

What If The Federal Government Was An Average Household? - lwc123
http://larrycheng.com/2009/10/31/what-if-the-federal-government-was-an-average-household/

======
bcl
The problem is that Governments aren't households. This isn't to say that all
the debt that has accrued over the last year is good -- it certainly isn't,
but these kinds of analogies really are meaningless.

~~~
mechanical_fish
Worse than meaningless: Actively misleading.

How many households are legally able to levy taxes? How many households are
legally able to print their own money? How many households can borrow money at
interest rates as low as the U.S. government can, because their money is a
global-standard reserve currency?

The fed isn't even much like a _state_ government, to say nothing of a
_household_.

 _This isn't to say that all the debt that has accrued over the last year is
good -- it certainly isn't_

Well, it's not good in the sense that it's always bad to have to take
emergency measures. But, given the alternative -- an even deeper economic
cratering than we have now -- accruing debt has been, and is, the right thing
to do.

Indeed, the stimulus has so far apparently managed to help stop the recession
and produce modest economic growth, but unemployment remains ghastly high. We
need more stimulus. Bring on the debt! That's what the federal government's
emergency powers are for.

[http://krugman.blogs.nytimes.com/2009/10/30/stimulating-
thou...](http://krugman.blogs.nytimes.com/2009/10/30/stimulating-thoughts-3rd-
quarter-edition/)

~~~
kevinholesh
Government spending does improve the economy, but not as much as tax cuts do.
If you give money back to the market, it is guaranteed to be spent
efficiently.

Government spending involves special interests (spending that benefits a small
amount of people at the expense of everyone) and incurs some wasteful
spending. Example: John Murtha airport
[http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index....](http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index.html)

I thought the article was good in comparing a household (something everyone
can compare to) to a government made up of the people. No household could ever
keep up that deficit without forcefully taking money from someone else.

~~~
bendotc
> Government spending does improve the economy, but not as much as tax cuts
> do. If you give money back to the market, it is guaranteed to be spent
> efficiently.

That's debatable. For example, Moody's Economy believes otherwise (see page 9
of [http://www.economy.com/mark-
zandi/documents/Economic_Stimulu...](http://www.economy.com/mark-
zandi/documents/Economic_Stimulus_House_Plan_012109.pdf)).

Now, I'm not saying one or the other is correct (I know enough to know I don't
have the tools to judge), but you say this as a statement of fact when it's
not a settled question at all.

> Government spending involves special interests (spending that benefits a
> small amount of people at the expense of everyone) and incurs some wasteful
> spending. Example: John Murtha airport
> [http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index....](http://www.cnn.com/2009/POLITICS/04/23/murtha.airport/index...).

Yes, and so do tax cuts. In the US, we have a menagerie of various taxes and
exceptions and brackets, etc., and it's very easy to tweak it to benefit
special interests, like we have many times in the past. That doesn't
invalidate the idea of passing tax cuts just like earmarks don't invalidate
the idea of government spending.

> I thought the article was good in comparing a household (something everyone
> can compare to) to a government made up of the people. No household could
> ever keep up that deficit without forcefully taking money from someone else.

I'm not advocating for the deficit, but just because you like the analogy
doesn't make correct. Likening a household's budget to the United States'
budget is like likening a photon to a race-car: any similarities there are are
very shallow, and you're likely to come away with huge misconceptions.

This is actually precisely why I hate seeing economics articles on social news
sites: it's a lot of propagation of (often wrong) ideas within a community of
people with insufficient knowledge to be able to sort the good from the bad.

I really wish we'd just stick to what we're good at, rather than getting into
the subject of macroeconomics and politics around here.

~~~
DanielBMarkham
The problem with your argument is that there are huge sections of human
knowledge in which we really don't know that much -- even experts. In fact,
I'd wager there's a hell of a lot more stuff that's debatable than most people
would be comfortable knowing about.

I've said it before: I don't think any topics should be off-limits as long as
people can reasonably discuss them. In fact, I think it's a test of a
community to see what it can productively discuss and what it can't.

Startups are full of people acting under intense pressure with incomplete
information. As such, these topics are just little baby toys, artificial
constructs of arguments that have little real impact on people's lives. Being
able to have reasonable conversations about emotional and important things
with incomplete information is something we should all strive for, not
something we should be afraid of.

~~~
bendotc
"The problem with your argument is that there are huge sections of human
knowledge in which we really don't know that much -- even experts. In fact,
I'd wager there's a hell of a lot more stuff that's debatable than most people
would be comfortable knowing about."

I don't see how this is a problem with my argument. I didn't claim that we
should only discuss things about which we have complete information, I was
instead suggesting that this community is so information-poor on this subject
that we lack the tools to separate right from wrong or reasonable from
unreasonable. I was also objecting to the claim of opinion as fact, which I
find misleads (usually unintentionally, as often these opinions are believed
to be fact).

And to be clear, I'm not talking about us not being steeped in theoretical
economics, but rather that most of us couldn't answer questions which have
factual, discoverable answers, such as how modern banking works, how money is
created, what the role and powers of the Federal Reserve are, etc. These are
questions with real, factual answers, but the way these things work is often
incredibly complex and counterintuitive, and cannot be gleaned from a couple
hours with an introductory book or Wikipedia.

And in case I'm coming across as being condescending, I'd just like to say
that I don't consider myself to be an economist and I don't think it's
reasonable for anyone to be an expert at everything.

"I've said it before: I don't think any topics should be off-limits as long as
people can reasonably discuss them."

Agreed, and I have seen very few reasonable discussions of economics around
here.

"Startups are full of people acting under intense pressure with incomplete
information. As such, these topics are just little baby toys, artificial
constructs of arguments that have little real impact on people's lives."

So, we may as well be debating how many angels can dance on the head of a pin.

"Being able to have reasonable conversations about emotional and important
things with incomplete information is something we should all strive for, not
something we should be afraid of."

And forming or refining beliefs in the absence of information is something we
should be afraid of, not strive for.

~~~
DanielBMarkham
_And forming or refining beliefs in the absence of information is something we
should be afraid of_

I think this gets to the heart of our differences. I don't know things, so I
ask people. Or I take up positions which others can criticize. As part of a
discussion, I learn more. If modern banking practices are germane, educate me
on them.

You, I think, seem to feel that there is some threshold of knowledge that one
must reach in order to talk reasonably about something. I, on the other hand,
acknowledge that more information is better than less, but that doesn't give
me the freedom to not act on things. I learn by both conversing and
experimentation.

There is a concept called "strong opinions, weakly held" You might want to
look into it.

As a side note, the internet is full of folks spouting off about things they
know little about. So is life. Democracy is built on the concept of average
voters voting on policies about complicated matters. Either learn to deal with
these topics as part and parcel of community life or prepare to be frustrated
a lot.

~~~
bendotc
"I think this gets to the heart of our differences. I don't know things, so I
ask people. Or I take up positions which others can criticize. As part of a
discussion, I learn more. If modern banking practices are germane, educate me
on them."

"There is a concept called 'strong opinions, weakly held' You might want to
look into it."

These are fine methods of learning when you're surrounded by people
significantly more knowledgeable than yourself. The problem is precisely the
situation I was discussing: when you don't have a critical mass of
knowledgeable people, it's the blind leading the blind, and thanks to the
Dunning-Krueger effect, it's unlikely that you'll be able to tell who among
the chorus of voices knows what they're talking about, and may even have
trouble recognizing that you're going down the wrong path.

"As a side note, the internet is full of folks spouting off about things they
know little about. So is life. Democracy is built on the concept of average
voters voting on policies about complicated matters."

And direct democracy isn't terribly prevalent. Representative democracy,
however, is based on electing representatives who are either themselves more
knowledgeable or who can talk to (or employ) those who are on a whole range of
subjects. And even on this count, I would argue we generally need to work on
finding ways around our biases to make better selections.

"Either learn to deal with these topics as part and parcel of community life
or prepare to be frustrated a lot."

You think my options are "live with it" or "be frustrated?" I choose the third
option, to advocate for improvement, to advocate for greater education where
it makes sense in the public sphere (such as economics), and to advocate for
systems of government that are more resistant to direct action on matters that
are likely to be adversely affected by common misunderstandings.

~~~
DanielBMarkham
_You think my options are "live with it" or "be frustrated?" I choose the
third option, to advocate for improvement_

Then you've chosen my second choice, living with it. Advocating for
improvement is exercising your options to participate in the conversation,
even if your participation only amounts to acknowledging our collective lack
of knowledge.

Isn't it great that reasonable people can discuss things that are complicated?
Think of how many intractable problems have been solved because people were
too stupid not to know they were insolvable?

Expertise is easy -- you can rent it when you need it. Highly-effective teams
working tough problems are not easy. It's perfectly legitimate to say
something along the lines of "hey, we're sadly lacking in knowledge here, and
here are the steps we should take to improve things" but that is a just
another form of participation.

~~~
bendotc
You're conflating what I was saying with the idea that we should just say
"it's complicated, everyone should give up," which is just silly. What I'm
saying is that if we don't stand on the shoulders of giants, there is a limit
to how far we can go. And specifically, I'm talking about subjects which are
counterintuitive at a basic level, and are not well learned by informal
discussion, but instead demand rigorous study. The pernicious thing about
these subjects is that it is hard for an outsider to judge good from bad
without doing the math or scientific experiments themselves. Most subjects
thankfully don't fall into this category, but economics, quantum physics, a
lot of medicine, and a lot of math do.

This, by the way, is precisely why it is so difficult for us to "rent" certain
expertise when you need it: non-technical people have a hard time hiring a
good programmer because they don't have a basis to judge programmers off of.
As it turns out, the guy who can talk the most convincingly is often not the
person who is the most knowledgeable or skilled.

An aside:

"Then you've chosen my second choice, living with it."

That's ridiculous. The idiomatic phrase "live with it" means that you put up
with or endure it. It is pretty much the opposite of working to change
something. By your logic, "be frustrated" would also be "living with it" as
anything short of killing myself or becoming a hermit would. This is just
being obtuse.

------
davidw
Aside from flagging it for being off topic, it would be proper to say "if the
government _were_ an average household".

