The more underfunded the government is, the less it can invest in schools, mental health care, the environment, infrastructure, a competent bureaucracy and so on. All things that are necessary for economic growth. Americans' allergic reaction to paying taxes is just one more reason why the country is circling the drain.
"Competent bureaucracy" is essentially an oxymoron. "Things" necessary for economic growth are infinitely more efficient when directed by the market, not by forceful removal of my property for "them" to decide how best it can be utilized. Why is my body (which extends to my means of production) not my own?
> "Competent bureaucracy" is essentially an oxymoron.
That's the belief that underpins your opinion but that is far from a fact. It's also a belief that tends to be self-fulfilling -- you get the government that you believe you should have.
It's a belief based on historical data and personal experience. The "state" and it's blind followers have one of the highest death tolls attributable to it, that's an objective truth. It's fascinating that so many people are fine having their lives decided by others, under the illusion of "authority".
Let's bomb some more kids in the middle east for no reason, shall we?
It's belief based on a small dataset that doesn't represent all democratic governments that exist. If anything, your experience is probably based on significant outliers.
Slavery, Prohibition, Women being unable to vote, Gays being unable to marry; the list of inequities imposed on others due to democracy, and faith in the State to "do the right thing" is long. The aforementioned aren't small data sets, nor are they outliers. That's not even mentioning how many murders the State has contributed to (see: Germany and Russia for significant contributions, in the millions of murders) under the guise of "protecting it's people". (see: USA's actions in Iraq, Afghanistan, Syria, etc.)
Slavery, murder, theft, are inequalities that humans do to each other which the state exists to prevent. This argument is a poor one. You can't simply pick and choose the negatives without balancing it against the positives.
Using the force of the state to further other's goals is something I am entirely against because historically we can see how much damage it's done, calling that stupid isn't constructive.
"'Things' necessary for economic growth are infinitely more efficient when directed by the market". This. I think you just touched the essentiel cultural difference.
IMHO the market is a good tool but it is very far from perfect. Its main weakness is the strength it gives to the signal price. The market is a global race to the lowest price and highest ROI. "Things" like infrastructure, health, environnement are expensive with a low (short/mid term) ROI. The market will never favor them.
> Why is my body (which extends to my means of production) not my own?
You believe your means of production are entirely self-contained which is entirely false. You need all of civilization for your production to be useful. It's not unreasonable to have to pay for that civilization.
So you're saying I'm indentured to my society? This is sounding increasingly similar to slavery. Using force against someone else to get what you want isn't morally acceptable, and it certainly isn't altruistic; if you disagree with me on that, that's fine.
If you've been educated in a school, travelled on a road, drank water from a tap, watched TV running on electricity, or worked on a computer that communicates across the globe to other computers then you absolutely have taken advantage of a society with a central authority and should conribute to it.
To believe otherwise is absurdly individualistic and self-centred. We are a social species and everything good we have done come through collective effort.
But in practice, more tax money just gets allocated to homeland security, military, police, domestic surveillance, and things that generally don't benefit most tax payers
Based off data that I've seen, increasing investments into the U.S. public education system by the government doesn't seem to have made significant improvements to the quality of education. There are those who feel that this funding actually removes, or at least lessens, the incentive to improve.
So what is the implication from the fact that it is impossible to block porn for people who are not "an adult that has a fully formed identity and personality"?
Not too easy if you're working two jobs to provide for your family. By giving all the responsibility to the family you sacrifice those vulnerable children who weren't as fortunate as yourself growing up.
I think we both realize that solving the two job problem is much harder. Hands off government and giving people the freedom to fuck up their life is great for middle class kids in super supportive families, but can be disastrous for less fortunate children.
> I think we both realize that solving the two job problem is much harder.
No, it's not harder than solving the problem of how you let the government substitute for absent parents without creating a regime that exerts authoritarian control of the adult population through its control of content.
I'm not from the US. I live in Sweden where it isn't as common with people working two jobs. But sure go ahead continue patching society because it is hard to solve the actual problem. So I'm not arguing for a hands off government, I'm actually arguing the opposite.
Turns out the fancy math mania among economists didn't help us leading up to and during the great recession. We should now go back and pick up again the lessons learned after the Great Depression (like Keynes' Animal spirits). Math and models are still important (they are in fact essential, without them we can't think clearly or rigorously enough) but they and their interpretations have to take into account the complexity of human nature to a greater extent, not rely on a simplistic and almost non-existent homo economicus.
Perhaps being a "productive" programmer requires understanding the requirements well enough to quickly write working code, then moving on to the next problem. Personally, I usually find that it takes two refactorings/rewrites to go from initial working code to something that I honestly believe is understandable/maintainable, and I don't always have time to do that.
It's more subtle than that. People act as if developers are all a clean slate, which isn't true.
developers have personalities with differing values. That super productive developer may just not value the flexibility of the code due to his personality coupled with that developers personal experience.
That developer will absolutely shine in some environments and be abysmal in others since there are absolutely environments where flexibility isn't an overriding concern.
As you get more experience you learn to be more explicit about your decisions, but you'll still have your preferences and your defaults and it takes a certain threshold for you to move away from said preferences and defaults.
Yea - I'm not really sure what the take away message here should be (although I found the article interesting).
I'm currently working at a late project right now that started early enough, but took too long to hire enough people to finish the project in time, and didn't use the time at the beginning of the project well enough to gather information about the current and future processes. Maybe that's an example of what the author means, but it certainly gets more complicated than "started too late" quite quickly...
The message is "late software" is really a failure of decision making at the highest level that waffle on necessary things until they become necessary but move too late on it. I've personally seen plenty of that, so works for me.
Plus I can't remember cos it was a conversation we had 5 years ago. We talked over MVC and open source (we both had open source projects) PHP, Perl, C# and Python weighing up the best option to write all the code in. Ended up using Python. It used a multi threaded library and crashed every so often with all sorts of weird errors. Never got to the bottom of it.
I'm happy for whatever health problems it incurred since it seems to have allowed and fostered modern civilization. I think a very important line from that article is this:
> The evidence suggests that the Indians at Dickson Mounds, like many other primitive peoples, took up farming not by choice but from necessity in order to feed their constantly growing numbers. "I don't think most hunger-gatherers farmed until they had to, and when they switched to farming they traded quality for quantity,"
Hunter-Gatherer works fine until you reach a certain population and it seems that that population/lifestyle is below the point where you start to really see civilization lifting up and starting to advance quickly.
Yes, I agree, I'm glad that people of the past sacrificed their dental health to build civilization to where it is now.
However, that's completely irrelevant to our food choices today. Modern agriculture is quite capable of producing foods which are more similar to foods we subsisted upon pre-agriculture. On an individual level, there's no reason for us to choose to eat grains. I suppose if everyone in society decided all at once to stop eating grains, it would cause problems, but that's unlikely; I think if society slowly shifts toward eating fewer grains, modern agriculture will be capable of adapting.
While agriculture has had health-effects, Jared Diamond is a quack who writes shallow fluff-anthropology and seems to take the approach of deciding on a conclusion, then go finding research to justify it.
While I'm with you on Jared Diamond not being the best scientist, your criticism misses the mark. What you've described is part of the scientific method: you come up with a hypothesis and you test it.
A better criticism of Jared Diamond's work would be that his work suffers from a lack of primary source evidence: he's not doing experiments or directly synthesizing actual data, he's synthesizing the results of studies. And since there's no objective way to choose which studies are relevant or evaluate the methodologies of different studies, that inevitably introduces his own bias into the process.
That said, I haven't seen any studies contradicting the claim that grains in diet are correlated with tooth decay (which is a smaller claim than the larger claims Diamond makes about health, and which I think the primary studies he cites actually support).
It didn't use to matter much. Consistent inflation is a rather new phenomenon that basically only appeared after WWII. There was for example almost no inflation in Britain between 1814 and 1914.
For the record, in case there still are Ron Paul fans/goldbugs out there: moderate inflation is generally considered a good thing by economists today and inflation is probably too low at the moment.
Personally, as a reductionist, I like the idea that money is somehow permanent. Maybe economists like inflation, and perhaps it is "good" for the economy overall. But the idea that a dollar saved today can buy roughly the same amount of stuff in a decade or a century seems like a powerful idea to me. To me that seems like a goal that's worthy of pursuing because then money becomes a true abstraction that's not leaky. And because of the way my brain works, I see that as incredibly useful. Not having to always inflation adjust things, not having to do this or that, not having to worry about how much retirement you actually have versus how much you think you have, etc. I understand that for various reasons few other people want this, but that doesn't convince me personally otherwise.
One person described money as "sweat, distilled" and I find that definition incredibly attractive. I recognize that plenty of people making money not by sweating but thinking or whatever, but I still find it an excellent description. And I can't see how devaluing a person's effort over time is a viable strategy for building a lasting civilization. I think it leads inevitably towards the kind of throwaway society we have here in the US and virtually guarantees that we won't build infrastructure of long lasting value like exists elsewhere in the world. Well built stuff can last for hundreds or thousands of years. I wish money was the same.
One aspect of inflation is that it is a tax on people who choose to hoard their money. Because inflation naturally makes every dollar worth less and less over time, you are forced to either spend it now or invest it somewhere that grows with inflation. As a result, money is actually utilized instead of sitting in a bank account.
Thus, I think the idea that a dollar saved today can buy roughly the same amount of stuff in a decade is actually bad, because in a world where that's likely, that dollar was probably sitting useless in someone's purse for a decade.
Inflation, in my opinion, actually does the opposite of what you suggest -- because it encourages lending and investing in order to beat inflation, money is actually put to use for longer term projects such as infrastructure that can last years and years.
As a result, money is actually utilized instead of sitting in a bank account.
Because we all know banks put all the currency they receive in huge vaults filled with paper $100 bills, instead of, oh, lending it out (several times over one way or another).
Unless you're converting it all to gold, or stuffing it under a mattress, your savings are in institutions like banks which are not a sink where the velocity of your money goes to zero, outside of economic messes where they aren't willing to lend, or people are afraid to borrow. And your being encouraged to spend your money doesn't seem to help those situations.
A piggy bank would have been a better example. Anyway, it's not an argument against inflation: the reason putting your money in a bank account is a good idea today is (among other things) because they do invest it to stave off inflation. So inflation doesn't preclude saving (as in savings accounts), it just makes sure you save in better ways, like storing it in a bank that does lending.
If you are earning less than a percent, you are probably paying for liquidity.
Inflation is currently bouncing between around 1.6% and 2% (but mostly towards the 1.6%). A 3 year CD at a decent bank is currently paying around 1.6%; a 5 year CD is paying around 2%. So if you're willing to commit to a 5 year deposit, you will probably beat inflation and realize a small, real return. Even an interesting-bearing checking account (with a sufficient balance...) pays close to 1.6%.
Granted, it's not the glorious 5%+ returns of yesteryear, but then, we're in a savings glut.
> Granted, it's not the glorious 5%+ returns of yesteryear, but then, we're in a savings glut.
That's a nonsensical statement when the central bank is fully in control of the money supply, and thus, the interest rate.
That's like saying "well my computer has a billion copies of funny cat gifs on it, so there's a funny cat gif glut". It doesn't make any sense. You control how many copies of funny cat gifs are on your computer. If there are too many, it's because you made too many copies. If there are two few, it's because you made too few. Pretending that market action had anything to do with something that you are ultimately in control of makes zero sense.
The interest rate is low (or zero) because the central bank decided it should be, not because all the people in the world collectively don't have any real preference for a dollar today versus a dollar tomorrow.
I don't see how you can just assert that they're similar but not the same, without any supporting argument, and expect me to accept it.
The interest rate is supposed to be the price of money. There's going to be a bid/ask spread on that because of the cost of accepting money and bundling it together, along with the cost of keeping up with the book-keeping and various other things that are costs for loans. So the rate you get paid in interest should always be less than the rate that you pay in interest. This I understand.
But if the interest rate is low, then the interest rate is low. The interest rate is determined by the aggregate supply and demand for money. If there is a lot of supply, relative to demand, then the interest rate is low. If there is a lot of demand relative to supply, then the rate is high. And given that people have a nearly infinite desire for money today versus in the future, the rate is really determined by the supply.
The Fed is in control of the supply by creating or destroying money as needed. That means that they fully and truly do set the rate, because they can do literally whatever is needed to move the needle.
The idea that everyone's individual actions to save is somehow what created the tremendous amount of expansion in the money supply (and thus the very low interest rate) is utter nonsense. The Fed created a lot of extra money which expanded the supply of loans, thus pushing down the rate.
Amplifying, the bank is also spending money to service your account. There's also the issue of how much your money is worth to the bank: demand deposits where it can all be withdrawn without notice are worth less than forms which lock it up for a while.
> Because we all know banks put all the currency they receive in huge vaults filled with paper $100 bills, instead of, oh, lending it out (several times over one way or another).
Right?! Every bank vault is just huge piles of gold bars and ornery old men counting and recounting the money, hoarding it up and never loaning it out.
So everyone should live paycheck to paycheck and thus keep money circulating in the economy more rather than "hoarded" in checking accounts to absorb shocks like big car repair bills and stuff like that?
I think the idea that a dollar today buys just as much in a decade IN NO WAY precludes people from investing their money to earn a return. It just eliminates the stupidity tax that some people pay for not understanding how things work.
In a non-inflationary environment nearly all people would still invest their money and put it to work. It's just that they wouldn't be taxed for not doing so.
Inflation doesn't encourage lending, it encourages borrowing. It's smart to pay back with dollars that are worth not as much as the dollars you borrow. Inflation actually discourages lending because you now have to find borrowers who can pay you back higher than the interest rate.
Of course, all this is predicated on a real market in interest rates which we don't have in the US because the Fed sets the rate through various means.
You don't need more than a year's buffer in a checking account, and target inflation is insignificant at the timescale of a year. It only discourages long-term uninvested money.
If a year's buffer is 20k (rent, utilities, car payments, insurance, etc can total $1500/mo pretty easily) then 2% inflation (and basically zero interest) means that this buffer costs me $400 a year, or over $30/mo. That's a non-trivial carrying cost, $30/mo can buy me substantial, actual real things.
I might not care too much if it was $0.50 or $1 per month. But quantitative differences eventually become qualitative ones, and at this point it's not just some tiny abstract amount of money, it's real consumption that a person has to forego every month (or day!) for the sake of not getting financially ruined the first time a big unexpected expense comes up.
It might seem like a nice idea that cash stuffed in a mattress for a few decades would keep it's value, but that's not beneficial to society. Encouraging money to be invested in order to earn a premium, and stave off inflation, is a good thing overall because it puts wealth to work creating jobs and stimulating economic activity.
Except it is beneficial, because that cash inside the mattress will get spent eventually. Guess when it gets spent? During a financial crisis. If everyone had a little bit of cash in their mattress, the spending wouldn't go down as much and the crisis would have a limited impact.
'Encouraging money to be invested, by motivating people via inflation, is a good thing overall because it puts wealth to work creating jobs and stimulating economic activity.'
No he didn't. He argued that we need inflation to stop hoarding of money and make people spend their money and create activity in the economy. This is important because in the economy as a whole TotalSpending == TotalIncome
He said that as a society we benefit from inflation because as individuals we are forced to invest our funds so that individually we can avoid the effects of the inflation.
Expanding on that, I came of age during the '70s where I believe the major transition in inflation expectations occurred, and being numerically literate, I have a feeling for how the value of the dollar declined (which I frequently reify with this calculator http://www.bls.gov/data/inflation_calculator.htm but know the government understates it, see below for one example).
When I see, oh, normal genre 300-500 page paperbacks going for Amazon prices from 8-11 USD, mid '80s official inflation adjusted prices of ~$3.65-5, and lower actual prices from a quick check of my library, my response to the higher end is not no, but hell no, and I'm not going to buy the lower end new for all but the most exceptional titles.
Many economists think deflation causes people to hoard their money, since an item bought tomorrow will cost less (assuming your form of storage survives, $N in a bank that goes bust before the FDIC was established is worth $0), and the reverse for inflation. I think it's a lot more complicated than that.
I agree that it's more complicated than that! Maybe for any 0.1% of change in the interest rate or inflation rate there is a marginal effect. But eventually quantitative differences become qualitative ones.
When the interest rate you pay is 4%, the inflation rate is 2% and the interest that you earn is 0.25% quantitative changes become qualitative ones at numbers that seem very innocuous.
2% annual inflation isn't a big deal, but 2% annual deflation would make all the money disappear in less than a year? How can that be so?
I do understand that for double-digit losses and gains things are nonlinear, in other words a 50% loss means that you need a 100% gain to offset it, and a 90% loss needs a 1000% gain to offset. But in the single digits, this is very close to linear. If you lose 5%, then gaining back 5% leaves you very close to even.
If 2% compounded deflation is the end of society, how can 2% compounded inflation be the savior?
I'm not saying inflation is the savior. I'm saying that in the current system, deflation can evaporate the money supply quickly and is a huge risk factor.
The reason is that ~90% of the money that exists needs to be continuously rolled over into new loans to maintain the total supply (and it actually needs to increase a bit [ie. inflation]). At any given time, only a small fraction (~10%) of the total supply is available to make the upcoming interest & principal payments. If new loans don't roll out in time (to replace the money destroyed by the principal payments), you can enter a situation where there is no legally manifestible currency (banks are completely insolvent) without some seriously disturbing hackery and deception.
You begin to hit serious problems (many individual actors will fail due to 0 flow) before you even get to that point. This is just the ultimate fate of our economy.
Edit: What we really need are accurate and accessible simulations of our economy so that everyone has a chance to understand it.
> to replace the money destroyed by the principal payments
The money isn't destroyed. It's back in the hands of the lender, available to do whatever they'd like with it. Perhaps they'd invest it into a factory or a business that they own, instead of just loaning it out. That would mean it'd be spent on real things in the real world, thus meeting the criteria of not being destroyed and being spent.
To start a bank, one must collect the initial capital on which to fund the bank's loans. The Federal Reserve requires that the bank must hold capital in excess of 10% of its assets. A bank cannot withdraw capital that would cause its assets to become greater than 90% of its net value. The capital that cannot be withdrawn is what I refer to as "true capital", as all of the other value exists solely as reflection of the true capital.
> The capital that cannot be withdrawn is what I refer to as "true capital", as all of the other value exists solely as reflection of the true capital.
What? How does that have any bearing on reality? The values of mortgages a bank has on its books aren't a reflection of how much reserves it has, it's a reflection of the dollar values attached to the loans.
How many loans a bank can write in a month is of course dependent upon how much money the bank has sitting around in excess of the reserves it is required to keep. But again, that doesn't dictate the dollar values on the loans. Those were fixed at signing and in the absence of problems, get smaller at a predictable rate. What do reserves have to do with the loan equations?
You said that the bank could just withdraw the money and use it for something else. The bank cannot just withdraw money. An individual or organization could withdraw from an account they have at the bank, but the bank itself cannot withdraw any of its capital (which is the only way the analogy we were discussing makes sense) if it has any outstanding loans. The reason the bank cannot do this is laid out in my previous comment.
> 2% annual inflation isn't a big deal, but 2% annual deflation would make all the money disappear in less than a year? How can that be so?
There's no symmetry between inflation and deflation. Your incredulity is unwarranted.
Money is an accounting method to enable easy trade. Ordinarily, it's worthless, which makes it available to be used in transactions. Under deflation, money gains an inherent value -- you can multiply your worth by holding on to the money you have now. This means that much less trade occurs, because the gains from that trade are less than the gains from holding on to your cash while it appreciates. But the gains from cash appreciation are in an important sense hallucinatory -- on a system level, they don't exist -- and the gains from trade are real, so the economy just ends up being crippled.
On the other hand, when you consider what money is an abstraction for - economic resources - inflation doesn't seem so unreasonable. Consider one fairly standardized resource unit - a barrel of oil. Crude oil lasts pretty well, but refined oil products definitely have a shelf life. Food commodities are of course perishable, and real estate can often lose use value if buildings aren't properly maintained. Of course this is not to say that all resources are perishable or perishable to similar degrees, but nature does impose 'use it or lose it' conditions of its own.
The other thing to consider is that any decision to wait has an opportunity cost, and the baseline opportunity cost is captured by the interest rate. Since nobody is going to stop charging interest to borrow money - even in sharia finance you pay a rental cost for money that is very very similar to interest - it would seem as if price inflation was an unavoidable characteristic of any system involving credit or loans.
Money, or more properly, _currency_, is not a store of value. Oil, timber, or woool is a store of value -- it is actually something you can use. Money is an abstract "IOU", a right to demand someone give you something of value. At the end of the day, a society with oil, timber and wool is better than a society with only money. The only utility money has is that it facilitates production, instead of leaving people unemployed and starving because they have no convenient way to trade their labor or capital for whatever they need.
Yes...that's why I described money as 'an abstraction.' My point is that the underlying resources on which money gives you an easy means of purchasing a claim (instead of having to barter) are sometimes perishable, which means that opting to store rather than use them can have a cost (separate of the opportunity cost of foregone alternatives) and inflation could be thought of as the incorporation of the aggregate perishability of goods into the abstraction of currency. I can't give you a citation for this, it's just my personal conjecture.
But permanent with respect to what? US GDP is 16.77 trillion. In 1950 it was $.3T. Ratio is 55:1. Population is only approximately 2:1. That's a compounded growth rate of 5%. So really- just to break even and make a dollar mean the same thing, we'd need an average money supply growth of 5% ( which is not the same as inflation ). But all the prices will be radically different - some more, some less.
No inflation encourages the type of behavior that we're seeing today -- hoarding of US dollars.
Gold as currency had lots of really negative effects, read up on the populist movement in the late 19th century U.S. and the background of the "Wizard of Oz" story.
Money is a measure of power. With money, you can make people do things for you. People don't crave money for its own sake. They crave money for the power it gives them over others.
There was a period of low inflation during that time frame but it temporary and isolated.. There were huge inflation swings before, during, and somewhat after that time..
I think you'll observe that there are periods of inflation offset by periods of deflation, meaning that over time the value of money was somewhat more stable than your image implies.
