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Is it even possible to discuss government debt with normal people?
electricitylikesme
Registered User regular
Registered User regular
Because I'm not sure it is, and there seem to be two forces at play here: the first is ideology. If you like or dislike a certain side, then you'll pretty much defend any action you approve of no matter what it is. 6 months from now the conservatives in Australia will win power, spend a ton of money on something retarded and I'm sure I'll wind up in an argument with someone where they insist it's different when it's not infrastructure spending being done by the liberals. I am unsurprised by this.
But the second seems more fundamental: I just cannot find a way to approach this topic where I can get someone to consider that government debt, hell corporation debt and the like, is in fact quite different to personally held debt. No matter what happens, people simply strawman out to "oh so we can just borrow unlimited money?" or the anti-thesis of that statement "but...but you can't just keep borrowing money!"
We see this all the time in US politics, and it's been gradually imported to Australian politics apparently principally because suddenly everyone is an expert despite neglecting to inform themselves on anything (my favorite example was the "Greece doesn't export anything!" line of moral judgement, even though 25% of it's GDP in 2008-2012 is in fact exports - my father straight up refuses to believe this can be a true figure).
It feels like, at some point, we've lost a step in democracy. I'd like to blame the media, but I'm really starting to think it's a chronic underestimate of the electorate by political media handlers, which is leading to an actual under-education of the electorate. Politicians aren't expected to speak in economic terms, or outline their plans in terms of future expectations, and then frame that as it relates to the country.
And it seems very relevant when it comes to government debt, because it leads to all sorts of dangerous perceptions about the nature of funding various projects: the idea that if we just hadn't spent a lump-sum of capital, we wouldn't have to raise taxes for an ongoing social program (in Australia it's the disability insurance scheme, and the Gonski review at the moment).
Economics is a complex, and somewhat subjective field - but the discussions we have in the [Economy] thread around here are essentially a side-show to the main political game nationally, which is that no-one is even being encouraged to try and understand basic terms of the systems - which would be fine, except for the simultaneous focus to only ever consider the highest, broadest levels of government, rather then individual projects, agencies or low level but much more important individually systems such as local councils.
But the second seems more fundamental: I just cannot find a way to approach this topic where I can get someone to consider that government debt, hell corporation debt and the like, is in fact quite different to personally held debt. No matter what happens, people simply strawman out to "oh so we can just borrow unlimited money?" or the anti-thesis of that statement "but...but you can't just keep borrowing money!"
We see this all the time in US politics, and it's been gradually imported to Australian politics apparently principally because suddenly everyone is an expert despite neglecting to inform themselves on anything (my favorite example was the "Greece doesn't export anything!" line of moral judgement, even though 25% of it's GDP in 2008-2012 is in fact exports - my father straight up refuses to believe this can be a true figure).
It feels like, at some point, we've lost a step in democracy. I'd like to blame the media, but I'm really starting to think it's a chronic underestimate of the electorate by political media handlers, which is leading to an actual under-education of the electorate. Politicians aren't expected to speak in economic terms, or outline their plans in terms of future expectations, and then frame that as it relates to the country.
And it seems very relevant when it comes to government debt, because it leads to all sorts of dangerous perceptions about the nature of funding various projects: the idea that if we just hadn't spent a lump-sum of capital, we wouldn't have to raise taxes for an ongoing social program (in Australia it's the disability insurance scheme, and the Gonski review at the moment).
Economics is a complex, and somewhat subjective field - but the discussions we have in the [Economy] thread around here are essentially a side-show to the main political game nationally, which is that no-one is even being encouraged to try and understand basic terms of the systems - which would be fine, except for the simultaneous focus to only ever consider the highest, broadest levels of government, rather then individual projects, agencies or low level but much more important individually systems such as local councils.
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Is this a valid assumption?
I made a game, it has penguins in it. It's pay what you like on Gumroad.
Currently Ebaying Nothing at all but I might do in the future.
Basically, most people view debt as inherently bad. It's axiomatic. You've got to hammer those notions apart before you even get to taking about what to do about government debt in a conversation about macroeconomics in my experience.
To get people to acknowledge that government debt is different from personal debt, you've got to convince them that debt is not bad on it's own, it's bad because of what it does.
-Indiana Solo, runner of blades
Yes and no. While they can treat their debt as if it were that type of system this does not mean they are free to deficit spend or continuously borrow. If they deficit spend without taking in a similar amount of loans they will cause inflation. Depending on responses this could crater the economy.
If they do issue bonds while they can always pay off those bonds by inflating they are the. Back at the previous predicament
Control over your own currency is more important for prices. It allows you to correct for macroeconomic disequilibrium by moving the price level closer to equilibrium.
What I mean is, is it possible they are the same thing but work in completely different time scales and orders of magnitudes, where different things raise as the meaningful issues?
I've ran in to this problem in different matters where the time and size scale raises enough. A lot of people seem to have their perspective skewed, when they try to fit too large issues to their normal frame of reference.
That's why they're different. People die, governments (yes yes exceptions) don't. Governments can take new loans to pay off the old ones without it being a downward spiral of dumb like if a person does it. (Except for when it's a downward spiral of dumb for a government too, but that's for different reasons.)
Infrastructure spending vs massive tax cuts for the upper class are going to have widely different economic effects. As is military acquisitions vs spending on social services or infrastructure. I don't know how the Australian parties come out on these issues, but it's not like the Eisenhower interstate system and Kim Jong Ill's pleasure palace are the same kind of government spending.
I think it is possible to discuss government debt with normal people, it is just difficult because so much of the world rests on people not understanding it. Even the Democrats are debt scolds in the US, so they play the household budget/stealing from the future card to justify their middling attempts at austerity.
Of course the question that comes to my mind for countries like the US and Australia is why would discussing the debt be important for normal people? It simply isn't a pressing issue for our countries (I think, I-again-don't know much about Australia other than that everything wants to kill me but I haven't heard anything that leads me to believe it is on its way to Greco-Roman collapse any time soon).
Most people don't bother to learn anything about government. Look at how many people don't even know Obamacare was passed.
It lets them gut welfare spending and give more money to themselves.
They've been into it for decades and people think it works. "The medicine we need" is a quote I hear often.
It's actually pretty genius. And it's such an easy idea to put out, really accessible to pretty much anyone.
You can't go into detail because you'd make their eyes glaze over, and attempting to bring it back to something equally as simple is almost impossible because 'family-of-four--kitchen-table' is such a superficial allegory.
It allows them to gut social service programs that help / empower the poor or minorities. Educated and empowered workers that don't rely on the good graces of their employer tend to ask for things like 'benefits' or 'higher pay' than employees who don't have any social safety net. Just look at how many people work shit jobs because 'they need the medical'.
Along the same lines, it allows them to justify selling off hugely valuable public assets to private / for-profit groups for a pittance. It prevents the government from investing in vital infrastructure programs that would threaten monopolies (looking at you Comcast / Charter). It cuts money from programs like OSHA or the EPA as they don't 'raise revenue'.
Also, by equating running a government to running a household / business, it puts successful businessmen in a position where they somehow have magic 'political credentials' even though they have never spent a day in public service. Case in point, the last election where Obama frequently was maligned and his experience / ability was called into question because he never 'ran a business' even though he had...and had run the entire country for four years.
It is not much difficult to understand why the average person resists that understanding. If you realize that money is a socially constructed instrument whose value is tied to a nearly infinite number of intangible factors and not a hard-and-fast measure of value, then an entire world of existential questions and fears open up - the kind that makes people question the stability of their lives and the wisdom of their choices.
One major irony to me is that while historically the value of a currency is strongly tied to the strength and reputation of the issuing government, conservatives, many of whom do see wealth as a sign of a person's value, are strongly for weakening the central government. Understanding debt and currency even at a basic level would make force them to question those beliefs.*
* Except, of course, for the Paulites and goldbugs, who are under the delusion that they can skip all these questions because of GOLD!
Ivory tower elites?
I don't think that their (conservatives) intrest in weakening the government has anything to do with their views on debt.
They are not interested in austerity. If they were interested in austerity then they would be interested in higher tax rates for upper income earners.
What they are interested in is a smokescreen to enact radical social policy change under the guise of "saving money"
I made a game, it has penguins in it. It's pay what you like on Gumroad.
Currently Ebaying Nothing at all but I might do in the future.
Go Oxbridge or go home.
"Is it even possible to discuss government debt with normal people? Because I'm not sure it is ..."
Yes, emnmnme, because even "experts" talk out of their ass about debt. Debt makes people crazy and they accept really stupid explanations. This makes productive conversation very difficult.
It's for the best that productive conversation will not include the unwashed masses normal people who strongly desire a balanced budget, then. Leave politics to the politicians.
No one is saying that but you.
Ever try and talk about a 'strategic default' on a personal loan with normal people? They act like you are talking about robbing a bank, even when you explain it's part of the contract / considerations the bank makes, you pay mortgage insurance because of the possibility, and businesses do shit like that ALL THE TIME.
When people don't even understand the real personal debt they have and the very basics of how it works, the idea that they would understand how government debt works is ludicrous. Hell, a lot of people don't know the difference between debt and deficit, they don't understand what the GDP is, they don't even understand what revenue is.
All they see is "SOME REALLY BIG SCARY NUMBER" and think 'oh my god, we've gotta do something about that'. Boomers didn't seem to care about debt until they had to pay for it, Gen X is preconditioned to fear it, hopefully the later generations are smart (or lazy) enough to say 'fuck it, nobody will be able to repo our shit, nice fancy infrastructure toys go on the credit card.'
It isn't.
-edit-
It's not like a "really big household" either.
It's a completely different beast. And people get upset when their reductive analogies which simply don't work and don't apply and don't make sense are told that.
Hence, normal people.
Well the productive conversation does include them. The problem is that elected officials and the media frame it as "See Spot run" instead of anything that approaches the magnitude of what's being discussed.
would you be for balancing the budget by slashing military spending and raising taxes?
is a "balanced budget" really the important part?
Can you explain how it is different?
I suspect that people mostly get upset because they are told that they are wrong but not given any explanation.
Of course I would be. The American military is too large for our defense needs and taxes on certain nonwage earnings are too low.
okay - i guess we're in agreement on that then.
(even though i guess my salary comes from a bloated defense budget)
your position, it should be noted, is an unusual one in the current budget debates. austerity is almost universally a smokescreen for cutting social insurance programs, gutting regulation and slashing generally inexpensive liberal pet programs like the NEA/ NPR/ PBS/ americorps
1. Default on debt
2. Inflate their way out of debt
Eventually debt catches up to governments in those two forms, unless something is done to alleviate the debt beforehand.
Russia defaulted on their debt in 1998, while Iceland defaulted on theirs in 2008, and even the USA defaulted on debt in 1934 (the USA also decided to inflate their money in 1934 too, to the tune of 40% compared to other currencies). You can read history to find out how default affected the countries.
A household doesn't have its own currency and people willing to invest in by buying "Bill and Carrie Smith savings bonds". Having a currency let's you control money supply and inflation and really- everything that goes into being an economy. Its like the difference between the ocean and a fish. They are related, yeah, but the ocean ain't just a big fish. The fish wont grow up to be a body of water someday, and neither does private debt mirror a nation's debt merely by correcting for size.
There are many many more differences, some of which you'll be able to come up with just by pausing to think about the implications. I am not an economist, and wouldn't presume to be able to list every way in which the anology doesn't work.
The short version is simply that government debt isn't a credit card. It's not even like a credit card, or a mortgage or a car loan or a line of credit or any other kind of debt a person can have vice a government.
I'm mainly miffed that people here assume that if you don't agree that debt is good and saving is bad for the nation, you're a normal person.
Then you really haven't been paying attention to politics for the past few decades. This is what fuels that asshole Norquist.
Please to be quoting anyone who has said this.
You're going to need a cite for the US defaulting in 1934. If you're talking about the Johnson Debt Default Act, that's about not buying bonds from countries that have defaulted. Also, declaring bankruptcy is effectively the same as defaulting as far as I can tell, except some kinds of debt (such as student loans) aren't cleared from the slate. You've also missed selling bonds, which governments can do but effectively nobody else can. Lastly, Iceland didn't default; one of their banks was declared in default on its debts, but that's really not the same thing.
Anyway her idea was: We get together private investment, or even foreign investment, whatever to establish an investment fund
They put money in to build a highway or repair a highway, once its completed they're allowed to put on a fee on gas or establish toll booths or something to make their investment back + X% (a few percent over what they put in over years) profit
We should do it that way instead of financing it with debt
I'm not sure my brain is still entirely functional
what's extra awesome about this is the foreign investment would almost certainly be a sovereign wealth fund
you know, GOVERNMENT MONEY
but not our government so it's better or something i guess