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Author Topic: State of the Union Discussion Thread
Geraine
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I saw a Pre State of the Union Address thread, so I figured I would start a post State of the Union Address threat.

What did you all think of it?

It all seemed a little unprofessional to me. The jokes, the snide remarks, and the laughter made me think he wasn't really being serious. He did make some good points but I became annoyed because it seemed he thought the whole thing was a joke.

I thought he started well, but then it seemed like he went back into campaign mode. He started blaming Bush again for the economy, promising transparency, and promising new domestic energy policies.

Blaming Bush again. Really? Look, Bush made a ton of mistakes. He wasn't an awesome president. But there comes a time when you stop looking backwards and start looking ahead. Blaming the person that came before you doesn't help, and it will only help you out so much before people start blaming you.

I still do not understand how spending money you do not have gets you out of debt. Freezing government spending is a step in the right direction, but it is not enough. Maybe I am old fashion, but I think when you get into debt you stop spending money and start working extra to get the money to pay it off.

What really got me was when he talked about creating energy here in the US by building nuclear power plants, starting off-shore oil drilling, and burning clean coal. Two years ago during his campaign he said he wanted to put the coal industry out of business.


The other thing that bugged me was on Health Care Reform. He said that all the republicans had done is block everything without offering their own ideas. He said "If you have a proposal that will lower costs, I want to see it!"

Well as of August there were three proposals, all of which were not given any consideration.

http://www.cnsnews.com/news/article/52896

The last part I did not care for was the transparency issue. We were promised unprecedented transparency, and that didn't happen. We were promised again last night that we would have transparency. I REALLY hope this time it happens.

I agree with him on domestic energy and transparency, I just hope that he keeps his promises this time.

So what did the rest of you think? Was it what you expected? Is there anything you feel he could have put better?

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kmbboots
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quote:
Originally posted by Geraine:
I still do not understand how spending money you do not have gets you out of debt. Freezing government spending is a step in the right direction, but it is not enough. Maybe I am old fashion, but I think when you get into debt you stop spending money and start working extra to get the money to pay it off.


The government does not make money by working the way corporations or people do. The government makes money by collecting taxes. If more people have jobs and are working and buying things, the more money the government will have. So a way for the government to "make" money during a recession is to spend money to get people back to work and spending money.

Both tax cuts and government spending help to shorten recessions but government spending is considered by most economists to be more effective.

http://www.nytimes.com/2009/01/07/business/economy/07spend.html

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Mucus
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quote:
Originally posted by Geraine:
... I became annoyed because it seemed he thought the whole thing was a joke.

It is a State of the Union speech, not a "let's be serious speech." Since the state of the union is in fact a joke, it is entirely appropriate that the speech about it is a joke too [Wink]
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Synesthesia
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I rather liked his speech. For some reason Obama keeps forcing me to like him. He made some good points, especially about jobs.
I really could use a job.

I both like Obama's tendency to try to be cooperative and hate it at the same time.

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Samprimary
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The commentary on the state of the union is utterly inane. I just listened to the 4,031,305th person bite onto the talking-point strategy of complaining that the speech was 'too political.'

good lord. what, he should have made sure to waste half the speech on empty platitudes instead?

quote:
Maybe I am old fashion, but I think when you get into debt you stop spending money and start working extra to get the money to pay it off.
Geraine, this is worse than being old fashioned. this is transposing a 'bootstraps' mentality to the government that acts like the government itself is an individual earner as opposed to a social system that operates off of taxation. If you don't agree with keynesianism or its derivatives, that's one thing. You're acting like you don't even remotely understand the concept.
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Lisa
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quote:
Originally posted by kmbboots:
quote:
Originally posted by Geraine:
I still do not understand how spending money you do not have gets you out of debt. Freezing government spending is a step in the right direction, but it is not enough. Maybe I am old fashion, but I think when you get into debt you stop spending money and start working extra to get the money to pay it off.


The government does not make money by working the way corporations or people do. The government makes money by collecting taxes. If more people have jobs and are working and buying things, the more money the government will have. So a way for the government to "make" money during a recession is to spend money to get people back to work and spending money.

Both tax cuts and government spending help to shorten recessions but government spending is considered by most economists to be more effective.
http://www.nytimes.com/2009/01/07/business/economy/07spend.html

It's like putting moisturizer on a gangrenous limb. It's pure cover-up, and yes, it looks beneficial in the short term, but where do you think the government is actually getting the wealth (which money only symbolizes) to spend? They can print all the money they want, but that doesn't increase wealth. They have to either get the wealth from us, via the invisible tax of inflation (no different than shaving coins used to be) or borrow from foreign sources. Like China. Which all but owns the US now.
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Lisa
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quote:
Originally posted by Synesthesia:
I rather liked his speech. For some reason Obama keeps forcing me to like him.

So Slicky McSlickster made a good speech. I'm shocked. Since making good speeches was his sole qualification for the presidency, I'd hope that he could at least still do that.
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The White Whale
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Slicky McSlickster?
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Lisa
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quote:
Originally posted by Samprimary:
quote:
Maybe I am old fashion, but I think when you get into debt you stop spending money and start working extra to get the money to pay it off.
Geraine, this is worse than being old fashioned. this is transposing a 'bootstraps' mentality to the government that acts like the government itself is an individual earner as opposed to a social system that operates off of taxation. If you don't agree with keynesianism or its derivatives, that's one thing. You're acting like you don't even remotely understand the concept.
I understand it. That's what my degree is in. And Keyes was demented.
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Samprimary
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Well, so was Ayn Rand, but hey.
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fugu13
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I largely agree with

quote:
It's like putting moisturizer on a gangrenous limb. It's pure cover-up, and yes, it looks beneficial in the short term, but where do you think the government is actually getting the wealth (which money only symbolizes) to spend? They can print all the money they want, but that doesn't increase wealth. They have to either get the wealth from us, via the invisible tax of inflation (no different than shaving coins used to be) or borrow from foreign sources. Like China. Which all but owns the US now.
But the last part is at best silly hyperbole, and at worst a severe misunderstanding of the situation.
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MrSquicky
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fugu,
That sounds like you don't think that government spending can lead to substantial increases in a country's wealth. Is that correct?

edit: Or is that you think that that is not going to happen in this case?

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MrSquicky
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I was disappointed by the State of the Union, but it's for most of the reasons why I've been disappointed by President Obama and the Democrats over the past year and I was not at all surprised.
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Mucus
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quote:
Originally posted by fugu13:
But the last part is at best silly hyperbole ...

Sadly true.
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Geraine
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I understand the concept Sam, and I didn't explain it well. I know that the government gets money through taxes.

Some think by raising taxes it will raise revenue, which is true. Opponents to this say that the more the average person is taxed the less money they will have, which then directly affects business. The businesses then lose money and are forced to lay people off.

Those same opponents to higher taxes believe that the less someone is taxed the more money they have for discretionary spending, which increases profits for businesses who can then hire more people that will be paying taxes. This is also true but takes a lot longer.

The truth is there is no quick fix to this mess but things can be done to help. This is why I agree with the President's spending freeze. It may only be a drop in the bucket but it is a step in the right direction.

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kmbboots
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Raising taxes is not the same as getting more money from taxes because people are working and buying things.
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fugu13
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Government spending does not lead to substantial increases in a country's wealth due to its quantity. Sometimes spending on specific things (such as enforcing the rule of law and private property rights, to name something very basic) can be very important to increasing a country's wealth, but government spending in general does not. While spending in general (again, excepting certain specific goals) is not a-productive, it is always less productive (in the long run, at least; in the short run there is more dispute possible) than the alternatives the resources would have been devoted to if the government had not appropriated them.

Note: being less productive is not necessarily an indictment of all such spending in my eyes (or the eyes of many economists). I, for instance, consider preventing death, pain, and suffering sufficiently countervailing goals to make a decrease in productivity worthwhile to pursue them with certain programs I think effective.

What's more, if you think that's what Keynes (or Keynesian or Neo-Keynesian economists) generally think, you're severely misinterpreting them. The furthest most of them have gone is that, under certain conditions in a downturn, the government can be a countervailing force to the downward swing away from the trend line. Long term, there is no conclusion that the government spending will result in a higher trend line.

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MrSquicky
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Geraine,
In many cases, what the tax revenue is spent on is more important than the level of taxation (and there's another complication of differing tax rates on different segments of the population affecting different segments of the economy).

A simple example of this is infrastructure, like the U.S. highway system. It was a massively expensive project, but the benefits for the country far, far outweighed what was spent on it.

Keyesian economics, as I understand it, calls for government spending in times of drastic economic downturns in order to keep money circulating and lead to a lessening of the time for an economic rebound.

If a government is successful in doing this, it can lead to a country's economy recovering faster and a corresponding increase in the country's economic wealth that can outweigh the money spent.

How the money is gotten is another complicated topic. Increased taxation is one way of getting it. This does tend to have the depressing effect on the economy that you noted. But, theoretically, this effect can be overcome by the wealth generating effects of an increased recovery.

Also, theoretically, a government or other central coordinating system can direct their spending towards areas that would most lead to economic recovery or wealth generation. This may be more effective than the distribution of money that comes from the market at that point.

It's still an open question on whether any of this actually happens in the real world. It's a very complex situation even in theory and it's confounded by our government, like most governments, being very corrupt, inefficient, and ineffective.

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MrSquicky
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quote:
While spending in general (again, excepting certain specific goals) is not a-productive, it is always less productive (in the long run, at least; in the short run there is more dispute possible) than the alternatives the resources would have been devoted to if the government had not appropriated them.
I noted the creation of the U.S. highway system as a very large government expenditure whose benefits far outweigh the cost. Would you say that in this case, it would have better if the government had not collected and used this money?

I'd also point to the government of Ireland's recent investment in fostering Information Technology in their country. By virtue of their centralized, directed effort, I'd say that they were better able to achieve their goal of growing a segment of their economy that was to the country's great benefit than if they had not appropriated the resources they used to achieve them.

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MrSquicky
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I'd also like to preemptively apologize. Life has gotten really, really busy and I find any time I engage a topic on Hatrack, I don't have the time to follow it up and end up abandoning it. I'm only writing now because I've got a large process that I'm waiting to finish up and soon I'll have to get back to work.

So, I don't want people to feel any obligation to respond to me because I'm pretty sure I won't be able to continue the discussion much longer, for which I am sorry.

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swbarnes2
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quote:
Originally posted by Geraine:
I understand the concept Sam, and I didn't explain it well. I know that the government gets money through taxes.

Some think by raising taxes it will raise revenue, which is true. Opponents to this say that the more the average person is taxed the less money they will have, which then directly affects business. The businesses then lose money and are forced to lay people off.

You seem to be acting as if all the tax money gets burned. It doesn't. Lots of it gets used on things that help people and businesses. If a bridge gets built with tax money, the people who mine the raw materials get paid. The people who refine those materials get paid. The bridge designers get paid, and the construction workers get paid. And the increase in traffic brings more people around, more economic activity means more money.

How much money would Wal-Mart make without public highways? How many more sick days would businesses have if the tax money didn't keep the water supply safe?

quote:
Those same opponents to higher taxes believe that the less someone is taxed the more money they have for discretionary spending
Not if your tax money does things for you that would be more expensive were you to do them yourself. Like maintaining a police force, making food and water safe, etc. How much discretionary money would you have if you paid a toll on every road? How much would you have if you were disabled, because no safety operators forced your company to provide a safe work environment for you?

quote:
Originally posted by fugu13:
but government spending in general does not. While spending in general (again, excepting certain specific goals) is not a-productive, it is always less productive (in the long run, at least; in the short run there is more dispute possible) than the alternatives the resources would have been devoted to if the government had not appropriated them.

So you are claiming that the TVA was a bad use of government money? That the NIH shouldn't fund basic research, we should just let drug companies spend all that money instead on advertising and tweaking the molecular structure of existing drugs, and paying politicians to pass favorable laws? Because you can't possibley argue that they don't choose to spend their money on exactly that now (and the third might increase in the coming years).
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Samprimary
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quote:
Originally posted by Geraine:
I understand the concept Sam, and I didn't explain it well. I know that the government gets money through taxes.

Some think by raising taxes it will raise revenue, which is true. Opponents to this say that the more the average person is taxed the less money they will have, which then directly affects business. The businesses then lose money and are forced to lay people off.

Those same opponents to higher taxes believe that the less someone is taxed the more money they have for discretionary spending, which increases profits for businesses who can then hire more people that will be paying taxes. This is also true but takes a lot longer.

The truth is there is no quick fix to this mess but things can be done to help. This is why I agree with the President's spending freeze. It may only be a drop in the bucket but it is a step in the right direction.

exactly how do these described principles relate to the keynesian/borrowed spending stimulus thing? you're shifting about on issues here.
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natural_mystic
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quote:
Originally posted by fugu13:
What's more, if you think that's what Keynes (or Keynesian or Neo-Keynesian economists) generally think, you're severely misinterpreting them. The furthest most of them have gone is that, under certain conditions in a downturn, the government can be a countervailing force to the downward swing away from the trend line.

Right. This is especially true when monetary policy is insufficient. The time to run up deficits is precisely when the economy is in the sort of shape it is currently in (not when the economy is OK as, say, from 2004-6 under Bush and "Deficits don't matter" Cheney). With the loss in tax revenue the government could tighten its belt and have more layoffs and cut social programs for the poor. The downside to this is a) the human misery caused, b)it's counter-productive because it depresses demand further c) you run a severe risk of re-entering recession. Most commentators agree that this happened in the Great Depression when FDR listened to the deficit hawks and pre-maturely cut the stimulus.

This is not to say that deficit spending is anything more than a stopgap measure. However, when assessing it, you can't merely look at the lost GDP to servicing the debt; you have to also compare it to the lost GDP of willing workers sitting at home, a worse-educated work force due to insufficient teachers etc.

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MrSquicky
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You know, Geraine often seems to me to be a little under-informed, but he generally seems to be polite and open to discussion. I don't think some people's negative tone towards him is called for.
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Blayne Bradley
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China probly owns or has a stake in some enterprises and corporations but they hardly "own" the government the US going over hurts them almost as much as it hurts the US.
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Lisa
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quote:
Originally posted by MrSquicky:
Geraine,
In many cases, what the tax revenue is spent on is more important than the level of taxation (and there's another complication of differing tax rates on different segments of the population affecting different segments of the economy).

A simple example of this is infrastructure, like the U.S. highway system. It was a massively expensive project, but the benefits for the country far, far outweighed what was spent on it.

Keyesian economics, as I understand it, calls for government spending in times of drastic economic downturns in order to keep money circulating and lead to a lessening of the time for an economic rebound.

If a government is successful in doing this, it can lead to a country's economy recovering faster and a corresponding increase in the country's economic wealth that can outweigh the money spent.

How the money is gotten is another complicated topic. Increased taxation is one way of getting it. This does tend to have the depressing effect on the economy that you noted. But, theoretically, this effect can be overcome by the wealth generating effects of an increased recovery.

Also, theoretically, a government or other central coordinating system can direct their spending towards areas that would most lead to economic recovery or wealth generation. This may be more effective than the distribution of money that comes from the market at that point.

It's still an open question on whether any of this actually happens in the real world. It's a very complex situation even in theory and it's confounded by our government, like most governments, being very corrupt, inefficient, and ineffective.

You just described a perpetual motion machine. Hooray.
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fugu13
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quote:
I'd also point to the government of Ireland's recent investment in fostering Information Technology in their country. By virtue of their centralized, directed effort, I'd say that they were better able to achieve their goal of growing a segment of their economy that was to the country's great benefit than if they had not appropriated the resources they used to achieve them.
They had significant growth because they had a well-educated populace available for work and changed their tax and corporate legal structures to make it very appealing for other companies, especially IT companies, to move there.

Their spending on IT-related things caused at most a tiny drop in the bucket of the benefits that proceeded due to those other changes.

Regarding the highway system, I would not be surprised if it was a net positive, especially including the defense benefits. Even if not a net positive, the equalizing effects of readily available transportation probably merited any loss of efficiency. Note that both those possibilities were explicit caveats in my post, and thus possibilities you might have considered.

quote:
So you are claiming that the TVA was a bad use of government money? That the NIH shouldn't fund basic research, we should just let drug companies spend all that money instead on advertising and tweaking the molecular structure of existing drugs, and paying politicians to pass favorable laws? Because you can't possibley argue that they don't choose to spend their money on exactly that now (and the third might increase in the coming years).
You clearly didn't read my post. Please note the numerous caveats and conditionals, most of what you mention could easily fall under. If you're interested in having a serious conversation about the place of such things in federal spending, start there, and make a post that shows you are paying attention to even the vague outline of what I've stated.
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kmbboots
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Did Ireland's well-educated populace get that way for free?
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fugu13
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Nope, they became so through a very sensible and worthwhile government educational system.

That was not, however, a part of the "recent investment in fostering Information Technology in their country" Ireland engaged in.

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kmbboots
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It did involve government spending which means taxes.
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natural_mystic
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kmbboots, fugu's position is more nuanced than you're giving him credit for.
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fugu13
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kmbboots: as it seems a possibility you did not read the important post of mine above, I quote a few things from it:

quote:
Sometimes spending on specific things (such as enforcing the rule of law and private property rights, to name something very basic) can be very important to increasing a country's wealth, but government spending in general does not.
quote:
Note: being less productive is not necessarily an indictment of all such spending in my eyes (or the eyes of many economists). I, for instance, consider preventing death, pain, and suffering sufficiently countervailing goals to make a decrease in productivity worthwhile to pursue them with certain programs I think effective.

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kmbboots
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I just want to make sure that Ireland's way more "socialist" than ours government spending wasn't ignored in this:

quote:
They had significant growth because they had a well-educated populace available for work and changed their tax and corporate legal structures to make it very appealing for other companies, especially IT companies, to move there.

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fugu13
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Considering that for most of the period they were substantially socialist they had very little growth, and only after they liberalized their taxes and corporate regulations did they see significant growth, I think attributing it to the overall socialism of the government would be a mistake.

Having public education hardly makes them particularly socialist, and, while important, it didn't lead them to economic prosperity until they liberalized their economy. They were well-educated for decades before the 90s, but still economically impoverished, especially compared to their neighbors in Western Europe.

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swbarnes2
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quote:
Originally posted by fugu13:
You clearly didn't read my post. Please note the numerous caveats and conditionals, most of what you mention could easily fall under.

I actually did.

Maybe some bolding will help:

quote:
While spending in general (again, excepting certain specific goals) is not a-productive, it is always less productive (in the long run, at least; in the short run there is more dispute possible) than the alternatives the resources would have been devoted to if the government had not appropriated them
So "always is less productive in the long run unless it has certain specific goal"?

So highways, the post office, public universities, government spending on disease control, the TVA, no matter how many truly important and profoundly helpful government programs we could name, you will say they don't count because they have certain specific goals? Well, what government spending doesn't?
What possible example could anyone bring up that would not fall under your "has a certain specific goal in mind" caveat?

So, federal grants in medical research; is medical research one of your certain specific goals, or not? And are you claiming that federal money spent on research is less prodictive than pharma money, which is spent on research, and commecials, and tweaking old molecules just enough to sell them as something new, and bribing politicians to pass laws that make them more money?

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kmbboots
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The neighbors in Western Europe who are also more "socialist" than we are. You will note that I am putting "" around "socialist". I don't think that government funded education, healthcare and so forth are socialist though many of my countrymen seem to.

I also don't think that "socialist" is a particularly bad or scary thing. Nor has Ireland which has a great deal of actual socialism in its philosophy of government.

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fugu13
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You should read the sentence again; you misunderstood it quite a bit. I'll bold a bit to help.

quote:
While spending in general (again, excepting certain specific goals) is not a-productive
Not unless it has any specific goal, but unless it deals with a certain set of specific goals that the government is better able to handle. Note that specific goals does not mean dedicated to accomplishing specific outcomes. For instance, accomplishing basic research in medicine would be a specific goal, even if the outcomes sought are more general.

Also, things such as (to use my own example) the WPA or (to use yours) the TVA are likely less productive on the whole than the same money spent by others than the government, they may reduce human misery enough more than the other allocation would to justify their usage; human misery is a competing goal with productivity that I feel at times takes precedence, as I explicitly stated. Failing to recognize the difference is a common error.

As for whether or not medical research is one of my specific goals, I'm fairly well convinced that it meets my criteria. The case is not nearly so cut and dried as you advance, though; that "big pharma" spends large amounts of money on other things does not mean they do not also spend large amounts of money on research, and that they focus on drugs that are less experimental is at least in part due to the difficulties of getting a drug approved by the government, and the massive sunk costs if one is not.

Of course almost anything could fall under the caveat, if one had no information about the benefits of actual programs. Whether anything does fall under it is, however, a matter that can be addressed by research (not with absolute certainty, but with a good deal of it). It isn't like my criteria is "things that I don't like"; my (first-cut) criteria is "things that lead to an increase in productivity when done by the government that are less than the cost of implementing them". One example I am extremely sure meets the criteria is enforcing the rule of law (in any non-small society). One example I am extremely sure does not meet the criteria is the legally mandated milk cartels in the US. There are many more on both sides, but it would be very tiresome to try to list them all. Additionally, there are programs I am very unsure about (either because I have insufficient information, or because it is very hard to untangle the effects of the program). Acknowledging this uncertainty is not a weakness of my position, and I am fairly certain that anyone who does voice such certainty about every government program, in any direction, is not considering things very well.

My second-cut criteria is for programs that lead to less overall productivity, but reduce pain and misery sufficiently (compared to the productivity loss due to spending on such programs) to make them worthwhile anyways. Examples of this include food stamps and unemployment insurance. These are more readily identifiable, at least as candidates, since most programs aren't really about this sort of thing at all, though determining if candidates meet the criterion is still complicated.

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fugu13
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quote:
I also don't think that "socialist" is a particularly bad or scary thing. Nor has Ireland which has a great deal of actual socialism in its philosophy of government.
Oh, I agree. But it has often been applied to do very stupid things, such as was the case in Ireland for a long period. And I agree that Western Europe has seen substantial growth (though less than us, by quite a bit) while having significant socialist policies. That does not, however, mean that the growth is attributable to those socialist policies, even if the socialist policies have been net positives to the society (which in at least some cases I believe they have been -- but usually under my second-cut criteria of reducing human suffering, rather than my first-cut criteria of leading to greater productivity when done by the government).
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kmbboots
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I would switch the priorities of your criteria.
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fugu13
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Switching the order they're considered has no effect on choosing whether or not a particular policy should be adopted if one is using those particular criteria. The order is essentially arbitrary.
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Mike
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Off topic: fugu, I tend to agree with you nearly all of the time, but sometimes you have a way of phrasing things that makes it difficult to divine what your actual position is, especially for a casual reader. Obviously you are capable of being consistently precise; can you be consistently clear as well?

For example, in my initial reading of your above quote, it sounded like you were saying that "in general", "spending ... is always less productive than alternatives" when you were actually talking about a more specific concept, namely "spending in general" (with caveats) taken as a single entity. Clearly I wasn't the only one who read it this way. In fact it took a concerted effort to parse the sentence as it seems you intended, and was only able to do so after your explanation.

I'm only pointing this out because it's painful to see your posts misinterpreted by others so frequently (and by me even once in a while). I just think you could be so much more effective.

Carry on.

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fugu13
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When I'm especially unclear it is often because I'm typing in a hurry. I do have to do my work sometime [Wink]

Also, this is a difficult topic. I am not being completely clear in all my of my phrasing; sometimes I am not sure I could be very clear to all the different people reading it, though I am sure I could be clearer. However, even when there are phrasings I am unclear about, I try to at least be very explicit in having caveats, and the general idea of what they cover. I was a little dismayed so many seemed to not notice the caveats at all.

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TomDavidson
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Perhaps UBB needs a caveat tag.
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rivka
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That's what "j/k [Wink] " is for, neh?
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fugu13
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[Razz] [Wink]
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TomDavidson
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Yes, among other things, but I'm aware that some people don't know how to properly use "j/k [Wink] " -- so am willing to concede that we might need to make allowances for them.
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Kwea
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That's good, Tom.....we've been making allowances for you for years.

[Wink] [Razz]

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