Government Debt and the Libertarian View

After a mere four years, I'm posting my Facebook flame war with my wonderful (and I mean it) Andrea about government debt. It quickly got to where I'm sure only she--something of a libertarian--and I were reading it. But I wanted to capture it all, and leaving it on Facebook wasn't going to do that...

Gail Oakes shared Mad World News's photo.

December 18 at 8:45pm · 

Comments

Patty Dalbec LBJ borrowed from Social Security to Pay for the war.

· December 18 at 8:56pm

Patty Dalbec The Vietnam War.

December 18 at 8:56pm

Andrea Habura Since the Social Security trust fund has to be held as government bonds, and the rest of the government is running a huge deficit, it kind of doesn't matter -- the missing money is going to come out of the taxpayers' pockets one way or the other. The only question on the table is *which* taxpayers are going to take the hit.

Gail Oakes It would be solved by upping the cap on income. Pretty simple except the wealthy will fight it.

Josh Fisher Drives me crazy, @Andrea Habura: " the missing money is going to come out of the taxpayers' pockets one way or the other." Sure, that would be true if only it were, say, a household that owed the debt. But it's the US government, the one that (1) prints the money, and (2) somehow borrows it really, really cheaply despite all the fear-mongering. All that's at stake, if there is anything at stake, is some small amount of inflation, which we probably could use a little of now. THERE IS NO "MISSING MONEY". There is a very complex system--a system like those you and I deal with (dealt with for me) professionally. To compare that system to our intuitions about debt--which politicians do all the time to scare people--is incredibly naive. Look at historic tables of debt as a % of GDP.

Andrea Habura Hmm. Not sure I'm entirely following. 

I'll grant you that debt owed by a sovereign country with its own currency is not the same animal as debt owed by a private household. However, it's not like economic forces completely don't apply. 

F'r example: My understanding is that it *is* possible to inflate away a certain amount of debt, but you have to be careful in how you do it. Inflation is basically a tax on all individuals (domestic and foreign) who hold assets denominated in the relevant currency. 

If you keep that "tax" low, you're not going to have that much of a problem when you go to retire the debt and issue new debt, which is something you have to do with government bonds on a regular basis. It also has useful side effects, such as counteracting "stickiness" in prices and wages.

But if inflation is high, bond holders start demanding higher returns, so you essentially have to issue more debt to make up for the inflation. You start getting diminishing returns. Plus, the recipients of the SS benefits start demanding higher and higher COLAS as the buying power of the payments falls. To a certain extent, that can be resisted (cf. "stickiness", above), but not completely. 

High inflation also causes people to start investing in commodities whose value will naturally rise along with the currency. But *that* can cause knock-on effects like asset bubbles which play merry hob with the overall economy. Which sucks, because it impairs your ability to organically grow your way out of the debt. 

Honestly, I think what might save us isn't responsible debt reduction -- politically, it'll never happen -- but rather possible decreases in the costs of several important categories of living expenses. I think technologically, we might be able to make transportation, housing and medicine cheaper by the time the demographic pinch really starts to hit, which means we can both slightly reduce the real value of benefits and crank up taxes a little.

Josh Fisher "What might save us". Save us from what? You are a priori arguing that debt is bad. I feel that way about my family--we avoid it like the plague. But debt is *good* for countries. It gives the knobs you can turn to manage the economy, which isn't so good at managing itself however much we wish it were. As Krugman points out http://www.nytimes.com/.../paul-krugman-debt-is-good-for..., England has had government debt for 300 years, an era spanning the Industrial Revolution, victory over Napoleon, and more. And we have had debt for 180 years, and our economy hasn't done so poorly either, except when things were too unfettered. Yes, the mechanisms you mention are part of the knobs and results in a very complex system. All successful national economies have debt, when they don't they invariably fall apart. And as a percentage of GDP, ours is just fine. The concern is just a boogeyman, as rational as witch burning and other things that explain what we don't intuitively understand.

Debt Is Good

A problem with the economy may be that we aren’t in deep enough, not that we’re in too deep.

NYTIMES.COM|BY PAUL KRUGMAN

Andrea Habura "Save us" from having more demands for current cash flows than we can raise. I am not a priori arguing that debt is bad -- I am saying that beyond a certain point, your ability to take on more debt is constrained. And the problem with things like SS and Medicare is that you can't easily stiff the recipients for a couple of years while you get things sorted out. 

I'm not sure -- are you arguing that the US government can effectively promise any level of entitlements desired, and pay for it via more debt and/or inflation? If not, what do you see as the effective limit?

Josh Fisher Sure, "beyond a certain point", you are right. But what makes you think we are anywhere near that point or I would believe such a crazy thing? And SS debt is no different from any other--really, the US govt can't stiff anybody. I'm not arguing that "the US govt can effectively promise" anything. I'm arguing that what has been promised is reasonable, safe, and sane policy, and the opposite of dangerous for our economy. THERE'S NO CRISES, or even any sign of one. People have sung this song for centuries, and no one seems to notice that they're always wrong. I'll point you at two instructive links--a historical review of US debt, compared with other countries, http://www.tradingeconomics.com/.../government-debt-to-gdp and Krugman again, this time on Social Security. http://www.nytimes.com/.../republicans-against-retirement... The simple reality is that the wealthy--the same people who are now financing our elections--hate it, because they are greedy.

United States Government Debt to GDP | 1940-2016 | Data | Chart |…

TRADINGECONOMICS.COM

Andrea Habura I really don't think I'm following you. The Trading Economics table shows that our GDP to debt ratio is fairly high compared to most other nations -- we're at 104%, the UK is at 89%, and Canada's at 92%. Now, we may naturally be able to carry more debt than some other countries, but I think it's a little insouciant to think we are nowhere near the point where it might become a problem. Japan's definitely an outlier, but they seem to be making strong moves toward reducing their debt burden, which has been causing problems for them (https://www.bloomberg.com/.../japan-s-debt-burden-is...). 

Furthermore, if there's no crisis, then why does the SSA think there is one? (See link below.) 

The main problem is demographics. There isn't a huge problem right now, but the big demographic bulge of the Baby Boomers is starting to hit retirement age. In 2005, 12% of the population was Social Security age -- in 2040, it'll be 20%. So, the promised outlays are about to go up a *lot*. SS and Medicare already consume about half of the Federal budget, so if we increase the size of that recipient population by 40%, we are sure as hell going to have to increase either revenues or debt load. 

Oh, and finally: yes, governments certainly can stiff people, at least temporarily. Ask any civil engineering firm or other government contractor -- they sometimes go years without being paid if the government budget gets tight. That's not going to work with SS recipients, who need that money on a regular basis.

https://www.ssa.gov/policy/docs/ssb/v66n4/v66n4p37.html

Japan’s Debt Burden Is Quietly Falling the Most in the World

BLOOMBERG.COM

Josh Fisher 1. Yes, most governments have been on a completely self-destructive austerity kick since the 2008 crash. So let's look at GDP growth in the examples you mentioned: UK: 0.5%, Canada: 0.9%, US: 3.2%. Does that seem unhealthy to you? Due to our "socialist" president, we actually spent a little money, and didn't give away the entire treasury to the rich. Now look at the chart of US debt to GDP. Look at the late 1940s, where, because of the war, the number was very high. Of course, that led to the 1950s, a time of mass starvation, lack of innovation, and financial crises in the US. http://cdn.tradingeconomics.com/.../united-states...

Josh Fisher 2. Yes, governments sometimes delay payments to contractors, I actually had exactly that happen to me with the govt of Belgium (read @Elizabeth Fisher's wonderful book https://www.amazon.com/Multiflow-Computer.../dp/1482780666, also Kindle). But the US will not delay payments to bondholders, because the effect on the economy would be devastating, despite what the president-elect fantasizes. And your 11-year-old SSA paper is plenty old news, you imagined that I don't know about the ticking time-bomb, being a baby-boomer on SS myself? The paper hardly describes a crises! It describes a problem that's been anticipated for decades, and a spectrum of relatively easy solutions.

Josh Fisher Look, here's my bottom line. The right wing has always hated SS, starting in 1935 (I cribbed the following: Alf Landon, the Kansas governor running as the Republican Party's 1936 presidential candidate, called it a "fraud on the working man." Silas Strawn, a former president of both the American Bar Assn. and the U.S. Chamber of Commerce, said it was part of President Franklin D. Roosevelt's attempt to "Sovietize the country." The American Medical Assn. denounced it as a "compulsory socialistic tax."), just as they always hated Medicare. But now these programs are too popular to attack, so they've resorted to a crocked-up "debt crises". They hate these programs because they are too greedy and short-sighted to understand that sometimes investments that don't immediately and directly benefit them might actually be good anyway, even for them. So now we have to worry about the solvency of a thriving economy, that is only being dragged down by austerity mania, corporate welfare of one sort or another, and tax giveaways and havens for the wealthy.

Asked-for Virus Scanner Advice

A friend recently asked for advice, to solve a mystery. The response explains itself.

>>> eScan has "quaranteed" them. I've never understood why anti-virus software doesn't just delete them

A very curious rumination, coming from a guy who once had to reinstall his entire OS, starting from scratch, because of the actions taken by an anti-virus program!

>>>   not found by the scan a week ago.

I'm sure that what changed in the past week is the definition of "virus" in your virus scanner (which, hopefully, changes at least daily).

You recently had a dead Ooma, and did the first steps of debugging yourself, before convincing Ooma to swap it out. You perhaps then were looking for, and perhaps even downloaded, a manual.

There are two ways to download a manual:  (1) Search the web, and click on what comes up, or (2) search the manufacturer's website and try to find it in the support section there.

I only use (2), unless (2) doesn't exist and I am truly desperate. That's because the way (1) works typically involves downloading an executable, which you then click on to get the manual. That's how the sites that collect manuals make their bucks.

So, for a demonstration, click on this, but DON'T click on anything on the page once you get there:

http://ebookbrowse..../ooma-telo-free-home-phone-service-manual-pdf-d353664170

Doesn't that look nice and official??? Note the dramatic similarity to the file name your scanner found.

That page presents lots of opportunity for clicking on something that tries to download a "download helper app", for example, that does help you download things, but shows advertising along the way--and could do much worse if the provider were truly malicious. The download helper, or whatever, often comes wrapped in an executable with the name of the manual you are looking for. It is probably the only way you can get the manual from that site.

The Crime of Multitasking

Yesterday, while watching Simone Bolelli beat Florent Serra on court 3 at the Sony-Ericsson, I was pulled out of my seat by a  Miami-Dade County policeman and a tournament official. As the Italian women I was sitting next to later told me, they said to each other, "This doesn't look good at all".

Mystified by the whole thing, I asked if I could bring my backpack, and was told I could. I looked back longingly at my favorite seat on court 3, which I had camped on to watch the two upcoming matches. I knew they both were going to be popular, and court 3 is small.

I couldn't imagine why the police would be interested in me, and it didn't seem to be anything random, like a drunk-driver traffic checkpoint. They clearly were interested in me in particular. When I got outside, the tournament official told me that, as a courtesy, he wanted me to know that gambling on these tennis matches was illegal, they've had a big problem, and they felt that I might have been doing so. I was outraged.

"Why me?"
"Well, you've been using your smartphone an awful lot."
"What!!!! I have the ATP app on my phone, and I'm following all the other matches, sending email to my wife, and doing all the other things I do on my phone. This is outrageous!"
"Yes, we figured it was something like that, but as a courtesy we just wanted you to know that gambling at these matches is illegal."

They had pulled me out between games, not during a changeover, and by now the next game had started. I didn't want to miss more of it, and the official escorted me back to my seat--which isn't supposed to happen during a game. During the changeover I told those sitting around me what had happened (naturally, they wondered).

For the rest of the day I observed other people with their smartphones, and I think I figured out what set this off. All the other people use their phones as follows: They press a button. They press another button. They stare at the screen. They press another button. They stare at the screen. This all takes something like 3 minutes. Then they might look up for a moment before pressing another button and staring at the screen. And so on. In short, they are either using their smartphones or watching tennis.

That's not exactly how I use my Droid. When a match is slow, as this one was (these two players are from Bordeaux and Bologna, y'know?), I get a lot of stuff done between points. But I don't miss a single point. In fact, I really don't miss what goes on between points. I just do both at once. This ability has had both good and bad effects on my life, but when it comes to multitasking, I was "born to the work".

So there I was, sitting in a seat that is perched literally 4 feet above the head of one of the players during changeovers, watching the supplements he is taking, and getting the best possible view of the match. I'm visibly noticing everything around me, furiously pressing buttons and looking back and forth. "As I always do," as my friend Denis said to me when he arrived before the next match.

So, another victim of the muggles' war on the unusual, if only a very minor victim. I was reminded of the poor girl from MIT, who arrived at Logan with a piece of electronics pinned to her sweater, as jewelry. Fortunately, being suspected of gambling isn't like being suspected of terrorism at an airport (it shut the place down in her case). People around me couldn't resist the opportunity to poke me. The ATP guy who was grading the skills of the linespeople on his little chart said bye to us all when he left, and then whispered to me, "and try to do something about that gambling problem". Two guys who had been sitting a few seats away left and said to me, "stay out of trouble, man".

But more seriously, I have become acquainted with a linesperson, who I met last year when we kept walking from the parking lot at the same time. He is a main linesman, did the finals at Indian Wells last week, and is obviously highly respected on the court, even by the chair umpires. He saw me sitting in my lot 3 perch after he was on the court for the last game there, and came over to say hi and tell me about his redeye and the travails of back-to-back tournaments. After we chatted I couldn't help but think, "Did ATP officials see him chatting with a 'suspected gambler'? Maybe that wouldn't be so good for him." Great, huh?

I realize that this is extremely minor compared to all the troubles in the world, even troubles of this nature, but I felt pretty police-stated. 

Taming the Hobbit

We recently got a Direct TV satellite dish installed in the worst possible place on our deck (long story). It was horrifying to look at. My first attempt at improvement was to cover the erector-set stand in burlap. Then it looked like a combo Hobbit/Droid was standing out there. Finally we bit the bullet and put in some potted arborvitae. And now I have a new hobby...

Before and after, from deck table&chairs:

The view from inside was improved a lot, too.

Chatting With India

A friend was not able to install his 80 y.o. wife's Photoshop on her new computer because, although she owned PS 5.5, and CS upgrade, he had lost the registration code for 5.5

Based on my own experience with a similar problem (involving Adobe Acrobat), I gave him the following advice. It generalizes beyond Adobe. It is actually not a bad way to get problems like this solved in this day and age.

1. Find an activity you really want to do that you can do at your desk, or on your computer, that does not take a large percentage of your IQ or your uninterrupted attention. Start that activity. Expect to spend hours at it.

2. Write a clear little paragraph describing your problem: It should be 4 or 5 sentences, and refer to your wife's age and her inability to master a new interface. No one will ever read this paragraph, but you will use it to pick out portions in response to what you are told.

3. Fire up a chat with someone in support at adobe.com.  The person will be India. For your explanation of what's wrong, paste the thing you typed. It is too long, and they will not read it. But anything shorter will convince them unshakably that you have some problem other than the one you have.

4. Now you must be very patient in two senses. One, it will take a long time, both because the answers will take a few minutes turnaround each, and because you will go down many little wormholes with the nice Indian person. Two, you will have periods of insanity that will test your patience. You will say "Mary has a healthy little lamb" six times, and out of the blue he will ask you what symptoms make you believe Maria's cow is sick. The person will constantly say insane things that will make you think he or she has no clue of what you're been talking about. No matter, just be persistent with your explanations. It's worth it, as long as you don't sit there twiddling your thumbs. Thus the activity you are doing in parallel.

5. Periodically, pick the text of your chat and paste it into a text editor. That way it is easier to go back and pick out things you need to say again, and paste them into the chat, without having to retype. You will constantly need to retell them things you've already said several times.

6. At various points, he will try to sell you on modern software. Just persistently pick where you said it isn't possible, and why.

7. Chances are good that he will eventually give you a registration code that will work.

8. Use this moment to gather all your registration numbers in some central file that you will remember exists, so you don't have to do this exact thing again.

Harold The Yorkie

Whoops! Pretty laid-back Yorkie.

Future Computers

Do you think today's Doonesbury's "Say What?" is there because of how absurd he (Trudeau) thinks it is? Because it is right on the nose. That is precisely what will happen some day, if we don't blow ourselves up first.

SAY WHAT?

"Computers are going to keep getting smaller and smaller. Ultimately, they will go inside our bodies and brains and make us healthier, make us smarter. We'll be online all the time. Search engines won't wait to be asked."
—Ray Kurzweil, on the future

Tiger Woods and Elitist Tennis

I was really startled the other day when a good friend of mine--who grew up in the depression relatively poor in the Bronx--asked me if Tiger Woods was playing in a tennis tournament that I attended. When I explained why he wasn't, he said, "Oh, yeah. I always confuse those rich people's sports".

Now this friend is a little deaf on the whole subject of competitive sports (I think of his sports highlight being once taken for Jerry Garcia when he took his son to a Yankees game, but thinking about it I recall that he was once a decent ping-pong player), but I was surprised by his linking of the two sports, which I think of as being different in every way.

Then, yesterday, at the awesome Miami-Dade Library book sale (a big event for me each winter), I, as always, bought all the tennis books I didn't already own. As I was a checking out, a woman about my age saw the book Extraordinary Tennis For The Ordinary Player. She said something like, "as if ordinary people can afford to play tennis".

Wow! Tons of public parks in almost any city have free tennis courts. A decent racquet can cost under $25. Balls are cheap. End of expense. You need shorts and sneakers, but that's it. In both Miami and Asheville I see lots of very "ordinary" people playing, many of whom have the appearance of not being at all well-off.

I believe a round of golf at a cheap public course costs $25-50, and in more exclusive settings can easily cost $200. Clubs and the other accoutrements are expensive as well.

Never mind the athleticism and exercise differences between the two.

So where is this weird "expensive and exclusive" reputation coming from? I guess from its roots. The Wikipedia article on tennis says:

After its creation, tennis spread throughout the upper-class English-speaking population before spreading around the world.^[1] Tennis is an Olympic sport and is played at all levels of society at all ages. The sport can be played by anyone who can hold a racket, including people in wheelchairs.

And it is true that tennis hasn't been as popular in the inner cities as other sports, though based on the kids I see playing in Miami, that's changing fast. It's all very odd, and probably not good for tennis, that people believe this thing that is so contrary to the truth.