What I've learned here in my time at RO....


#1

So yes, I have learned something. Something valuable I might add…

What follows isn’t something I’m quoting directly from any one person, rather a collection of ideas that have played out over the last few weeks in posts by several RO members.

It seems that there is a pervasive beleif that Government cannot, by definition provide things of value to the economy though spending.

To show this, start with a relatively neutral definition of job: any routine activity for which we earn income. This covers a wide range of pursuits, from managing a grocery store to selling financial derivatives. It does not include cutting your lawn (it’s routine but you don’t earn income) or selling that pool table you were positive you were going to use (you earn income but it’s not routine). As for myself, I build data network, storage and visualizations solutions and in exchange my company direct deposits money into my account every month. I don’t think anyone would deny that what I do qualifies as a job.

But, those who say that the government cannot create employment are adding another element to the definition. To them, a job is any routine activity for which we earn income paid by an entity required to earn a profit. There is no compelling reason for this addendum and it arbitrarily excludes most credit unions, and other non profits, and it also excludes my local police and firefighters. By the qualified definition, they don’t have “jobs” because their income is derived from tax revenue and not private-sector sales. Ditto every single postal worker, public school teacher, Marine, sailor, airman, soldier, national park ranger, defense industry employee, NASA scientist, social worker, librarian, etc., etc. None of them has a job.

Why would someone would embrace such a questionable characterization? Because their true goal isn’t to generate a scientific understanding of the manner in which the macroeconomy operates, but to make a moral statement. Specifically, their contention is that only those routine activities financed by profit are truly of value. Everything the government does is unnecessary because if people really wanted it, they would have bought it in the private sector. Furthermore, they say, were it not for my taxes, those in the public sector would not have a job. Firemen earn a salary only because some of mine was taken away (under threat of imprisonment).

It doesn’t surprise me to know that those who espouse this view are almost always in the private sector themselves. They say, “I deserve my income because I work hard creating something of value. Meanwhile, government employees are just handed a portion of my salary for doing something no one really wants. Therefore, not only am I morally superior, but my taxes should be cut!” It’s a very convenient philosophy, but it’s not economic analysis. (From time to time, you also hear this from some that are employed, directly or indirectly by government, but they either conveniently ignore the contradiction or believe that where they work is one of the few exceptions.)

This conveniently ignores the fact that not everything that is profitable is truly of social value and not everything of social value is profitable. If we defined a job as any routine activity for which we earn income paid by an entity whose activities are socially valuable, then we would most certainly be excluding things done by BOTH the private and public sectors. How much do private sector activities like pornography, reality TV, and cigarette smoking add to our well being? Meanwhile, if we depended solely on profit for motivation, we would not have national defense, child protective services, or education (or police protection or fire protection) for the poor.

Furthermore, the means by which public sector activity is financed is more complex than anyone here understands or will admit. Not only do your taxes go to pay the salary of the fireman, but, when he spends it, his salary contributes to your wages. So who is supporting whom?

Is the government dependent on taxation of private sector salaries, or are private sector salaries dependent on sales to government institutions and employees? Obviously, they are largely interdependent and rely on the continuation of the flow between them. Largely, however, but not completely, for if one of the two can act with autonomy, it is the government. At the federal level, we can spend in deficit indefinitely and without fear of default. Something no one here thus far understands.

-Cheers


#2

Generalize, much? But, you have let us know how you feel about us.
Look, we get it. You are so much smarter than us old conservatives, and we bow to your excellence.
We should be smart enough to learn from you how benevolent and morally cognizant the Federal Gooberment is.
We should be smart enough to see how intellectually and morally advanced you are, and agree to let you teach us economics.
We should be smart enough to know that you are only looking out for us, and should follow you blindly, where ever you may go.

We ain’t that smart.
Cheers.


#3

Why I have been enlighten just reading his stuff/sarcasm


#4

How, pray tell, did the government create any of those positions without the benefit of a PROFIT from the taxpayers?

Just for starters, our fire dept is entirely volunteer. They do, from time to time, receive grants from tax-payers for equipment. Otherwise, they’re totally funded by dues; which are also volunteer. I pay dues although I know their dept can never conceivably make it to my home in time to put out a fire.
Why? 'Cuz I like and admire them. They even got out of a jacuzzi drunk off their asses to go put out a fire! They got a $100 tip from me just for that.

As for (most of) the rest, in case you missed Constitution 101, the military, and the expenditure for which, is right there in it. Those who join voluntarily have an even more admirable job than firemen. (Of which, NASA is a part of; just in case you didn’t know that.)
Ranger Rex wannabe’s I could live without; same goes for most "social workers."
Libraries have pretty well lost their usefulness, as they’ve decided to become arbiters of what is politically acceptable or not.

Why would someone would embrace such a questionable characterization? Because their true goal isn’t to generate a scientific understanding of the manner in which the macroeconomy operates, but to make a moral statement. Specifically, their contention is that only those routine activities financed by profit are truly of value.

Again, how would the government be able to provide ANYTHING if it did not profit from the revenue they collect?

Everything the government does is unnecessary because if people really wanted it, they would have bought it in the private sector.

Pretty much.

Furthermore, they say, were it not for my taxes, those in the public sector would not have a job.

In many cases, that is a fact. Why even attempt to refute it?

Firemen earn a salary only because some of mine was taken away (under threat of imprisonment).

That, too, is true in many cases. Are you trying to say it isn’t?
It may come as a cerebral shock to you, but it is very possible to have private fire departments that charge for putting out fires.

It doesn’t surprise me to know that those who espouse this view are almost always in the private sector themselves. They say, “I deserve my income because I work hard creating something of value. Meanwhile, government employees are just handed a portion of my salary for doing something no one really wants. Therefore, not only am I morally superior, but my taxes should be cut!” It’s a very convenient philosophy, but it’s not economic analysis. (From time to time, you also hear this from some that are employed, directly or indirectly by government, but they either conveniently ignore the contradiction or believe that where they work is one of the few exceptions.)

Not morally superior; just mentally so.

This conveniently ignores the fact that not everything that is profitable is truly of social value.

Who said it was?

and not everything of social value is profitable.

Maybe not monetarily, but still profitable in some - or even many - cases.

If we defined a job as any routine activity for which we earn income paid by an entity whose activities are socially valuable, then we would most certainly be excluding things done by BOTH the private and public sectors. How much do private sector activities like pornography, reality TV, and cigarette smoking add to our well being? Meanwhile, if we depended solely on profit for motivation, we would not have national defense, child protective services, or education (or police protection or fire protection) for the poor.

You’re wearing out my patience.
Whoever said that a private enterprise MUST be “socially valuable?” Define, "socially valuable."
And again, you bring up having missed Constitution 101 that states the authority for our government to create, and provide for, the defense of our nation.
Aside from which; education, fire, and police protection are provided for the rich and poor alike, so what’s this nonsense about "for the poor?"
As for “Child Protective Services”, my guess is that you’ve never been at the receiving end of their jackbooted thuggery, or you would be defending them.

Furthermore, the means by which public sector activity is financed is more complex than anyone here understands or will admit. Not only do your taxes go to pay the salary of the fireman, but, when he spends it, his salary contributes to your wages. So who is supporting whom?

You’re right. That height of economics is WAY over our heads!

Is the government dependent on taxation of private sector salaries, or are private sector salaries dependent on sales to government institutions and employees? Obviously, they are largely interdependent and rely on the continuation of the flow between them. Largely, however, but not completely, for if one of the two can act with autonomy, it is the government. At the federal level, we can spend in deficit indefinitely and without fear of default. Something no one here thus far understands.

Now THAT - IS THE HEIGHT OF ECONOMIC IGNORANCE!!!

No wonder we’re in such bad shape.


#5

I should’ve gone your route. Had I read the last sentence before responding…

Never mind. Does my stupidity for taking the time make my BUTT look big?


#6

CS, the government diverts production and resources by force. The same production and resources will be used regardless of whether the government is making the choice by force or if someone chooses to privately. You should take those comments about the government not “creating” anything of value from that perspective. Government imposes an opportunity cost against the will of its citizens. None of that is to say that it doesn’t have any legitimate function, but it is to say that spending more than it brings in does not magically grow the economy.

No one is telling you that the government can’t make a pencil, something of value. Certainly not me.

I agree with 2cent. I think this is the height of economic ignorance.


#7
  1. Speaking for myself, I say that government can only relocate employment- inefficiently. Government as an employer can seem great in the short term; but like any socialist scheme, it’s like sprinting in a marathon. That’s not to say that there aren’t jobs best overseen by government (military, law enforcement, fire department, etc. (but not welfare or make-work jobs that accomplish nothing)). But for most purposes, government employment is a bad bet for those (the taxpayers) who have to pay for it.
  2. Hogwash. Dissing socialism has nothing to do with “making a moral statement.” It has everything to do with the fact that it’s historically and repeatedly proven to not work. As to your example of firefighters, there are nongovernmental fire departments…
  3. Hogwash again. I don’t know of anyone here who is saying that all government functions are unnecessary. We’re just saying that we should keep them to a minimum because government isn’t worth doo-doo at getting value for the money (not to mention imbezzling a lot along the way, or spending on pork). And I did work in one of the few exceptions; the United States Navy.
  1. No, because our argument isn’t all-or-nothing; it’s minimize. And yes, there’s a lot that isn’t of socially redeeming value in the private sector that I wouldn’t mind seeing going the way of the dinosaurs. As to government “services,” they’re often not. Or they’re disservices.
  2. I’m supporting him. What he’s putting into the economy is to his benefit; not mine. Circulation of dollars does not automatically mean a healthy economy.
  3. The government is dependent upon the taxpayers in quite a parasitic manner. If private citizens still had the money, it would still be circulating without the government waste. Yes, private individuals waste their money on a lot of things; but it’s their money, not someone elses. Not that is a moral argument.

#8

[quote=“2cent, post:5, topic:48145”]
I should’ve gone your route. Had I read the last sentence before responding…

Never mind. Does my stupidity for taking the time make my BUTT look big?
[/quote]I refuse to even approach that line.
No, you are not stupid. Good enough?


#9

Smart man!


#10

I can’t see that csbrown has learned very much here at all - except that he can’t convince us that his ridiculous views are right. Or maybe he hasn’t even learned that, because he keeps coming back with more of the same.


#11

If you had truly “learned something” in your time here it would have been the first thing that everyone learns here, that misrepresenting the arguments and motivations of others in order to present a defense for your position that would not be possible by respecting the arguments of others; will be called out every time.

Fallacies, False Premises, Straw Man responses, misdirection, goal post moving, ignoring the challenges that you cannot refute, repeating positions long since shown to be without merit; these tactics do not go unnoticed or unchallenged on a forum populated with people who think and do.

Those are effective tactics in the media, the public schools and other forums that I have observed but they do not gain traction here; that is why RO is a unique place.


#12

Disagree with bolded. There are some things that private industry just isn’t equipped to do. You can’t depend on private companies for your military and intelligence agencies. Nor can I see private companies investing billions building the Large Hadron Collider, the Mars Rovers, Hubble Telescope, Pioneer and Voyager probes, International Space Station, nor running the Centers for Disease Control, FEMA, Oak Ridge/Los Alamos laboratories, National Institutes of Health, etc.


#13

[quote=“DHLiberal, post:12, topic:48145”]
Disagree with bolded. There are some things that private industry just isn’t equipped to do. You can’t depend on private companies for your military and intelligence agencies. Nor can I see private companies investing billions building the Large Hadron Collider, the Mars Rovers, Hubble Telescope, Pioneer and Voyager probes, International Space Station, nor running the Centers for Disease Control, FEMA, Oak Ridge/Los Alamos laboratories, National Institutes of Health, etc.
[/quote]Without discussing each particular item (good arguments exist to the contrary for some of that list), my comment was not an argument against government spending. I agree that government must provide some services. I didn’t claim that the private sector could or would provide them. Nonetheless, resources and production will all be used in the private sector without government involvement. Government policy does not create more labor, land, production or capital. All it can do is redirect it in the face of market forces, the decisions of private individuals. This is something that in some cases we *must *do.

It is counter to the claim the OP makes that public deficit spending fuels the creation of wealth. While it is the reality about production, resources and wealth, it doesn’t answer whether we should buy hadron colliders with public dollars. That is a different discussion.


#14

OK, I misunderstood you.


#15

Not exactly what the OP says. The common theme in my posts is that the US exports dollars and imports goods and services. This leads to an unbalanced economy, that is, the private sector is losing dollar assets each year. There are three ways to balance it:

  1. Stop spending money on imports, thus taking in more foreign dollars via in exports - (Not going to happen)
  2. Increase private sector borrowing - (unsustainable for more than 3-5 years, but the way things have been done in the recent past)
  3. Increase deficit spending - (can be sustained indefinitely if done correctly)

Contrary to what RET says,

Wealth doesn’t create currency. Period. Ever. It is the availability of currency that incentivizes productivity. That productivity leads to wealth creation.
There are trillions of dollars sent out of our economy each year that do not circulate in our economy. Thus those dollars cannot be recaptured and used to pay debt and taxes. Failure to replace them leads to stagnation and a shrinking economy. Shrinking economy leads to decreased savings and increased private sector borrowing.

People desire currency to transact business. When there is a shortage of currency, regardless of the level of wealth creation the economy slows down. Only government can create currency, they have a monopoly on it and everyone needs to pay their taxes and bills in it because it is LEGAL TENDER. The fact that government institutes it’s rules by force changes nothing about my assessment.


#16

Right, I’m sorry. Missed a couple of your assertions. But I was in particular addressing your assertion that deficit spending magically creates growth and prosperity.

Your trade deficit claim is equally absurd but much more commonly believed in different words, hence Donald Trump, Bernie Sanders and numerous members of this very site call for more protectionism through higher tariffs. Trade is the stuff that creates wealth and grows the actual value of an economy. When I give you a dollar for your super pencil, we’re both made better off. Trading with other nations does not harm us. It helps us. At what level should we trade? At whatever level the individuals in an economy want to. That maximizes value for everyone involved. In this case, only governments and bad weather can ruin it.


#17

See that’s the problem, you think it’s magic. There is nothing magical about it, any more than 2 hours into a Monopoly game all the properties are owned and have houses and hotels on them.

I agree if your saying that protectionism doesn’t work.

We agree 100%. We are the wealthiest nation in the world because most large countries believe that exporting real things of real value in trade for our dollar credits is good for them!!

I said it in another post, but I’ll say it again. Imagine if on Armistice Day in 1945 when Japan surrendered that MacArthur had told the Japanese that for the next 60 years they had to build 2 million cars per year and in return we’d give them dollar credits. Yet people like Trump are convinced it’s the US that’s loosing. Foxconn is a city sized manufacturing plant that has a hand in making almost everything that has integrated circuits. People live in dorms surrounded by nets so they don’t fling themselves of the roofs and free themselves from their miserable existence all so we can have Cheap phones and TV’s. They are the slaves…And yet people believe that we are the ones that are getting screwed? Are you kidding me?

So yea, we agree on this point as well, but again, when we send them our dollar credits to pay for their real goods and services, they end up with a surplus of dollars and we end up with a deficit of dollars. As I said before, there are three ways to cure that deficit and only one of them can be sustained.

[quote=“Rightwing_Nutjob, post:16, topic:48145”]
When I give you a dollar for your super pencil, we’re both made better off.
[/quote] Agreed, except if that was the only dollar you can’t buy any more pencils. If I live near you in your country, you can work or buy from me to earn that dollar back. I could pay you to provide a service or a good, but if I live in China and the government there buys the dollar and then leaves it in an account and does nothing with it, you can’t re-earn it.

Despite what RET says, there are $9 Trillion dollars of foreign reserves at the Fed that do NOTHING. I’m not talking about debt held by foreign nations, I’m talking about reserves, China holds $3.6 trillion all by itself. They aren’t invested, they aren’t curculating. THAT is why our deficit is so high. Because we are sending money to other nations and getting things of real wealth in return. If we didn’t replace that missing money with new money everything stops. Do you know why China holds on to that money, happy to let it sit and even loose value? Because if they spent it into our economy and bought things with it it would increase our exports and make our products more affordable here in the US and theirs less so. They don’t want the competition. Fine, if they want to be our labor b*tch, let them. As you said, trade is good. Trade deficits represent the REAL value of an economy.

Again we agree, trade is great, except it creates the illusion that we are irresponsible with our money. The truth is we are sending our money over seas and we’re simply not replacing it because the way the US create NEW MONEY is though deficit spending and there is a beleif that somehow the government can re-earn the $9 trillion held by foreign governments. Private sector borrowing creates money, but it has to be paid back and when it’s paid back it vanishes because it cancels out the liability that created it. That isn’t sustainable.

Bank money creation doesn’t create permanent money, only government deficit spending creates money that can (can does not mean it has to) stay in the economy indefinitely.


#18

#19

Oh, interesting. That’s what CS is promoting. It’s actually a thing that some people believe.

CS, when we send out dollars to buy stuff, we receive value in exchange. The dollars sitting in China once we’ve spent them are irrelevant. We have used them to exchange the value of our labor for theirs. Value is exchanged. And it doesn’t matter whether I trade with you here in America or with a resident of China, which I do, regularly through middlemen. If you take away all dollars and all of the existing currency in the world, we will still exchange value. Bartering sucks, so we’ll reinvent money, either something real or by fiat, but we will trade.


#20

I don’t debate links, however I will say that I’m familiar with Dr. Murphy. I the article you linked he specifically mentions Warren Mosler. He debated Warren Mosler **HERE, **it’s worth a watch.

I think it’s interesting Dr. Murphy’s credentials are largely, thought not entirely, academic

ROBERT MURPHY, Ph.D, is a Senior Economist with the Institute for Energy Research and an Associated Scholar at the Ludwig von Mises Institute, where he teaches at the Mises Academy. He is also an adjunct scholar at the Mackinac Center for Public Policy. From 2003 until 2006, Murphy was Visiting Assistant Professor of Economics at Hillsdale College in Michigan, U.S. From 2006 until early 2007, he was employed as a research and portfolio analyst with Laffer Associates, an economic and investment consultancy in New York. He runs the blog Free Advice (Free Advice) and writes a column for Townhall.com and has also written for LewRockwell.com. He is the author of a number of books including The Politically Incorrect Guide to Capitalism and Lessons for the Young Economist.

On the other hand, we have Mr. Mosler who has worked in fiance since 1973…

WARREN MOSLER is an early developer of Modern Monetary Theory (MMT), the President of Valance Co, Inc., and Senior Financial Advisor to Senator Ronald E. Russell, President of the 29th Legislature of the U.S. Virgin Islands. He is the founder and current manager of the III Funds, which peaked at over $5 billion AUM in 2007 and currently manages about $1.5 billion, as well as the Founder and President of Mosler Automotive, which manufactures the MT900 sports car in Riviera Beach, Florida. Mr. Mosler has written a number of academic papers on issues relating to macroeconomics and monetary policy, and is the author of Seven Deadly Innocent Frauds of Economic Policy (2010). He maintains a personal blog, The Center of the Universe (http://moslereconomics.com), and can be followed on Twitter athttp://moslereconomics.com.