OT: Current Affairs and Politics

[Poupou Escobar]

That's all about slowing population growth, nothing about inflation?

Well there is obviously a strong link between the two. Or is it not obvious?

 

[Poupou Escobar]

EDIT

Cause basically you are saying that's the end of capitalism as we know it, which isn't in and of itself a radical idea, but still, it's outside the box.

Capitalism itself rests on a few assumptions. One is that people want more stuff and are willing to trade their time and effort for the opportunity to get it. Another is that nothing will prevent them from doing so.

 

[I'm a loser baby...]

Capitalism itself rests on a few assumptions. One is that people want more stuff and are willing to trade their time and effort for the opportunity to get it. Another is that nothing will prevent them from doing so.

What if the alternatives proposed just seem worse?

 

[Poupou Escobar]

Well the alternatives (so far) haven't been able to scale the way capitalism does and generate huge amounts of valuable things (wealth), so it's just been easier for national governments to support. Even the Chinese Communist Party loves capitalism.

Capitalism is driven by two fundamental human activities - production and consumption of goods/services - but because it scales, one of the consequences is inequality, which is a legitimate social problem (or rich kids wouldn't call themselves communists).

 

[Bandwagon]

Well there is obviously a strong link between the two. Or is it not obvious?

Yeah I understand you're saying there's a link on the demand side, but then there's a link on the supply side which might just as easily work the other way.

 

[crocodile]

Well the alternatives (so far) haven't been able to scale the way capitalism does and generate huge amounts of valuable things (wealth), so it's just been easier for national governments to support. Even the Chinese Communist Party loves capitalism.

Capitalism is driven by two fundamental human activities - production and consumption of goods/services - but because it scales, one of the consequences is inequality, which is a legitimate social problem (or rich kids wouldn't call themselves communists).

We can all be equally poor.

 

[Poupou Escobar]

Yeah I understand you're saying there's a link on the demand side, but then there's a link on the supply side which might just as easily work the other way.

Well my point is that anything might happen. How much do we want to be exposed to it?

 

[Poupou Escobar]

We can all be equally poor.

I reckon plenty of people would prefer that. The difference is that the ones who want to be rich understandably have more power to have things their own way.

 

[Bandwagon]

Well my point is that anything might happen. How much do we want to be exposed to it?

Well sure, anything might happen. I mean two months ago if I was to suggest that the Morrisson Government where about to basically suspend capitalism, and introduce a whole heap of very socialist looking policy in an attempt to save our economy from deep recession, or perhaps even depression, quite rightly you might have directed me to seek help.

Yet here we are.

That all however digress' from the point, which is again the assumption that government debt exposes us to greater levels of risk, and that those levels of risk are significant. And so it's preferable that risk is borne by transferring that debt to private debt.

Again, the government is far better equipped to service debt than is the private sector, and I'm yet to see any meaningful explanation as to how that debt becomes problematic for the government beyond blithe statements that attempt to align the finances of a sovereign state with that of a household.

 

[crocodile]

I reckon plenty of people would prefer that. The difference is that the ones who want to be rich understandably have more power to have things their own way.

Like North Korea have perfect equality.

 

[strider]

Omg when will it end .... its becoming depressing

No, not the virus, this

 

[Poupou Escobar]

Like North Korea have perfect equality.

That's not true at all. The elites in North Korea live pretty well, no different to anywhere else. The problem is low social mobility.

 

[Poupou Escobar]

Well sure, anything might happen. I mean two months ago if I was to suggest that the Morrisson Government where about to basically suspend capitalism, and introduce a whole heap of very socialist looking policy in an attempt to save our economy from deep recession, or perhaps even depression, quite rightly you might have directed me to seek help.

Not really. Socialism is what government intervention looks like, and disasters are when they're supposed to intervene.

Yet here we are.

That all however digress' from the point, which is again the assumption that government debt exposes us to greater levels of risk, and that those levels of risk are significant. And so it's preferable that risk is borne by transferring that debt to private debt.

What's wrong with private debt? This is the only time when the benefits of debt are directly linked to the consequences. Public debt allows some to benefit while others pay the price.

Again, the government is far better equipped to service debt than is the private sector

OMFG no it isn't. Government is wasteful and easily exploited for the benefit of the powerful. The whole problem of government is that it's by definition too big to fail.

and I'm yet to see any meaningful explanation as to how that debt becomes problematic for the government beyond blithe statements that attempt to align the finances of a sovereign state with that of a household.

If you're convinced public debt is preferable to private debt, we'll just have to agree to disagree.

 

[Bandwagon]

Not really. Socialism is what government intervention looks like, and disasters are when they're supposed to intervene.

Really? Socialism and government intervention are hardly analogous, the government intervenes in some shape or form with nearly every part of our lives, it's how they do it that makes it more "socialist"

What's wrong with private debt? This is the only time when the benefits of debt are directly linked to the consequences. Public debt allows some to benefit while others pay the price.

I haven't said there is anything wrong with private debt. I don't know where you got the impression I did?

What I've said is that reducing government debt through greater taxation transfers government debt to private debt. I do think there's something wrong with that.

OMFG no it isn't. Government is wasteful and easily exploited for the benefit of the powerful. The whole problem of government is that it's by definition too big to fail.

True or not, none of which means plop in regards to the governments ability to service debt. The proof is in the pudding mate, take a look at the price the government pays for it's debt, you'll find it's far lower than you can secure debt for, that's because the difference in interest rates reflects the margin for greater risk. Clearly the merkins who are doing the lending believe that the government is a far lesser risk than you or I. which in the end is all that really matters.

If you're convinced public debt is preferable to private debt, we'll just have to agree to disagree.

No, again, I think it's preferable that the government doesn't transfer it's debt to the public through higher taxation, and further that government debt isn't the problem it's falsely made out to be.

 

[Poupou Escobar]

Really? Socialism and government intervention are hardly analogous, the government intervenes in some shape or form with nearly every part of our lives, it's how they do it that makes it more "socialist"

Agreed, and we haven't implemented socialism, it just looks like it, as I said.

I haven't said there is anything wrong with private debt. I don't know where you got the impression I did?

What I've said is that reducing government debt through greater taxation transfers government debt to private debt. I do think there's something wrong with that.

Given tax is largely based on income, why would people need to borrow to pay their taxes?

True or not, none of which means plop in regards to the governments ability to service debt. The proof is in the pudding mate, take a look at the price the government pays for it's debt, you'll find it's far lower than you can secure debt for, that's because the difference in interest rates reflects the margin for greater risk. Clearly the merkins who are doing the lending believe that the government is a far lesser risk than you or I. which in the end is all that really matters.

How long can a government remain low risk when it keeps accumulating debt or losing income? It's dangerous to assume this is some sort of constant.

No, again, I think it's preferable that the government doesn't transfer it's debt to the public through higher taxation, and further that government debt isn't the problem it's falsely made out to be.

It's not a problem *yet*. Assuming it will never become a problem is where the massive risk lies.

 

[Bandwagon]

Agreed, and we haven't implemented socialism, it just looks like it, as I said.

Cool.

Given tax is largely based on income, why would people need to borrow to pay their taxes?

They wouldn't, they need to borrow to replace the money that is taken as tax, but of course not just people, business, which is often people too.

How long can a government remain low risk when it keeps accumulating debt or losing income? It's dangerous to assume this is some sort of constant.

Sure risk profiles change, but again, I'm not advocating an ever growing accumulation of debt beyond the levels of economic growth.

It's not a problem *yet*. Assuming it will never become a problem is where the massive risk lies.

It's certainly not a problem in the remotely foreseeable future, particularly when our contemporaries around the world are amassing debt at far greater levels.

 

[Gary Gutful]

Shout out to Bandwagon for his use of the word 'plop'.

 

[Poupou Escobar]

Cool.



They wouldn't, they need to borrow to replace the money that is taken as tax, but of course not just people, business, which is often people too.

Do people and businesses really only borrow because they need to, or because they can? If you need to borrow, tax is unlikely to be your problem. When tax is a problem, borrowing becomes a tool to reduce tax.

Sure risk profiles change, but again, I'm not advocating an ever growing accumulation of debt beyond the levels of economic growth.

So you think it's good that we hadn't already maxed out our capacity to service debt when the COVID crisis happened?

It's certainly not a problem in the remotely foreseeable future, particularly when our contemporaries around the world are amassing debt at far greater levels.

Never be too certain about things like this. I agree the recent increase in government debt was probably necessary but the world is changing, and governments (i.e. voters) shouldn't rely on previous or even current conditions for their outlook on debt-financed spending.

 

[Bandwagon]

Do people and businesses really only borrow because they need to, or because they can? If you need to borrow, tax is unlikely to be your problem. When tax is a problem, borrowing becomes a tool to reduce tax.

Need , want, It doesn't matter , what matters is that growth is funded, if the government isn't spending as much as it's taxing, that slows growth, so in order to have growth people and business need to spend, if the money they need to spend is going to the government in taxes, then they have to borrow to support spending.

So you think it's good that we hadn't already maxed out our capacity to service debt when the COVID crisis happened?

Our capacity to service debt is based upon the size of our economy, as it grows, so does our ability to service debt, I think it's good when the economy is growing.

Never be too certain about things like this. I agree the recent increase in government debt was probably necessary but the world is changing, and governments (i.e. voters) shouldn't rely on previous or even current conditions for their outlook on debt-financed spending.

Shit will change and because shit changes, shit changes. Yes, that is true.

What works now may or may not work in the future, but really should we act upon what we know, or wait to see what we don't know?

 

[Poupou Escobar]

Need , want, It doesn't matter , what matters is that growth is funded, if the government isn't spending as much as it's taxing, that slows growth

Not if government spending is stopping people from doing it.

so in order to have growth people and business need to spend, if the money they need to spend is going to the government in taxes, then they have to borrow to support spending.

Increasing taxes isn't the only way to run a surplus. The government could also spend less.

Our capacity to service debt is based upon the size of our economy, as it grows, so does our ability to service debt, I think it's good when the economy is growing.

You've neglected to mention that these aren't necessarily linear relationships, and that there are more factors than just economic growth = we can keep borrowing.

Shit will change and because shit changes, shit changes. Yes, that is true.

What works now may or may not work in the future, but really should we act upon what we know, or wait to see what we don't know?

Well just like with COVID-19 we should leave some wiggle room so we are at least somewhat prepared for the things we can't predict.