What are the potential impacts of public confidence on the economy's recovery?

[Astronuc]

Again, as we've discussed before, the CRA didn't cause all of the problems - Bill Clinton (unintended consequences) also helped.
http://2010.newsweek.com/top-10/history-altering-decisions/clinton-signs-securities-legislation.html

Actually, the CFMA was drafted Rep Thomas Ewing (R - IL) and cosponsor by several republicans, including Bob Ney, who pled guilty to charges of conspiracy and making false statements in the Jack Abramoff scandal.

H.R.10
Title: Financial Services Act of 1999
Sponsor: Rep Leach, James A. [IA-1] (introduced 1/6/1999)

S.900
Title: Gramm-Leach-Bliley Act
http://thomas.loc.gov/cgi-bin/bdquery/D?d106:1:./temp/~bdYOLz:@@@P

H.R.4541
Title: Commodity Futures Modernization Act of 2000
Sponsor: Rep Ewing, Thomas W. [IL-15] (introduced 5/25/2000)

S.2697
Title: Commodity Futures Modernization Act of 2000
Sponsor: Sen Lugar, Richard G. [IN] (introduced 6/8/2000) Phil Gramm was a consponsor.
http://thomas.loc.gov/cgi-bin/bdquery/D?d106:7:./temp/~bdYOLz:@@@P

Clinton certainly enabled those folks undo the regulation of the financial industry.

The commercial and investment banks had the reins taken off.


The mess we're in at the moment involves bipartisan complicity and poor governance. Certainly more of the same is not going help, but better governance would.

 

[Al68]

Are you looking at a different page than the one I cited?

EVERY SINGLE country in the 30-ish long Eurostat list has a higher revenue fraction than the US.

And in the 31-member OECD list, the only countries with a lower revenue fraction are Japan, Mexico and Turkey.

I think that counts as "nearly every other developed country".

Nope, since the Eurostat list is only a small fraction of the countries on earth. Ditto for the OECD list. Unless you're claiming that all the countries not on the Eurostat list (majority of the world's countries) are not developed? That would be a rather strange claim.

 

[Gokul43201]

Nope, since the Eurostat list is only a small fraction of the countries on earth. Ditto for the OECD list. Unless you're claiming that all the countries not on the Eurostat list (majority of the world's countries) are not developed? That would be a rather strange claim.

No it wouldn't ... not by a long shot.

Here's a page with about a half-dozen different lists that are commonly accepted as representing all the developed countries (the OECD being one of them).

http://en.wikipedia.org/wiki/Developed_country

The first list, with 42 member states, has 2 countries with an essentially identical revenue rate (Japan, South Korea), and 5 countries with a significantly lower rate: Hong Kong, Singapore, UAE, Qatar, Bahrain (those last 3 being states where the governments reap oil revenues).

The remaining lists all look very similar, and I'll happily wager a small amount that none of those lists has more than 20% of its members with a lower revenue rate than the US.

From my first link, the following countries all have higher or identical (within 1%, which is about the size of the error bar) tax revenues compared to the US.

South Korea 	 
 Japan 	
 Montenegro 		
 Trinidad and Tobago
 Romania 		
 Namibia 	
 Macedonia
 Slovakia 	
 Switzerland
 Dominica 	
 Latvia 	
 Australia 	
 Estonia 	
 Guyana 	
 Seychelles
 Turkey 	
 Barbados 	
 Canada 	
 Greece 	
 Moldova 	
 Mongolia 	
 Poland 	
 Ireland 	
 Serbia 	
 Bulgaria 	
 Botswana 	
 Malta 	
 Czech Republic 	
 Luxembourg 	
 New Zealand 	
 Cyprus 	
 Israel 	
 Russia 	
 Portugal 	
 Hungary 	
 Spain 	
 Ukraine 	
 Brazil  		
 United Kingdom 	
 Slovenia 	
 Netherlands 	
 Swaziland 	
 Iceland 	
 Germany 	
 Bosnia and Herzegovina 	
 Italy 	
 Lesotho 	
 Austria 	
 Finland 	
 Norway 	
 Cuba 
 France 
 Belgium 	
 Zimbabwe 		
 Sweden 
 Denmark

You don't think that list includes nearly all the developed countries??

 

[Al68]

No it wouldn't ... not by a long shot.

Here's a page with about a half-dozen different lists that are commonly accepted as representing all the developed countries (the OECD being one of them).

Well, the OECD is certainly far more inclusive than Eurostat.

The remaining lists all look very similar, and I'll happily wager a small amount that none of those lists has more than 20% of its members with a lower revenue rate than the US.

I think I'll just decline and cede the point. I'm too lazy to do the research, and whether that's true or not doesn't really matter, since it's certainly true that government revenues in the U.S. as a percentage of GDP is far from uncommon among countries, which I think was your point, anyway.

But a claim that the U.S. federal government suffers from a "lack of revenue" doesn't follow from that, anyway. I was really comparing it to what was needed to cover the cost of expenditures authorized by the U.S. constitution, not some standard established by the spending habits of other countries' governments.

 

[brainstorm]

And how do you establish a reasonable standard?

How exactly is one-seventh of GDP as revenue (rather than any other fraction) equivalent to 85 candy bars for a 200 lb 9-year-old. Or did you just randomly pick numbers out of the air?

If all the other healthy kids on the planet get more, it questions which planet you are establishing your reasonable standard from.

What you are basically doing when you approach the issue like this is the following: You're dividing up the world into national economies and then comparing your nation with other wealthy/prosperous nations. By doing this, you're basically arguing for a right to equality with the richest of the rich, especially if you're comparing wealth/prosperity of the governing class of each regime. This is like a CEO going to their factory workers and showing how the top-managers of other companies get multimillion dollar bonuses, so s/he should as well.

If you are alert, you should notice that government employees like to compare their wage-levels with that of managers in private business instead of the working class. They do this because this makes them seem relatively underpaid instead of overprivileged. In fact, the real problem with resource allocation is not how much is going to government in taxes or kept by taxpayers by lowering taxes. It is how much is being paid to and spent by middle-class professionals vs. the income and budgets of people with low-incomes.

Furthermore, the solution imo is not to pay lower-income people more because that would just create more profits and pressure for the service industry to expand as they consume and spend more. The solution is for middle-class professionals to spend and consume less, in order to set a more responsible standard for those with lower incomes. The reason is that those with lower income tend to look "up" to the middle class as "the way people are supposed to live." When the lifestyles they see are effectively unsustainable, they become frustrated and cannot feel happy with the lower levels of consumption available to them.

Before WWII/Keynes, people made due with relatively little spending, even if they had the income to spend more. The reason was that it was known that it was not possible for everyone to achieve an aristocratic lifestyle so it was socially responsible to save one's money instead of flaunting it. The differences between rich and poor were present but their effects were dampened somewhat by fiscal responsibility at the level of personal/private consumption.

 

[Gokul43201]

What you are basically doing when you approach the issue like this is the following: You're dividing up the world into national economies and then comparing your nation with other wealthy/prosperous nations. By doing this, you're basically arguing for a right to equality with the richest of the rich, especially if you're comparing wealth/prosperity of the governing class of each regime. This is like a CEO going to their factory workers and showing how the top-managers of other companies get multimillion dollar bonuses, so s/he should as well.

No, it is not.

What I'm doing is, to use Al's analogy, pointing out that some of the healthiest children in the planet are eating more than 85 candy bars a day, so that ought to give pause to anyone that says 85 is so obviously in excess of any reasonable standard that it hardly deserves justification.

 

[brainstorm]

No, it is not.

Insufficient rebuttal.

What I'm doing is, to use Al's analogy, pointing out that some of the healthiest children in the planet are eating more than 85 candy bars a day, so that ought to give pause to anyone that says 85 is so obviously in excess of any reasonable standard that it hardly deserves justification.

I can't tell if you are implying that somehow these wealthy "healthy children" refers to everyone in those economies. If so, you need to do a more accurate analysis of everyone who is part of them. People living in Europe enjoy a relatively high standard of living, which is more broadly distributed by government spending but try to figure out where all the material consumption comes from. Do you think that when everyone living in Europe is sporting new clothes with every tick of the fashion clock that these clothes are being manufactured by middle-class or even working-class Europeans with lots of vacation time and fringe benefits? No, there is an enormous global working class who are excluded from anything close to the standard of living provided to European citizens by relatively socialist governments. Those governments would not be able to provide the same standard of living if all the global workers involved received the same benefits.

This is why equality politics should be focused on reducing the consumption gap between the global middle-class and global working class. Saying that the middle-class enjoys a higher standard of living in the socialist paradises of Europe may be true but you cannot prove that such a standard of living is achievable for everyone globally. Likewise, if you raise income levels for government employees in the US, this will only result in more middle-class spending, which in turn will expand the service industry and force more people into dead-end low-income jobs. These jobs make people miserable and unhealthy because they demand long hours and relentless emotional pandering to customers. It is this life of servitude that you will be expanding if you get your wish of increasing middle-class administrative income to match that of the wealth aristocracies of the global economy, imo.

 

[Al68]

What I'm doing is, to use Al's analogy, pointing out that some of the healthiest children in the planet are eating more than 85 candy bars a day, so that ought to give pause to anyone that says 85 is so obviously in excess of any reasonable standard that it hardly deserves justification.

Whoa, there. The obvious implication of my analogy was that eating 85 candy bars a day was not healthy, and that the kids who ate more were not healthy.

And the analogy is that the other governments that tax more than the U.S. are also taxing too much, and that it's a bad thing, not a good thing.

 

[Gokul43201]

I can't tell if

Incomplete sentence.

(See what I/you did there?)

 

[Gokul43201]

Whoa, there. The obvious implication of my analogy was that eating 85 candy bars a day was not healthy, and that the kids who ate more were not healthy.

And the analogy is that the other governments that tax more than the U.S. are also taxing too much, and that it's a bad thing, not a good thing.

I get that, and my point is just the opposite. If all the kids eating more than 85 candy bars seem to be pretty healthy, then perhaps it might not be a bad idea to revisit the premise and re-examine the arguments.

 

[brainstorm]

Incomplete sentence.

(See what I/you did there?)

Is this just your way of ignoring the whole post by pretending you can't understand the first sentence or can you really not read it?

FYI, "I can't tell if you are implying that somehow these wealthy "healthy children" refers to everyone in those economies." is indeed a complete sentence. I even remembered to put a period on the end.

So are you implying that governments that tax and spend more are creating healthier economies? If so, are you paying attention of the pressure they put on domestic investors to extract profit from global markets? Do you note the health-differential between the people benefiting from the taxation/spending and those living in the economies where profits are being extracted? Are you looking at who is manufacturing the goods consumed in these welfare states and the level of welfare enjoyed by those workers? Do you really think these tax-spend welfare states are doing anything except creating internally egalitarian global elites while exploiting the global markets and working classes to buttress national welfare?

The US could surely do the same thing: i.e. raise taxes and increase consumption-levels for an expanding number of people. This, in turn, would put pressure on tax-payers to support the higher government budget, which would require either greater exploitation of certain workers domestically or in foreign markets. If domestic workers were indeed provided with increased consumption and services, this would require more domestic service personnel, which would further displace manufacturing to cheaper labor pools globally. In the end, I believe that global interdependency would be increased, which would stimulate the global working class to develop the same sense of entitlement that domestic workers are developing. The question is whether middle-class prosperity will ever be sustainably achievable for everyone on Earth. If it was, it might be worth pursuing but I don't think there is ultimately enough resources.

It makes far more sense to reduce consumption among the global middle-class and reduce global, national, AND local economic interdependencies by encouraging as much independence and sustainability as possible. This will never be easy as long as the middle-class culture of high-consumption and service-dependency persists, but slowly progress can be made as people start to discover radical innovations that drastically reduce the gap between rich and poor without compromising health and happiness.

 

[Al68]

I get that, and my point is just the opposite. If all the kids eating more than 85 candy bars seem to be pretty healthy, then perhaps it might not be a bad idea to revisit the premise and re-examine the arguments.

Or, assuming analogously that those other kids are also obese, we might consider that the appearance of current healthiness isn't evidence that their eating habits are healthy.

And more to the point, the fact that other obese children eat just as many, or more, candy bars doesn't change the fact that it would be absurd to claim the kid isn't eating enough candy bars.

 

[brainstorm]

Or, assuming analogously that those other kids are also obese, we might consider that the appearance of current healthiness isn't evidence that their eating habits are healthy.

And more to the point, the fact that other obese children eat just as many, or more, candy bars doesn't change the fact that it would be absurd to claim the kid isn't eating enough candy bars.

My impression is that materialism has modernized to the point where the aesthetics of status has almost totally eclipsed other measures of human well-being in popular perceptions. So, to reference your analogical "fat kid," the kid is not only eating too many candy bars, s/he also requires a whole slew of medicines, activity-regimes, and therapy to deal with the side-effects of all the sugar and other empty calories. Sure, the end result is a healthy-looking kid - but similar results could have been achieved with a much simpler life that required much lower levels of consumption in the first place. The only reason why economic "recession" has made people look unhealthy is because they are suffering from various forms of materialist withdrawal that manifests in psychological and even some physiological symptoms. If people would earnestly develop lifestyle patterns that were simple yet healthy, they would find themselves very happy with relatively little. They've just been programmed to interpret budgeting as hell, so they're screaming and searching for more money to avoid doing the real work of figuring out ways of enjoying their lives constructively with lower levels of (income-producing) economic activity.

 

[WhoWee]

We might be a little off topic?

 

[brainstorm]

We might be a little off topic?

How is that? Isn't this discussion addressing the very heart of why economic recovery is being sought and assumptions about what a healthy economy even entails?

 

[WhoWee]

Has anyone been following the GM IPO?
http://www.reuters.com/article/idUSWEN287720101110
"Nov 10 (Reuters) - General Motors Co [GM.UL] is in the final stage of talks to sell equity to long-time Chinese partner SAIC Motor Corp (600104.SS) in conjunction with its landmark initial public offering, two people familiar with the matter said.
"

 

[mheslep]

Has anyone been following the GM IPO?

Upthread
https://www.physicsforums.com/showpost.php?p=2969792&postcount=765
https://www.physicsforums.com/showpost.php?p=2970538&postcount=767

 

[Al68]

My impression is that materialism has modernized to the point where the aesthetics of status has almost totally eclipsed other measures of human well-being in popular perceptions. So, to reference your analogical "fat kid," the kid is not only eating too many candy bars, s/he also requires a whole slew of medicines, activity-regimes, and therapy to deal with the side-effects of all the sugar and other empty calories. Sure, the end result is a healthy-looking kid - but similar results could have been achieved with a much simpler life that required much lower levels of consumption in the first place. The only reason why economic "recession" has made people look unhealthy is because they are suffering from various forms of materialist withdrawal that manifests in psychological and even some physiological symptoms. If people would earnestly develop lifestyle patterns that were simple yet healthy, they would find themselves very happy with relatively little. They've just been programmed to interpret budgeting as hell, so they're screaming and searching for more money to avoid doing the real work of figuring out ways of enjoying their lives constructively with lower levels of (income-producing) economic activity.

Or a simple recognition of the reality that we almost all live an extraordinarily fantastic life relative to 99.99% of humans who have ever lived. How many of us lose sight of that? I do fairly often, even over such relatively trivial things like a flat tire.

 

[brainstorm]

Or a simple recognition of the reality that we almost all live an extraordinarily fantastic life relative to 99.99% of humans who have ever lived. How many of us lose sight of that? I do fairly often, even over such relatively trivial things like a flat tire.

Why are you obfuscating my point by responding like this?

 

[mheslep]

Rep Jack Kingston is in the running for the chair of the House Appropriations Committee and the upcoming Congress, though he's far junior than others. He's put together http://online.wsj.com/public/resources/documents/1kingston.pdf" for the selection committee. I like his priorities. In case anyone forgets, here's the 2010 budget picture again (from Kingston):

Revenue: $2.2T
Spending: $3.5T
Deficit: $1.3T

 

[mheslep]

Another Paul Ryan bit on QE2, Fed on CNBC. This guy must be the soundest, most well informed congressman on economic issues in the history of the institution .
http://www.economics21.org/content/...-were-coming-untethered-our-sound-money-roots

As a behind the scenes member of the Debt/Deficit commission that reported out today, I'm betting he's persuasiveness is the primary reason they came out with some very sound ideas as opposed more "Its time to be patriotic" and pay more taxes nonsense.

 

[Mech_Engineer]

Revenue: $2.2T
Spending: $3.5T
Deficit: $1.3T

All we have to do is chop out social security, medicare, and medicaid and we're good to go! I'm curious, what constitutes "other mandatory"?

 

[Char. Limit]

All we have to do is chop out social security, medicare, and medicaid and we're good to go! I'm curious, what constitutes "other mandatory"?

Cutting all discretionary spending works as well.

 

[Mech_Engineer]

Cutting all discretionary spending works as well.

I don't view defense spending as discretionary, it's one of the few sections of the pie chart that is actually outlined in the Constitution (although it might be able to be trimmed down a bit, I'm sure there's plenty of waste in there). I'm curious what the breakdown is in the "Non-Defense Discretionary" and "Other Mandatory" sections though.

 

[russ_watters]

All we have to do is chop out social security, medicare, and medicaid and we're good to go! I'm curious, what constitutes "other mandatory"?

I'm curious: what makes social security, medicare and medicaid "mandatory"?

 

[mheslep]

. I'm curious what the breakdown is in the "Non-Defense Discretionary" ...

Slide 3
http://online.wsj.com/public/resources/documents/1kingston.pdf
Homeland- $44.1
Interior $32.3
Labor-HHS $163.6
Leg Branch $4.7
MilCon-VA $102.9
State-Foreign Ops $48.9
Ag-FDA $23.3
CJS $68.7
Energy & Water $33.4
Financial Services $46.4
T-HUD $122.10

 

[mheslep]

I also believe in a strong US military, but spending without limit doesn't guarantee one. Defense spending at $640B per year is greater than the http://en.wikipedia.org/wiki/List_o...nditures#SIPRI_Military_Expenditure_Database".

 

[mheslep]

I'm curious: what makes social security, medicare and medicaid "mandatory"?

Part of that would be wrapped up in the idea, long past, that we all pay directly in to SS and Medicare via FICA, etc, and supposedly have a direct call on that money.

 

[russ_watters]

Part of that would be wrapped up in the idea, long past, that we all pay directly in to SS and Medicare via FICA, etc, and supposedly have a direct call on that money.

Which, of course, is now and always was a load of crap...but you may be right that that's why they call it "mandatory".

To me, "mandatory" actually should mean "mandatory". Interest on the debt is mandatory in that Congress can't just pass a law to change it and if you don't spend it, the economy collapses. That's really about it. SS can be changed simply by choosing to change it (and we must).

 

[mheslep]

Which, of course, is now and always was a load of crap...but you may be right that that's why they call it "mandatory".

To me, "mandatory" actually should mean "mandatory".

Radical notion. Next you'll want a "cut" to mean a "cut" instead of a less than planned increase.

Interest on the debt is mandatory in that Congress can't just pass a law to change it and if you don't spend it, the economy collapses. That's really about it. SS can be changed simply by choosing to change it (and we must).

I'd privatize the thing away, ala Chile.

 

[russ_watters]

Radical notion. Next you'll want a "cut" to mean a "cut" instead of a less than planned increase.

Perhaps we should call the "Bush tax cut expiration" the "Obama tax increase"...?

And getting richer slower isn't getting poorer.

 

[Mech_Engineer]

I'm curious: what makes social security, medicare and medicaid "mandatory"?

My thoughts exactly. If we don't have enough money for them, we can't have them. Simple as that (perhaps too simple?).

If I could I would opt-out of all 3 tomorrow, but the citizens that are dependent on it wouldn't want that to happen... Still, it pisses me off that I see my paycheck go down for money I will never get back.

 

[talk2glenn]

Which, of course, is now and always was a load of crap...but you may be right that that's why they call it "mandatory".

To me, "mandatory" actually should mean "mandatory". Interest on the debt is mandatory in that Congress can't just pass a law to change it and if you don't spend it, the economy collapses. That's really about it. SS can be changed simply by choosing to change it (and we must).

Mandatory spending refers to funds whose appropriation is not directly controlled by Congress through the annual budget-making process. It is spending which is, by law, obligated automatically.

Social Security outlays cannot be changed without changing the law. This is mandatory, by definition . Interest payments on the public debt are a part of the annual Congressional discretionary budget outlays. This is voluntary, again by definition. The United States is under no legal obligation to honor its debts, anymore than, say, Bank of America is - if it were, it would distort the marketability of that debt. It is under contractual obligation, like any other borrower, but since the US has never actually tried not paying its debts, I don't think anybody really knows what consequence this would have for Congress if we decided to go that route. In practice, its conjecture in the extreme.

I'm curious, what constitutes "other mandatory"?

Unemployment benefits, most veterans benefits, income support programs, some product subsidies. Any spending that is required by law, and not appropriated annually by Congress.

It's actually pretty surprising how much of the budget is mandatory - this is why reducing government expenses is so difficult. The budget can be passed with relative ease, bypassing most of the procedural obstacles that slow down legislation, and is a consequence a pretty volatile outlay. It grows and shrinks pretty dramatically over a relatively short time, and is difficult to predict forward. Mandatory outlays, on the other hand, change little (speaking fundamentally) over time and are pretty easy to predict forward - it's just a matter of statistics once you assume the law doesn't change.

Something like 3/4 of the USDA budget is mandatory, for example.

 

[Al68]

Mandatory spending refers to funds whose appropriation is not directly controlled by Congress through the annual budget-making process. It is spending which is, by law, obligated automatically.

Social Security outlays cannot be changed without changing the law. This is mandatory, by definition . Interest payments on the public debt are a part of the annual Congressional discretionary budget outlays. This is voluntary, again by definition. The United States is under no legal obligation to honor its debts, anymore than, say, Bank of America is - if it were, it would distort the marketability of that debt. It is under contractual obligation, like any other borrower, but since the US has never actually tried not paying its debts, I don't think anybody really knows what consequence this would have for Congress if we decided to go that route. In practice, its conjecture in the extreme.



Unemployment benefits, most veterans benefits, income support programs, some product subsidies. Any spending that is required by law, and not appropriated annually by Congress.

It's actually pretty surprising how much of the budget is mandatory - this is why reducing government expenses is so difficult. The budget can be passed with relative ease, bypassing most of the procedural obstacles that slow down legislation, and is a consequence a pretty volatile outlay. It grows and shrinks pretty dramatically over a relatively short time, and is difficult to predict forward. Mandatory outlays, on the other hand, change little (speaking fundamentally) over time and are pretty easy to predict forward - it's just a matter of statistics once you assume the law doesn't change.

Something like 3/4 of the USDA budget is mandatory, for example.

I think we all understand that, but I would never use that politically motivated definition of "mandatory". Government has a choice whether or not, and to what extent, to continue any of those programs. The national debt is, like you say, a contractual obligation authorized by the constitution. Most of the rest is nothing more than political promises by politicians that do not constitute an obligation on the part of my children and grandchildren to pay for. Despite promises by past and current politicians, our children and grandchildren have no moral or legal obligation whatsoever as a result. That meets the dictionary definition of voluntary, not mandatory.

 

[M.Dowson]

I'm curious: what makes social security, medicare and medicaid "mandatory"?

Just the prejudice that they should be. I am a free man and I want to have my own choice. Why don't they just give me one?