Of interest

Here's a question that has been bothering me for a while. How come none of the economist can predect anything correctly? It doesn't matter which side of the aisle they are on none of them seem to be able to give more than a WAG.

Well that's comforting ain't it?

Have a safe trip.

Oh, now I remember. The Republicans picked up on a sure political loser; while they were spending on everything else in sight, they decided they would get their cuts by "holding the line" on the school lunch program. It was one of their politically brain-dead moments. d8-)

So, that's it? "Holding the line" on feeding school kids is your idea of Republican fiscal prudence? I'm surprised they didn't cut out emergency medical care for indigent grandmothers. It would have been a nice one-two punch.

Anything else that explains away their profligate spending on everything from military hardware suited for the last century's wars to bridges to nowhere?

No, but cutting spending had nothing to do with more than a tiny fraction of votes they lost. And no one should expect things to be any different now. It's an institutional problem, and the Republicans have shown that they've lost their way on the issue. They have no answer for it, either. I seriously doubt if they, or anyone else, will find it again.

The table shows steady growth from before 1994, through 1994, and up to today. The war had nothing to do with the pattern, although it certainly added a nice spike to discretionary spending.

The ones who won in "red" states certainly are to the right of the Democratic leaders. Whether they have any fiscal magic up their sleeves remains to be seen but it is unlikely they do. Don't anticipate any changes in spending patterns.

As I said, Republicans have been going on this way for a long time. When I reviewed the numbers I realized that it hasn't been for 20 years, it's been much the same for 36 years. Whether it was a Republican Congress passing the spending bills or a Republican president signing them, they haven't lived up to their supposed reputation for fiscal restraint. All they've done is run up the national debt.

So there is nothing new that would explain why they were voted out of office, except for a small effect resulting from public alarm over the debt. Most people, though, have no idea what the debt is, and even less about what caused it.

And the public myth that Republicans are thrifty spenders has become, since the Reagan years, just that: a myth.

-- Ed Huntress

The word is 'shifty' not 'thrifty'.

John

Because economics, as my first econ professor declared pointedly, is a descriptive science, not a predictive one.

I know, that's not a very satisfying answer, but the truth is that every economic theory is just a window to analyze what has happened in the past. Projecting from those theories is not especially consistent. The world wants economics to be able to predict and economists try like hell to do it. But they only get it right in a few areas (monetary policy, a predictive enterprise, has been doing great for 25 years now, but many economists say that's about to come to an end).

To that degree it's one of the humanities, rather than a social science. When it tries to be a social science it runs into the same brick wall that every social science runs into when it comes time to predict the future: the world, and especially those cussed human beings, are too complicated, and present too many unknown variables with strong consequences, to accurately predict what's going to happen. And, as economics has begun to recognize, theories based on rational behavior of humans (practically all theory from Adam Smith to Milton Friedman) tend to miss the confounding point, which is that humans aren't especially rational. The field needs an infusion of chaos theory and modern psychology.

As Harry Truman once said, "I wish somebody would get me a one-armed economist. The ones I have are always saying, 'on the one hand...but then, on the other hand.'"

I think he was being a little facetious but the conclusion (and the context of what he was saying) is that economics, hooked to politics, becomes more politics than economics. The well-named Laffer Curve and the whole supply-side schpiel was more a matter of political philosophy and wishful thinking than sound economics. And the real economists on Reagan's team knew it. Stockman is the main one, but not the only one (Krugman says the same thing, for example), to admit it in the years since.

The objective point of view about it is that both consumption and supply have to be in balance. You can prime the pump for a short while by pushing consumption (Keynesian economics, and our current deficit spending, which is Keynes on steroids). But there is scant evidence that you get much growth by ignoring consumption and pushing supply. You do get lower prices, all else being equal (although it rarely is), and the long-term effect of priming investment is a positive thing. The point is, you can't do it in preference to, or to the exclusion of, policy that results in a commensurate increase in demand.

Thanks, I did. Round-trip from Metuchen, NJ to Lexington, VA and back. Fourteen hours of driving. Whpew. I'm getting too old for that. d8-)

-- Ed Huntress

It appears that most political observers feel the Republicans lost power because of the war in Iraq more than anything else. A more complete explanation might be to say that we acquired a sense that their ideology allowed them no way to get out that they could agree upon. Whether the Dems do any better is problematic; the problem was getting in there in the first place. And most of us sure as hell don't want to add Iran to the list of problems, which looks like a possibility under the current political philosophy.

I will do so if you really want me to, but I don't disagree with your point. I just happen to think it was such a minor effort on their part, compared to the big things that add to our budget, and that one anecdotal case doesn't change the big trends in spending.

For example, the interest on the national debt. That's now a really big one. The obvious thing would have been to ramp taxes back slowly, rather than hitting the budget smack between the eyes and running the interest up higher than any savings they might have accomplished elsewhere. All dogma, no brains.

Sorry to hear about your dad. Here's a surprise for you: I've been a registered Republican for over two decades and I was once picked as a delegate to my county Republican convention. What a good, obedient Republican I was. So there.

I was just a little late to the party, believing that Republicans stood for individual responsibility (I was a welfare hawk), fiscal responsibility (I'm not opposed to all deficits, but accumulated deficits cut our options and put us on shaky ground, economically), and accountability for spending programs that were supposed to improve things. Imagine my surprise when it turned out they wanted to turn the safety net over to the Holy Rollers, run deficits up the wazoo, and shut down the budget office that was supposed to audit contractor expenditures in Iraq, not to mention shutting SEC investigations of the hedge-fund operations and other shady dealers from stealing small investors blind.

They have a chance now to get their act back together, but it's looking like the neocons, the Holy Rollers, and certain business interests have them by the balls. We'll see.

Now, about checking those numbers. I always feel a little guilty when a disagreement turns into a big research job, sometimes at my instigation, and I don't want to take anybody's valuable time for one of these silly Usenet arguments. Check them out if you want to but I'm not going to pursue it any further. We have better things to do with our time.

FWIW, I have done that kind of economic/political research as part of my work for close to half of the last three decades, so I'm pretty quick about it. Also FWIW, my decades of doing that kind of research has taught me many things, the first of which is that most of our ideas about economic policy are a load of crap, and that it's driven at least as much by political ideology as by good economic analysis, on both sides. I don't think anyone on either side has employed a frankly economic policy to taxation, business regulation, health care, savings incentives, international trade, or many other key economic policy matters since WWII. Ideology drives the policymakers toward one theory or the other, and the work of economists gets turned into ammunition for fighting doctrinal wars.

I don't think there will be big differences in terms of national economic consequences of having one party or the other in power. Business cycles and world markets, especially instant-on, instant-off currency markets, dominate what happens. A fiscal tweak here or there by Congress won't make much difference in terms of our overall economy. The fear now is that even a big monetary tweak here or there by the Fed may not make much of a difference. Thanks to deficit spending and foreign ownership of US securities, we may have lost control of our own money; a big purchase or sale by China or Japan trumps maybe a half-point of interest in the prime rate.

Hang on, it may be a bumpy ride.

-- Ed Huntress

"Ed Huntress" wrote

The national debt is now very close to $30K per person. I still say the easiest way to make people aware of that number is to "privatize the national debt", but let that pass. And yes, I lnow: the _projected_ debt is way more than $30K/person, based on unfunded liabilities. But the debt we are currently paying interest on is the $30K number.

So the question for now is this: does a debt burden of $30K for every man, woman, and child in America represent too much debt? If people _were_ aware of that number, would it bother them enough to influence their votes?

I don't know the answer to that question. I do know it's not being asked properly. Politicians and economists both persist in talking aggregate numbers, not per-capita ones. American voters are not quite as innumerate as primitive tribesmen whose counting scheme is "one, two, three, many", but no human being can actually comprehend "billion" or "trillion" at a gut level.

You will know that politicians, of either party, are _actually_ interested in reducing the national debt when they start talking about it in per-capita terms.

-- TP

I think those are two separate questions. I won't attempt to answer them accept to say the two questions would get two very different answers.

All of that is true. But it's also true that very few people know what the debt means in the context of a government that can print money to pay its debts. It isn't a household, and the economics of it are not sufficiently obvious that untrained people will know what it implies.

They're listening to their economists and to their constituents. Their job, as politicians, is to do what is politically possible. Holding forth on the theories of money and economics won't meet that requirement -- even if they knew enough to hold forth on those subjects at all.

Meantime, let's hope that nothing upsets the applecart; the applecart being the system of incentives that keeps foreign governments buying our bonds, and keeps private foreign investors investing in our private economy. That's the whole ballgame if we're to avoid a recession or worse. It's not as vulnerable as some would have us believe, but it is potentially vulnerable.

-- Ed Huntress

Back in the 1980s the leftwing of the UK Labour Party argued that if only they were more socialist they'd win the elections - 18 years later they won with a slightly center left party. After 1997 the rightwing of the UK Tory Party argued that if only they were more conservative they'd win the elections - 9 years later and they are shedding their extreme conservativism moving to the center, chatting about hugging thugs and trees, and they are gaining support.

Every now though one of them mutters about 20% tax cuts and down goes their support.

It must be epidemic in democratic governments. When a party loses because it got too nutty, some of the members think they lost because they weren't nutty enough.

In a two-party system, you can't win without the middle. The Republicans made noises like moderates in 2000, and won. By 2004 we knew they weren't moderates but we were in the early period of a military conflict, and we don't usually change parties during a war. In 2006, we reverted to form.

-- Ed Huntress

"Ed Huntress" wrote

I'm not being snide, Ed, but: do _you_ know what it means to have a "government that can print money to pay its debts"?

Sure, government is not a household in some ways, but it _is_ like a household in others. If you have a self-contained, isolated economy, the government's scope is different than when you have an economy which is largely interwoven with the economies of other nations under other governments.

I agree that lectures on economic theory would be counterproductive for politicians to engage in. That's why I keep harping on the importance of stating the debt in per-capita terms: $30K/person is a fact, not a theory. It is admittedly also a bit of _spin_, but I am content to let the sort of politicians who claim "deficits don't matter" give the lectures required to un-spin it :-)

vulnerable.

Amen. But we will need to do more than hope. We may have to go so far as to (gasp!) educate ourselves about economics.

-- TP

That isn't snide, and I'm not being snotty, but I have a fair working knowledge of it. It's convenient that our debts are denoted in our own currency. However, the consequences of having to pay the debt under duress, or under a sharp rise in interest rates is not a pretty thought. We could be in for a free-falling dollar and a wild rise in interest rates. Regardless, it is somewhat better than defaulting.

Keep in mind that the monetary hawks, including _The Economist_, seem relatively unconcerned. They rightly point out that our debt service at current interest rates is much less than the benefit to GDP we're receiving from all of that cash and investment floating around. The potential problem arises if there's a big economic slowdown or if the dollar takes a dive, and the Fed doesn't move quickly enough to deal with it.

That's a potential problem we may face if we lose monetary control, as some economists are predicting. Some people see all of that leverage in the hands of the Chinese and other Asians, coupled with the growing capability of the Euro bond market to soak up excess cash, as a threat. It makes me a little antsy but not paranoid. The Chinese, the Japanese, and the rest of Asia still need the US market and a relatively strong dollar for the sake of their exports. They aren't going to do anything precipitous. It appears that the interweaving of economies is a double-edged sword, in that China and Japan could not afford a collapse of the dollar any more than we could.

I'd welcome having them explain it. It's all opinion at this level, but mine is that you don't want that decision to be placed in the hands of the average householder, in any case. If you're following trends in academic economics you know about the unfolding recognition of risk-aversion, and that it's an irrationality inclined to adversely influence markets. Middle-class homeowners with families are hellishly risk-averse, in the sense that there is a rational way to value economic risk and that most people don't have it, which, in the aggregate, distorts markets in a very depressing way. If big decisions are made on the basis of the excessive risk aversion possessed by the middle class and even by many wealthy individuals, we're likely to wind ourselves into a recession before you can drop a hat. We can discuss this further at some time if you're interested in talking about it, but it's too much for now.

Good God. Can't we spend our limited time on this planet doing something useful? d8-)

-- Ed Huntress

Okay, so I'm late and catching up, but Gunner wrote on Sat, 25 Nov 2006 07:26:04 GMT in rec.crafts.metalworking :

Then they will blame the Republicans for not "connecting the dots", after having done everything in their power to prevent "collecting the dots." Can't connect what you don't have ...eh?

pyotr

Maybe you should try to think for yourself. Instead of regurgitating rush limbaugh's lies. You make yourself look as stupid and backwards as gunner.

Oh, Gunner, you're going to keep singing that song until you're so irrelevant that no one will even remember what you were talking about. Your prescription for fixing the failure is to keep doing the things that caused it, only harder. You're pushing yourself off a cliff.

The Republicans lost because they lost the center. They had their "base" out on the right wing but everyone, including Karl Rove, knows you can't win by catering to the extreme wings. In a two-party system, the party that wins is the one that overlaps the center, which the Democrats did very strategically in this last election.

Of course, the "center" was re-defined by the Iraq war. Who will overlap and capture the center in 2008 is anybody's guess. But one thing that *won't* happen is that either party will win by catering primarily, or even noticeably, to its extreme wings. If the Republicans swing to the right to try to fix their problems, they'll wind up back in the wilderness for another 40 years, like they did last time.

I doubt if most voters even noticed. What they *did* notice was a self-destructive foreign policy that was running us into a ditch, and an administration that was living on self-delusion while it dragged the Republican Congress in tow. That's what people meant when they said we need a "new direction."

Those conservative principles of smaller government and minimalist government are broad-based traditional goals that cut across the spectrum of American voters, starting from the extreme right and substantially overlapping the center. They're the characteristics of our country that lead other countries to say we're basically conservative, which we largely are. But they've been subsumed as party differentiators to questions of how we will manage ourselves, and our power, in the world. That's where the real political split is right now: it's a split in attitude about how we will live on this planet with some billions of other people.

Look for that to be the underlying issue in the next election. If the Republicans can shut up the neocons and move traditional moderates and conservatives back into party leadership, they have a good chance. But if the posture and attitude projected by the Republican leadership continues to be pugnacious, preachy, and warlike, all bets are off.

As one analyst said recently, the Republican Party right now is in danger of becoming the party of the deep South, with little chance of winning big elections, if they keep reaching to the right wing for their support. If they do that the only thing that will pop their heads above water is to have the good luck to have a troubled economy while the Democrats happen to be in office.

-- Ed Huntress

"rigger" wrote (to Gunner)

Gunner's "Reason" is much like Turd Blossom's "_the_ math". Both reign supreme -- in an alternate universe.

-- TP

That's simple. Gunner is a Repo-Libretardian. That is to say, he doesn't really have a political home. With one foot in anti-liberalism and the other in anti-authoritarianism, he doesn't recognize that he's cherry-picking from two opposite ideologies, gets the two confused all the time, and then winds up just wanting to shoot somebody.

-- Ed Huntress

If it walks like a duck, quacks like a duck and has webbed feet.....

Gunner

Rule #35 "That which does not kill you, has made a huge tactical error"

Id stated many times..the Republicans were in for a close election and as the time grew nearer..indeed it got dicier and dicier. It was hardly a "landslide" and if more republicans had simply showed up at the polls, they would have won, while losing a few seats

One should look at the history of 6th year elections as well. Typically the loss to the minority party is 44 seats. The Republicans lost something like 35. So the Republicans did much better than average.

And yes..the Republican leadership has screwed the pooch, which Ive stated quite clearly. Ive also voiced my continued support for the war in Iraq..which oddly enough..the Democrats are now starting to do again. Charlie Rangle may well get his wish and the Democrats may indeed fire up the Draft again.

Lets wait and watch as the Dems start showing the good things that have occured in Iraq..and start getting tough with Iran and Syria. Two nations they have on paper..been supportive of over the past 4 yrs.

We do live in interesting times

Gunner

Rule #35 "That which does not kill you, has made a huge tactical error"

Well then Sieg Heil to you our little nazi-ish storm trooper. Suggesting any countries to invade or innocent people to kill lately? Or have you given that sabre ratteling up since the elections dashed your hopes?

dennis in nca