It's always seemed, from the beginning of this debate, nearly self-evident that it is not true that a failure to increase the debt limit equates to default. We obviously have enough revenue to pay our debt service, despite the lies from the Democrats. Almost every Democrat has repeated this absurd lie, and yet many people still haven't caught on.
I say it is nearly self-evident because all you need to know is that our revenues (over $2 trillion) are more than half our expenses (over $3 trillion), and that debt service is not nearly half our expenses ($164 billion in FY 2010; as we have no budget for FY 2011, because the Democrats didn't want to pass it an election year, I am unsure of the actual FY 2011 figure, but it's probably still well under 10 percent of revenues).
Therefore, we have more than enough money coming in to pay for our debt service, and we are in no danger of being forced into default come August 2. It's very clear, and very obvious.
It's bizarre that seasoned newspeople like Bob Schieffer don't even understand it. He was completely outclassed by Michele Bachmann a couple of weeks ago in this exchange:
BOB SCHIEFFER: Congress will soon decide whether to raise the debt ceiling, which has to be done in order for the government to borrow the money to pay the bills that are coming due. ... would you really vote against raising the debt ceiling and allow the government or force the government to begin defaulting on its debts?
REPRESENTATIVE MICHELE BACHMANN: Well, first of all it isn't true that the government would default on its debt because very simply the Treasury secretary can pay the interest on the debt first and then from there we have to just prioritize our spending. ...
SCHIEFFER: Congresswoman, I have to take issue with what you say that ... the government would be able to pay its financial obligations. Experts inside and outside the government say that if we don't raise the debt ceiling, we face the United States having to default on its financial obligations. ... Are you saying these are scare tactics or are you saying that's not true ... how can you say that?
BACHMANN: It is scare tactics because, Bob, the interest on the debt isn't any more than ten percent of what we're taking in. In fact, it's less than that. And so, the Treasury secretary can very simply pay the interest on the debt first then we're not in default.
Of course, Bachmann was absolutely right, and the math is so completely clear, and Schieffer embarrassed himself and his network.
Default, I've been telling people, is a choice. If we do not raise the debt limit, and we default, it is only because President Obama chose to default. It is because he put other priorities ahead of paying the debt service. You can blame the Republicans for blocking an increase in the debt limit, sure, but Obama still has a choice ... and I'd turn right around and blame the Democrats for increasing spending -- and therefore, the debt -- more than any time since the second World War.
And that's really the point: we've tried many ways to get the government to reverse its spending habits. We've tried electing a fiscally conservative President with a Democratic Congress; we went with all Democrats, then put Republicans under a Democratic President; we tried electing all Republicans; then all Democrats again. All we learned is that at best, the deficit decreases during good times, sometimes even to the point of a surplus, but that spending continues to rise, and given our economic policies, we cannot count on the good times to continue.
So I'm fine with forcing massive federal spending cuts, if that's what it takes (and yes, I realize the cuts would be massive: almost all discretionary spending would be cut, we'd have to bring home almost all our troops, cut all spending on education and HUD and health and transportation, yadda yadda yadda ... sounds great to me). Call it draconian or evil or heartless or unwise; I don't care. Children often say the same thing when their parents take away their credit cards. Obama recently talked about managing the government's financial affairs like families do, but he wasn't talking about any families I know: they do not go out and get more credit cards or increased limits every time their credit cards run out. They prioritize spending. They, for the most part, pay the bills first (or do tithes or charity first, and then the bills, depending on their convictions), and then they divy up what is left over.
Obama and the Democrats, and, yes, many Republicans too, act like spoiled, entitled, children who believe any limits on their spending are unfair and unjustified and just who do we think we are, anyway?
Well, even the worst parents often wise up and take action, even if it's a bit late, and they cut those cards and make their kids get jobs to pay off the balance. Yes, Mr. President, let's act like responsible families: I urge Congress to refuse to up your limit, and to take away your credit cards, and to force the government to live within its means for once.
Frankly, I might even be OK with raising taxes if it corresponded with scheduled reductions in the debt ceiling; that is, if the government were forced to use that money to pay down the debt. As that's unlikely, I won't be supporting any tax increases, let alone debt ceiling increases.
If the Republicans held the line on this, I might actually be proud of my party's congressional delegation in DC, for the first time in quite awhile.
Cross-posted on <pudge/*>.
Posted by pudge at July 08, 2011 07:44 AM | Email ThisBut, again, you are of course 100% correct that the real debt of the USA *could* be paid even if the debt ceiling wasn't raised... the question is - would it? Is there a law that says T-Bill/Note holders get paid first from revenues (sort of like in bankruptcy cases)? If there is no law, I guess Obama decides?
- TT
Posted by: TT on July 8, 2011 08:43 AMNow, we couldn't fully pay all federal salaries and benefits, but that's OK, because most of them wouldn't be working anyway, since almost every other department would be shut down. We'd probably also carve out a slice to keep the courts, and part of homeland security, running, but we'd also surely scale back our military spending, which would free up some more money a bit down the road.
Are the people willing to accept this? I dunno. I am. But whether or not they would, the point is that it is a choice.
Is there a law that says T-Bill/Note holders get paid first from revenues (sort of like in bankruptcy cases)?
In my opinion, the 14th Amendment says this: "The validity of the public debt of the United States, authorized by law ... shall not be questioned."
If there is no law, I guess Obama decides?
Well, regardless of the law, Obama decides, yes. Whether a law says it or not, he decides where the money goes. It's not automatic, even if constitutionally required.
No, not unless the corporation has a net negative tax burden. Otherwise it is not spending, it is a reduction in revenue, unless you believe that all money belongs to the government. But yes, it is a subsidy, either way.
Why can't they cut THAT spending?
Government should not pick and choose which subsidies to cut based on how rich the recipient is, or whether it goes to a private jet or manufacturing equipment. In fact, it could very well be that the private jet subsidy creates more jobs and tax revenue than the manufacturing equipment subsidy: people build, service, and operate the jets.
I guarantee you that Keynes would say that such a subsidy might be perfectly acceptable use of government money. Focusing on private jets, as opposed to other subsidies, is economic nonsense. It's nothing but class warfare designed to inflame the passions of people who don't understand it.
Now that said, I do think all such subsidies should be cut. I just have two concerns:
a. that it is applied to all corporate subsidies equally
b. that it doesn't happen while we're still in this recession, I mean, "recovery." As much as I would love to end all those subsidies, doing it now would have the immediate impact of destroying private sector jobs, which I don't have a problem with ... but I don't think now is a good time to do it. I'd much rather whittle down the government jobs, which will encourage the growth of the private sector.
I wouldn't mind an agreement that says, as soon as GDP hits, say, 5 percent, then all subsidies end. Or maybe they scale down as GDP increases.
100% of Federal Revenues are used to cover Social Security, Medicare/Medicaid, and income security (welfare, section 8, unemployment, etc).
We borrow every dollar used for EVERYTHING else - defense, EPA, education, VA, border patrol, FBI, even debt service.
We cannot solve this problem WITHOUT cutting Social Security, Medicare/Medicaid, and income security. They are more than half the budget, and consume all Federal revenues. We HAVE to cut those programs - there is no other solution.
As far as taxation goes, eliminate corporate income and capital gains taxes. Zero them out entirely. And make it a permanent change to the tax law (not just a 2 year plan, like the extension of the Bush tax cuts). You'll see business and capital flood back to the US so fast we'll quickly get out of our recession and the GDP will skyrocket. And thanks to that little thing called Hauser's Law, Federal receipts will also boom - which will only help with our budget-shattering deficits.
Posted by: Shanghai Dan on July 8, 2011 09:45 AMThey also need to push for an overhaul in the tax code, so that 48% of taxpayers no longer pay no taxes. I am not sure that is even on the table, but had better be. If that number gets above 50%, we have ourselves a welfare state/banana republic and we aren't that far away from it !
Posted by: KDS on July 8, 2011 10:13 AMEvery dollar that exists naturally is PRIVATE. Government CONFISCATES money in order to do things "for us". When they confiscate less of that PRIVATE money they don't "spend" anything. Anyone who has some amount less taken from them isn't being gifted anything. It was their money to begin with!
As it was said above, to think otherwise is to say that all money is really the government's and what the "rich" are permitted to retain is granted or gifted to them by the government.
Someone, a deomocrat, answer this question. At what percent of a person's income is the confiscation by the government considered obscene? Leave alone what the economic impacts are, and they are great. On a basic human level, in a free society, where do you draw the line on what the government can simply steal from any one person to give to another?
Spending? It's all confiscation the only question is how disgusting is the taking and how counter productive is that taking.
Posted by: Cecil on July 8, 2011 10:24 AMIf that capitulation meant something actually positive -- say, massive permanent spending cuts, on the order of close to a trillion dollars -- then I would be OK with him being reelected, frankly. Four more years of Obama versus slashing most government programs? That's a trade I can live with!
Posted by pudge at July 8, 2011 11:03 AM
Sorry, I don't believe in unicorns, which are about as likely. That is not in his DNA. Needless to say, i am highly skeptical of these motives. It seems like a trick from the MSM and their wishful thinking.
Posted by: KDS on July 8, 2011 11:28 AMWhat would you say an insurance company that sold you a wage replacement retirment insurance policy did if after 40 years of paying premiums, they refused to pay out? That is default.
Moody's would say so, S&P would say so. It isn't debatable (but you can go ahead and pretend as you please).
More likely we "default" on T-bills the Central Bank rolls over periodically because they can just make money with electronic magic, and that is inflationary.
Then there's Gold in Fort Knox, stop paying Congressmen anything, etc.
We're getting pretty close to an "everybody out of the pool" moment when folks argue defaulting on your obligations is not default.
Posted by: G on July 8, 2011 04:06 PMFalse. You're just wrong. Default means something very specific: failing to meet debt obligations. Social Security benefits are not debt, and therefore failing to pay them is not default.
What would you say an insurance company that sold you a wage replacement retirment insurance policy did if after 40 years of paying premiums, they refused to pay out? That is default.
But, of course, such a policy has set payments guaranteed by legal contract. No such thing exists with Social Security. It's not debt, it's not legally owed. The government could shut down all Social Security benefits tomorrow, and forever, and it wouldn't be default.
Not that it matters anyway, because we'd still be able to pay Social Security, and our debt service, and our private defense contract payments, and so on, as I demonstrated in comment #4.
We're getting pretty close to an "everybody out of the pool" moment when folks argue defaulting on your obligations is not default.
You're committing the question-begging fallacy: again, there is no legal obligation with Social Security, there is no debt, so there cannot be default.
You should check out the Supreme Court ruling in Flemming v. Nestor, where the found that "there is no contractual right to receive Social Security payments. Payments due under Social Security are not “property” rights and are not protected by the Takings Clause of the Fifth Amendment. The interest of a beneficiary of Social Security is protected only by the Due Process Clause".
You have no contractual right or claim to receive ANY Social Security payments. Any Social Security you receive is at the pleasure and direction of the current Congress, there is no legal promise or requirement for Congress to fund any Social Security payouts. They could cancel the entire program today and it would be 100% legal.
You cannot default on a non-contract; it's impossible, legally, technically, and contextually. Thus there is NO way to default on any Social Security payments. Ever.
Posted by: Shanghai Dan on July 8, 2011 05:36 PMHowever, a point can be made that negotiating with the Democratics is like going up against the old Soviets. They are fighting tooth and nail for big government, which is what a majority of we the people don't want. We don't need new taxes, we need new taxpayers - such as the 47+% that do not pay any Federal Income Taxes.
There needs to be tax code reform - perhaps it will happen in this round, but it absolutely needs to happen to be able to sustain our Democratic Republic -either that or slip into a Social Democracy (Statism). Does anyone think that the Democrats would want to do any of this on their own w/o raising taxes significantly ? That is not in their DNA. Progressives are trying to drive the deficit bus over the cliff, into a nanny-statism entrapment.
Posted by: KDS on July 10, 2011 07:47 PMNot that many Republicans don't do this too -- though most conservatives don't -- the Democrats have simply been repeating things they do not now, not will ever, believe: primarily, that it is somehow wrong/immoral/bad to cut Social Security or Medicare. They cannot believe this, because they say the programs need reform to save money, and all reform that will save money is a cut of some kind.
So now they say that every cut in those programs is evil, but that's a damned shame for them because if they could come up with some modest cuts that would significantly help, they could frame themselves as the heroes. But now if they do it, they get framed as evil, or as losers.
It's hard to play politics when you don't start from principles.
Xavier Becerra (D-CA) was on Fox News Sunday today claiming, again, the lie that no debt increase means default, but then he said we shouldn't cut S.S. and Medicare to help the budget because they do not add to the deficit ... which, of course, is another lie. It was amazing ... when questioned about the fact that the S.S. Trust Fund is being drawn on right now, and that every time you draw on the Trust Fund you take money from the General Fund, which adds to the deficit, he said something like "the documents in the Trust Fund are essentially legal tender, just like the $5 bill in your wallet." Except that to pay me for my $5 bill, no one has to draw on the General Fund.
And of course, even if S.S. were not a current burden on the budget, even if it did currently pay for itself, it soon would begin to be such a burden, as with Medicare. He said we have another 25 years, but he is either far too stupid to be the Democratic Caucus Vice Chairman, or he is just telling a damned lie, because, again, the money for paying back the Trust Fund adds to the deficit. It's not sitting in a vault somewhere.
The reason I think he's a moron and not a total liar is that the only point of saying the notes in the Trust Fund are essentially legal tender is to assuage any fear that the S.S. Trust Fund will not pay benefits to retirees. But that has nothing to do with the burden that such payments will place on the General Fund. We will be adding hundreds of billions to the deficit and debt in the coming years because of Social Security, and it's beginning now.
Posted by: pudge on July 10, 2011 08:53 PMI agree with your point and what Obama should tell the Republicans that if they don't pass the bill, his Treasury will prioritize the bills and the Republican based causes/backers (like big oil) will be last on the list. Them the GOP squirm when they leave it up to the Treasury to make these decisions. The Executive branch will start cutting and it won't be pretty where the cuts fall. If Congress fails to do its job, then they have left it to the Executive branch to pick up the pieces. I say Obama should call their bluff.
Posted by: tc on July 11, 2011 12:59 PMIf you mean "tax breaks" then no, this would only apply to expenditures, not reductions in revenues. I think some money actually gets paid TO oil companies though, and surely that could be stopped, and few conservatives would have a problem with it.
But if Obama does this politically -- pick what Republicans want -- it will be transparent and he'll get destroyed for it. He need to prioritize in the only sensible way: first our legal obligations, then any structural expenses without which we would collapse (courts, electricity bills, etc.), then national security (not ALL of it, of course), then payments to individual citizens like Medicare and S.S.
After that there'll be no money left over anyway, nothing to really play politics with, picking conservative vs. progressive causes. The GOP will be far less unhappy than the left, I guarantee.
Another idea, although not a short term fix, since it would take time to execute, would be to sell off federal assets. I am not sure if this would have any political impact, and probably would hurt more on the Democratic side, but it also would take a buyer.
The problem I see with your proposal is neither side controls how the markets will react. They are both playing with fire here. This whole fiasco of not doing one's job could end up costing you and me a lot more in the long run if interest rates go up, stocks tank, etc. My opinion, the deal this weekend that was rejected was the best deal for the country. I understand it wasn't wise for either party, but it was good for the country.
This is going to get a lot uglier before it gets any better.
Posted by: tc on July 11, 2011 01:49 PMThis implies more that just interest payment. So Bachmann is incorrect in assuming that no harm would be done by simply securing interest payments.
“If you prioritize payments…you would have to contract your payments in a massive way overnight and that would have very sharp negative fiscal impulse to the economy and that would
be disruptive." -S&P
I have a problem with Michelle Bachmann posing as an expert in arbitrage. As we've seen in the Greece saga, this is a very sticky subject. I seriously doubt Bachmann understands the nuances of these issues better than the BIS, for example.
Posted by: DSK on July 11, 2011 02:21 PMThere would be no money for any such contracts, tc. But if there were, and Obama transparently picked Dem states over GOP ones, it would be a terribly stupid political mistake.
The problem I see with your proposal is neither side controls how the markets will react.
I don't see that as a problem: I don't really care.
My opinion, the deal this weekend that was rejected was the best deal for the country.
Since we don't know the details, I don't see how anyone could have such an opinion. We know a few details, but what we know is just stupid: Obama insisting on a four-trillion-dollar increase in the debt. Obama wants a long-term deal, but he knows that while the debt limit increase will last, any cuts in spending may not. A short-term deal is the only realistic goal at this point, because the Republicans obviously cannot trust the Democrats to keep cuts, but Obama said that's off the table, too.
The GOP should AT MOST agree to a six-month deal (I know it's in dollar terms and not time terms, but they estimate) and demand massive cuts in return, and if the Democrats renege on the cuts, then there won't be a deal next time. I think much of the GOP would be OK with getting rid of many deductions if it meant AT LEAST dollar-for-dollar CUTS (and not reductions in spending growth), AND a promise to implement certain *types* of Medicare and S.S. reforms (not implementing them now, but an agreement in principle to, say, raise retirement age, etc.). Then in six months if there's no progress on entitle reform and spending cuts haven't happened, well, no more debt limit increase in January.
See, here's the thing, going back to what I said about credit cards. Obama is like a teenage girl saying how unfair it all is, and then when the parents say, "you can have this card, but only for gas and food for yourself, and in a month we'll look at your bill and reevaluate," she says, "no, you just need to give me my credit card back for whatever I want." His demands make no sense. He won't agree to a short-term deal, but he's the one who has proven himself grossly irresponsible, far moreso than any President in history. He doesn't DESERVE any trust, and a short-term deal is the best he should expect.
There's principal due in August.
So Bachmann is incorrect in assuming that no harm would be done by simply securing interest payments.
She was speaking in general terms. August is a unique month, which is why Obama and Geithner conspired to push it until August, so they could say, "no, it's not $30 billion, it's $500 billion!" But that's question-begging: first, Obama and Geithner could have started saving for these payments back in January, and second, we could simply extend the debt limit enough to pay the principal payments, and nothing else ... but Obama said he wouldn't accept that.
I have a problem with Michelle Bachmann posing as an expert in arbitrage.
She's a hell of a lot more of an expert than Obama is, to be sure. She has a master's degree in tax law from William and Mary, and worked as an attorney for the IRS. She knows law, and she knows money, and she knows money law.
I have a problem with people having a problem with Bachmann talking about topics they have no problem with the President talking about, when it's clear she has far more experience in the general field than the he does.
If you're going to criticize what she said, fine; but to criticize that SHE said it is fallacious.
However, Harry Reid and the Senate Democrat majority do not want to do that - they would rather not pass a budget, let the debt ceiling cap our spending, and hope the politics falls out better for them.
We've had a budget - and a way out of this debt ceiling fiasco - for 3 months. Too bad Harry Reid, President Obama, and the Democrats put politics ahead of the good of the Nation.
Posted by: Shanghai Dan on July 11, 2011 02:56 PMOn your last part, trust goes both ways and is sorely lacking in DC. Obama's proposal is basically where the Republicans were at six months ago. If Obama agreed to what you propose he would be a fool because the Republicans will keep moving the goal posts until they get what they ultimately want.
I don't feel Obama's demands are unreasonable. What we know of this weekends deal are: (1) proposed Medicare Age increase from 65 to 67 (start after 2013 and implemented over time), (2) agreement to revise the tax code to close loopholes and deductions in turn for lower rates and address the issue of the expiration of the Bush Tax Cuts. We also know that Obama was proposing at least $3 Trillion in cuts in return for $1 Trillion in revenues (from the tax code revisions). We also know that Obama was adamant that the tax code remain progressive (i.e., protect the lower income levels) and that nothing be implemented until 2013 (so not to affect the recovery).
That doesn't sound like the situation you describe. Maybe you have other information that counteracts those reports.
Posted by: tc on July 11, 2011 03:30 PMHowever, Harry Reid and the Senate Democrat majority do not want to do that - they would rather not pass a budget, let the debt ceiling cap our spending, and hope the politics falls out better for them.
We've had a budget - and a way out of this debt ceiling fiasco - for 3 months. Too bad Harry Reid, President Obama, and the Democrats put politics ahead of the good of the Nation.
Posted by: Shanghai Dan on July 11, 2011 03:35 PMhttp://online.wsj.com/article/SB10001424052702304584404576439880232239232.html
Posted by: tc on July 11, 2011 03:37 PMWow. Point to me where the Republicans wanted tax increases six months ago, please.
If Obama agreed to what you propose he would be a fool because the Republicans will keep moving the goal posts ...
So not wanting tax increases now, is moving the goalposts from not wanting tax increases six months ago?
You're a riot.
The Republicans haven't shifted, and no one believes you when you say what is so obviously false.
I don't feel Obama's demands are unreasonable.
They are.
(1) proposed Medicare Age increase from 65 to 67 (start after 2013 and implemented over time)
Not nearly enough of a concession.
(2) agreement to revise the tax code to close loopholes and deductions in turn for lower rates and address the issue of the expiration of the Bush Tax Cuts
None of which is happening now, so is meaningless.
We also know that Obama was proposing at least $3 Trillion in cuts in return for $1 Trillion in revenues (from the tax code revisions).
Also meaningless. How STUPID do you think Republicans are? They fell for this 25 years ago; what makes you think they will fall for it now?
With the exception of entitlement reform -- where the concession is enough, I think, because it's been hard enough to even get THAT, and once you get it, implementation is not a big deal, probably -- unless it happens NOW it is meaningless, because the Democrats will renege like they always do. They've never cut spending, and oh BY THE WAY, those spending cuts are lies on the face anyway, since they are cuts in growth and not actual reductions.
Further, if Republicans were truly concerned about the deficit why is a proposal to reduce the deficit by $4T ($3T cuts, $1T in tax changes) so unacceptable. It is because they are more concerned about keeping there "no taxes" pledge and expanding that to include any change in revenue that it has boxed them into a corner. (Obama has also boxed himself into a separate corner and the Democrats in congress have moved into a third corner).
What Obama was proposing was a 3-1 proposal. What the Republicans are proposing instead is at the max of only $2T in cuts and more likely only a short term fix of little to no cuts. For a party that is supposed to be concerned about the deficit, they sure are showing it weird. Either the deficit is the main problem or it is not. What is the story? If spending is the problem and the deficit isn't, then the Republican's stand is correct. It isn't what they have been saying, however.
Like I have stated in the past, "Starve the Beast" does not work. I don't know why this is the only play in the GOP's playbook (not all, some are trying to make an effort, like Coburn).
OBTW, the Medicare age idea wasn't Obama's, it was Coburn (and ??) idea that Obama liked and proposed.
Posted by: tc on July 12, 2011 10:51 AMSix months ago, Republicans were proposing about $3T in cuts. Now this level of cuts is not sufficient for them. This is what I meant by the comment on moving the goal posts.
Well, in the last 6 months - because of the Democrat refusal to address this issue and a budget - we've added another $340 billion in debt. What we have to address continues to rise - when are the Democrats going to take this issue seriously and actually address the root problem - overspending?
Like I have stated in the past, "Starve the Beast" does not work.
Why? Where has it been tried and failed? It seems to be the approach that most of the shaky EU members are taking, and apparently it's working for them...
Posted by: Shanghai Dan on July 12, 2011 11:11 AMQuote them saying that. I've never heard it. What I have heard them saying is that something IN ADDITION TO the cuts is unacceptable to them: in particular, TAX INCREASES. If you can quote them saying "three trillion in cuts is not enough," please, provide it to us.
Also, I don't believe Obama has proposed ANY cuts. He's proposed reductions in growth, but that is not a cut. I would like to be wrong, but I don't think I am.
Further, if Republicans were truly concerned about the deficit why is a proposal to reduce the deficit by $4T ($3T cuts, $1T in tax changes [sic]) so unacceptable.
Because tax increases (not "changes," please stop being so intentionally deceptive) will, in their opinion, harm the economy. You're being (again) dishonest by saying we can just add spending cuts and tax increases together and get even more of a deficit reduction and it's even better than less of a reduction: that assumes the tax increases won't have other negative and undesirable impacts.
Your argument is no different (just in degree, but not substance) than saying, "if they were truly concerned about the deficit, why is a proposal to confiscate all property to pay down the deficit so unacceptable?" The reason is because of the effects distinct from the immediate impact on the deficit, obviously.
It is because they are more concerned about keeping there "no taxes" pledge and expanding that to include any change in revenue that it has boxed them into a corner.
Some of them, maybe; but no, the majority of them simply think it is wrong to raise taxes (either right now, or ever). I am in the former camp: I think it is wrong to raise taxes right now. I would compromise on it, but ONLY IF the increases would need to be renewed each year, because no one can trust the Democrats to not re-increase the spending.
Like I have stated in the past, "Starve the Beast" does not work.
Correct: the Democrats have proven that they will spend us into massive debt whether they have the money or not. This is far more of an indictment on the Democrats than the Republicans, you know. As Dan points out, it HAS worked in nations that -- unlike the U.S. -- recognize that ever-increasing debt that is greater the entire GDP is a bad thing.
OBTW, the Medicare age idea wasn't Obama's, it was Coburn (and ??) idea that Obama liked and proposed.
That has nothing to do with anything I said. I didn't criticize it, except to say that it's only a start. I should point out, though, that according to the Democrats, Obama has now proposed to end Medicare. Just saying.
So? Neither does being President.
False. Perhaps she DOES not, but you are wrong to say she CANNOT. You are committing -- in the wost and most obvious way -- the ad hominem fallacy.
Here assertion that we could just prioritize our payments and that would solve the problem is false.
False. You're completely wrong. I pointed out the figures. We absolutely could. We get more revenues than we have service on all our debts combined. You are wrong. And it doesn't take being an expert in anything to know this: it only takes knowing what our debt obligations are, and what our revenues are.
Feel free to provide evidence against what I wrote, but unless you do, your assertion that hers is false, is unacceptable: evidence has provided to back her case, so you have to provide evidence to back yours. That's how argument works.
You did hint at the principal payments, but I explained how those are just for August, and how we could have saved for those by prioritizing throughout the year to this point. You didn't respond to those facts, but ignored them.
I don't remember mentioning the President.
Yes, exactly my point: the President is making arguments about default every day, and he has less personal experience with the subject than Bachmann does; so why aren't you criticizing him for his lack of knowledge? (The answer is obvious, but I'd like to see you admit it.)
“If you prioritize payments…you would have to contract your payments in a massive way overnight and that would have very sharp negative fiscal impulse to the economy and that would
be disruptive." -S&P
The last quote deals with the method of repayment that you and Michelle Bachmann prefer. Standard & Poor's disagrees with you and Bachmann, perhaps you might want to take your argument up with them. Until then I'm incline to recognize their views as those of an expert. The first is about the implications of a failure to cut a deal.
The august date is about outflows outpacing inflows, not bond maturity dates as you suggest.
From the qualifications you stated, a masters in tax law from William and Mary, she cannot have intimate knowledge of what constitutes default.
I don't bring up the President because my criticism is not directed to the President, it's directed towards Michelle Bachmann's authoritative claim. Not about Michelle Bachmann, but her EXPERTISE on the subject of sovereign bonds as it relates to default.
Posted by: DSK on July 12, 2011 04:15 PMThis is the President's problem and he has the ability to resolve it now or mooch for political points as he likes to do, but that is not looking favorable as people are wising up to his tactics. The GOP does not look like they will roil over, like he was banking on.
Posted by: KDS on July 12, 2011 05:15 PMBut I already demonstrated that full payment of obligations IS secure. You are committing the question-begging fallacy.
If you prioritize payments…you would have to contract your payments in a massive way overnight and that would have very sharp negative fiscal impulse to the economy and that would be disruptive.
That is beside the point, and a separate argument. You are committing the straw man fallacy. In this interview, Bachmann did not say there would be no disruption, she simply said we could pay the obligations without increasing the debt limit.
The last quote deals with the method of repayment that you and Michelle Bachmann prefer. Standard & Poor's disagrees with you and Bachmann
If so, then you provided no quote saying so. You would have to provide a quote of S&P saying that repayment of our obligations is not possible, but you only provided a quote describing some of the effects if we did it that way, which is beside the point here.
The first is about the implications of a failure to cut a deal.
False. It's about the implications of not cutting a deal AND not repaying our obligations. But we CAN repay our obligations, as demonstrated.
The august date is about outflows outpacing inflows, not bond maturity dates as you suggest.
Shrug. Take it up with Secretary Geithner:
... every week starting the week of August 2, we have to go out and finance roughly $100 billion in maturing obligations of the government. ... we have to convince people to come and refinance $500 billion in maturing principal payments that come due in August.
If not for the principal payments, we absolutely could pay for August's obligations on August revenues alone. The revenues are over $170b, and the interest is less than $30b.
From the qualifications you stated, a masters in tax law from William and Mary, she cannot have intimate knowledge of what constitutes default.
This is so incredibly dumb that it's hard to know where to begin. You keep unashamedly repeating this obviously fallacious claim, as though logic and reason don't apply to you. It is simply not possible that any qualification, or lack of it, is necessary for having any particular knowledge. All that's required for having knowledge is sitting down and learning something.
And don't lie to me and pretend that you just mean that those qualifications don't mean she has knowledge, because a. I never said it did, and neither did anyone else, and b. YOU said that she DOES NOT HAVE qualifications to understand it. But qualifications are not necessary for understanding.
All I did was point out that she has a strong background in law, and money, and laws about money, which means she is certainly capable of understanding default. Whether she does or not, you don't know, and you are lying when you claim otherwise.
I don't bring up the President because my criticism is not directed to the President, it's directed towards Michelle Bachmann's authoritative claim. Not about Michelle Bachmann, but her EXPERTISE on the subject of sovereign bonds as it relates to default.
You're a damned liar. Obama also made authoritative claims, and made far more of them, far more often, than Bachmann did. If you truly cared at all about someone's qualifications in making such authoritative claims, you'd criticize Obama too.
What probably happened is that you disagree with and disrespect Bachmann, so you decided to try to undermine her credibility by making an asinine ad hominem attack against her; when it backfired -- because you didn't do your homework, and you are bigoted against conservatives and women, so you simply assumed that because she's a female Republican she's dumb -- you doubled down. But it's not working. You should give it up, because you will not get anywhere trying to claim such obvious logical fallacies: that she "cannot" understand something because of a characteristic that is not even possibly necessary for understanding that thing, only undermines everything else you say by making you look like a moron.
Seriously, give up.
And, of course, more than Obama's!
But because he disagrees with Bachmann and loves Obama, it's only Bachmann's expertise, and not his, that matters.
Pathetic.
Nice try buddy!
Posted by: DSK on July 12, 2011 05:38 PMUmmmm ... what? You didn't make a point. You linked to a page that doesn't disagree with anything I said.
I actually read that document -- and referenced it above. Perhaps you think the "spending obligations" it refers to are debts. They are not. Almost none of them have anything to do with any possibility of default. The "obligations" are mostly things like entitlements, salaries, and so on. We could safely cut most of it without defaulting.
DSK, do not bother to post again unless you will actually post a substantive, non-fallacius, argument relating somehow to the topic of discussion.
False, as I demonstrated.
the inflows and outflow are "lumpy" and do not match up very well
For the most part, it works out fine. For the case of these principal payments, it does not, obviously: which is why I said above, "we could have saved for those by prioritizing throughout the year to this point."
And I also said that for this one thing -- refinancing the maturing principal payments -- I would be willing to extend the debt limit for the amount necessary specifically for that purpose alone.
May be you can shed some light on how exactly you would match these without it being disorderly.
As that is a red herring, no, I will not. I never said it would be orderly, I simply said it could be done.
You seem to not care if we lose our ability to track infectious diseases apparently.
It depends on the disease. I don't think any rational and intelligent person thinks there's a serious federal government interest in tracking influenza. But there's others that are important, which is why -- despite your dishonest implications to the contrary -- we prioritize spending. If something is so important to public health that we feel we must do it because the risk is too great to not do it, fine, we do that and cut something else.
To say that prioritizing spending means to cut the most important things first is to lie.
But at least this time you made a substantive point, talking about matching up monthly revenue and expenditures, even though you completely missed, and did not address, the answer I already gave. Please make sure the next comment is at LEAST as substantive, and try to dispense with the fallacies and lies next time.
Starting to? Supposedly they crop up every other year or so, and yet every time we go nuts about the dangers -- whether it's the bird flu or swine flu or whatever -- the result is the same: essentially a very normal flu season, with maybe a handful of outliers here and there.
With swine flu in particular, as soon as "news" broke of it, I asked everyone I knew: what makes it worse? OK, maybe it targets people slightly differently, and maybe is slightly more virulent, but are mortality rates higher? Does it cause more long-term disability? No one could answer that, and therefore, no one could give me an evidence-based reason to care about it more than any other flu ... and therefore, I did not. The swine flu thing was, from beginning to end, of no serious public concern.
We panic over these supposed pandemics that don't happen, on the fear of what MIGHT happen, and you yourself give the argument against yourself: what they think is unimportant may turn out to be important after all. That goes not just for you and me, but for the politicians and the scientists too. We cannot predict what will happen and what will be "important" (the Black Plague) and what won't be (bird flu and swine flu). So your argument necessarily leads to the insane notion that government should essentially try to do everything, which we've proven is inefficient and unsustainable.
I don't want to do nothing, there's plenty to do
The question I ponder, is who plans for whom?
Do I plan for myself or leave it to you?
I want plans by the many, not by the few
The lesson I've learned? It's how little we know,
the world is complex, not some circular flow
the economy's not a class you can master in college
to think otherwise is the pretense of knowledge
That goes for pretty much everything, except for law enforcement (police, courts, wars).
If the prioritization is disorderly, that possibility is more likely.
If people are left to their own devices, we will collectively figure out how to solve the problems government is no longer trying to solve.
give us a chance so we can discoverPosted by: pudge on July 13, 2011 07:47 AM
the most valuable ways to serve one another
The problems surrounding water supply in overdeveloped drought prone areas are a clear example of how collective wisdom lacked foresight, especially in places where property rights were thought to be more important than water quality. People were left to their own devices and that too proved to be inefficient and unsustainable.
Posted by: DSK on July 13, 2011 10:44 AMMany of us think that "collectively figuring out how to solve problems" is the proper definition of government, not a replacement for it.
You've hit on the main difference between your libertarian worldview and the beliefs of most people in the world. (Not that being in the minority necessarily makes you wrong or bad, of course -- though I think your ideology is harmful practically, and wrong to the extent you think it's constitutionally mandated.)
You are, once again, committing the question-begging fallacy, assuming -- without ANY justification -- that government does, or would do, the job better. There's no evidence supporting this assumption whatsoever, and if anything, the fact that the government keeps scaring us about things that turn out to be nothing, and doesn't do anything to protect us from threats we do know about.
Worst of all -- apart from my philosophical opposition to general government involvement here -- they encourage what I believe (as do many medical experts) is very bad and dangerous behavior, both for individuals AND for society: mass vaccinations for the flu. We know that the more people get vaccinated, the more likely the virus is to build up an immunity. We also know that for people who are at a low risk of contracting the flu, or are at a very low risk of serious illness of the flu, getting a flu vaccine can increase the liklihood of illness, or serious illness. So it can be a bad thing for individuals to do, in addition for a bad thing for society.
So please, don't expect me to just accept the -- to me -- crazy notion that government is going to do a better job. That doesn't even pass the smell test. MAYBE they would, but there's NO evidence of it.
... especially in places where property rights were thought to be more important than water quality.
Property rights ARE more important than water quality. That's a given. Without property rights, you wouldn't have any water at all!
Property rights are not the problem, though. There's no tension between the two. The problems I know of is when there are disputes or confusion over property rights.
That said, water is obviously a shared resource. I can have the rights to certain water that is part of the same body of water you have, and I have no problem whatsoever (in the abstract) with government being involved in that. But that generally has nothing to do with federal government, which is our context here, but with state and local government.
People were left to their own devices and that too proved to be inefficient and unsustainable.
False. No such thing was proved.
Bruce: Many of us think that "collectively figuring out how to solve problems" is the proper definition of government, not a replacement for it.
Those people are obviously wrong. Government uses force. That's (primarily) what makes it different.
You've hit on the main difference between your libertarian worldview and the beliefs of most people in the world.
Thankfully, though, not most people in the U.S. And increasingly more are agreeing with me every year.
I think your ideology is harmful practically, and wrong to the extent you think it's constitutionally mandated.
I don't know that anyone's ever come up with any example of harm; and I want to constitutionally mandate nothing. On the contrary, I want to simply enforce the rules already clearly on the books, which PREVENT action, not MANDATE it. It's your side that wants to mandate so many things, that doesn't even recognize the fact that the Constitution explicitly limits the power of the federal government.
Interesting line, which could be read many ways.
1. Every year, the US appears to be getting more polarized, which does means Bruce's statement is false.
2. "More agreeing" can definitely be correct when the starting base is left undefined.
I don't see, however, Pudge, that this is a good thing. I for one do not want a society where there is a single viewpoint (Bruce's or yours). What I do wish for is a society that is tolerant, by which I mean, we can respectfully listen to each others viewpoints and be civil about it, and a society that in the ends comes together and accomplishes movement forward. Ideological battles (left or right) are good for theoretical debates, but at some point solutions do need to be proposed for the real problems of today.
It appears to me that no one wants to solve the budget/debt/deficit problem in Washington. They all are playing from the playbook of not wanting the other win (lose-lose philosophy).
Posted by: tc on July 13, 2011 01:57 PMNot really.
Every year, the US appears to be getting more polarized ...
Maybe, but that is not the meaning of what I wrote.
... which does means Bruce's statement is false.
I didn't express disagreement with him on that point.
I don't see, however, Pudge, that this is a good thing.
Yes, you think people agreeing with me is bad. Shock. :-)
I for one do not want a society where there is a single viewpoint (Bruce's or yours).
That doesn't make any real sense to me: my view is, expressly, that everyone should have -- and be able to live and act by -- their own view, without interference, except to prevent and punish direct harm caused to others.
It appears to me that no one wants to solve the budget/debt/deficit problem in Washington.
The problem you refer to can be wrapped up in a single word: spending. We see many people trying to solve the problem of spending.
They all are playing from the playbook of not wanting the other win (lose-lose philosophy).
Nonsense. When one side says "spend less" and the other side says "spend more," those are two necessarily opposing positions. You can't have both sides win.
Tracking and identifying potentially deadly infectious diseases has nothing to do with mass vaccinations. You're making the mistake of assuming that I advocate mass vaccinations.
"Leaving people to their own devices" implies that they operate outside the reach of the coercive tentacles of the federal government. So citing a state and municipal example is relevant.
There is famous incident in Texas were a community voted to pass an ordinance that restricted certain types of real estate development over aquifer recharge zones. Developers successfully lobbied the state legislature to pass legislation that rendered the ordinance obsolete. This in turn opened the door to massive urban development, mostly horizontal, and in less than 5 years overextended its water supply. Sustainable development was thought of by many developers as a threat to their business. Evidence of climate change was dismissed as junk science. However, quietly behind the curtains of power-not a conspiracy-a plan was being devised for a engineering marvel that would redirect water from rivers into lake-sized reservoirs and funnel flood waters to marshland at the cost of over $3b. So they figured it out, but that's far from being efficient.
You could state ,I suppose, that the coercion of state lawmakers is evidence of not letting the people to their own devices. But abuses of power are deeply rooted in corporate history. Even over 200 years ago when the East India Company operated in an completely unregulated environment. In fact, the height of corporate power was precisely during this period, and it committed atrocities that would make the Nazi's look like Mother Teresa's. My point is that this Friedman-ish idea of anarchocapitalism is a utopia, and will quickly be undermined by those who seek to consolidate power. The rule of law is the first thing that suffers, thus rendering the whole stateless idea unworkable in the first place. I believe my point is consistent with constitutional principles.
Posted by: DSK on July 13, 2011 03:00 PMExcept this is not the case. If this were true, then the GOP would not have approved the budget. Further it isn't true because there examples on both sides where the opposite is true (Democrats wanting to cut areas and Republicans wanting to spend more in areas). Yes, the GOP policy has been "Starve the Beast" (beast being spending), but then balk when it comes to programs (especially jobs) in their own district/state. Examples include wanting defense items that DoD has stated they don't want. There are serious and consistent cutters, like Coburn (nickname Dr. No) and Ron Paul, but they are few and far between, in my opinion.
Posted by: tc on July 13, 2011 03:21 PMFalse logic. First, we're talking about right now, not three months ago. Second, I realize -- and this negates the rest of your comment -- that not ALL of the GOP wants to cut spending. I was not talking about everyone: YOU were.
Posted by: pudge on July 13, 2011 04:21 PMYou're lying. I did no such thing.
everywhere this has been implemented morbidity rates have increases.
You're lying. There's no data of any kind backing up that claim. I absolutely defy you to present your data.
Tracking and identifying potentially deadly infectious diseases has nothing to do with mass vaccinations.
Yes, in fact, it does: when the government tracks an infections disease heading this way, that is one of the many idiotic policies they usually (though not always) advocate. You could argue, of course, that one doesn't necessarily lead to the other; but the point is that government should not HAVE the power to routinely offer or provide for mass vaccinations in the first place.
You're making the mistake of assuming that I advocate mass vaccinations.
I did no such thing: I simply gave an example of how government screws things up in this area.
"Leaving people to their own devices" implies that they operate outside the reach of the coercive tentacles of the federal government.
It implies that for the most part, they are left alone by ANY force. There's exceptions, as I've already noted.
So citing a state and municipal example is relevant.
False.
There is famous incident in Texas were a community voted to pass an ordinance that restricted certain types of real estate development over aquifer recharge zones. Developers successfully lobbied the state legislature to pass legislation that rendered the ordinance obsolete. This in turn opened the door to massive urban development, mostly horizontal, and in less than 5 years overextended its water supply.
Yes, this is exactly what I was talking about: "... water is obviously a shared resource. I can have the rights to certain water that is part of the same body of water you have, and I have no problem whatsoever (in the abstract) with government being involved in that." That necessarily includes aquifers.
You could state, I suppose, that the coercion of state lawmakers is evidence of not letting the people to their own devices.
You mean, I could state the obvious. Yes, obviously. You are saying that because one side uses force to get their way, we should therefore increase the sphere of government force. Doesn't that seem stupid to you? Governments being bought is always argument for LESS government power, not more.
But abuses of power are deeply rooted in corporate history.
I don't care. If they are abusing power through government, well, then government having that power to be abused is your problem. If they are abusing power and violating the rights of others apart from government, then government -- as I've noted -- has a role in preventing or punishing that. Otherwise ... well, aside from those things, I don't know what "abuse of power" could possibly mean, if they aren't abusing government power or directly harming anyone's rights.
Even over 200 years ago when the East India Company operated in an completely unregulated environment.
You're just making things up. Completely unregulated? That's entirely backward! What actually happened is that the British government gave East India a total monopoly on the sale of tea in the colonies. How is that "completely unregulated"?!
And to top it all off, that monopoly was extended as a bailout to East India, which was suffering losses from a recession across Europe, and it was this extension of the monopoly, with the LOWERING of the tax on tea to help East India's profits -- which also lowered the cost to the consumer -- that was the direct event leading to the Boston Tea Party.
Yes, the Boston Tea Party was not about increased taxes, or taxation without representation, though these were factors: but the greatest factor leading to the Boston Tea Party was a government bailout that picked winners and losers.
To say this was a "completely unregulated environment" is just ... exceptionally bizarre.
My point is that this Friedman-ish idea of anarchocapitalism is a utopia, and will quickly be undermined by those who seek to consolidate power.
First, calling it "anarchocapitalism" is a lie. There's nothing anarchical about it. As I've repeated, the government has a major role in securing individual rights. That's what Thomas Jefferson said the whole reason of government IS, explicitly, in our very own Declaration of Independence. Anarchocapitalism denies this.
Second, as you demonstrated with your examples about water and East India, it is government that is used to undermine our rights, by those who seek to consolidate power.
Third, we've seen "Friedman-ish" ideas work, time and again, in Hong Kong, in Estonia, and in the U.S. prior to Reconstruction.
The rule of law is the first thing that suffers
In your ridiculous straw man fallacy, yes. But in the real world, where my ideas are absolutely predicated on the establishment and the preservation of the rule of law as the only reasonable method for government to secure individual liberties, you're absolutely wrong.
thus rendering the whole stateless idea unworkable in the first place
As I've rendered your straw man unworkable.
I believe my point is consistent with constitutional principles.
OK, but it's not. The Constitution explicitly disallows most of what the federal government does, which you want it to continue to do. We have an enumeration of federal powers, a clause that says the federal government can do what is necessary to execute THOSE enumerated powers, and we have a Tenth Amendment which limits the government to only those powers.
The tea act of 1773 was a failed attempt to rein in the East India Company after the East India bubble of 1772. The fact is that it wasn't suffering losses because of the European recession, it was suffering loses because it was playing the same sucker game with China that trapped and helped bankrupt the Roman Empire. On June 8 1772 a Scottish banker by the name of Alexander Fordyce tried to short the collapsing East India Company, but the stock momentarily rebounded and he skipped town 550,000 pounds in debt, collapsing the Ayr Bank in the process. Within 3 weeks 30 banks imploded around Europe bringing trade to a standstill. What ensued next are the numerous bailouts that led to the events you mentioned. The East India Company was losing money long before the European recession, in fact the East India was the cause of the recession.
The act that allowed its formation also allowed ANY English firms to trade with India, the monopoly came much later thanks in part to its powerful lobby and deep pockets. Neither did it control world trade when it was founded, Spain and Portugal had a big head start. In practice, it faced little domestic competition, much that was because of collusion between a group of traders. Adam Smith later wrote about this kind of collusion, stating that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Smith's Wealth of Nations(1776)was greatly influenced by the parliamentary debate over the EIC's mismanagement after the East India crash.
The Company never did fully gain control of the Crown, but it came close to it when it financed it during its many troubled times. This financing is what allowed it to operate unregulated.
Estonia has barely a million inhabitants and Hong Kong was more like a city state. Do you have an example that scales? Haiti didn't fare too well, rule of law got undermined.
Strange you mention Hong Kong, a city that was wrestled away from China by the East India Company, and was run by Jardine Matheson-a spinoff of "The Honorable Company." If they operated now the same way they did then, they would be considered a narco-terrorist corporation and make the Taliban look like kindergartners.
My point was about keeping power from being consolidated, perhaps I didn't make myself clear, but I think I did mention parties trying to consolidate their power. Anyway, I'm glad we agree on something.
Posted by: DSK on July 13, 2011 08:45 PMWow. Rein in?!? It was a damned bailout! It cut East India's taxes, it gave them MORE control over the tea market in the colonies. Saying that is "reining in" is nonsense on its face. And note that prior to the Tea Act, East India already had a monopoly on tea sold to the colonies (the Tea Act gave them a monopoly on the distribution, as well as the supply), so saying it was unregulated before the Tea Act is just lies.
And I never said that the ONLY reason for East India's problems was the recession, just like the ONLY reason for our problems is not the recession. The recession and other problems are caused by many factors. I was just pointing out the fact that the Tea Act was a bailout of a company in trouble.
The act that allowed its formation also allowed ANY English firms to trade with India, the monopoly came much later
No, it didn't. The monopoly on supplying the colonies preexisted the Tea Act, and the Tea Act established a new monopoly in the colonies on distribution.
Adam Smith later wrote about this kind of collusion, stating that "People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices."
Yes, which is an argument against your view that government should have the control to do such things in the first place.
This financing is what allowed it to operate unregulated.
Again, you're lying. They weren't operating unregulated, in any rational sense of the word.
Estonia has barely a million inhabitants and Hong Kong was more like a city state.
So what? You say that as though it is relevant. It's not.
Haiti didn't fare too well, rule of law got undermined.
So you admit they didn't have a libertarian government, and therefore it's not an example of anything. The rule of law is a necessary precondition to libertarianism, and is what sets it apart from anarcholibertarianism.
Strange you mention Hong Kong, a city that was wrestled away from China by the East India Company
False, of course. Government did that. Surely the company was involved, but it was the power of government that did it. Why do you insist on providing examples that argue AGAINST you?
My point was about keeping power from being consolidated, perhaps I didn't make myself clear, but I think I did mention parties trying to consolidate their power.
Right, and yet, you don't understand the indisputable fact that the government IS such a consolidation of power, despite the fact that government was deeply involved in EVERY example you came up with. And even your Adam Smith quote speaks to my point ... well, the part you left out: But though the law cannot hinder people of the same trade from sometimes assembling together, it ought to do nothing to facilitate such assemblies; much less to render them necessary. He was arguing AGAINST the use of government power.
By the time of the Tea Act it had already taken over Bengal(1757) and squeezed it dry of profits. The way they took over Bengal was with guns, its own guns. Its army was an independent unit of the British Army aptly called The East India Company. Well, the battle of Plassey was more of a side show than main attraction, much of the dirty work had been done. And it was dirty indeed, deceit, forgery of contracts, licensing frauds, murder, double-crossing, arm-twisting, Lord Clive was certainly ready for his close up after that thriller. The first Opium War was fought primarily with Company funds and firepower. The government may had taken part in it, it often did when the Company's own guns didn't suffice, but the Company led the war effort.
Government or not, they would have wanted and succeeded with their goal. Any resistance would have been met with force, and it was, regardless who or if anyone is in power. Thus the role government is not the key vector. In other words, a corporation wagging war against a sovereign nation.
I can see that your level of knowledge of the history of the East India Company-and first half of corporate history- is causing some confusion. Perhaps we should look at a more contemporary example, and one that doesn't involve much government at all. News of the World didn't lobby anyone, it just bribed law enforcement among other illicit activities.
Government is indeed a consolidation of power, and so is the corporation. Adam Smith's commentary proves me right. But at least government doesn't put its own narrow self interest above people's lives.
Posted by: DSK on July 14, 2011 03:57 PMNo. All I care about at this point is that you incorrectly used it as an example of an unregulated market/company, and you won't own up to it. Or, put another way: you are lying. Until you retract the claim that East India was unregulated, you remain a liar.
The first Opium War was fought primarily with Company funds and firepower. The government may had taken part in it ...
... and therefore the evidence argues for me, and not for you, no matter how you slice it. Not that you slice it in a reasonable way "may taken part in it" is more deception. It was ALL ABOUT the British government, from beginning to end. If the British didn't want the war, they would have stopped it. Indeed, it was the government that pushed -- and paid -- for the beginning of that war, largely on behalf of East India.
These examples help MY case, and hurt YOUR case.
the Company led the war effort.
Except for when they didn't, such as at the war's start. Unless you meant through lobbying the British government to start the war, but again, that just helps my argument, again.
Government or not, they would have wanted and succeeded with their goal.
False. The British government would have stopped it if they wished it to be stopped. That is completely and entirely obvious, because East India relied on the British government for its trade licenses. Without the license from the government, East India would have had NO business there AT ALL. Pretending that they would have done it without the aid and support of the British government is stupid.
Thus the role government is not the key vector.
You are entirely, and entirely obviously, wrong. There is no conceivable way this would've happened without the full-throated support of the British government, because there's no conceivable way East India would've stood up to the opposition from the government, which controlled East India's fate.
I can see that your level of knowledge of the history of the East India Company-and first half of corporate history- is causing some confusion.
Oh, to be sure! I am completely confused at how you could say so many completely incorrect things. My level of confusion on that is quite high, absolutely.
Please dispense with your ad hominem bullshit that you dredge up when you've lost the argument. It only annoys me, and makes you look dumber.
News of the World didn't lobby anyone, it just bribed law enforcement among other illicit activities.
Wow. It's amazing how little you get. YOU ARE AGAIN PROVING MY POINT. "It's not government, it's just law enforcement!" Um, yes, that's government!
They couldn't have gotten away with most of what they did had they not received help from GOVERNMENT, whether it was bribing or convincing people to look away.
Maybe they could've gotten away with the hacking without help from government -- we don't know enough details yet -- but ... so what? I never implied government is involved in all negative and criminal activity.
Showing a corporation doing something bad doesn't harm my point, or help yours, in the slightest bit. To harm my point, you'd have to show a corporation violating someone's rights without the help of government, and without government being able to do anything about it.
Government is indeed a consolidation of power, and so is the corporation.
And the former is MUCH more dangerous than the latter, because -- as your examples demonstrate, and as your LACK of examples NOT involving government prove -- the corporation is at its most dangerous when it is using the power of government to back it up.
Adam Smith's commentary proves me right.
Um. Again: Adam Smith said that government shouldn't help or hinder business, for the most part. You are arguing that government should hinder business, and you are dismissing Smith's significant concern about government helping business.
Adam Smith explicitly argued AGAINST you, in the very passage you started and I finished. His point was, again, that corporations are most dangerous when government colludes with them. Or to repeat myself from above:
If they are abusing power through government, well, then government having that power to be abused is your problem. If they are abusing power and violating the rights of others apart from government, then government -- as I've noted -- has a role in preventing or punishing that. Otherwise ... well, aside from those things, I don't know what "abuse of power" could possibly mean, if they aren't abusing government power or directly harming anyone's rights.
And you never addressed that. When they are bribing police, government is the problem, for not upholding the law. And when they are not going through the government to cause harm, then government punishes that; and if it fails to do so, then government is, once again, the problem.
But at least government doesn't put its own narrow self interest above people's lives.
That's what the bribed police did in your most recent example! My goodness. You are amazingly dense.
Parliament only protected it from the domestic competition-but not always. Foreign competitors where more abundant and more powerful. Almost all of them had about 150 years head start. Their charter did not include the monopoly of world trade. So how did they come to control world trade if government influence did not extend beyond its borders?
As I said before passed, an act that allowed for competition was passed in 1694, which essentially annulled the company's previous charter. Two of the largest companies merged in 1708 and formed the EIC-not encouraged by the government. Your claim that this is false illustrates how little you know about the subject, you even got your century wrong. And as I state above, this was just domestically, but EIC was a multinational corporation-the prototypical multinational.
If you're not conversant on the subject you can't possibly understand the governments involvement or lack thereof in the affairs of the EIC.
You're rationalizing by trying to disprove historical fact with logic. Case in point, your claim that the quote from S&P that I provided supported your views were blown out of the water by S&P yesterday-you were warned.
In the case of Newscorp's paper, people's invasion of privacy was a source of revenue.
Who's going to uphold the law? Can they be bribed? Or how about assassinated? Can they stop a belligerent party from taking over the state by force?
Posted by: DSK on July 15, 2011 08:51 AMSo what's this ... the fifth, sixth, seventh time you've shifted the goalposts?
Admit you were wrong about lack of government involvement in Hong Kong, about East India being "unregulated," about having no monopoly until after the Tea Act ... you are being extremely dishonest by failing to acknowledge my proofs against the existing arguments you've laid out, and I won't continue to chase you around.
If you're not conversant on the subject ...
Little pimple: I've disproved almost every claim you've made. YOU are the one who is not conversant.
You're rationalizing by trying to disprove historical fact with logic.
You're a damned liar. I proved the British government was integral in Hong Kong by showing that the British government was heavily involved -- financially, materially, and politically -- in the matter. I proved East India was not unregulated -- and that they had a monopoly -- by showing they had a monopoly. I am providing FACTS, and you are ignoring them. You are extremely dishonest.
Case in point, your claim that the quote from S&P that I provided supported your views were blown out of the water by S&P yesterday-you were warned.
Again, you're a damned liar. No such thing happened. IN FACT, what S&P actually said backs me up more than you: they said raising the debt limit isn't the solution. NOWHERE did they say that if we don't raise the debt limit, that we will default, or that they will reduce our rating, which is your point. Therefore, you are a damned liar.
S&P said a credible solution to our long-term debt problem is the issue, and that is going to require MASSIVE spending cuts ... and Obama and the Democrats are proposing spending INCREASES. This was a slap in the face to Obama more than anyone.
In the case of Newscorp's paper, people's invasion of privacy was a source of revenue.
So? How, in any way, does that argue against ANYTHING I said? It doesn't.
Who's going to uphold the law? Can they be bribed? Or how about assassinated? Can they stop a belligerent party from taking over the state by force?
What do you hope to accomplish by those questions? They certainly do not argue against anything I've written.
Your continued lies will not be allowed any longer. This is your last warning.
The EIC operated unregulated prior to 1773. The takeover of Bengal and its control of India proves it-I dare you find an act that sanctions this prior to 1773. India was under company control until 1857, not crown rule. This was not a part of its charter. You argued that a corporation is most dangerous when it uses government power, the hostile takeover of Bengal proves that assumption to be false. Therefore any support the government might have given the company during the first Opium War does not prove that such support is imperative to taking over a country or force the surrender of sovereign territory. Nor does it prove that a corporation cannot become powerful without the help of the government. I've referenced Bengal in post #56, you didn't seem to have a problem with it then. Why is it a problem now?
You also claimed that the Tea Act was not an attempt to rein in the EIC and and stated that I was "making things up." Yet you clearly did not see the connection between the act and Lord North's attempt to overhaul company management. The Tea Act-which dealt with that excess supply problem I mentioned- was part of a more comprehensive set of acts to deal with the mismanaged company, it also included the East India Act of 1773 and the Regulating Act for India of 1773. The former establishes that the "acquisition of sovereignty by the subjects of the Crown is on behalf of the Crown and not in its own right." See date India changed to Crown rule for evidence of why this failed. More proof that it operated in an unregulated environment prior to 1773. Again I challenge you to find an act or wording in the EIC charter that authorized acquisition of sovereign land for itself. You only understand the Tea Act of 1773 as it pertains to the Colonies, but you're completely clueless to its greater context. I believe this proves that I have it right and your claims to the opposite have been demonstrated to be false. You state that you have proven that you're fluent in the subject. How could this be when you don't have the prerequisite knowledge to understand the bigger picture?
You haven't provided much historically accurate facts that have disproved mine-because they are none, but you offered plenty general assumptions and attempts at using logic to try to disprove historical facts.
I will grant you this, there was a bailout-several in fact, after all the EIC was the original too big-to-fail corporation. The crash brought European trade to a standstill, hence the excess supply.
As I have demonstrated, you are not conversant in the subject, but you categorically state that you are. Yet you want to ban me for alleged dishonesty. Duly noted.
http://www.reuters.com/article/2011/07/14/us-usa-debt-warning-idUSTRE76D36D20110714
Here's what Bernanke had to say on the subject. "It's possible that simply defaulting on our obligations to our citizens might be enough to create a downgrade in credit ratings and higher interest rates for us, which would be counterproductive, of course, since it makes the deficit worse..."
Thank you for allowing me to participate in this discussion.
Posted by: DSK on July 15, 2011 08:05 PMYou're a liar. I also pointed out several facts you were not aware of, in regards to British government involvement in the First Opium War, for example.
That's a very weak claim
Wow.
Um.
Your ENTIRE ARGUMENT was that East India was unregulated. That was the basis of your claim. I quote you:
... abuses of power are deeply rooted in corporate history. Even over 200 years ago when the East India Company operated in an completely unregulated environment.
So no, my pointing out the fact that the British government gave East India a monopoly is not a weak argument: it completely undermines your point.
You claimed that the fact that the trade licenses could be pulled was enough to prove that it was regulated.
First, no, I didn't claim that at all. I won't waste time demonstrating my actual point; I've already made it, and I have no reason to think you'd suddenly grow the ability to get it.
Second, wow, you actually just conceded they had a trade license, and then in the same sentence try to imply they were unregulated. It's amazing that you have enough brainpower to breathe, let alone type such idiotic drivel. A trade license is regulation.
The EIC operated unregulated prior to 1773.
Again: you're a damned liar. They had trade licenses, as you've conceded. And I also already pointed out how they had a monopoly on supply of tea to the colonies well before 1773 ... the Tea Act extended their monopoly to distribution as well. I know you're not very conversant on the subject, but this is a really major point. Anyone who has read anything about it would know this.
As I have demonstrated, you are not conversant in the subject
Funny how when I prove you wrong, several times over -- and you are clearly unaware of some of the most basic facts -- that I am the ignorant one. You're a real piece of work.
Yet you want to ban me for alleged dishonesty.
Shrug. Anyone can look and see it for themselves, over and over again, from your first dishonest claim that failing to increase the debt limit somehow equals default or lowering of our credit rating, to your shortly thereafter dishonest claim that Bachmann "cannot have the knowledge require to decide what conditions constitutes default," right up to your dishonest claim that East India was unregulated (even while conceding at the time that they were regulated!).
Here's what Bernanke had to say on the subject. "It's possible that simply defaulting on our obligations to our citizens might be enough to create a downgrade in credit ratings and higher interest rates for us, which would be counterproductive, of course, since it makes the deficit worse..."
That makes no sense. Default, as Bernake knows, has a very specific meaning: it refers to legal debt obligations. Social Security and Medicare cannot be defaulted on, because the meaning of the word doesn't apply. Regardless, it is very easy to pay off all our debt obligations AND pay for S.S. and Medicare, without increasing the debt.
But here's the thing: Obama and the Democrats are proposing annual net INCREASES in spending, INCREASES in taxes, and INCREASES in debt, for the forseeable future. The end result of this would be far worse than default.
Thank you for allowing me to participate in this discussion.
Nonsense. EVERYONE is allowed to participate in any discussion here, until they've proven themselves incapable, as you now have.