Are We Heading Into an Economic Meltdown?

There is an interesting economics column in the Wall Street Journal on the similarities between the Greek meltdown and our own fiscal policies. I have long been a critic of the wild spending of both Congress and President Obama, including the recent proposal to simply pay for an over $200 million short-range missile program for Israel (here). This article discusses the possible disaster awaiting the United States as our leaders blissfully assume that a recovering economy will pay for their various programs and pet projects.

The column questions the logic of being able to tax their way out of this deficit. While I am socially liberal, I tend to be fiscally conservative and I find the current situation extremely alarming.

This article is interesting for its proposition that higher taxes are not able to close such a gap:

The feds assume a relationship between the economy and tax revenue that is divorced from reality. Six decades of history have established one far-reaching fact that needs to be built into fiscal calculations: Increases in federal tax rates, particularly if targeted at the higher brackets, produce no additional revenue. For politicians this is truly an inconvenient truth.

This is a different take on the problem. I have always been skeptical of the “spend out way out of the crisis” approach — which is an awfully convenient theory for members who are always inclined to spend more and put off payments to the future. Once back in power, the Democrats seemed to immediately fulfill a stereotype of higher spending and immediately turning to higher taxes as the solution. This is precisely the course that led to the last Republican takeover of Congress. In their defense, Democrats faced a crisis left to them by the Republicans and particularly George Bush who was one of the greatest spendthrifts in our history. However, they have shown no serious commitment to tackle these dire economic forecasts — gushing money in Iraq and Afghanistan while watching cities and states shutting down basic programs. Our debt is now growing at a record pace — roughly $5 billion a day (here).

This is not to excuse the Republicans who, under Bush, showed no restraint and left Obama with a massive debt. I simply have little faith in our current economic policies or a sense that leaders are seriously addressing the growing threat to the nation from our growing debt. Various countries have raised alarm over our debt and the similarities to the Greek meltdown, here.

For the column, click here.

223 thoughts on “Are We Heading Into an Economic Meltdown?”

  1. Locke is writing a treatise on what he thinks government should be; and in that treatise is using arguments he introduces as absolutes. If the absolutes he propounds have extant counter-examples that prove they are not absolute, his argument is based on falsehood. That is the relevance of counter-examples.

    OUR social contract might be premised on property rights; not ALL social contracts are, and claiming (as Locke does) that property rights are essential to a social contract is simply false.

    The precedents matter because he is using the claims to justify subsequent sentences, that is why he writes the claims down. If the foundational claims are false, they do not serve to justify his subsequent argument or final conclusions. I can claim that one plus one is three and generate all sorts of interesting mathematics from that “falsehood,” but none of it would be true.

    As far as the “state of nature” is concerned, Locke is wrong there, too. For the vast majority of recorded history, and for what we can determine about unrecorded history, men have not been free, equal, OR independent. They have been dependent and unequal, and therefore not absolutely free. Freedom is not our natural state except in the imagination; we are social animals that depend heavily for our survival on other humans and on collective action. Even modern hunter-gatherers work in family groups and cooperatively and collectively, they are not independent, and typically not equal.

    Whether our founding fathers adopted this model is immaterial, whether we live under it is immaterial. The point is whether Locke’s argument is sound, and it is not.

    As far as Bentham is concerned: Have other independent researchers analyzed their samples and come to the same conclusion? Have other researchers analyzed OTHER samples and come to this conclusion? I don’t know, but I doubt it.

  2. Tony C.: Locke also makes several absolutes here that are simply untrue. Certainly somebody CAN be put out of this state by force.

    He’s not referring to ‘the state.’ The word is ‘estate’ and he uses it per the state of nature while developing the rules and systems for his treatise of government.

    Tony C.: What makes men automatically “free, equal, and independent” ? That is a rather modern concept that must be taken as axiomatic; the Romans ruled for centuries without that assumption.

    I don’t understand the objection since Locke is writing a treatise on what government SHOULD be. Whether the concept is modern or not is also irrelevant.

    Tony C.: Locke talks about the “secure enjoyment of their properties,” which presupposes property rights even exist.

    Locke makes a cogent argument for the source and protection of property rights in chapter five which dovetails with the purpose of the social compact; i.e. the better protection of person and property than could be had in the state of nature. Again, the purpose of the “treatise” is to expound and develop HIS system.

    Tony C.: Again, we have had working societies on this planet (that have fed themselves and reproduced for generations) that had no property rights other than what they carried on their person.

    Since our social compact is based upon the premise of the pre-existence of property rights, who the hell cares about ‘other societies?’ Relevance?

    Tony C.: “This any number of men may do, because it injures not the freedom of the rest …” Not really true either. Resources are always limited and living together always demands compromise. There is competition for mates, food, space and control. If majority rules, as Locke says, then minorities are perforce ruled and their “freedom” is “injured.”

    The statement refers to the formation of political society as contrasted with the state of nature. There’s a difference between formation of a contract and the execution of a contract; Locke was talking about the prior, you’re referring to the latter.

    Tony C.: As a consumer and reviewer of scientific academic papers, I am accustomed to seeking out the false assumptions and claims of others, and treating them with skepticism.

    (Off topic)

    Really? Epistemically speaking, would a paper (circa April 2009) examining real evidence, like this

    http://www.bentham-open.org/pages/content.php?TOCPJ/2009/00000002/00000001/7TOCPJ.SGM

    alter any previous assumptions you had about a certain event? (I’m sure Buddha is keen to guess also)

    (Continuing…)

    Tony C.: I can agree with Locke’s conclusions without agreeing that his argument is sound. It is not, because it makes claims that are easily falsified.

    But Locke is not making ‘claims’ per se; outside the definition of a claim per existing within the structure of an argument. As the term Treatise denotes, he’s expounding on a proposed system of government. A system which, like it or not, our Founders adopted and used to model our republic.

    Tom C.: I think Byron has given up. My own answer: Compliance IS more important than the rights to life and property and freedom, but we need a long slope of escalation. Refusal to pay a traffic ticket is not execution worthy; but the ticket or fines must be paid, or arrest will follow, and if that is resisted, violence will ensue, that may result in death. Laws that can be flouted by simple refusal are not laws.

    Personally I disagree with Kant and say that the Death Penalty should only be applicable to the crime of treason. Other than that, in the words of Hunter S. Thompson …

    “Buy the ticket, take the ride.”

  3. @Bob:

    I fully agree that governmental coercion (including lethal means) is a necessary state — If you have not been following this thread, I have been trying to get Byron to a point where he can see the contradiction in his beliefs. My questions here have been for him to answer; but he refuses.

    That said, Locke also makes several absolutes here that are simply untrue. Certainly somebody CAN be put out of this state by force. What makes men automatically “free, equal, and independent” ? That is a rather modern concept that must be taken as axiomatic; the Romans ruled for centuries without that assumption.

    Locke talks about the “secure enjoyment of their properties,” which presupposes property rights even exist. Again, we have had working societies on this planet (that have fed themselves and reproduced for generations) that had no property rights other than what they carried on their person.

    “This any number of men may do, because it injures not the freedom of the rest …”

    Not really true either. Resources are always limited and living together always demands compromise. There is competition for mates, food, space and control. If majority rules, as Locke says, then minorities are perforce ruled and their “freedom” is “injured.”

    As a consumer and reviewer of scientific academic papers, I am accustomed to seeking out the false assumptions and claims of others, and treating them with skepticism. I can agree with Locke’s conclusions without agreeing that his argument is sound. It is not, because it makes claims that are easily falsified.

    I think Byron has given up. My own answer: Compliance IS more important than the rights to life and property and freedom, but we need a long slope of escalation. Refusal to pay a traffic ticket is not execution worthy; but the ticket or fines must be paid, or arrest will follow, and if that is resisted, violence will ensue, that may result in death. Laws that can be flouted by simple refusal are not laws.

  4. Tony C.: So what gives government the authority to use coercion to prevent coercion?

    “MEN being, as has been said, by nature, all free, equal, and independent, no one can be put out of this estate, and subjected to the political power of another, without his own consent. The only way whereby any one divests himself of his natural liberty, and puts on the bonds of civil society, is by agreeing with other men to join and unite into a community for their comfortable, safe, and peaceable living one amongst another, in a secure enjoyment of their properties, and a greater security against any, that are not of it. This any number of men may do, because it injures not the freedom of the rest; they are left as they were in the liberty of the state of nature. When any number of men have so consented to make one community or government, they are thereby presently incorporated, and make one body politic, wherein the majority have a right to act and conclude the rest.” — J. Locke

    Tom C.: “What makes governmental coercion moral?”

    The categorical imperative and the distinction between duties of right and duties of virtue.

    Tom C.: Is it moral if escalated to lethal force?

    Depends on the context; see ‘categorical imperative.’

    Tom C.: Is compliance more important than a right to life?

    Only in the Matrix.

  5. Unless you have a means of trying and convicting a person, you cannot be sure they ARE a criminal. Suspects cannot be deemed to have given up any rights to anybody, otherwise they are being tried and convicted and punished without evidence.

    For example, you tell the story of a home invader killed by the homeowner. How do we know that was not a murder? How do we know that “invader” was not invited in for a drink, for the secret purpose of being a victim in a thrill murder? Even if he WAS an invader, how do we know he wasn’t summarily shot to death with his hands high above his head in surrender to a pissed off homeowner holding him at gunpoint?

    I believe it was a case in Texas where a homeowner chased a burglar into the street and shot the burglar in the back as he was running away. That burglar posed no threat of self injury to the homeowner chasing him; was the homeowner within his rights to execute a person that HAD broken into his house but was no longer even on his property? Or was that just vigilantism?

    There is a limit to the rights surrendered by breaking the law; if a person speeds, or drunkenly stumbles into the wrong house, or shoplifts a candy bar, they do not deserve to be murdered for their transgression.

  6. Buddha, ditto that. One of the purposes of the law is to provide a rational framework for evaluating the frequently irrational behavior of individuals and the entities through which they act.

  7. Byron,

    The same applies, electrical, mechanical or civil. You think in terms of absolutes – absolute tolerance or absolute failure. Either a wall with carry the load or it won’t. This is still a binary mode of thought. In your defense, you are not the first engineer I’ve known to have that habit. In fact, I’d say the majority of the ones I know do including my father. If you thought in base-8, maybe you’d have a finer grasp on the analog nature of reality. Polar extremes are a rarity in nature. Most things fall into the gray in-between.

    And if you think in hex? You should be a software engineer. But fair warning! If you start to think in hex, you’ll develop strange sleeping patterns and an addiction to cold pizza, Mountain Dew and cartoons from XKCD.

    The bottom line you are missing is this:

    Government is necessary to prevent anarchy.

    All forms of government are rooted ultimately in coercion – the ability to discourage unwanted behavior and in some cases the corollary to encourage desired behavior.

    The prevention of anarchy is required for the continuation of civilization.

    The continuation of the individual and their rights cannot exist without a government to protect them.

    The continuation of civilization and the guarantee of individual rights are both good and necessary.

    Ergo, coercion is a necessary component of government to ensure the rights of the individual and to ensure those rights do not grow so expansive as to threaten the lives and rights of others. To that end, coercion is both moral and ethical. Your rights end where others rights begin.

  8. Tony C:

    We give government authority to do certain things. Governmental coercion is not necessarily moral, are individual rights held to be sacrosanct? If not then the action is not moral. A criminal gives up some of his rights by his initiation of force against another.

    I honestly don’t know if it is moral for the state to kill a citizen. We give the state the authority to do it. I would probably not use it except in extraordinary cases and especially heinous crimes.

    But what you are talking about is not the norm. Ethics are best evaluated sans life boat. For the simple reason that a life boat in the middle of the ocean is an extraordinary circumstance, much like your example of prison and prisoners. Most people do not commit crimes.

    No I meant correction, I presume when talking about prisoners you are using coercion to correct anti-social behavior.

  9. I presume you meant coercion. So what gives government the authority to use coercion to prevent coercion? What makes governmental coercion moral? Is it moral if escalated to lethal force? Is compliance more important than a right to life?

  10. Buddha:

    I am not an electrical engineer, anyway why cant I be stuck in hexadecimal mode? Nibble on that for awhile :).

  11. Tony C:

    I answered that above.

    But anyway we use correction to try and force criminals to behave. But criminals have adopted a view of people as prey, they generally don’t respect other people’s rights. I think for most incarceration is a waste of time and for the true predators leave them in prison to rot.

    So my answer to you is we try and “coerce” criminals to learn to respect the rights of others. We do this because it is necessary for individuals to respect the rights of other individuals for a civilized society.

    Could it be that the reason there is so much recidivism is because the programs in prison do not focus on the individual rights of the victim but rather on empathy for the victim? Just a thought.

  12. @Byron:

    >> I have answered almost every question you asked.

    Oh, really? Well answer again because I can’t find it, WHY is coercion wrong, and if it is, why do we practice coercion upon those we deem criminals?

  13. B,

    It’s that “engineer brain” again. You’re stuck in binary mode.

  14. Perhaps you don’t know what the “blank slate” hypothesis IS. I do believe animals learn quite a bit from infancy through adulthood, but I don’t believe they learn EVERYTHING. I do not believe the slate is BLANK.

    The choices are not “completely blank” or “completely full,” as usual you want to choose either black or white and nothing in-between.

    I believe, for example, that sexual attraction and the recognition of mates is not learned, and is not the result of environment. I believe the perception of equivalence is not learned, and that this is the basis for all subsequent learning. I believe empathy is hard-wired via mirror neurons. I believe the evidence that certain components of language acquisition have a genetic basis. I don’t believe that many emotional reactions, like disgust or the urge to vomit at certain smells, is “learned.” I do not believe blind rage or punitive retaliation are learned reactions.

    I don’t believe in God. I do believe in patterns and mechanisms and evolution, and the BLANK slate idea does not make evolutionary sense to me. In my view, animals (including us) must be born with some working, underlying operating system capable of generalizing experience and recognizing patterns in ORDER to learn something. I call that working, underlying operating system a ‘mind.’

  15. Tony C:

    so you adhere to the platonic idea of the mind at birth? Now how the hell is that possible? You said you don’t believe in God. You certainly have some rudimentary sensory development such as being able to discern hunger and light and cry if you are uncomfortable but I don’t think you are born having a supernatural understanding of geometry.

    I have been explaining the entire time, I have answered almost every question you asked.

    I just threw in “rational to the best of their ability” to try and communicate in your language.

  16. @Byron:

    I do not subscribe to the blank slate model, I find that idiotic.

    Must you constantly drive everything to some extreme? Did I say, somewhere, that man was INCAPABLE of rationality? Did I say, somewhere, that man had no control over his environment? What brand of idiocy is THAT?

    Saying “man is rational to the best of his abilities” is so qualified you could be AGREEING with me; although I still doubt it. I have seen PhDs clearly CAPABLE of rational thought do things on impulse that even a moment of rationality would have prohibited; so obviously THEY were not rational to the best of THEIR abilities.

    We are CAPABLE (at least I am) of being rational when we aren’t facing existential threats, and in such times we can use our rationality, including debate, and evidence, and our understanding of others, to develop rules for action when we are incapable of rationality, or in emergencies when we do not have time to consider things rationally. On my checklist of things to do every quarter, I check the fire extinguisher in our kitchen. The LAW in my house is to HAVE a working fire extinguisher at the entrance to the kitchen and opposite the stove. I arrived at this law rationally, not as the result of ever having a kitchen fire, because I deduced it would be a little late to decide upon this law after a fire was already in progress.

    The government SHOULD be decided upon rationally. What should not be assumed by the law is that PEOPLE will always act rationally, or even “for the most part” act rationally. The point of law is primarily to address IRRATIONAL behavior and a disregard for the welfare of others (like driving drunk, or selling cancer-producing medication, or deceptive practices).

    As for protecting you from yourself: Yes, to some extent. Your illness or delusion or immaturity or mental incapacity can cost all of society, not just in cash but in heartbreak. There are few self-harming actions you can take that do not have any impact on the rest of us. Where exactly that impact reaches a threshold that requires legislation is open to debate; but I feel certain the level exists. BTW, I do not think the maximum level of self-harm, suicide, has the maximum impact on society. Something like cocaine addiction can kill the empathic mechanisms of the brain, producing an addict that engages in uncaring robbery, assault and murder. That can have a far greater impact on society as a whole than just another death.

    I notice you are incapable of answering the simplest of questions about what you think. Is that because you are incapable of reason? You must be under a lot of stress. My sympathies. Or pity, whichever is appropriate.

  17. where do emotions come from? do you agree that the brain is a blank slate when born? if that is the case how do we learn to fear or to love? Or is our existence just a bunch of electrochemical signals that are based on millions of years of evolution and the cognitive part of our brain is impotent.

    I’ll take my view that man has control of his environment and is for the most part rational to the best of his abilities. that our constitution understood this and tried to have a rational consistent view of human nature. Emotional man would have no way to develop or sustain a consistent view of reality such that laws would have any meaning.

  18. So most people are slaves to their emotions and government must protect us from ourselves? And who writes the laws? Emotional beings such as ourselves. How does that work?

  19. @Byron:

    Alright, I miss-spoke slightly. We CAN assume that people can suppress or control their emotions to a good extent; we CANNOT assume they will act rationally in disregard of their emotions. But what is deemed “rational” will STILL be judged by them emotionally; not by arithmetic on some spreadsheet.

  20. “See, you love these absolute statements that are just false. In fact, I could say the exact opposite: We can pre-suppose that man is an irrational animal, which he is, and organize a society that forces him to be rational.”

    Bingo. As to the “pre-suppose” part of that statement, I’m going to through one of Jefferson’s favorite words back at you Tony: self-evident.

    Again, Byron, this comes down to your flawed perception of human nature as a species versus individual human nature. Your totally free market dreamland would only be possible in a world where everyone was a rational (and sane) good actor when history manifestly shows that is not the case for our species as a whole.

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