasy?

Runner Katy said...

Oh my gosh, I love this. And then hate our government even more....which I didn't know was possible. I love our country, and love the core values of it, but government gets more corrupt by the millisecond. I would share this on Facebook if I could.

John Craig said...

Mark --
Ha! You got me.

I honestly don't know what to call myself these days. For the longest time I've thought of myself as a libertarian, but recently I've been coming more and more to realize that that philosophy doesn't work unless you have a society with a unanimously universalist spirit. If we're all taught to judge others as individuals, but then certain groups are more cohesive and work together as interest groups, it just doesn't work. Sure is hard to figure out what works in a multicultural society.

John Craig said...

Runner Katy --
Thank you. (I think you can share it on Facebook, can't you? I get traffic from Facebook fairly frequently.)

Baloo said...

Great stuff as always! Reblogged, and with a Confucius quibcag!
John Craig on the Government as Next-Door Neighbor

Quartermain said...

I would say that neighbor deserves to be in one of your sociopath alert posts and then executed after a public trial.

John Craig said...

Quartermain --
I do think that the people who've made the decision to let more Syrians into this country, after all the foiled terrorist plots etc, are borderline treasonous.

jova said...

if the government were a person they would be in prison with Bernie Madoff for running the greatest Ponzi scheme of all time, Social Security.

it is unfortunate our government continues to ignore the constitution which put so many restrictions on Presidential power, such as waging wars without congressional declaration of war or even obtaining congressional approval to drop bombs on other nations.

John Craig said...

Jova --
You're right, but given our debt accumulation, isn't the ENTIRE government a sort of Ponzi pyramid?

The current President has taken his powers to new levels. He hasn't waged any new wars, but he has issued executive orders for things that should have been subject to Congressional approval, such as amnesty, and the way he turned around the law that required a 2/3rds majority to vote for any treaty (regarding the Iran deal) was beyond sleazy.

Anonymous said...

If the government were a person, I wouldn't like the government/person, believing it to be a corrupt entity.

- Susan

John Craig said...

Susan --
That would definitely be the correct conclusion.

Random said...

That's not really how it works.
Government spends from its cash buffer. If there is no saving in the spending chain the government will get ALL its money back. Some money is spent, some generates tax, it is respent, etc.
It's that saving that *causes* the deficit.
The govt deficit by accounting identity the private sector surplus.
It "borrows" in the same way your bank borrows when you put money in it - an involuntary decision to
Now I know it sounds ridiculous but I have references here.
This is described in Modern Monetary Theory:

Random said...

Govt spending is constrained by *real resources* not finance when it issues its own currency.
This does not make things any less coercive however - taxation creates demand for a currency. You have to pay taxes or men with guns will be sent over.
It is there to control inflation, not raise revenue.

Random said...

Hi there,
Thanks for publishing my comments.
Mainstream economics is flawed and is a an excellent exercise in Groupthink. They award themselves a fake Nobel Prize for instance, and the inflexible Eurozone design that leaves powers to the "independent" ECB.
It blatantly lies to students on some aspects of the monetary system e.g. the money multiplier as explained here:
When a bank creates a loan it expands both sides of its balance sheet, creating a loan and a demand deposit (no money I.e. govt IOUs are involved.)
At the start this is fine and fully funded.
Many countries such as Canada and the UK have *no* reserve requirenents. This aroused my suspicion on the standard story.
Banks don't lend reserves.
When you withdraw cash from a bank or move your money to another account, the bank then needs reserves/vault cash. Banks lend reserves to each other via the interbank market.
Bank IOUs are generally as accepted as govt IOUs due to deposit insurance.
If you move to another account the bank needs reserves. Banks *settle* with reserves (govt IOUs.)
You'll find the entire basis of the tax system is that the government gives people money and then recovers that money from the induced monetary flow. It works like an oil pump in the engine.
The alternative theory of economics you may find interesting - MMT money as an IOU. A full primer on MMT is here:
You may also want to look up - Bill Black on NEP. He has many examples of sociopathy.

Random said...

"If someone kept taking out new loans in your children's names, and continually got them deeper and deeper into debt, would you find that a little troublesome?"
Very much so, as long as you didn't have a super platinum credit card ;)
Interest payments means a steady flow of PAYMENTS to future generations. And interest if spent generates tax revenue. Works just like any other spending - generates an amount of tax and savings.
We gain *nothing* from depressing output now. I do wish people understood you can't save up for pensions. You can't transport bread 30 years in time.
Pensions are always a current production issue.
Personally I would do away with issuing debt as the interest paid is just corporate welfare.
On foreigners "funding" the govt - it is more foreigners save in the currency.
Explained here with analogies.
Beware, I am a dreaded "Aspie" obsessed with this one topic. Perhaps your worst enemy :b
Excellent posts on that BTW.
What you can do though is not use up renewable resources so us young people have access to them.

John Craig said...

Random --
Thank you for all your thoughtful and knowledgeable comments on this topic. You obviously know more and have thought much more about this topic than I have. I'll admit, one thing I've thing I've never really had a handle on is how government "revenues" square with a government's ability to print money. What you say certainly makes sense there, that its role is more to control inflation than to balance its books.

This post wasn't really meant to be an analysis of either monetary or fiscal policy, but merely a way to personalize government (and, obviously, make it seem more reprehensible ).

Your Aspergerian obsession with this topic has obviously resulted in a lot of good thinking on the subject. That's the best thing about Aspies, their focus and concentration -- and often, their insight on that topic.

Aspies, by the way, aren't my worst enemy; if you browse through the blog a little more, you'll see that sociopaths are.

Random said...

Cheers. The analogy is a bit off as it, like many others, sees the government as a currency user not issuer. There is a major difference.
That is why Japan has a "debt to GDP ratio" of over 200% yet no "debt crisis." They have tried "printing money" in vain and the central bank is buying over 70% of bonds but it has done barely anything. The regular predictions of doom for Japan are extremely funny. See here:
Whereas countries like Argentina (pre-2002) or Greece do not issue their own currencies and so genuinely are revenue constrained.
All government spending is "printing money." Taxes unprint money.
Saying the government can run out of money is like saying the scorekeeper can run out of points. The score keeper like the govt neither has nor dosen't have money (points.) The players do though.
The links will explain it much much better than I can.
The link here is interesting, along with the comments on it (about small towns use of money):
The way I view it is that money is a government IOU.
Put it this way - one IOU is interest bearing ("govt borrowing") and the other is not. Anyone can issue their own IOUs, the problem is in getting it accepted. I can promise you £10 in this comment if you print it out and cut out this section for example.
And the financial and real circuits are different. You can see the financial circuit inducing a flow in the real circuit (think of electricity)
The other major difference is convertibility. Most currencies today are non-convertible since about the 1970s (look up the "Bretton Woods system") If you want to swap £ for $ someone has to swap $ for £.
However the world as a whole is a closed system. If your currency goes down, all others go up. So it works kind of like conversion. I see it on the boundary of conversion and exchange.
It is simply true that there are no operational constraints on government spending, as it works by crediting bank accounts. However it is limited by resources, and taxation is only good at freeing up general fungible resources. This is funny as many people on the left wing are obsessed with tax for some reason, and want to " tax the rich" to "pay for" things. The spending pays for itself, generating an amount of tax and borrowings.

For example in the UK the Conservative government and the left wing Labour Party have called for a 7 day NHS (weekends are notoriously bad) and other wild promises, and the resources are just not there.
They are importing doctors from abroad. It is not likely that others countries have a surplus of trained medical staff! But this is "progressive." There is no long term planning on anything. It beggers belief.

Random said...

I think the key problem in Economics is Groupthink. The Eurozone is a classic example of that:
"The currency is stable"??

Random said...
You may also find this post on the EU open borders "experiment" (heh) interesting

John Craig said...

Random --
I appreciate you sending in all this material, you'll have to forgive me for not trying to formulate any sort of cogent response, I'm out of my depth here. But thank you.

I agree with that last article, by the way.

Random said...

Cheers. I will stop posting now. :)