My View: Phony Debt Crisis

Fiscal-Cliff-2Earlier this week, someone asked essentially why I am so concerned with the city’s fiscal picture while I seemingly fall in line with partisan bias on the nation’s debt picture.  The answer to that question is both simple and complex.The simple answer is that the city, unlike the federal government, does not have a debt mechanism.  The city has to pay its bills and if it cannot, it is forced to cut spending.  If it fails to do that, it declares bankruptcy.  The city has taken clear steps to avoid the fate of other cities, but as our column earlier this week demonstrates, we are far from out of the woods and past councils have clear blame.

On the other hand, the nation’s debt, while a big number, is actually not nearly as problematic as some would have it.  There has been a lot of big talk about whether we have a spending or a revenue problem in this country – in my view what we have had is an economic problem.

Debt-GDP

If we look at the US public debt as a percentage of Gross Domestic Product, we see that last year we reached a postwar high.  What has happened is the revenue has bottomed out as spending has spiked, but the GDP fell sharply early in the recession and has not returned to more typical growth levels.

Over the last fifty years, spending has averaged 20.6 percent of the GDP, while revenues have averaged 17.9 percent of the GDP.  Right now the spending is high, about 23.3% ,while the revenue is slightly higher than when it bottomed out in 2009 – but it is still at 16.1%, or a low figure for the past 50 years.  In fact, if you take out the bottom of the recession, it is still at the lowest point from 1960 to 2008.

So, while some have suggested we have a spending problem, we actually have the combination of both.

What has happened, as New York Times analyst Binyamin Appelbaum explained, is that as the recession eroded revenues, the government attempted to restore the economy through spending on the stimulus and other safety net measures.  As a result, what was about a $455 billion deficit in 2008 surged to $1.4 trillion.

It is easy to pin this on presidential policies, as the debt has grown by about $6 trillion since 2009 from $10.5 trillion to $16.4 trillion.

However, it is less clear how much of that is due to the President. Last year, Ezra Klein of the Washington Post concluded that just $983 billion of the debt was due to legislation signed by President Obama.

His chart shows that a good deal is due to the economy and policies implemented by President Bush.

The question of blame is a political question; the more important question is whether we should be overly concerned with these numbers.

As I pointed out earlier this week, I have a difficult time taking seriously the alarm raised by Republicans.  There have been two times when Republicans have expressed concern over the debt, not during the Reagan era when the debt increased considerably and not during the George W. Bush era, but during the two Democratic administrations.

A Congressional Research Service report argued that, while the debt-to-GDP ratio cannot continue to rise indefinitely, “it can rise for a time.”

They write: “It is hard to predict at what point bond holders would deem it to be unsustainable. A few other advanced economies have debt-to-GDP ratios higher than that of the United States. Some of those countries in Europe have recently seen their financing costs rise to the point that they are unable to finance their deficits solely through private markets. But Japan has the highest debt-to-GDP ratio of any advanced economy, and it has continued to be able to finance its debt at extremely low costs.”

The Republicans clearly see the debt discussion as a way to cut entitlement and other government spending.  When they failed to get leverage rhetorically, they attempted first the fiscal cliff crisis, which ultimately failed to gain any spending cuts and they will attempt the same for the debt ceiling, but that does not appear likely to work either.

As Newt Gingrich, who himself attempted leverage by shutting down the government to his own political peril, said this week, “Everybody’s now talking about, ‘Oh, here comes the debt ceiling.’ I think that’s, frankly, a dead loser. Because in the end, you know it’s gonna happen. The whole national financial system is going to come in to Washington and on television, and say: ‘Oh my God, this will be a gigantic heart attack, the entire economy of the world will collapse. You guys will be held responsible.’ And they’ll cave.”

“He can’t keep thinking the way he’s thought the last few months without having a disaster on his hands,” said Mr. Gingrich of House Speaker John Boehner.

Not only does attempting to use the nation’s credit to leverage spending cuts create a political problem, it also creates an economic problem.

Given the nation’s perilous economy and fragile recovery, cutting spending to pay off the debt is not a very logical move.  It would potentially take money out of the economy and harm the economy.

As Mr. Appelbaum explained, “Borrowing can be very good policy. It allows the government to provide Americans with a higher quality of life: more infrastructure, more services, more investment in the future.”

“And as long as the economy continues to grow, the loans actually become easier to repay with time because doing so requires a smaller share of current revenue,” he continued.

There are actually relatively painless ways to deal with this problem.  It is what the nation did in the late 1990s.  At that time, Congress and President Clinton slowed the growth in spending in critical areas and the robust economic growth led the nation to its first surplus since the 1950s.

So, if you are concerned with the debt, and I’m still not convinced you should be, the best policy advice is to allow the economy to fully recover, produce large GDP increases and then slow down government spending.

Allowing the nation’s economy to grow plus allowing inflation to slowly reduce the magnitude of the debt seems like a more realistic and viable option, rather than creating phony crises to force the hand.

As Mr. Appelbaum notes, “Consider what happened after World War II. In 1946, the federal debt equaled 122 percent of the nation’s annual economic output, the highest level on record. And over the next three decades, the amount the government owed almost exactly doubled.”

However, though the government ran deficits in the post-war years, “economic output, and inflation, rose even faster. By 1975, the federal debt was twice as large, but it equaled just 35 percent of the nation’s gross domestic product.”

He compares it also to a person buying a house.  In simplistic terms, say a person makes $10,000 and buys a house with a mortgage that requires annual payments of $2,000.

“Over the following decade, the person gets a few raises and a new job. Add in some inflation, and the worker is now making $20,000. The mortgage debt, however, does not increase. The person still owes just $2,000 a year,” he writes.

If the Republicans wish to cut entitlement spending, they can have that discussion.  But holding the nation’s credit and possibly the world’s economy hostage does not make sense.

—David M. Greenwald reporting

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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127 thoughts on “My View: Phony Debt Crisis”

  1. rusty49

    From Newsbusters:
    “To be clear, Klein is referring to every dime of “the Bush tax cuts,” which at this point really means “the federal income tax system we’ve had in place for nine years,” from the highest to lowest taxable incomes. Solely based on eyeballing the graph (it really isn’t worth digging further), the CBPP claims that the tax cuts passed in 2001 and 2003 are responsible for about 20%, or over $2.2 trillion, of the current $11.2 trillion of “debt held by the public.”

    What the CBPP won’t address is how tax collections managed to go up so quickly after 2003 tax cuts, which were the ones which affected marginal income-tax rates and investment decisions, leaped after they were passed:

    – Fiscal 2003 — $1.782 trillion
    – Fiscal 2004 — $2.880 trillion
    – Fiscal 2005 — $2.154 trillion
    – Fiscal 2006 — $2.407 trillion
    – Fiscal 2007 — $2.568 trillion (four-year increase of 44%)

    To believe the CBPP, you have to believe that collections would have been higher in every year presented by the amount people would have willingly paid in extra taxes without changing their spending or economic behavior in any way — which is obviously sheer fantasy.

    This year’s collections are on track to come in at about $2.4 trillion. That’s because economic activity is still low thanks to Obama administration policy decisions and moves which haven’t led to a legitimate recovery. That’s not Bush’s fault.

    What isn’t fantasy is the the budget deficit in fiscal 2007, driven by the final budget passed by a Republican Congress, was $163 billion — within striking distance of balancing. After that, a Democratic Congress took over and the chickens of the CRA-, Freddie Mac- and Fannie Mae-driven housing bubble came home to roost. That was followed by Barack Obama, Nancy Pelosi, and Harry Reid ramping up annual federal spending from about $2.9 trillion to $3.6 trillion, and then claiming that the higher level should be the new baseline from which any cuts proposed (except to the military) are heartless, cruel and unacceptable.

    The graph in question and Klein’s commentary are useless, agenda-driven, incoherent wastes of readers’ time.”

  2. Adam Smith

    Politically, I believe a majority of the voters in the US understand that cutting entitlement spending is a necessary step to turn the course of what will soon become national debt levels that are unsustainable. A crisis seems to be the only way we get things done at the national level. The Democrats will likely suffer politically (just as the Republicans did with raising taxes) if they refuse to make significant changes to those spending levels.

  3. Siegel

    The problem with the analysis regurgitated without comment by Rusty is they cite one variable, tax receipts. Raw tax receipts are useless unless you note a few factors:

    1. What was the overall growth in GDP for the year cited.
    2. Given that growth rate, how much would those tax receipts have grown without the tax cuts
    3. What happened to those tax receipts once the economy tanked
    and
    4. What is the difference in the tax receipts after the economy plunged with and without the tax cuts

    Now implicit in this snarky comment, “To believe the CBPP, you have to believe that collections would have been higher in every year presented by the amount people would have willingly paid in extra taxes without changing their spending or economic behavior in any way — which is obviously sheer fantasy” is the idea that the tax cuts caused the economy to increase. But they never prove the point or do the calculations, so we are left with their assumptions.

    We don’t know. What we do know is that the folks they mock at CBPP did a lot more mathematical modeling to come up with their conclusions than whoever you cited in this article did in dismissing their work. I’m skeptical about their ability to do so with a single variable and no calculations.

  4. Frankly

    The new left template: “Deficits Don’t Matter!” Now watch the media regurgitate it and spit it out into the minds of the brainless and brainwashed masses.

    You can’t prove that tax cuts spur economic growth that leads to greater tax receipts, greater prosperity, more jobs, and a happier population… except for the simple fact that IT HAS HAPPENED EVERY DAMN TIME.

    Partisan economists and anyone with a big political agenda benefit from ramping up the complexity of this argument. But, it is really quite simple to understand. All it takes is a little common sense combined with maybe a little real conversation with the producers and consumers.

    But it is irresponsible for anyone to try and make the point that deficits don’t matter… especially the deficits we can project looking at our current trends. It astounds me that those with children and an education would accept this point.

    I do see a correlation from those with government jobs or those that rely on public assistance having less of a concern. That makes some rational sense as people tend to support their own self-interests for what they are familiar with. However, therein lies our biggest economic risk for this county. [b]The more people that become familiar with a life funded by government spending, the fewer will favor a tax system that motivates economic growth and wealth creation.[/b] And, since it is the latter than generates the economic activity that produces the tax revenue… we will be doing the equivalent of eating all the food in the pantry without tending the garden that continues to fill it.

    Of course we need tax revenue and government needs to spend money on essential things. But, unless you are an advocate for a more pure collectivist system where government owns who industries to net out fair consideration to the people (and we KNOW how well that works!), it is madness to think that we can keep spending and then taxing our way out of the debt.

    The key is balance. The Laffer Curve is a device that can and should be used for striking that balance. The evidence for the theory (and this is one that all should be able to understand with just a dose of common sense) that some rate of taxation is optimum for creating the greatest tax revenue.

    [img]http://www.cscdc.org/miscjeff/laffercurve.jpg[/img]

    Tax at a higher rate, and the incentives to invest, start and grow taxable economic activities will decrease enough to offset the increased revenue expected from the tax increase.

    But Democrats take a bass-ackwards approach. They start with their demands for government services, and then attempt to punish and shame the economic producers into giving up more of their earned wealth. Then when the tax receipts don’t measure up, they rack up debt. Then they start saying debt does not matter. That is what the people of Greece are saying. That is what the people of Spain and Portugal are saying.

    It is idiocy for us to be doing the exact same things as these failing countries are doing.

    But then we are becoming a county of idiots (those without enough common sense), so maybe it is our uncontrollable destiny.

  5. biddlin

    “You know, Paul, Reagan proved that deficits don’t matter. We won the mid-term elections, this is our due.”
    Dick Cheney to Paul O’Neill, then Treasury Secretary at a meeting with the vice president after the mid-term elections in 2002 .( As related by O’Neill in:” The Price of Loyalty “by Ron Suskind )

  6. Siegel

    “The new left template: “Deficits Don’t Matter!” Now watch the media regurgitate it and spit it out into the minds of the brainless and brainwashed masses. “

    It’s strange your obsession with media, especially given the fact that the media is much more diffuse than ever before. This is not 1972 or even 1992, there is no longer “the media.”

  7. medwoman

    [quote]brainless and brainwashed masses. [/quote]

    As one of whom you speak, please allow me to present a slightly different perspective.

    [quote]You can’t prove that tax cuts spur economic growth that leads to greater tax receipts, greater prosperity, more jobs, and a happier population… except for the simple fact that IT HAS HAPPENED EVERY DAMN TIME.
    [/quote]

    Every Damn Time ? Bush tax cuts ?

    [quote]That makes some rational sense as people tend to support their own self-interests[/quote]

    And some people define their own self interests more broadly than you seem to. One of the realizations that caused me to reject the philosophy of Ayn Rand came when I was starting high school. It became apparent to me that if I brought money in to the household, it benefitted not only me, but also my mother who was working two jobs to keep us in food with a roof over our heads. By expanding this philosophy slightly to the understanding that I have an obligation not only to my direct family, but also to others who are part of my society, I realized that my self interest included the interests of other members of our society. If I contributed, we all did a little better. If I did very well financially, I could live materially better, and could contribute more.
    This seems entirely rational to me. For example, while it is true that my work as a doctor helps to provide work for nurses, medical assistants, clerks, janitorial staff ….. it is equally true that I could not do my work without their support. This is not just me being a producer, but all of us working together to provide for the well being of our patients.

    [quote]he key is balance. The Laffer Curve is a device that can and should be used for striking that balance.[/quote]

    I agree with the first sentence. However, the Laffer Curve is only one device that has a limited descriptive power.
    It is a graph, not a prescription for success. As such it lacks any nuance about motivation and provides no insight into other factors affecting a systems financial health. It is a model, not a panacea and should be viewed as such.

    [quote]Of course we need tax revenue and government needs to spend money on essential things.[/quote]

    Completely agree. However, the difficulty is that we seem to define “essential things” differently. I view a strong population in which everyone has enough to eat, a secure living space, education, clothing and health care as essential. This is what I would see as a minimal requirement for a truly strong nation as opposed to a nation that merely pats itself on the back for its accomplishments and ignores or worse vilifies those who have not risen to the economic top ( or at least middle) of the food chain. It would be absolutely fine with me if the “free market” and charity were to provide these “essentials”. However, they haven’t. And therefore to be truly, not superficially strong, the government will need to play some role in the provision of these “essentials”.

    You, yourself, have said that you believe that every child should be provided with everything that I have mentioned. So it would seem that, at least in principle, we are in agreement. So now, what we are really down to is haggling about how much provision is essential.

  8. Frankly

    You mean the Dick Cheney that was VP during the Bush Administration… the one that the Democrats routinely demonize for spending so much and wrecking the economy. Biddlin, I think you need to pick a side… you are making me dizzy bouncing back a forth contradicting your ideological views.

    So, you found yourself a fiscal RINO that goes against the tide of conservative fiscal wisdom. You might find a few more if you look hard enough. That is no surprise from the Party that tends to support and project freedom of ideas and expression.

    However, the VAST MAJORITY of Republicans and most economists are saying the same thing… that our national debt is unsustainable and a big looming disaster.

    Deficit deniers need to consider that they are heading to the same place that lefties want to put global warming deniers… one where we they have to wear a dunce cap and a big “L” on their forehead. Only in this case the deficit deniers get the bigger cap and larger L since there is no questions the looming debt catastrophe is anthropogenic.

  9. medwoman

    [quote]That is no surprise from the Party that tends to support and project freedom of ideas and expression. [/quote]

    Jeff, are you referring to the same party that virtually demands that its candidates, in order not to be challenged
    in primaries by those richly funded, pledge no increased taxes under any circumstances, hard line positions on
    anti gun control, and place religious positions above a woman’s right to her own choice of medical care.
    Is that the party to which you are referring ?

    [quote]Deficit deniers need to consider that they are heading to the same place that lefties want to put global warming deniers.[/quote]

    Is it truly not possible for you to post your own ideas, without erroneously describing the positions of “lefties” so that you can then knock them down ?

  10. Don Shor

    [i]”Tax at a higher rate, and the incentives to invest, start and grow taxable economic activities will decrease enough [b]to offset the increased revenue expected[/b] from the tax increase. “[/i]

    No. [b]Some of the increased revenue[/b]. Your whole premise seems to be that we have arrived at the point on the Laffer Curve where 100% of a tax increase will fail to materialize. Pressed on the point in an interview, David Stockman said you probably get a 70% yield on a tax increase right now. The Laffer Curve is interesting, but the question is where we are on it. And of course, reform of the tax code can affect the impact of any increase or decrease in tax rates.
    The deficit and the debt are problems. Reducing them will take time, take bipartisan action, and will have to be done carefully because lots of people and communities depend on government expenditures. Unfortunately, if you take any one part of it out of the equation (‘we can’t cut defense’) then you shift the burden of deficit reduction to someone else. So your agitation about the deficit is somewhat undone by your adamant refusal to consider defense cuts.

  11. wdf1

    Don Shor: [i]The Laffer Curve is interesting, but the question is where we are on it.[/i]

    Agreed. Are we on the left or right side of that curve, and how do you know?

  12. Don Shor

    What economists think: [url]http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_2irlrss5UC27YXi[/url]

    Bottom line, looking at the curve from the other direction:
    [img]http://davismerchants.org/vanguard/laffercurve.jpg[/img]

  13. Edgar Wai

    As Medwoman explained, government provision is not the best solution. It is second to the solution where people who are wealthy voluntarily support those who cannot support themselves. In the following I am trying to explore what actions would it take for people to voluntarily support others.

    A person’s action follows their world view. To change a person’s action without forcing them, is to change their ideology. The following are some ideologies I can think of, that prevents a person from helping another person voluntarily.

    [b]Ideology:[/b] That people need help because they don’t work hard, so they don’t deserve to be helped.

    Let’s first assume that the people who need help are not homogeneous. It might be true that some of them are lazy, and are using various frauds to trick the government for a living, but on the other hand, also people who are not lazy, but couldn’t find work for other reasons. By this distinction, it follows that people with this ideology would voluntarily help those who they deem ‘deserving help’. Then this problem will be solved if the needed show their intention to contribute.

    What to do with those with no intention to contribute but just ‘riding’ the system? It does sound logical to remove the support. The short-term effect, might be that the ‘free-loaders’ threaten to cause harm to society if their demands are not met. This tactic is equivalent to terrorism. If the threat is immediate and substantial, these ‘malicious free-loaders’ would be dealt with by the justice system. If the threat is not immediate, perhaps the first action is to listen to their perspective and find out exactly why they refuse to the community.

    In summary, people who have this ideology are probably:
    1) Willing to help those who are trying to contribute
    2) Willing to listen to those who refuse to contribute, because it is possible that the community itself has a not well-known problem
    3) Willing to report those who threaten the community when the threat is immediate and substantial.

    People who have this ideology could be good people.

    [b]Ideology:[/b] Government agencies that help the needed are not efficient.

    This argument has two parts. An agency could misspend resource by helping those who claim to need help too readily, promoting a culture of ‘free-loaders’. An agency could also misspend resource when it takes no step to eliminate itself. If these were true, the agency would have no defense again not being funded because the agency itself becomes a glorified free-loader.

    People who have this ideology are probably:
    1) Willing to point out the problems with the agency
    2) Willing to suggest changes to the agency
    3) Willing to help those in need by themselves, by-passing the inefficient agency.
    People who have this ideology could also be good people.

    [b]Ideology:[/b] I am not voluntarily helping anyone because I already pay tax, and the government is supposed to take care of helping people.

    People who have this ideology could also be good people because they are:
    1) Willing to pay tax to help people
    2) Willing to make sure that a good portion of the tax they paid is used to help people, instead of being spent on other undesirable projects

    * * *

    So far, people have these ideologies can still be contributing from different angles. If a person claims that they don’t help for one of these ideologies, you could expect them still be willing to help in other ways. If they don’t help in those other ways, it is possible that they did not state their ideology correctly. By discussion, the true ideology can be discovered, and we can identify how people with those ideology can still help.

    If you view the situation as a network of leaky pipes, and each person is looking at a different leak, there is no reason why every person can be fixing the system at different leaks all at the same time. Cooperation doesn’t mean that everyone has to be looking at the same leak and fix one together. Cooperation can be distributed.

  14. DT Businessman

    A few reactions:

    1. The Republican Party, since Reagan’s 1st successful presidential campaign, is in no position to lecture anbody about deficits or debt levels. George H.W. Bush was spot on when he labeled Reagan’s campaign economic policies as “vodoo economicss”.

    2. Deficits absolutely do matter. Were country risk assessment still part of my job description, I would certainly put the US on credit watch. Debt as a percentage of GDP is far too high. The fact that it’s trending the wrong way is an even worse signal. Change the circumstances slightly and we’re in big, big trouble (increasing interest rates for example). These high debt levels are severely restricting are ability to react to circumstances outside out control.

    3. The reason for taking on more debt certainly matters. Borrowing for investment purposes (e.g. infrastructure, educations, healthcare) is far more defensible than borrowing to fund tax cuts. The Republican actions under George W. Bush were irresponsible to say the least.

    4. It’s fairly safe to say we’re on the left side of the Laffer Curve for higher income brackets. It’s less safe to say how far left.

    5. David’s economic analysis is extremely faulty with numerous questionable statements. A comprehensive response would be far too lengthy and zzzzzz boring! So, I’ll stick to the short, easy one. The comparison to the homeowner is way off base. The US of A homeowner has come very close to purchasing more house than he can afford, has done so with a variable interest rate mortgage, is on the verge of filing (political) divorce, has questionable job prospects in his professional field, is considering entering a job retraining program but can’t figure out how to do so and still generate sufficient income to make the mortgage payment, has no health insurance, etc. It’s by no means certain that the US of A homeowner will default, but the challenges are fairly daunting, particularly given the married couple (i.e. the two parties) are so occupied with battling each other they can’t get their and other policy shit together (economic, healthcare, immigration, etc. policy).

    -Michael Bisch

  15. SouthofDavis

    Jeff wrote:

    > However, the VAST MAJORITY of Republicans and most
    > economists are saying the same thing… that our national
    > debt is unsustainable and a big looming disaster.

    Yet the Republicans still add to the debt (It has gone up more with a Republican in the White House than with a Democrat)… The debt crisis is not “phony”, and while I don’t know when things will get real bad I know they will if we keep borrowing so much money.

    In the 80’s there was a big push to give college kids credit cards (and cash advance checks). I knew a lot of people that got as many credit cards as they could with many using cash advance checks from one credit card to pay the other cards as they maxed them out. Some kids lasted a little longer than others, but it never ended well…

    The politicians on the BOTH the right and left don’t care about our kids or the future of the country they just want to keep giving money to the people that give them money and votes so they get re-elected.

    I’m hoping that we can get enough people to realize this before we crash. Right now the Democrats and Republicans driving the train toward the wall are happy that the people in the back keep arguing about how many rounds a gun clip can hold and whether Adam and Steve can get “married” and don’t notice that they are shoveling billions of dollars of borrowed money at their campaign contributors…

  16. Frankly

    I understand that we have a bunch of mediators in this blogging group. And, I certainly don’t assign 100% blame to one political party over the other. However, the argument that because the government racked up debt under Republican administrations it is a good enough reason to not trust them and not vote for them is extremely disingenuous unless you voted for an independent. Because the Democrats are by far the biggest spending party, the spending argument against the Republicans is really a bunch of hogwash. Also, it is looking backwards in a pre-housing crash view when 95% of the population thought the gravy train would keep rolling. Well, here it is now and we KNOW the gravy train is no longer rolling and Republicans are saying enough, and Democrats are cranking it up.

  17. J.R.

    I didn’t see any evidence presented that this is a phony crisis.

    Basically the questions we should be asking are:

    1. How high can the debt go before it blows up?

    2. What will happen if it does?

    3. What can we do to stop a crisis from happening?

    The article correctly indicates that both parties are at fault for deficits, and that there is a lot of dishonesty in the discussion. But who to blame is a separate question that just leads to diversions.

    Now we don’t have to ask these questions, and we can pretend they don’t matter. But I think they do and most economists do as well. There do seem to be some debt deniers, such as Krugman. Pretending the debt doesn’t matter is to follow the path of the old Davis City Councils.

    The debt now has reached close to 100% of GDP, up quite a bit from the chart shown. As it rises, it accelerates due to exponential compounding. Once markets lose faith in the debt, which is largely short term, the cost of carrying it will rise and it will get larger faster. At some point it becomes impossible to repay, or even to stop it from growing. This is what happened in Greece, and in many other countries in the past.

    It’s true that the government can always pay its debts by printing currency. This is where we’re headed, and it will lead to devastating inflation and economic distortions. The victims will be the financially unsophisticated, children, retired people, the poor, as always.

    As to what we can do? My opinion is nothing can be done. We are not going to be able to take the steps needed to cut spending. Hopefully the crisis when it comes will be overcome without the disastrous outcomes that past such situations created, (see the demise of the Weimar Republic).

  18. Frankly

    Edgar, related to your points about ideology… here are my related views on one:

    [i]That people need help because they don’t work hard, so they don’t deserve to be helped.[/i]
    Romney made his stupid 47% mistake. Governor Schwarzenegger made his mistake blaming teachers. In my view, these groups are the victims. Call them victim-sheep. They are being lead to an eventual cliff of reckoning with unsustainable benefits. The real culprit is big government and those powerful liberal elites that demand it. These are people afflicted with some saver’s syndrome… seeing the lack of almost every unfulfilled want as some crisis or tragedy that must be force-mended. The problem is that it creates a co-dependency and sets a new normal where these things become expected and demanded as a way of life. This is the slippery slope that many – myself included – think we have already started to slide down. This last election was alarming to many conservatives because it was a crucible of discovery that we changed as a country… and not the race, gender, sexual preference division that the Democrat political machine and left media likes to enflame. The change we see is more universal and economic in nature. I describe it as a switch from a hard-driving, competitive patriarchy, to a soft-embracing, collectivist matriarchy. And the victim-sheep are attracted to the hug and are rejecting the competitive game for the first time in our history.

    I too am attracted to the hug and promise of a softer, easier, less-stressful and less competitive life. The problem is that this approach has never, ever, ever, ever worked. It has ALWAYS failed. Many have attempted the same, but societies that have are either gone, or they are going.

    What we should be doing instead is putting our complete effort into enhancing the economic opportunities and blowing the doors off our education system so that more people can successfully compete and win. Instead of teaching them how to live a simpler and less-stressful and less competitive life, we should be teaching them how to win in the global economy. Because the former is unsustainable, and the latter is what we have always done to be great.

  19. Edgar Wai

    Re: JB

    I agree that we need to teach people how to win in the global economy. It was unclear in the context, but when I say win, I mean it in the sense of win-win. Mutually thriving could be neither competitive nor collective.

    I understand that there are many precedents of how an idealistic view would lead to failure, but I don’t see that as a theoretical proof that it can’t be archived. Instead, I see that as study materials on what must be fixed before the system can become sustainable.

    On the topic of education, I am still reading the thread at the bulletin board ([url]http://davisvanguard.org/index.php?option=com_kunena&func=view&catid=2&id=36&limit=6&limitstart=234&Itemid=192[/url]). I am on page 40. I will reply there when I catch up.

  20. DT Businessman

    “I too am attracted to the hug and promise of a softer, easier, less-stressful and less competitive life. The problem is that this approach has never, ever, ever, ever worked. It has ALWAYS failed. Many have attempted the same, but societies that have are either gone, or they are going.”

    Jeff, have you ever heard of the country of Germany, or perhaps Luxemburg?

    -Michael Bisch

  21. DT Businessman

    “…the spending argument against the Republicans is really a bunch of hogwash.”

    This is the kind of statement that causes me to completely mistrust/disdain the modern day Republican Party. It’s in absolute denial and intellectually dishonest to boot. They’ve lost their bearing. Under Reagan they decided that deficits didn’t matter and under George W. Bush they came completely unhinged on spending. The rate of federal government employment under GW was unprecedented. The difference between the Dems and the Republicans is only in what they want to spend money on. There is no counterweight to the rampant spending of both parties. And the free, competetive market claims of Republicans are just as bogus. There’s never been a corporate merger that Republicans couldn’t get behind. Adam Smith would be ostracized in the modern day Republican Party.

    -Michael Bisch

  22. Frankly

    Michael, while I am no great fan of the modern day Republican politician, you appear to have caught some post Great Recession political amnesia. The EPA alone under the Obama administration has racked up enough anti-competition policy-making to pad three decades of what you can blame Republicans for. Yea environment, screw the people that need jobs!

    All politicians since FDR have been aflicted with keynesian thinking. Wasn’t the Great Recession the final chapter of that screwed up text-book?

    I have never been a fan of looking backwards except for the lessons for what should be done going forward. Looking backwards can make us blind to what SHOULD be done because our brain power is tied up in the past.

    So, what exacty is it that you like about what the Democrats are selling for going forward? What Romney and Ryan were selling should have been much more appealing given what we learned. Last I checked Romney was not Bush and Obama is not Clinton.

  23. Frankly

    [i]”Jeff, have you ever heard of the country of Germany, or perhaps Luxemburg?”[/i]

    Michael, do you honestly think the US can transform to either of those models while maintaining our general standard of living? We are the thrid most populated country on the planet. The state of Texas has an economy as large as Germany’s last I checked. You also cherry-picked two out of several dozen countries attemping similar models that are currently heading toward failure.

    What specifically about Germany do you like? Is it the higher percentage of whites? Or their history bigotry or their failed military endeavors to take over the world that led to many of their people starving and the Marshall Plan rebuilding them, and the US winning the Cold War so East and West Germany could be re-unified (thanks to the good ol’ USA!)

    Seriously though, what about Germany should we adopt? I would like us to have a highway were wealthy car owners can drive as fast as possible,

  24. DT Businessman

    Jeff, you stated that “this approach has never, ever, ever, ever worked. It has ALWAYS failed. Many have attempted the same, but societies that have are either gone, or they are going.” I proved your statement false with the examples of Germany and Luxemburg (Switzerland, the Netherlands, Denmark, Norway, Swededen, Finland, Denmark also come to mind). Instead of acknowledging that you may have gotten a bit carried away with your statement, you then went on a rant about Germany. By the way, Germany and Luxemburg have far greater population densities than Texas, as well as the entire US.

    As for what I admire about these countries, they have advanced economies, healthcare & educational systems. They lack the income disparaties and many of the excesses of the US. Is the US superior in some other regards? Yes. Greater natural resources for example.

    Listening to Republican hyperbole, one would never know successful social democracies existed.

    -Michael Bisch

  25. Edgar Wai

    Re: Michael

    To be fair I didn’t know about Germany. If it is clearly better, then the only question remains is do we know how to get there? If we also know how to get there (from our current state with Republicans), then I think the problem is solved. What do I need to do?

  26. DT Businessman

    I don’t know that Germany is “better”. “Better” is very subjective. The weather in Germany sucks for example and it is a bit too densely populated for my tastes.

    I do know that idealogues, of all stripes, frequently make use of false statements to further their agendas thereby harming their fellow citizens. This runs contrary to the common good. If the cause is just, there generally is no need to mislead. The healthcare debate is a great example of the welfare of our citizens being undermined by idealogues. There are MANY examples of succesful socialized healthcare systems (I have lived and worked in 2 such systems). Yet one would never know it from listening to the idealogues.

    What we need is a new party, the Pragmatist Party to counter the two existing parties who have come unhinged (although party names ending in “ist” are pretty suspect).

    -Michael Bisch

  27. DT Businessman

    I’m going to float an observation out here to see if it gains any traction. Democrats generally aim to further the common good, but have a very poor track record of crafting and implementing policies to further there aims. Indeed, their policies frequently backfire (for lack of practical experience?).

    Republicans have very little aim to further the common good, but are better than Democrats at crafting and implementing policies to further their aims.

    Note that I did not use the terms “liberals” and “conservatives”. I don’t think liberals or conservaties control either major party.
    Frankly, I’m wondering whether conservatives are extinct.

    -Michael Bisch

  28. Edgar Wai

    In any case, Pragmatists will be the ones solving all problems, so they will be the only ones remaining.

    I think the relevant questions are:
    1) How do I know if I am a Pragmatist?
    2) If I am not a Pragmatist, how do I become one?
    3) If I am a Pragmatist, how do I become a better one?

    Do you agree with the following?

    A Pragmatist is someone who can solve problems in a way that no stakeholder objects. Crafting and implementing policies is just one of the many ways to solve a problem. To find a solution that no one objects,
    a Pragmatist learns the concerns of all stakeholders, and propose solution that addresses all concerns.

    The main skills a Pragmatist has are how to creation innovative proposals, how to identify the parts of a proposal that no one objects, and to focus the efforts to beneficial changes.

    A Pragmatist is never afraid to make proposal, because they understand that when a proposal is objected, a stakeholder is found, and the concern can be documented. When all the concerns are documented, they can be sure that the solution that remains will harm no one.

    Is this concept of Pragmatist unrealistic:

    In this discussion, there are about 10 people. Is it possible we have a common solution that we don’t know about right now, that a Pragmatist can figure out by proposing a solution and evolve it to address all concerns?

  29. Don Shor

    A majority of the members of the majority party of the House have demonstrated clearly that they are not pragmatists, so a deficit reduction proposal will not be found that will pass the current Congress. This will not be a legislative priority before 2014.

  30. Adam Smith

    [i]A majority of the members of the majority party of the House have demonstrated clearly that they are not pragmatists, so a deficit reduction proposal will not be found that will pass the current Congress. This will not be a legislative priority before 2014. [/i]

    Don’s statement is true of both Democrats and Republicans. But with last week’s tax bill, the political issues are different. House Republicans have agreed to a tax increase, although they clearly didn’t want to. Now deficit reduction becomes about spending decreases, which the Republicans are very much in favor of. Therefore, if the Democrats refuse to cut spending, then they are the party not in favor of deficit reduction. This is why the Republicans will attempt to use the debt limit force some much needed changes in spending.

    If anyone reading here still thinks that entitlement spending can go on unabated, please read this from the NY Times[url]http://www.nytimes.com/2013/01/06/opinion/sunday/social-security-its-worse-than-you-think.html?ref=opinion[/url]

  31. rusty49

    Adam, you’re exactly right. Typical left winger speak that it’s all the GOP’s fault and that they are the ones who aren’t pragmatists when the Democrats are very much to blame also.

  32. rusty49

    “The way Bush has done it over the last eight years is to take out a credit card from the Bank of China in the name of our children, driving up our national debt from $5 trillion for the first 42 Presidents; number 43 added $4 trillion by his lonesome, so that we now have over $9 trillion of debt that we are going to have to pay back. Thirty thousand dollars for every man, woman and child. That’s irresponsible. It’s unpatriotic.”

    Barrack Obama 2008

    Obviously by his own words the left winger’s God doesn’t think it’s a “Phony Debt Crisis”

  33. David M. Greenwald

    Actually the left wing doesn’t really like Obama. Some held their nose and voted for him.

    Obama was wrong in 2008. Things changed in terms of debt calculation as we moved from economic growth to deep recession. Obama was making a political argument rather than a policy argument rooted in analysis.

  34. rusty49

    Paul Krugman is also a hypocrite when it comes to the national debt:

    [url]http://www.realclearpolitics.com/articles/2010/02/11/krugman_bushs_deficit_bad_obamas_deficit_good_100258.html[/url]

  35. DT Businessman

    Coming from an equal opportunity both major parties despiser, my overall feeling is the Dems have been stronger on the national debt than the Republicans over the past 30 years. Rusty, you’re confusing big government with big debt. Generally, Dems want a lot of government services and wish to tax business and higher income earners to pay for the services (along with cuts to military spending). That’s a balanced budget approach. In my view, the Dems are consistently unrealistic in their expectations of how much potential tax revenue is out there.

    Republicans on the other hand, generally want to cut taxes and deficit spend money on non-Dem priorities, damn the national debt consequences. This recent hallelujah moment by some Republicans is simply not credible. Romney (for those suffering amnesia he was the Republican presidential nominee until a few weeks ago), was playing the same old shell game. Retain lower tax rates and trust me to find spending cuts. Reagan said the same thing and Reagan’s record on exploding national debt is undeniable.

    -Michael Bisch

  36. Don Shor

    [i]”House Republicans have agreed to a tax increase, “
    [/i]
    No. By a very large margin, the majority of House Republicans voted against it.

    Republicans: 151 No, 85 Yes.
    Democrats: 172 Yes, 16 No.

    It passed because the Democrats voted for it, and only because of that. So your next statement certainly doesn’t follow:’
    [i]”Therefore, if the Democrats refuse to cut spending, then they are the party not in favor of deficit reduction.”
    [/i]
    Republicans want to cut taxes, cut social spending, and increase defense spending. They did not run on a platform that would have led to deficit reduction. They do not have a record of cutting the debt or the deficit. When they’ve been in office, it has clearly not been a priority.
    Holding the debt ceiling hostage is not a credible answer to deficit reduction. The debt ceiling pertains to money already appropriated. It is an irresponsible way to try to tackle spending and deficits. It threatens the fiscal integrity of the US as the world’s primary economic power. It shouldn’t even be an option to block the increase in the debt ceiling.
    Reducing the debt and the deficit is a long-term issue. Actually, Germany gives us one good model for how to do that. Read about their fiscal policies. We could start adopting parts of Bowles-Simpson, or something similar. As I’ve said before, everyone pretty much knows what needs to be done in the long run. But unfortunately, the Tea Party wing of the Republican Party wouldn’t even support that: Paul Ryan, on the Bowles-Simpson commission, voted against the final report.
    Yes, the progressive caucus in the Democratic Party is fairly united on some of these issues. But unlike Speaker Boehner, Nancy Pelosi can wrangle them into voting for compromise positions.
    So my position holds, based on current evidence as recently as this week, that the main impediment to progress on any fiscal issues will be the Tea Party members of the House of Representatives.

  37. DT Businessman

    The Republicans lost their bearings when the conservatives disappeared from their ranks. Yes, conservatives, now extinct. Nobody even know what they are anymore. You know those guys espousing the view that the federal government should provide a limited range of services, resulting in a smaller federal government, and as a consequence requiring less taxes to support it? Yeah, yeah, those guys. Gone, toast, haven’t heard from them in a long, long, time. The country is the worse for it.

    Conservatives have been replaced by some creature that espouses lower tax rates for higher income earners, big spending by big government, resulting in big deficits.

    -Michael Bisch

  38. Frankly

    [i]Republicans have very little aim to further the common good, but are better than Democrats at crafting and implementing policies to further their aims.[/i]

    I think you don’t understand what “Republican” stand for in principle if not practice.

    [i]Note that I did not use the terms “liberals” and “conservatives”. I don’t think liberals or conservatives control either major party.
    Frankly, I’m wondering whether conservatives are extinct.[/i]

    Before the election there was a shared understanding – I mean shared in the Republican and Democrat circles and also in the main media – that the US was filled with an electorate that is fiscally conservative. That was proven false this last election. They are not extinct. They did not disappear. But we have had decades of immigration floods of first generations that have overwhelmed our ability to truly assimilate second and third generations into the American work and wealth-creation ethos. The same with our children… the spoiled, confused, entitled bubble of baby-boomers and their babies that have had their life-prospects destroyed by the combination of a crappy education system and a crappy government filled with the wrong types of politicians (those good at raising campaign money and prone to seek the camera to help increase their book sales) implementing one liberal fiscal policy after another… all these things are the perfect storm of moocher-looter-ism that caused us to now be a country lacking enough of an electorate that even understands why balanced budgets matter.

    I worked on farms and ranches when I was a teenager to earn money to buy myself things that my parents could not afford. How many parents today would allow their little darlings to work on a farm or ranch? Even if these parents would allow their kids to do that type of work, there are fewer of these jobs because we have flooded the country with low-skilled uneducated immigrants that take them.

    Related to this entire drop in American work and wealth-creation ethos and fiscal conservatism is the move to the nanny state. If you listen to your modern countrymen and women it is the sound of crying babies, weak men and weeping women. We have marched our civil rights movement right past the point of common sense, and the hyper sensitivity that has developed in our social and professional structures (And which is soundly and hypocritically disregarded by the same Hollywood and entertainment elite that likes to lecture us on how evil those things are.) makes a fine base from which nanny government and a corrupt money-seeking crop of trial lawyers can come to the rescue.

    The social issues then become a wedge for continuing enflame the whining, weak and weeping from enlightenment of the fiscal train wreck looming.

    The view northern European countries that you point to as models we should become are false targets. First, without the US military defense they would have been taken over by Nazis or communists by now. Second, the only reason that they can afford to give their population free health care is that they don’t have to defend themselves. Third, they are not the US. The main thing different is a lack of ethic/racial diversity. Germany is 95% German. Finland is 93% Finn. I don’t need to go one because all the countries you mention have the same or similar lack of diversity in their populations. These are primary Caucasian people with the same cultural basis. It is a pipedream for those thinking we can be like those countries. We cannot because we don’t have a binding cultural basis. What has bound us is our American work and wealth-creation ethos… our free market economy… our understanding that American is a different country and that the reason diversity worked is that everyone had the INDIVIDUAL freedom and ability to grow a happy and prosperous life without needing GROUP affiliation to fight for redistribution rights.

    By failing to appropriately tend the economic engine of the US and deconstructing the electorate’s American work and wealth-creation ethos, we will slide into a divided country where group turf wars will erupt over government redistribution policy. That is what is happening now.

    If we were to somehow inject the same level of US ethnic, racial and cultural diversity into the German population today, it would explode tomorrow.

  39. Edgar Wai

    Proposal 1:
    Let the budget have multiple reserves. When we pay tax, we can designate a portion, up to 100% to be controlled by which party, or to repay the deficit. (Example: When I file my Tax Return, I can designate 30% to go to Party X, 20% to pay off the deficit, and the rest to unassigned.)

    Proposal 2:
    Let there be a cap on spending that does not exceed the tax revenue collected in the previous year. (This is the concept of spend what you got, not what you think you will get.)

    Proposal 3:
    When a proposal that has passed legislature, that needs funding beyond the revenue, allow private donations to implement the proposal, and acknowledge those private entities as donors.

  40. medwoman

    Adam Smith

    Having read the NYT article, and given this issue a lot of thought recently since I am now of “early retirement” age I find myself grappling with these issues on a personal and societal level. One personal issue for me, and one I hear frequently from my patients us what I want my role to be after retirement. One issue that was not featured prominently in the article, but which in the aggregate could have a major impact both is what seniors choose to do with their now “free time”.

    So I would make a small proposal to see what people think of this.
    We have a wealth of experience and knowledge in our retiring population. Many will need social security as part of their post retirement income. We have many, many societal needs and if my reading is accurate, a group of young people lacking in necessary skills to meet employment demands. Given these needs, I would propose a transitional work/volunteer corps of the newly retired.
    One could choose to:
    1) Not participate at all and collect no social security. This option would be offered to those who perceive themselves as having enough financially and therefore are not in need of any supplemental income.
    2) Volunteer on a part time basis for a prorated amount of their full social security benefit
    3) Volunteer at a level determined to qualify for their full social security benefit.
    This could be done in some combination with age modifications. I dislike arbitrary age qualifications for retirement since this largely discounts individual variation in age limited ability to perform certain tasks.

    This type of plan would have a number of advantages:
    1) Encourage continued productivity and social interactions in the community, a real problem for many seniors
    2) Encourage intergenerational interaction improving understanding between seniors and youth
    3) Help younger people develop the basic skills which some have not acquired in school
    4) In some areas retirees might be considered for positions that are unattractive to those who are seeking more
    financial gain than is available in certain job categories such as teaching, tutoring, social welfare programs
    such as drug rehab, domestic violence, foster care, group homes and jail or prison re entry to name a few.

  41. Frankly

    [i]They did not run on a platform that would have led to deficit reduction[/i]

    Bullshit, bullshit, bullshit.

    The Ryan budget and the Romney plan would have dealt with Medicare and Social Security… the main federal budget destroyers. What have the Democrats offered on these things besides more spending? Defense spending has continued to fall over the last 60 years. It is a false culprit.

    Don, I don’t know where you get your material, but obvioulsy it is limited.

  42. Edgar Wai

    Proposal:
    Promote a ‘Pragmatic’ mindset to get things done that is independent to the principles. There can be a Pragmatic Democrat cooperating with a Pragmatic Republican.

  43. Frankly

    [i]No. By a very large margin, the majority of House Republicans voted against it.

    Republicans: 151 No, 85 Yes.
    Democrats: 172 Yes, 16 No. [/i]

    Don, I don’t think you understand how the political process works. The GOP gave it enough votes to pass without allowing the Democrats to come back when the economy tanks again and unemployment fails to recover and tax revenues are lower than expected… and point fingers at the GOP and say “see they voted for it too!!!”.

    The GOP supported it, plain and simple.

  44. Davis Progressive

    [quote]Don, I don’t know where you get your material, but obvioulsy it is limited. [/quote]

    Well here is the non-partisan report that analyzed Romney’s plan; [url]http://crfb.org/sites/default/files/Primary_Numbers_–_Romney_add.pdf[/url]

    And if you want to attack the group, Committee for a Responsible Federal Budget, they also criticized the President budget arguing it would come up well short of the projected $4 trillion in savings.

    They find: “Estimated roughly, ignoring interactions and microdynamic effects, we find that without offsets Governor Romney’s plan on the whole would increase the debt by about $2.6 trillion.”

    So I have to wonder where you get your material, because it’s obviously one of those blogs that Romney was citing as though it were a study.

  45. Frankly

    [i]Promote a ‘Pragmatic’ mindset to get things done that is independent to the principles. There can be a Pragmatic Democrat cooperating with a Pragmatic Republican.[/i]

    There is no pragmatism in politics when government is the primary source of funding. reduce the size and scope of government, and we will have more cooperation in politics.

    We have moved and are continuing to move the pursuit of self-interest from the private economy to the public political process. So, instead of competition in the free market, we have to compete in politics to secure our slice or prosperity.

    Which Party has the bigger blame for that movement?

    Let’s say both are equally at fault.

    Next question… which Party ideology is the bigger blame.

    The left wins that designation by a landslide.

  46. Davis Progressive

    “Don, I don’t think you understand how the political process works. The GOP gave it enough votes to pass without allowing the Democrats to come back when the economy tanks again and unemployment fails to recover and tax revenues are lower than expected… and point fingers at the GOP and say “see they voted for it too!!!”. “

    That’s malarkey. It ignores the true divide within the Republican party. That wasn’t a planned vote, it was a fluke. Just like when Boner couldn’t get his Plan B through his own caucus. I can’t take your analysis seriously because not only cannot you not divorce yourself from your own ideology, you’re actually quite naive and easily manipulated.

  47. DT Businessman

    1) I think Medwoman is headed in the right direction. Some kind of comibnation of the business community, community volunteers, and faith based group is going to have to provide many of the governmental services that governments are no longer able to provide.

    2)Jeff, I can poke all sorts of holes in your 11am post, but I will focus for the moment on your immigration comments.

    “But we have had decades of immigration floods of first generations that have overwhelmed our ability to truly assimilate second and third generations into the American work and wealth-creation ethos.”

    Floods of low skilled, uneducated immigrants is not a recent US phenomenon. Hello! This has gone on for centuries. By the way, we did not assimilate, rather, we replaced the native culture with our own, primarily European culture. I myself, am a 1st generation American, both my parents were immigrants. I grew up in San Diego surrounded by immigrants from all over the world. My first vacation job in the US as a 10 year old was on a ranch. The ranch owner was an English immigrant. The guys I was working with were illegal immigrants from Mexico. Your immigration comments are turning history on its head.

    By the way, Germany is also a land of immigrants. The country has been repeatedly re-populated externally, by a wide variety of ethnicities, following episodes of depopulation over the centuries.

    -Michael Bisch

  48. Frankly

    Obama favors higher taxes and decreased spending and Romney favored decreased spending and a growing economy. The problem with all the economic analyses painting Romney’s plan as increasing the deficit (other than the left-bias and regurgitation of Dem talking points) is that it discounted the Romney projections for economic growth increasing tax receipts. Basically, the Romney view is that we are already on the right of the Laffer Curve, and that by lowering tax rates and investing in things that help business, we would grow the economy.
    [quote]On spending cuts, Romney wants to cap federal spending at 20 percent of GDP. He would also institute a five percent across-the-board spending cut for all non-security discretionary spending and cap all non-security discretionary spending at below 2008 levels.

    Romney also advocates the following specific cuts in spending (the amount Romney claims to save is in parentheses).
    -Repeal the Affordable Care Act, or “Obamacare” ($95 billion)
    -Privatize Amtrak ($1.6 billion)
    -Reduce subsidies for The National Endowments for the Arts and Humanities, The Corporation for Public Broadcasting, and the Legal Services Corporation ($600 million)
    -Eliminate Title X family planning funding ($300 million)
    -Reduce foreign aid ($100 million)
    -Convert some federal programs to block grants for states ($100 billion)
    -Reduce waste and fraud ($60 billion)
    -Reduce federal employee compensation ($47 billion)
    -Repeal the Davis-Bacon Act ($11 billion)
    -Reduce the federal workforce by 10 percent via attrition ($4 billion)

    These proposals total $319.6 billion.[/quote]
    But, we hear from the left and left media that Romney is weak on specifics… while at the same time they don’t say a thing about the same from the Teflon Messiah.
    [quote]What, if any, new spending cuts Obama is advocating are difficult to find. A large portion of his $4 trillion deficit reduction plan includes decisions that have already been made by Congress and Obama. It includes $1.78 trillion in spending cuts that were enacted under the Budget Control Act, $850 billion in savings from removing military troops from Iraq and Afghanistan, and $800 billion in lower debt payments.

    The rest of the deficit reduction comes from $590 billion less spending on “health and other mandatory initiatives” and $70 billion from “other.” The website is not clear on whether the health savings are those that have already been passed as part of the Affordable Care Act. And, it does not specify what belongs in the “other” category.[/quote]

  49. Frankly

    [i]I can’t take your analysis seriously because not only cannot you not divorce yourself from your own ideology, you’re actually quite naive and easily manipulated.[/i]

    I see the same in you Growth Issue, only without a real name.

  50. DT Businessman

    Edgar, I think your Pragmatist approach, independent of ideology, is exactly what’s currently happening here locally. There are many examples of it. Our challenges are simply too pressing to allow ideological squabbles to undermine the welfare of our community.

    -Michael Bisch

  51. Frankly

    [i]By the way, Germany is also a land of immigrants. The country has been repeatedly re-populated externally, by a wide variety of ethnicities, following episodes of depopulation over the centuries. [/i]

    There you are looking backwards again. I would prefer we keep the arguments to the here and now. Otherwise we have to include all of that past German social conflict that you just glossed over looking backwards. Can you not even concede the point of fact that Germany is 95% German in ethnicity?

    Your immigration arguments are weak Michael and completely ignore the demographics. We have had nothing like what we have today. No country has had anything similar and not exploded in some type of civil war or degraded into social and political turmoil. Immigration was much more diverse and the US was a county that needed to grow its population and workforce. The assimilation of all prior groups has been into the American work and wealth-creation ethos that really took off at the end of the 19th century. That was when immigration really started to explode because America was a place you could go and be free and make a good life. Now it is a land where you can go and get free stuff from the government and nanny government is working to make sure you have fewer and fewer freedoms.

  52. Frankly

    From the 2010 Federal budget pie:

    19.63% – Social Security
    16.30% – Welfare and unemployment
    12.79% – Medicare
    08.19% – Medicaid
    04.36% – Debt interest
    ======
    61.27%

    18.74% – Defense

    19.99% – Other federal programs and agency budgets

    So, what is the Democrat plan for dealing with the 61.27% of the budget that is social entitlements spending. That is the part of the budget that has exploded. Or, what is the Democrat plan for dealing with the 19.99% spending on other federal programs and agency budgets. That too has exploded. The only budget spending category that the Democrats have any interest in reducing is defense. And non-war defense spending has remained flat in dollars for the last 15 years (about $300 billion) and has fallen drastically as a percent of total spending and spending per GDP.

  53. Frankly

    I am for a political pragmatist approach. For that to work, we need shared goals. For us to have shared goals, we would need to first reduce the competition for funding from the government by eliminating the number of things the government funds.

    Is pragmatism the same as being rational? We might have more of a pragmatist approach now with this council, but we don’t yet have much policy change to show for it. I remain more optimistic and hopeful, but only actions matter.

    My experience in large corporate change, is that pragmatism is often something demanded by people more skilled at manipulating their agenda. Because everyone has an agenda. Instead of expecting everyone to agree and get along, because they don’t and won’t, the corporate decision process includes phases where conflict and debate is encouraged up front, but then after the decision is made all stakeholders must support it. But, we measure the level of return on investment for the decision, and allow for objective and fact-based assessment… opening up the debate again at scheduled milestones where the project or program can be killed if it is not meeting expectations for return. If we would implement this type of process for government programs (where we could kill them if they were not meeting expectations or goals), then I think we could have more cooperation of the rational.

    But, since we can emote issues and use the media to sway public opinion to policy demands void of facts and/or shared goals, pragmatism is not so easily attainable in the political arena. Use gun control as an example. There are powerful groups exploiting the crisis of Sandy Hook to with an ideological worldview over people that don’t share the same views and goals. There can be no pragmatism here because of those tactics. It is divisive and combative and the battle lines have been drawn.

  54. Edgar Wai

    Re: MW

    I am aware that your proposal could potentially ‘harm’ the job market because the retirees will be taking many social roles. But even with that I still accept the proposal. In effect, this concept of social security is not an extended pay check, but a type of job security.

    I think there are two parameters that the proposal must address:

    1) How much time (or other unit) that a retiree needs to volunteer to get the full amount

    2) How much is the full amount based on

    For parameter 1, I think you meant 40hr/wk. For parameter 2, I think you meant the same amount that the current social security system plans to distribute.

    Could you confirm that we are talking about this:

    Young people work and pay tax. Part of the tax goes to the pot of social security funds. Retirees who have paid tax are eligible to draw from the pot of that same year by volunteering.

    Volunteering will lower the market demands for those positions, and drive the education system and the market toward other functions with roles where retirees can’t take (due to physical limitations or technological gaps).

    Jobs that will become ‘reserved’ for seniors would include: child care, tutoring, welfare, teaching of basic skills, etc.

    Question: What if there isn’t enough demand for the retirees to volunteer 40hr/wk? (The situation where 5 retirees are trying to tutor one child.)

    My concern is that under this system, the retired population will start taking managerial jobs also. This could be bad because now we are heading for a future where the retirees not only take money from the tax revenue, but also learning and growth opportunities from the younger generation.

    How should a society decide what roles the retirees should take, and what roles they shouldn’t take to promote the development of younger generations?

  55. Edgar Wai

    Re: MW

    In summary, 3 important parameters:
    1) How much time to volunteer to get full amount -> 40hr/wk
    2) How much is the full amount -> draw from the current budget based on previous contribution
    3) What roles are eligible -> dynamically decided by local community depending on the supply and demands of the local community.

  56. medwoman

    [quote]Some kind of comibnation of the business community, community volunteers, and faith based group is going to have to provide many of the governmental services that governments are no longer able to provide. [/quote]

    I see part of the problem with depending on the business community, community volunteers, and faith based groups to “provide many of the government services that governments are no longer abe to provide” is that there is no accountability and no real coordination of efforts. In an individual business, if there is not accountability for product or service, the business will fail. If an elected official does not do their job to the satisfaction of the majority of their constituents, they can be voted out of office. For volunteer efforts be they charitable efforts by businesses, community volunteers or faith based groups, there is no accountability.
    What I would promote would actually be much more far reaching than the very modest proposal that I stated with regard to retirees. I would like to extend this suggestion to all ages in our society. If we were to change our national mind set to one of competition + collaboration instead of our current focus on competition alone I believe that we could make a major impact on not only our financial problems, but also on our major societal challenges.

    Note that am I recommending that this be an incentivized, not coercive model. If there were attractive incentives and enough community support, I believe that a tipping point would be reached at which these kinds of activities would be considered the norm
    1)Starting with young children, if they are old enough to pick up their clothes, they are old enough to participate in neighborhood clean up and could earn some form of community credits perhaps for goods or services offered by local businesses ( say a frozen yogurt for a certain amount of time spent sprucing up the block)
    2) For grade school children, same + possibly supervising the play of younger children, pet care or similar services in return for age appropriate rewards. Perhaps summer vacations could be seen not only as time off to relax and play, but also time to contribute to the community
    3) For high schoolers both above + for those who drive, perhaps providing transportation to laundry and other services difficult to access for “the other Davis”, child care for service credits instead of just babysitting money,
    tutoring of younger students or English as a second language students or adult literacy.
    4) For college students and or those recently graduated, entry level pay for those willing to teach or provide services to underserved populations perhaps organized in much the same way that the Public and Indian Health services have operated to serve their respective populations.
    5) For the unemployed, I would recommend organizing the provision of services within their area of training to those who cannot afford these services rather than providing them with “unemployment benefits” for doing nothing. They could split their time between providing these services and seeking private sector employment with this community work showing on their resumes rather than just having it grow as unemployed time thus making them progressively less likely to find private sector jobs.
    6) For anyone who is the recipient of above services, pay back hour for hour in whatever area they can contribute. For example, if you are a janitor who needs English as a second language instruction, you put in an hours worth of time in “community clean up”.
    6) Retirees – as proposed above

    I could see all of this being organized as public/ private partnerships with those such as Jeff, DT, and any other successful business person providing the expertise in efficiency and determining how to establish accountability as they will have demonstrated experience and knowledge in these areas. And they could then reap their “incentive” for time spent organizing ; )

  57. Don Shor

    Republicans: 151 No, 85 Yes.
    Democrats: 172 Yes, 16 No.

    [i]Don, I don’t think you understand how the political process works. The GOP gave it enough votes to pass without allowing the Democrats to come back when the economy tanks again and unemployment fails to recover and tax revenues are lower than expected… and point fingers at the GOP and say “see they voted for it too!!!”.

    The GOP supported it, plain and simple.[/i]

    The GOP did not support it, plain, simple, or otherwise. There is no substance to your statement. Boehner has no control over his caucus. The only thing he managed to do was bring the bill to the floor. And, to his credit, he voted for it.
    I understand how the political process works. Why would you say something absurd like that, Jeff? I am not stupid. We are watching the disintegration of the Republican center, and the party in the House is dominated by the extremists. Any progress on fiscal issues will come about only by Senate Republicans and Democrats joining together with House Democrats and a shrinking minority of northern ‘moderate’ Republicans. So any fiscal proposal has to be acceptable to those groups. House Republicans will gradually render themselves irrelevant, except for their ability to block legislation.

  58. davehart

    After wading through the first page of comments, I think it is safe to say that economics as a discipline is showing the abuse it has taken at the hands of those who determine university priorities. Believe it or not, a new school of thought has been emerging in the last 30 years with the name of Modern Money Theory (MMT). Currently, it’s center of gravity is the University of Missouri, Kansas City. The most interesting thing about MMT is that it is an impartial theory of how money actually works and does not suggest or dictate any specific policy directions. The analogy is that physics describes the motion of a body in a vacuum, in the air, under wind currents, etc. but does not dictate or suggest what decisions should be made to change the direction of the body. That is the province of engineering. You have to understand physics to be an engineer and you have to understand MMT to offer cogent economic policies.

    If you all want to understand what you are talking about (and from reading the comments here I venture to say all of us are out of our element and woefully ignorant) you need to at least understand MMT. They have put up a website and described MMT in 52 short weekly blogs.

    You can find it here: http://neweconomicperspectives.org/p/modern-monetary-theory-primer.html

  59. Edgar Wai

    Re: MW

    On your model of general community support, I express it as the ‘community help desk’, which is a system of coordinated voluntary efforts to meet needs in the community. Its principles include:

    1) Service: that people help because they want to help, but because they need it to recoup withheld benefits. The people who help are not asking for any return to themselves or to the community. No string attached, no social stigma to those who don’t help.

    2) Wish-fulfillment: The system should not limit itself to logistical needs, but also any whacky, fun, creative projects. It should be a safe and cooperative platform to allow the community to dream big and explore new possibilities. Make a wish, and the system will make it happen.

  60. Edgar Wai

    (Cont)
    Principle:

    3) Pragmatic: When everyone gets what they need, who cares who is doing what? Focus on getting things done, and free one another to help one another.

  61. SouthofDavis

    Don wrote:

    > I understand how the political process works.

    Have you ever worked for a member of Congress in Washington DC?

    As a kid interested in politics I was amazed at how many “close votes” there were in Congress.

    After spending a week back there (with a fraternity brother who took a semester off to work for a California Congressman) I learned that leadership lines up the votes it “needs” then lets the rest of the party vote the way it wants.

    Party leadership will often force a member to vote against the party and in a way they personally disagree with if they don’t need the vote and they think it will help them in the next election campaign.

    What matters is if a bill passes, the total number of votes on any issue means nothing.

  62. Frankly

    [i]Party leadership will often force a member to vote against the party and in a way they personally disagree with if they don’t need the vote and they think it will help them in the next election campaign.

    What matters is if a bill passes, the total number of votes on any issue means nothing[/i]

    Exactly. The Democrats do this too. It is a political tactic to ensure that reps don’t get hammered by their constituents back home for giving up on ideological principles.

    That is what I meant Don. Not that you are “stupid” because you are obviously one the smartest guys in the room. But, it seems that you are not considering this in your assertion that the GOP is garbage.

  63. David M. Greenwald

    SOD: I worked for two years in DC. What was unusual about the fiscal cliff vote is that, it was not “whipped.” In a usual situation, the leadership will as you describe tell it’s membership how to vote. Now sometimes the members don’t follow directions, sometimes they get punished for it. In this vote on the fiscal cliff, the members were basically turned loose to vote how they wanted. In fact, Boehner got criticized by many for essentially giving up Republican majority rights.

  64. David M. Greenwald

    [quote]Former House Speaker Dennis Hastert — the namesake of the rule requiring House legislation to have the support of the majority of the party in power — warned House Speaker John Boehner on Thursday that if he continues to rely on Democratic votes to pass legislation, “you’re not in power anymore.”

    “Maybe you can do it once, maybe you can do it twice, but when you start cutting deals where you have to get Democrats to pass the legislation, you’re not in power anymore,” Hastert said on Fox News Radio’s “Kilmeade and Friends.”[/quote]

    [quote]“When you start passing stuff that your members aren’t in line with, all of a sudden your ability to lead is in jeopardy,” Hastert said. “Because somebody else is making decisions. The President is making decisions, [House Minority Leader Nancy Pelosi] is making decisions, or they are making the decisions in the Senate. All tax bills and all spending bills, under the Constitution, start in the House. When you give up that responsibility you really give up your ability to govern, and that is the problem.”[/quote]

    Source: Politico ([url]http://www.politico.com/story/2013/01/dennis-hastert-warns-boehner-on-his-rule-85721.html[/url])

  65. Frankly

    [i]Now sometimes the members don’t follow directions, sometimes they get punished for it. [/i]

    Exactly. Do you remember the Blue Dog Democrats?

    Remember, the House GOP has the majority.

  66. David M. Greenwald

    Republicans have the same problem now that the Democrats did 30 years ago , they can’t control their own caucus or they risk losing the majority. Boehner didn’t try to give the minimum votes he needed, that’s all he could muster.

  67. Frankly

    [quote] The Blue Dog Democrats were formed in 1995 by approximately thirty conservative-leaning House Democrats who sought to challenge the liberal tilt of the broader Democratic party. After Republicans took control of Congress in 1994 by a narrow margin, the Blue Dogs sought to become the swing vote.

    Former Rep. Pete Geren (D-TX) is credited with the term by explaining these conservative Democrats had been “choked blue” by liberals in his party.[/Quote]
    [quote]Just when the Blue Dogs thought it couldn’t get any worse, it did.

    Two years after the 2010 midterm elections decimated their ranks, the coalition of conservative Democrats is poised to get pummeled again in November — moving the Blue Dogs dangerously close to extinction.
    Of the 24 remaining Blue Dogs, five are not seeking reelection. More than a half-dozen others are facing treacherous contests in which their reelection hopes are in jeopardy.

    “It’s a tough environment out there,” said former Alabama Rep. Bud Cramer, a longtime member of the House Blue Dog Coalition. “Their numbers are down. Redistricting has not been kind to them.”[/quote]
    [quote] Privately, Mr. Obama has described himself, at times, as essentially a Blue Dog Democrat, referring to the shrinking caucus of fiscally conservative members of the party.[/quote]
    [Quote] President Barack Obama firmly resists ideological labels, but at the end of a private meeting with a group of moderate Democrats on Tuesday afternoon, he offered a statement of solidarity.
    “I am a New Democrat,” he told the New Democrat Coalition, according to two sources at the White House session.
    The group is comprised of centrist Democratic members of the House, who support free trade and a muscular foreign policy but are more moderate than the conservative Blue Dog Coalition.[/quote]
    So, the Blue Dogs have been wiped out by the liberals in the Democrat Party, yet we are fed the media template that the GOP has grown more conservative.

    Right.

    Obama is a Blue Dog, then he is a Liberal, then he is a fiscal conservative, then he is a liberal, then he is a social moderate, then he is a liberal. Yet Romney is the one that flip flops.

    Right.

    But then we are all only trying to be pragmatic and rational about this stuff.

    Right.

  68. Don Shor

    Blue Dog and DLC aren’t the same thing.
    The DLC largely took over the Democratic Party, with the Progressive Caucus representing the remainder. DLC are, in fact, largely centrist on issues of trade and foreign policy, and are more conservative on fiscal issues than are the members of the Progressive Caucus. Blue Dogs, being almost entirely from the south, lost to Republicans or got redistricted out.
    Democrats definitely became more centrist under Clinton, and had some internal battles over trade policy. Go back and look at who supported and opposed NAFTA and the related trade agreements. On health care, DLC Dems favored the approach that is embodied in the Affordable Care Act. Progressives preferred single-payer, which Obama never even put forward.
    The takeover of the Democratic Party by DLC members was sufficiently thorough that the DLC has disbanded. Members of the Progressive Caucus go along with the President and the current leadership, despite their more liberal preferences, because they are aware they have no other choice.

  69. Don Shor

    Obama is definitely governing more from the NDC/DLC wing of the party. No progressive would have appointed Geithner and Summers. None would have used any military action in Libya, increased our troop numbers in Afghanistan, expanded the use of drones. Single-payer would have been the first choice. On issue after issue, Obama is much more in the mold of Clinton than, say, Kucinich.

  70. medwoman

    [quote]For parameter 1, I think you meant 40hr/wk. For parameter 2, I think you meant the same amount that the current social security system plans to distribute. [/quote]

    Actually Edgar, I had not gotten far enough along in my thought process to have any specific ideas about the number of hours that would constitute the amount of time contribution to obtain one’s full social security benefit. Also, as stated I do not know how the age criteria should be employed. I also do not know the details of how such as system could be arranged so that it did not harm “the market”. However, I do see that there is much, much to be done in our society that is not being done and see an extension of the role of our youth and elders as a way of addressing these needs. Clearly, as a gynecologist, I am way over my head in thinking of the terms of the details of the systems to make such an extension work. But I do see it as a way of thinking beyond the very limited models we currently use where everything is dichotomized artificially into public vs private, “free market” vs “nanny state”, individualist vs collectivist, instead of seeking more creative models in which we leverage both peoples desire for individual improvement, and their desire to contribute to the well being of something larger than themselves.

  71. DT Businessman

    “Can you not even concede the point of fact that Germany is 95% German in ethnicity?”

    Jeff, I don’t know why you persist in this Germany thing. No, I don’t concede that Germany is 95% German in ethnicity. According to the United Nations Population Fund, Germany is host to the “third highest number of international migrants worldwide. More than 16 million people are of foreign/immigrant descent.” That’s out of a population of 82 million (20% of the population). That’s just the recent immigrants (1st and 2nd generation). As I said before, Germany has been overrun, invaded, re-settled, and re-populated numerous times over many centuries. I was astounded to learn, I believe it was in the ‘70s, that ethnically blue-eyed and blond haired Germans now (then) officially constituted less than 50% of the population. I grew up thinking that my family was pure Aryan. Come to find out shortly before my grandfather’s death that his family were French Huguenots, fleeing Catholic persecution, that had been invited in the 1700s by rulers of Prussia to settle German-ruled areas that had formerly been occupied by Slavs. My paternal side of the family are Hessians that were invited by the Hungarian rulers to settle parts of what is now Serbia to re-populate the frontier of the receding Turkish empire. Germany is very much a mixed ethnic bag of Germans, Slavs, Romans, Turks, Jews, Latins, what have you.

    In reply to one of your earlier comments, according to Wikipedia, “Germany has one of the world’s highest levels of education, technological development, and economic productivity….The social welfare system provides for universal health care, unemployment compensation, child benefits and other social programs.” I’m not suggesting that the US model itself after Germany. I’m only posting this to counter an earlier false assertion of yours. Perhaps you’ll re-think your position, perhaps you won’t.

    What’s particularly relevant from the Wikipedia excerpt is the universal health care comment. I have lived and worked there. Universal health care in Germany is nothing like the failed system that Republicans describe. It’s not a perfect system, but it is significantly better than the US system. You can repeat until you’re blue in the face that the sun sets in the East, my own experience leads me to believe it sets in the West.

    -Michael Bisch

  72. SouthofDavis

    Jeff wrote:

    > Can you not even concede the point of fact that Germany
    > is 95% German in ethnicity?

    Then DT Businessman wrote:

    > Jeff, I don’t know why you persist in this Germany thing.
    > No, I don’t concede that Germany is 95% German in ethnicity.
    > According to the United Nations Population Fund, Germany is
    > host to the “third highest number of international migrants
    > worldwide. More than 16 million people are of foreign/immigrant
    > descent.” That’s out of a population of 82 million (20% of
    > the population).

    I’ve been to Germany many times since 1984 (my last trip was in 2010) and while I don’t doubt that 20% of the population are of foreign/immigrant decent I’m betting that just like a large percentage of the immigrants in California come from the south (Mexico) a large percentage of German immigrants also come from the south (Austria and Switzerland). If you are on a bus with 80% Germans and 15% Austrians and Swiss it looks like the bus has 95% Germans…

    A point I have made many times is that it is foolish to focus on one thing (like health care) that is different in two countries/states/cities/communities and think that changing that one thing will have similar results unless you change ALL (or almost all) the other things that are different.

  73. Frankly

    Michael, I am a bit perplexed as to your points and purpose relative to this continued assertion that Germany is a working model of collectivism and worthy of so much praise. Germany and much of old Europe are social democracies. They are not much different than the US in their designs of governance.

    The main (some might say only) thing about Germany that is better than the US is its social welfare system. And, I would argue that it is unsustainable. Germany is benefitting right now as being the top performing country in a collapsing Eurozone. In fact, the only reason that Germany is able to reduce its debt right now is the reduced borrowing costs from investors fleeing the southern Europe.

    Every industrialized country has lower health care costs than us. And I agree that ours are too high. But theirs are all proving unsustainable. For example, France continues to inject more free-market competition into their system because costs continue to rise. And, all these countries benefit sponging off the medical drug and technology advancements developed in the US. What would they all do if we stopped? There is another fact-based view of US healthcare is the best in the world for those that can afford it. Germans and other European people of means like their healthcare vacations to the US where they can get the best care money can buy.

    In terms of sponging off the US, the same is true for defense. These European countries, all with a history of trying to defeat each other, might have evolved enough to stop doing so, but then it is the strength of the US military preventing it and protecting them from others.

    In fact, related to defense. Germany was a mess for much of the 20th century. It started two world wars and its people were starving before and after. It was the US primarily, that saved it. You know… that country of free market capitalism that helped it become the largest and most successful economic power in the history of the world. The US that invented almost everything that Germany produces except sausage and beer. The US was the model that Germany adopted after WWII.

    Can we learn things from Germany? Absolutely. Not as much as they have learned from the US, but certainly we should always exploit imporvements. But I think many Americans that keep pointing back to these few Northern European countries as being a model for us have Cinderella glasses on. They look at a few things that looks better to make their case They are missing the big picture. And frankly, the fact that more Americans are not flocking to these countries is proof enough that this assertion is largely false.

    On German diversity…
    [quote]Multiculturalism has been a fiercely controversial topic in Germany in recent years, engendering vigorous debate over the integration of immigrants, many of whom moved to the country in the 1960s as guest workers from Turkey. There are now 16 million people with an immigrant background living in Germany – 19.5% of the country’s population.[/quote]

    19.5%? So my 85% German was off by 4.5%.

  74. Don Shor

    Jeff:
    [i]> Can you not even concede the point of fact that Germany
    > is 95% German in ethnicity?

    19.5%? So my 85% German was off by 4.5%.[/i]

    Or something.

  75. Frankly

    Don gets the prize!

    And there is probably some diagnosable medical condition to explain why someone would read “85%” and type “95%”. Is subconscious “hyperbol-sim” treatable?

    My mom was notorious for thinking one thing and then saying another. She used to respond when challenged: “Please listen to what I mean, not what I say!”

    I listen to Alan Colmes on Foxs Newstalk (at least until XM dropped them and I dropped XM) and I noted this common tactic he has for fixating on some word or irrelevant singularity when the point being made was incompatible with his views. I see that tactic as a passive aggressive move of the intellectually dishonest. When the error is de minimis in supporting the argument in challenge, it should be discounted as simply an error to be corrected. If the error is material in supporting the argument in challenge, then by all means go for it.

    My mom’s response works here, since it does not matter if the correct number is 95%, 85% or 81.5%… my point that Germany is much less ethnically (and more importantly, much less culturally) diverse than the US still stands large and accurate. And, I would argue that this is very big deal. In fact, looking at all the countries that my left and left-moderate blogging friends like to suggest as models for the US to follow are ALL significantly homogenous in their ethnic and cultural make up.

    I get a chuckle out of this view from those living and working in Davis… another economically and ethnically homogenous community, that we should pursue a more cooperative and mutually-beneficial society. The simple fact is that there is a strong correlation with ethnic and cultural diversity and strife. The US is the ONLY shining example were extreme diversity works. So, ask yourself why. Why does the US continue to dominate the world stage having this giant mix of people from different cultural and ethnic origins? Why are we not exploding into wars over cultural differences like every other country? Hell, even Germany could not stand having 2% of their population Jewish and ended up exterminating 90% of them. But here in the good ol’ US, we mix and match without much conflict.

    Answer that question and you will understand what is at stake taking the country farther down the road of European socialism.

  76. Don Shor

    Actually, backing up to the main point of this thread, it doesn’t really matter all that much what the ethnic composition of Germany is. You would probably like their fiscal policies. They’re very conservative, they’ve been consistent about that, and it seems to be working. [i]Severe[/i] austerity in other countries has not helped, at least according to analyses that I’ve read. My take-away lesson would be that a long-term process of bringing the deficit down is the best approach. But it would have to be bipartisan for that to work.

    I frankly don’t know enough about the other aspects to be able to compare. People I know who have been to Germany and Austria praise the health care systems. People who I’ve met who come here are pretty amazed at how cumbersome and expensive ours is. But I have seriously had a couple of them not even realize their level of taxation. I guess the VAT there is just added in to products, not separately calculated as we do. So the German 19% VAT is just part of the cost of living that funds the social services they have come to expect.

  77. Frankly

    [i]But I have seriously had a couple of them not even realize their level of taxation.[/i]

    I think this is largely the case all around… and is one of the expectations for the politicos that push higher taxes. It is that expectation that everyone will just reset to a new normal. I think there is some evidence that this will happen to some degree. However, when things are bad economically, I think more people pay attention to those things. And because we have to compete more on a global scale for general prosperity, the new normal will not be as good as the old normal of higher taxes that the left likes to harken back to. In fact, I think it will be disastrous.

    But, I do think it makes a difference how ethnically and culturally diverse a country is in terms of cooperation for policy-making. Conflict increase correlates with a drop in homogeneity. Homogeneity generally makes it easier to govern. The US is an exception for success with diversity. The reason it is an exception is because our economic system allowed for a division of resources based on individual achievement and not affiliation with a group. The left is working to change that by enflaming and exploiting group conflict. The end game is more government distribution of resources based on some assessment of need. That assessment of need and the tendency for the left to celebrate groupism will create a mess of group conflict with each demanding a larger share of the government-controlled pie.

  78. Don Shor

    [i] I do think it makes a difference how ethnically and culturally diverse a country is in terms of cooperation for policy-making.[/i]

    Hm. I’ve watched televised proceedings of both the Knesset and the British parliament, and I think I’d have to disagree.

  79. DT Businessman

    Jeff,
    You continue to make false assertion after false assertion about Germany. To what end?

    “The US that invented almost everything that Germany produces except sausage and beer.”

    This is crazy talk about a country that is world reknowned for its engineering talent and products.

    “The US was the model that Germany adopted after WWII.”

    This is a false statement both politically and economically. Germany adopted a parlimentary form of government after WWII. Whereas the US is a republic. Germany has a social market economy. The German federal government as well as the various state and local governments have significant stakes in numerous corporations and financial institutions. Indeed, many of the largest banks and corporations are wholly or majority owned by these governments. The US has a significantly more liberal economy. Republicans would suffer a seizure if anyone proposed adopting a German-style economy.

    As for the Marshall Plan, exerpt from Wikipedia:

    “Contrary to popular belief, the Marshall Plan, which was extended to also include Western Germany after it was realized that the suppression of the Western German economy was holding back the recovery of the rest of Europe,was not the main force behind the Wirtschaftswunder. The amount of monetary aid (which was in the form of loans) received by Germany through the Marshall Plan (about $1.65 billion in total) was far overshadowed by the amount the Germans had to pay back as war reparations and by the charges the Allies made on the Germans for the ongoing cost of occupation (about $2.4 billion per year).”

    Anyway, this is all beside the point because of your diversions, Jeff. You started out saying all generous welfare states have failed. I provided Germany as an example proving your assertion false. You then went on to make a number of additional goofy assertions, which were easily proven false. I’m not suggesting we emulate Germany (although there are a number of things that Germany does pretty well). My comments about Germany have all been to correct the false statements that you were using to support your ideology.

    -Michael Bisch

  80. Frankly

    Ok Michael, there are obvious points of disagreement on the wonderfulness of Germany past and present.

    But getting back to my first point that set this off.

    I wrote: [i]”I too am attracted to the hug and promise of a softer, easier, less-stressful and less competitive life. The problem is that this approach has never, ever, ever, ever worked. It has ALWAYS failed. Many have attempted the same, but societies that have are either gone, or they are going.”[/i]

    Then you wrote: [i]Jeff, have you ever heard of the country of Germany, or perhaps Luxemburg?[/i]

    Although I completely stand by my later point that no northern European country is a valid model for the US (for all the reasons mentioned), my original point was about collectivism (socialism, Marxism and communism), not social democracies. At least that was what I was thinking about… and have been pretty consistent in my assertions that this is what I am worried about. And yes, the former have always failed. Communist China is the only one still standing with anything resembling a good future, but only after taking back Hong Kong and cloning a bastard version of the very economic system that made the US so great. So, I don’t know how to classify China.

    So, if your point is that the US should transform to a social democracy like Germany or Luxemburg, I think that will just be a different type of disaster even though you have some examples to claim.

    I would be up for considering a few related changes AFTER we cut spending and significantly reduce our debt and eliminate our budget deficit.

  81. DT Businessman

    Again, nowhere in this thread am I advocating we adopt Germany’s social market economy along with its generous social welfare system. I’m merely pointing out that it is most definitely a viable/sustainable system.

    And since we’re talking about various economic systems, I’m pretty sure communism hasn’t been tried yet, at least not on a large scale in modern times. As far as I know, no nation has succesfully completed the transformation from capitalism or feudalism to communism.

    -Michael Bisch

  82. Frankly

    [i]Hm. I’ve watched televised proceedings of both the Knesset and the British parliament, and I think I’d have to disagree.[/i]

    I found this sitting on my computer this morning… forgot to press [Add Comment]. A little stale at this point given the back and forth with Michael, but still valid I think because I would like to hear from Don to explain his thinking.

    Don, I’m still mystified over your post. The U.K is 85% White British and over 5% additional non-British white. The closest second is Indian at 1.8% Isael is a very ethnically diverse country, but 97.7% Jews. Which then gets me back to my argument about the US losing its binding cultural values that have been historically based on Christianity.

    The US is by far the most diverse successful industrialized country on the planet. No city in the world can match Los Angeles or New York in terms of ethnic and cultural diversity. Conflict has erupted in East LA over the Rodney King verdict, and it resulted in black, Hispanic and Asian conflict. But in general, these diverse racial groups have lived in harmony. A Brown study listed the following US cities as the most diverse:

    – Vallejo
    – San Francisco
    – Stockton
    – DC
    – New York
    – San Jose
    – Las Vegas
    – Houston
    – Los Angeles
    – Honolulu

    I would also put Miami high on the list. Also Oakland, San Diego and Dallas.

    Can you find any Northern or old European cities of similar size that even come close to the level of diversity contained in these cities?

    London? Toronto? Maybe Sydney? Given the percentage of white English-speaking people, not even close. Don’t even start making a case that Berlin is more diverse than any of these US cities.

    [url]http://fullfact.org/factchecks/London_2012_Olympics_most_diverse_city-27738[/url]

  83. Frankly

    [i]Again, nowhere in this thread am I advocating we adopt Germany’s social market economy along with its generous social welfare system. I’m merely pointing out that it is most definitely a viable/sustainable system.[/i]

    Okay, so your point was that Germany is an example of something that works, but not something that we should adopt. I can accept that.

    [i]I’m pretty sure communism hasn’t been tried yet, at least not on a large scale in modern times.[/i]

    What do you mean “modern times?” USSR, North Korea, China?, Cuba? Is your point that none of these are “pure” communism? If so, I would have to argue that no implementation of any political ideology is ever pure.

  84. DT Businessman

    The term “communism” has always been inaccurately used in the US in my lifetime, perhaps before as well (much like “Wienerschnitzle”). USSR, North Korea, and China do not practice communism in any way shape or form, not pure, not diluted, not al all. I’m fairly certain they themselves do not, or did not, think they were practicing communism. Communism is an end point in a transition, which none of those countries ever came close to achieving, problably because their attempts were immediately met with internal and external hostile existential threats. It’s pretty hard to try to implement a new economic model while people are trying to kill you (I’m not judging the hostility, I’m merely pointing out a condition).

    Redacted from Wikipedia: “Communism” is a revolutionary socialist movement to create a classless, moneyless and stateless social order structured upon common ownership of the means of production, as well as a social, political and economic ideology that aims at the establishment of this social order. This movement, in its Marxist–Leninist interpretations, significantly influenced the history of the 20th century, which saw intense rivalry between the “socialist world” (socialist states ruled by communist parties) and the “western world” (countries with capitalist economies).

    Marxist theory holds that pure communism or full communism is a specific stage of historical development that inevitably emerges from the development of the productive forces that leads to a superabundance of material wealth, allowing for distribution based on need and social relations based on freely associated individuals. The exact definition of communism varies, and it is often mistakenly, in general political discourse, used interchangeably with socialism; however, Marxist theory contends that socialism is just a transitional stage on the road to communism. Leninism adds to Marxism the notion of a vanguard party to lead the proletarian revolution and to secure all political power after the revolution for the working class, for the development of universal class consciousness and worker participation, in a transitional stage between capitalism and socialism.

    -Michael Bisch

  85. DT Businessman

    “Communist party”, as used in the Wikipedia piece above, is a misnomer. These communists parties were not meant to practice communism. They were meant to shepherd the transition to communism. “Transitional party” would be a better term.

    -Michael Bisch

  86. Don Shor

    Totalitarian socialism has not been successful anywhere, ever. Democratic socialism, as far as I can tell, is apparently satisfactory to the residents of those countries. Not appropriate to us in many ways, but that doesn’t mean we have nothing to learn from them (or vice versa). Note that Europeans go back and forth between more socialist and more conservative (Euro style) governments. European voters in some countries do recognize the need for fiscal stability. And European legislators will take fiscally conservative positions, as noted when the Greek parliament passed their austerity measure in November.

    Jeff, I was being a little facetious in my comments about the Knesset and the Parliament; just that they are very raucous and that contention can be common in ethnically homogeneous countries. You were making the point that cultural diversity leads to conflict in political decision-making. Our Congress is a model of decorum compared to some others, and I’m not sure I agree with your premise anyway. But it’s clear that you are much more concerned about the impact of cultural diversity than I am.

  87. Frankly

    I like and support cultural diversity, but it has a very poor track record unless there is glue to hold all the people with different views, affiliations and demands together. Without it we degrade to tribal turf battles. I don’t think there is any working industrialized nation as diverse as the US… especially when analyzing diversity in all the different socio-economic strata. I think it is our free market economy that has been the glue.

  88. Frankly

    Michael, so then what label do you assign to the governance style of North Korea, China and Cuba if not communist?

    [i]We have a free market economy?[/i]

    We used to have a democratic free market economy. We still have the closest thing to it compared to most other countries. The measurement is economic freedom. That is why we still sit atop the global economic pyramid. However, it is being eroded by those that have lost perspective for what it is and what it should be.

    It seems that is our destiny… the human liability of forgetting the past, losing perspective, and destroying the very principles and structures they previously discovered to make themselves better off.

    On a micro scale, it is the Hostess syndrome. A willingness to destroy the system in pursuit of individual selfish interest.

  89. Don Shor

    Each of those, along with Vietnam and Laos, is a single-party state governed by their version of the Communist Party. There are a couple of other single-party, non-Communist states, such as Turkmenistan. There are lots of former single-party states (see Wikipedia). And there are many “dominant-party” states where one party has effective control but opposition parties exist (like Syria, for example).
    Yes, it really is a shame what those investment bankers did to Hostess. But lo, the brand will survive!

  90. Frankly

    [i]Yes, it really is a shame what those investment bankers did to Hostess[/i]

    Nice spin! You can make ding dong filling if you put it in some cream!

  91. DT Businessman

    Jeff, as the Wikipedia excerpt states, those nations are socialist, not communist. There has never been a communist country.

    Like Don, I snickered when you said the US has a free market economy, but I didn’t feel like contradicting you at every turn. However, you’re repeating the claim, so I’ll respond. The US has never had a free market economy. It’s freer than most other economies, but less so than some. Indeed, there are no free market economies currently, perhaps there was at some time. Our economy is riven with barriers, monopolies, oligopolies, governmental intervention, various forms of market abuse such as price fixing and collusion. The list goes on and on. As the list shows, not only does the government not desire a free market, neither do businesses. Large businesses generally hate free markets except for certain restricted conditions. The moment a business is successful it seeks ways to prevent competition and manipulate the market.

    -Michael Bisch

  92. Frankly

    Michael, like Don, you are a person gifted with a tendency toward significant intellectual nuance. I’m made of simpler stuff. When my high school civics and world history teachers told me that the USSR and China were both communist countries/empires, I stopped looking for reasons to call them something else.

    Also, I think this tendency to apply so much nuance is a tactic to reintroduce those failed models labeled as something different. I can’t say that is either of your motivation, but we see the love of Marxism and communism popping up more and more these days… especially on our liberal-controlled college campuses.

    Sticking with your assertion that nothing is absolute so it cannot be labeled as such, let’s just say that even the ATTEMPT to implement these proven failed principles of collectivism have resulted in many orders of magnitude more human misery, suffering and death than has our US attempt at democratic free market capitalism. I know that point does not sit well with the US left and their Occupy Movement buddies. They NEED the US attempt at democratic free market capitalism to appear more sinister than Mao’s or Stalin’s attempts at their vision of social nirvana. And, after all, US collectivists are oh so much more educated and intelligent than were those dolts of the past… they would do Marxism and communism right if given the chance!

  93. DT Businessman

    I’m not left and I’m no advocat for communism. Your high school civics and history teachers did not know what they were talking about. Your college economics teachers should have set you straight. My comments about communism are straight out of college economics 101. The economies of the countries your referring to are nowhere near communist. Did you not read the Wikipedia excerpt? It explains what communism is. There’s no state involvement in the economy. Indeed, there is no state, there is no state control, there is no money, and there is no ownership. That’s the exact opposite of what is practiced in the countries you mention. What part of this are you not understanding?

    -Michael Bisch

  94. Don Shor

    Single-party states are disastrous for their citizens from the standpoint of freedom and many other things we value. Dominant-party states are also generally not great for their citizens, though we certainly propped up lots of them around the world during the Cold War. Collectivism is not inherently bad for the citizenry or for the economy. Every free society practices it to varying degrees.

  95. Frankly

    Michael, since you like to quote Wikipedia:
    [quote]A Communist state is a term that generally refers to a state whose official ideology is Marxism-Leninism.[/quote]
    Seems pretty clear to me.

    [b]List of current communist states[/b]

    [url]http://en.wikipedia.org/wiki/List_of_current_communist_states[/url]

    [b]List of current socialist countries[/b]

    [url]http://en.wikipedia.org/wiki/List_of_socialist_countries[/url]

    USSR:
    [quote]ruled as a single-party state by the [b]Communist[/b] Party with Moscow as its capital[/quote]
    [quote]From its creation, the government in the Soviet Union was based on the one-party rule of the [b]Communist[/b] Party (Bolsheviks).[/quote]
    [quote]The Soviet Union became the first country to adopt a planned economy, whereby production and distribution of goods were centralized and directed by the government. The first Bolshevik experience with a command economy was the policy of War [b]Communism[/b], which involved nationalization of industry, centralized distribution of output, coercive requisition of agricultural production, and attempts to eliminate the circulation of money, as well as private enterprises and free trade.[/quote]
    Sonds like all the Marxism-Leninism stuff one would expect for communism.

    Is it possible that your college economics 101 professor was forgetting to adjust his lesson plan to reality? I mean there was some academic textbook definition of Communism and it didn’t match what was going on, and so you claim it wasn’t communism even though the leaders of those countries claimed it was. So, who was/is right?

  96. Frankly

    On collectivism:
    [quote]1. “They” *say* that individualism is an “illusion” (Marx) and even a disease.

    2. They “prove” this by showing the corrosion of society, or personal greed, or criminal activity, and saying these are by-products of “do as thou wilt.”

    3. Having dispensed of looking at, never mind investigating, the corrosive qualities of collectivism (coercion breeding rebellion and revolution; sameness breeding creative rebellion, i.e., individualistic thought), the anti-individualists claim a brighter world with collectivism, based on platitudinous “shared” wealth and sacrifice.

    4. This world-to-come (“utopia”) will be crime-free, full of love and empathy for fellow man, and without want – basically, a paradise for both the middle- and upper-class (bourgeoisie) and lower-class (proletariat) dreams.

    5. Naturally, many will resist. Therefore, they “must” be re-educated, enslaved for ends, or eliminated. It’s only proper and, really, humane.

    6. In essence, those who resist collectivism are the enemy of mankind, diseased if you will (if it lets you sleep at night), but certainly dangerous, and therefore both expendable and “in-the-way.”

    7. The first order of business for collectivism is to cultivate hatred of individualism, especially the two fork tines of “selfish motivation” and “moral disinclination,” the first ascribed to capitalism, free markets, competition, and wealth-gathering; the second ascribed to rejecting communal theories such as global warming and other environmental matters, “equal rights” for particular minorities, and insular living.

    8. Polarization is an essential tool for the collectivist, ironically isolating those who disagree, rather than gathering by convincing evidence and argument a true communal spirit.

    9. Deep hatred of the individualist is incurred by continually pointing out the “faults” of “those people” who “stand in the way” of human progress. Typically, religionists who espouse individualistic aspiration (Jews, Protestants) are targeted, and often these overlap with political individualists (conservatives, libertarians).

    10. The “moral high ground” of collectivism is often invoked in a religious manner to provoke this division, with much preaching and sermonizing of an evangelical nature, meant to foment collectivists towards a revolution or revolutionary posture. This is the dialectic of Lenin.

    11. Naturally, collectivists work hard to infiltrate organizations, dedicating great portions of their lives to “helping the helpless” so that their “superior morality” will shine. This action does not actually free the one aided, but enslaves further to the helping hand. In essence, it is welfare for loyalty (to the collectivists).

    12. A “master race” mentality is born in the collectivist which believes that individualism must be eradicated so that “we” can live free from crime, poverty, war, depression, nationalism, and other true ills. The collectivist sees himself as a superior person, at times even defining the individualist as not even human. The culmination of this idea has ended many times in the worst massacres in mankind’s history (Nazi, Communist).[/quote]

  97. Edgar Wai

    I think we agree on this ranking:

    1) A society where everyone cooperates and lives to their individual potentials, is better than…
    2) A society where everyone feels that they are sacrificing for the common good, or…
    3) A society where everyone only cares about themselves and exploit others.

    If you agree with this, it doesn’t matter what you call each type of society. The only thing that matters is what each of us can do to move society up.

    To learn how to upgrade society, each of us could first focus on how to upgrade ourselves:

    1) A person who enjoys striving for their potentials while helping others do the same, is happier, more respected, and achieve more than…
    2) A person who sacrifices their own potential to help others, or…
    3) A person who strives for their own potentials while putting down others.

    I’ve always wanted to learn macroeconomics but it never got to a priority. I am now reading [Modern Monetary Theory Primer] ([url]http://neweconomicperspectives.org/p/modern-monetary-theory-primer.html[/url]) that davehart referred. Kudos to davehart for bringing it up.

    I have only read to #6. I hope that I can learn it so well that the next time it matters, I could just explain it on the spot with simple diagrams or English. If it takes me two weeks to read all of it to understand it, I want to learn how to teach it in one post.

  98. Edgar Wai

    Some people think that without competition, things won’t progress, because there will be no ‘threat’, no ‘pressure’ to do better.

    But pressure isn’t the only type of motivation.

    I want to be effective so that I can free myself and others. Because I know that a person that is truly free from negative thoughts, can do surprisingly wonderful things.

  99. Frankly

    I think that without competition, things do not progress as well. But competition does not need to be winner take all, or even winner-vs-loser. Healthy competition can be for instance self challenges, or challenges within a team to meet certain goals. However, without a competitive environment, many people stop trying as hard. Without the potential for the rewards of winning, the sense of urgency falls and performance mediocrity takes over.

    Think about the Saturn and Apollo projects without the USSR breathing down our neck.

    We would have less product choice, fewer product featuers and higher product costs.

    I think we take our competitive environment for granted, or in some cases even disparage it. That is unfortunate in my view, because even altruism benefits from it.

    It perplexes me how many highly educated people dismiss competition in the economy after having spent a quarter decade or more competing furiously for acedemic acceptance, grades, classes, awards, grants, positions, recognition, etc…

  100. Edgar Wai

    I understand that competition does not necessarily mean winner-vs-loser, but I think it implies waste.

    When two party are truly in competition, they are not sharing the knowledge they have. PartyA invented the wheel, then PartyB invented the wheel again. That is waste.

    If PartyA and PartyB value diversity, they could have intentionally split up and spend the resource on two different pursuits. PartyA invents the wheel, PartyB invents the engine.

    People compete because there is limited resource. But competition creates waste, which is by definition not an efficient way to spend the limited resource.

    If you want the same effect as “competition” you could simply put up the task as a “challenge”. When there is a demand, I make a chair and I tell you everything I did to make it and tell you how much energy it took me. When there is a demand again, you can add your experience to mine, and make it even faster, better, and use less energy. In this case, there is less waste because our outputs are both needed–we didn’t make anything extra. We built on top of one another and didn’t waste time to regain the experience.

    In what scenario is competition superior?

    Do you see how much energy is wasted in the grant writing process? If everyone just have a brain storm and discuss their ideas, then collaborate, we could be inhabiting Mars already.

  101. Edgar Wai

    Education system does not need to teach people to complete. It can teach people to dream, and collaborate to fulfill it.

    This is as far as I get in my philosophical understanding of education. I am giving it to you so that you can surpass me.

  102. Don Shor

    [i]I was just being snarky expecting you to check the author of the previous and discredit him. [/i]

    I guess he got caught up in one of the British cash scandals a few years ago. The Speaker of their parliament had to resign over something similar. As to his essay, it follows the usual slippery slope premise of so many conservative positions. A little collective behavior always leads to genocide? Do you really believe that? Seems rather paranoid to me. We all, every society, engage in collective behavior through our democratic processes.

    We vote to take actions that cost money, or require taxes, or need regulations, in order to enhance a broader public good. Whether it is building roads or getting cleaner water, those are all forms of collective action.
    Increasingly in recent years, conservatives have sought to portray these as limiting freedoms. Sometimes they do: the freedom to pollute, or to take actions that our neighbors consider adverse, etc. The political process is our way of balancing competing interests. It is reasonable to argue that we’ve gone too far in some regards, but it isn’t reasonable to portray collective efforts as the camel’s nose of totalitarianism.

  103. Frankly

    I don’t understand a great many things well enough, and probably will not in this life as I lack the time to read and blog about everything I am curious about. But, one subject that I think I understand is human motivation. From a Freudian view, I think we are all child-based in our motivating impulses. A minority of us develops beyond craving for mothers love and father’s acceptance, but most of us are driven by those internal need-satiating forces… in addition to other forces.

    But, regardless if one pursues research to cure a disease, to bring education or clean water to poor people in foreign lands, to ladle soup into bowls feeding the homeless, or starts and grows a business that returns tremendous personal wealth… I see all of our motivational drivers being similar or the same.

    There is not a valid binary comparison between competition and cooperation. We cooperate when it benefits us, or when we are protecting ourselves from a perceived reduction in benefits. I see cooperation is just a subset of competition for our individual pursuits in response of these drivers.

    Because of individual pursuit, like most of our natural biological systems, our economic system will grow weaker without the correcting mechanism of creative destruction. If we could magically transform humans into fully functional adults separated from their childish wants and needs, maybe we could have a system of cooperation that allowed all companies in an industry to share ideas, costs and revenues so that no company failed and had to fire employees. But we cannot. And there is plenty of proof that industries and business lacking competition grow less efficient and find their product and/or service value declines over time. A good example of this is our state university system. It has a partial monopoly on higher learning in this state. It has received state money without any connection to performance. Now it has effectively priced most of its customers out of the market and is at risk of financial insolvency. How might that industry have progressed differently in a model where the students were given a voucher and could decide which school they would attend? Might the CSU and UC systems worked to become leaner and more efficient with more value-added service to attract customer dollars?

  104. Frankly

    I can use my industry as a good example…

    The company I work for participates in an SBA guaranteed loan program. There are about 300 similar companies throughout the nation. About 28 years ago the loan program was run out of Washington and the SBA district offices in each state. But, the program was not getting capital out to small businesses well enough. So, then SBA decided to create a certification process where small non-profits could take over doing the lending to small business. Initially these Certified Development Companies (CDCs) were given geographic territories. It worked okay for about 20 years with more capital getting out to small business. However, there were complaints of poor service, and it as still believed that more small business could be served. So, eight years ago SBA allowed all CDCs in a state to complete statewide.

    Prior to this change, there was a collegiate relationship with all the CDC management and employees. Our trade association meetings were collaborative events with lots of hand-shaking, hugging and personal connections with all the managers and employees working in the industry. We would share ideas and help each other. There is less of that today because many of us compete with each other.

    Just recently, one of the largest CDCs in the nation – located in Folsom CA, was de-certified because of failure to pay the loss share to SBA as a result of too-aggressive lending practices. 60 employees lost their jobs on Christmas Eve.

    But during the last eight years of competition, every CDC ramped up their operation and service. The speed and quality of loan applications, approvals and fundings improved dramatically. The industry invested in technology. Lots of money was made, and still is.

    This is perfect example of the tradeoffs between a cooperative model and a competitive model. Neither is perfect, but the competitive model provides the ONLY mechanism supporting long-term survival because humans will pursue their self-interest. And, if they don’t need to compete, they will gravitate to comfort instead of achievement. And if they gravitate toward comfort, they will achieve less, grow less, strive less… and as a result, the entire system will decline.

  105. Don Shor

    [i]A good example of this is our state university system. It has a partial monopoly on higher learning in this state. It has received state money without any connection to performance. Now it has effectively priced most of its customers out of the market and is at risk of financial insolvency.[/i]

    There is competition within the university system, and I don’t see how you can describe it as even a partial monopoly. College applicants have many private and public options. In my son’s case, he was choosing between UC, trade school, and community college. Many are using a combination of those: he did trade school first, then community college, considered UC, got in, then got bumped due to space limitations in his chosen program. So he bailed on UC and had put that off for awhile. He chose from among the many options he has, and that is the pattern of his peers.
    Application rates to UC continue to increase, which is probably the metric the administrators look at. They have tightened acceptance rates for financial reasons, but enrollment has increased at UC Davis, and at UC Merced, for two that I looked up. The competition they have is between campuses, and between UC and CSU applications.

    [i]Think about the Saturn and Apollo projects without the USSR breathing down our neck. [/i]

    That competition caused us to squander billions of dollars on a space program that simply fails any cost-benefit analysis. IMO the space program is one of the remarkable boondoggles of the modern era. Much of the money would have been far better spent on basic research and the development of more unmanned space exploration devices. I consider your example excellent for demonstrating the downside of competition: it leads to tremendous waste due to pride and refusal to cooperate. Cooperation in space ventures and shared technology and research is a much more reasonable approach, and it is where our space program has gone in recent years.

  106. Frankly

    [i]There is competition within the university system[/i]

    Some, but not enough. Obviously not enough. The entire system is going down to technology in the next 10-20 years.

    [i]That competition caused us to squander billions of dollars on a space program that simply fails any cost-benefit analysis.[/i]

    Completely disagree. The cost benefit analysis needs to factor qualitiative benefits while also quantifying a whole lot of secondary and tirtiary benefits… for example, eastern block people getting a taste for how the US with a Democratic free-market free-enterprise system would kick their ass.

  107. Don Shor

    [i]Some, but not enough. Obviously not enough. The entire system is going down to technology in the next 10-20 years. [/i]
    The measure for that will be a decline in applications. That hasn’t happened and shows no sign of happening yet. Evidently the customers of California’s university systems disagree with you.

    I’m always amazed when fiscal conservatives defend the space program.

  108. Don Shor

    Hey, look, professors are cooperating, providing their course content free for online access, and helping to develop a system of online education that complements their existing system, and provides no profit to the developers or the professors.
    Cooperation in action.
    [url]http://www.pbs.org/newshour/bb/education/jan-june13/online_01-08.html[/url]

  109. Frankly

    [b]The End of the University as We Know It[/b]

    [url]http://www.the-american-interest.com/article.cfm?piece=1352[/url]

    If the CSU and UC systems transform in time, they will not cease to exist.

    This fiscal conservative supports government sponsored programs that spur private business, invest in progress and that improves our overall financial security and defense. NASA has been wasteful like most government programs. So has the US military. That is the hallmark of public-sector business. However, it is the cost of doing business in things that provide enough of a return looking at it from a comprehensive view. Handing free stuff to people that don’t want to work is an investment in decline.

  110. K.Smith

    [quote]It perplexes me how many highly educated people dismiss competition in the economy after having spent a quarter decade or more competing furiously for acedemic acceptance, grades, classes, awards, grants, positions, recognition, etc… [/quote]

    I think you’re ignoring some real downsides to this. Therapists’ offices are full up in this town (and I’m sure other university towns) with academics who are having real health impacts because of having to keep up with all of these: grant writing, producing scholarly publications to achieve and keep tenure, etc.

    Not to mention all of the suicides in places like China (or maybe it was Japan?) because the kids are taught from a very young age to be super-competitive in academics.

    To be in constant competition mode/survival mode takes a real toll on the human psyche.

  111. Frankly

    [i]To be in constant competition mode/survival mode takes a real toll on the human psyche.[/i]

    I know those lions in the Serengeti are in need to therapy on a regular basis.

    So did the early Americans that were more likely to just scratch out a living off the land and then die of some virus or old age at 55.

    If you look back over that 4000-5000 years of recorded human history, I think most of our ancestors would say we are a bunch of whiners and snibblers that have lost perspective for what really constitutes a hard and stressful life.

    Instead of “A chicken in every pot, and a model T in every garage”, the new promise is “Free college, a great salary on a 30-hour per week job, full healthcare coverage, subsidized food and energy, a big screen TV, a computer, and a smart phone for all family members, several cars, overseas vacations, and full retirement at age 57.” But, weekly therapy sessions to deal with all the stress.

  112. Edgar Wai

    I haven’t seen a lazy person for so long that I had forgotten what it is.
    What is a lazy person?

    I see troubled people.
    I see people who are trapped by systems.
    I see people who meticulously plan to hurt others.

    But what is a lazy person?

    If basic living needs are all free, so that you don’t need to work to stay alive anymore, what will you do?

    I know what I would do, because once upon a time I was a child that didn’t need to worry about survival. At first I would watch TV, play games, but then I would get bored because I felt they weren’t interesting enough. Then I started making games, making puzzles, but I got bored about those because they weren’t real and felt like a waste of time. Then I started philosophizing about what happiness is, what peace is, and look for more challenging pursuits.

    I didn’t do these things because of any external stress. I did them because the ideas overflow inside me and I want to get them out. The source of motivation is internal.

    If you think about how the mind works, for you to perceive something to be beautiful or perfect, your mind has to recognize it. While the notion of perfection can be influenced and changes through time, at every moment, your mind has a concept of what perfection is what goodness means. When your mind recognizes the ultimate goodness in real life, it physiologically moves you into tears, gives you infinite emotional strength, peace, and joy. Because the source itself is infinite, there is nothing the person can do but to share it.

    Some people call this feeling love. But the meaning of love could be different for each person. If you look at different kinds of love, you could list them in this order:

    1) The love of one’s self
    2) The love of one’s children
    3) The love of one’s close relatives
    4) The love of one’s cultural group
    5) The love of one’s supportive cultural groups
    6) …

    As you go down the list, you start loving everyone. When you look in their eyes, you can see if their dreams are shining through, you can see if they are troubled, stressed, or trapped. You want to help them because you know that behind the curtain of reactionary life, there is an original dream with infinite energy, just like the one you have.

    Then, you realize that you can activate it, you look into your past, think about the opportunities that you missed, what you could have done differently, and prepare yourself to do a better job to activate it next time.

    * * *

    I was at the doctor’s office today. The atmosphere was serious and uncomfortable. I could have lightened it up if I had said, “Am I going to die?” That could have taken down some barriers and build some real connection.

    So where are the lazy people? Haven’t seen one in a while.

  113. Edgar Wai

    This Tuesday night, I was at the Davis Community Meals shelter to be trained as a volunteer. Everyone was doing their chores, trying to get employment, happily coexisting, and excitely sharing what they did.

    An observer could say that they did so because they could get vacated if they don’t, but I think that seeing it this way would blind the observer from seeing the good in people. It would make the observer always second guess those who do good from their heart, and deny that goodness itself could be a spontaneous motivation.

    That night, the staff there (Ken and John) were also exchanging their experiences on teaching women’s self-defense classes. Along with the previous post I wrote last night, I had this dream this morning:

    [Dream]
    I was in a room with other people, and the police was going to have a rape prevention class. When the instructor called us to gather, I sat at the front row because there was only one row, but then more people came and the assistants set up more seats behind me. As the instructor started teaching, I felt that there was a man sitting on my right, who started resting his head on my right shoulder.

    I didn’t know if the man had fallen asleep, if he was drunk and just wandered into the classroom, or if he was part of the class and I was supposed to do something about him. I thought it would look weird, but since it didn’t affect me, I just let him rest on my shoulder.

    Then I felt that his head was sweating, and my shoulder was getting wet. I asked for towel, and put it between my shoulder and his head. And we were both comfortable again. But after a few moments, he left my right shoulder, and sat on my left, and started to rest on my left shoulder with the towel. At that point I felt something wasn’t right, and looked at the him.

    His head was mostly bald, but had bits of wet hair. His eyes were not focused, it seemed that he was mentally ill. I took the towel and started to dry his head, but there were many water marks that couldn’t be dry. Then I realized that those were blisters and scars, as if something once splashed onto his head. When I saw that, I started to weep, and I asked him, “What did you do?”
    [/Dream]

    When I woke up there were tears in my eyes.
    I know what my subconscious think love is, because I can see it in dreams.

    I was born in the US because my family was afraid of China. Before Hong Kong was returned to China in 1997, they sent me to the US to continue my education. Throughout my life, I always feel a stake in my heart because I felt that my family took advantage at the law to get me here. It also didn’t help that starting my second year of undergrad, I got scholarship, and when I was in graduate school, my tuition was waived because the TA Union advocated it. When I was done with school, my student loan was $8000. I didn’t have work for 6 months, but my coworker when I was an intern, wanted me to come back to work.

    Instead of thinking that somehow the laws are all wrong and that I shouldn’t be where I am, I decided that the laws were correct, that the US did a remarkable generous offer, and acted with remarkable goodwill toward immigrants. I want to believe in the goodness of the US. I want to honor that goodwill by helping it to spread it.

    Someone asked me what I think would be the strongest country in the future. I said US. They disagree and said China. I didn’t tell her the reason why I felt US would be the strongest country. But this was it:

    Because I am in the US, and I will do my best to make it the strongest. And I think people who read this could feel the same. A country with citizens who act out of moral integrity instead of incentives is the strongest country. Many years ago, the US was already on that path. Pick up the flag and carry it on.

    * * *

    In the summer, when the tide is lowest, all the stars would show up on the beach. I have never seen it, and my mom wanted to see it with me. I am looking forward to that. I hope that my life is long enough to see it.

  114. Frankly

    Edgar – thanks so much for your wonderful writing. I enjoyed reading your posts.

    [i]Because I am in the US, and I will do my best to make it the strongest. And I think people who read this could feel the same. A country with citizens who act out of moral integrity instead of incentives is the strongest country. Many years ago, the US was already on that path. Pick up the flag and carry it on.[/i]

    [i]So where are the lazy people?[/i]

    I think you answered your own question. Lazy people are those that do not take the time and effort to develop moral integrity and apply it in their everyday life. It does not matter if you are poor or rich or sick or healthy.

    A moral and ethical person pursuing his own interests is a good person and worthy of praise.

    But I do not think we humans can be so successful eliminating struggle from life. I’m not sure it is a healthy thing to do even if we could.

    My sons craved struggle (and adventure) that their middle-class Davis life did not provide. They have had much of the creativity and dreams sucked out of them by a system that more and more tries to satisfy their every need. They are ok now. A system cannot do a good job at that because humans are all different. They are wired differently. They have different interests, different talents, and different dreams. The key is individuality. Support and celebration of the individual and individual pursuits, combined with an expectation for a moral and ethical framework of behavior, is why the US has been a great country. We are losing that. We are coming up with more and more excuses for certain people that behave badly, and we are stomping out the freedom of the individual because of the hurt feeling that can develop when the weak are trying to develop strength. Instead of a hand-up and tough love to help them develop strength, we are gravitating toward a new approach to embrace them and make them feel better in their hours of weakness. That is a debilitating thing, because being made to feel better in an hour of weakness, results in months and years of weakness.

    Laziness is a condition when the spirit is zapped of its energy to struggle and pursue and strive. I see it as immoral and unethical too. Because it should be a requirement that all people work as hard as possible to increase their level of happiness until they are content and satisfied. But they must do so in a way that does not materially harm others.

  115. Edgar Wai

    I still have a hard time picturing what a lazy person is. Do you currently know someone who is lazy? What does that person do in a day?

    I was passing by the MU (memorial union on campus) last Sunday and saw the homeless woman with blanket sleeping (while sitting) on the bench inside. I have never talked to her, but I think she is quite recognizable.

    When you say lazy people do you mean someone like her?

    Suppose laziness is not binary, how do you compare and rank laziness?

    1) John was assigned to clean the bathroom, but after he cleaned it, he saw that the corridor outside was also dirty, so he cleaned it too.

    2) John was assigned to clean the bathroom, but after he cleaned it, he saw that the corridor outside was also dirty. He was supposed to be doing his homework next, but since he didn’t like to do homework, he decided to clean the corridor also.

    3) Mary was assigned to clean the corridor, but she didn’t do it.

    4) Mary was assigned to clean the corridor, but she saw someone fell off the stairs outside and went to help. She ended up not cleaning the corridor.

    5) Tom sat at the stairs all day doing nothing and fell asleep.

    6) Tom was abandoned by his family, and had no place to go. Seeing that everyone else has a loving family, he realized that the world would be better without him. He didn’t ask for help, and sat at the stairs alone. It had been the third day and he hadn’t eaten anything. He fell over.

    How deep do you need to see to tell if a person is lazy?

    7) Ann goes to play all day and goes home only to ask for money, and threatens to commit suicide if they don’t pay.

    Are we talking about this? If this happens, what do you do?
    a) Give her the money
    b) Blog about her
    c) Disown her
    d) Don’t let her back in the house
    e) Go for a vacation
    f) Give her everything and join the peace crop aboard
    g) Cry/weep until you pass out
    h) Ignore her
    i) Call out the neighbors to see the situation
    j) Call the police
    k) Start video taping the incident
    l) Walk outside the house to where there are witnesses
    m) Call the suicide hotline
    n) …

    I think I will do L. If I suspect that it is an act of manipulation, then I will look for witnesses, because the truth is important.

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