My Two Cents (Worth only half a cent 10 years from now…)

Nob Akimoto

Nob Akimoto

Nob Akimoto is a policy analyst and part-time dungeon master. When not talking endlessly about matters of public policy, he is a dungeon master on the NWN World of Avlis

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107 Responses

  1. PS. Erik, how do I add trackbacks to the other folks?Report

  2. Avatar James K says:

    I think you make good points here:

    1) I think an austerity programme is necessary, but it can be performed safely over 20 years.  I don’t think there’s anything wrong with taking 12 months or so to give the economy time to perk up a bit.

    2) The reasons the IMF pins conditions to it’s emergency loans is so that it can expect to get that money back.  It’s more of a loss-minimising strategy than anything else.

    3) This is true from a financial standpoint, but not a political one.  While now is a good time to borrow, government spending is hard to restrain once it has started.  Borrowing more because revenues have fallen is one thing, but there are long-run risks to actually increasing spending.

    4) Yes a government can run a deficit as % of GDP equal to the growth rate in its tax base forever.  unfortunately your deficit is a lot higher than that now.

    5) How can I argue with this point, I live inside it.Report

    • Nob Akimoto Nob Akimoto in reply to James K says:

      I do love that you spell “austerity program” as programme, it does give me a sense that we commune with people from all over!
      On a more serious note and…
      In substantive terms:

      1. We’re talking here a problem that’s more of a political vs. policy problem. Substantively speaking you’re correct that it’s possible to phase in a gradual balanced budget that takes shape over 20 years. Pragmatically speaking, however, US politics revolves around 2-4 year time horizons. The focus of austerity boosters is always to cut in the here and now, which is absurd. From a 3-4 year program time horizon, a mix of more fiscal stimulus, particularly infrastructure spending, plus state budget support in the next year or two,with a revenue increase of back to FY 2000 level marginal rates and a paring down of the defense budget by winding down supplemental spending is actually sufficient to close the deficit to a sufficient point where the only major concern would actually be Medicare cost containment in the next 20-30 year horizon.

      2. I’m not entirely convinced about the loss minimization given that a lot of the more onerous IMF conditions have tended to bog down economies and place countries in danger of perpetual debt, or at least underperformance. At the very least, I’m highly skeptical of World Bank and IMF efforts to “liberalize” economies. The track record at least has not been great.

      3. Your point is well taken from a political point of view, but I take the general stance that large scale infrastructure projects are relatively finite in number. Broadband deployment, highway construction, highspeed rail projects, urban rail, there’s a handful of very low hanging fruit that once expended won’t need renewal for a number of years. Moreover, big ticket items of this sort tend to have high public support. You can easily add sunset provisions (like TxDot does) to projects to make sure they’re wound down once you start borrowing.

      4. Again, baseline Obama Administration budgets that rely on nothing more complicated than letting tax cuts lapse and withdrawing from Afghanistan have the GDP-deficit ratio at around 2%. Modest growth in the 3% range over FY 2013 – 2016 would then already begin to heal much of the “debt growth” fears.Report

      • Avatar Kimmi in reply to Nob Akimoto says:

        Don’t forget squirrel-removal. It’s the latest national security issue.Report

      • Avatar Burt Likko in reply to Nob Akimoto says:

        High speed rail is another bugaboo of mine, particularly here in California where it seems like it would be such a natural fit into our local economy. Most New Deal-era infrastructure projects came in early and under budget, with tolerable levels of graft and corruption. It’s a bit different now.

        I don’t dislike the idea of investing in creating this kind of infrastructure, but I despaired from the beginning that it could be done in practice. Unfortuantely my all-too-easy predictions have come true; ten years and billions of dollars later not a single rail has been laid, we’re told the high-speed portions of the track will be routed over existing (nonelectrified) rail lines laid in the nineteenth century, and the system won’t carry passengers until ten years after the initial opening date.

        If the public actually got the promised investment for something like the promised price tag at something approximating the original deliverability date, I’d be all over it. What’s actually happening is of little economic benefit to anyone other than the graftors, serves as a dead lead weight on the state’s budget, and will not deliver the promised infrastructure and corresponding economi benefit in the unlikely event that it is ever delivered.Report

        • Avatar Kimmi in reply to Burt Likko says:

          To understand something about America, you should look at train timetables, specifically who runs on time, and who doesn’t. Some areas have a real culture of professionalism (and muckraking, and anti-corruption), and others really don’t. This exists by and large independent of the fiscal renumeration (though there are tweaks, like not going with minimum bidders).Report

        • This is a topic on which I’d like to see someone write a relatively in-depth piece: why does government contracting in the US seem to regularly run so exorbitantly over-budget?  This may well just be my perception, but it seems to me that this is not as large a problem in most other industrialized nations.Report

          • Avatar Kimmi in reply to Mark Thompson says:

            Just a light comment, rather than an indepth piece:

            PA pays minimum bid for transportation contracts (roadbuilding/fixing).

            MD pays “average” bid, but has a “if it breaks within 2 years, you fix it for free”

            Maryland tends to be a lot less overbudget on Transportation, because of this.

            Anyone who buys from “lowest bidder” is a damn fool (particularly if lowest bidder is over a sigma away from his competition). There’s always some bright kook in the marketplace to take advantage of the fools who think that the “lowest bidder” isn’t going to have cost overruns. He gets you in, he gets started, and then you gotta pay more and more…

            Note: I’m not talking fireants, or other “oh, my gawd, where are we building!!?!” problems… You build on a place with mine subsidence issues (hi, pittsburgh!), you got trouble.Report

          • Avatar Will H. in reply to Mark Thompson says:

            Short answer: Cost-plus bidding.Report

            • Avatar Patrick Cahalan in reply to Will H. says:

              This.

              Doing business with the government is horrendously annoying when you do business with the government as part of a normal revenue stream.

              Doing business with the government when you have a cost-plus bid contract *still* seems to be a grant to come up with crazy-ass ways to bill for more money.Report

          • Avatar James Hanley in reply to Mark Thompson says:

            Also not in-depth, but an addition to the discussion… Occasionally local governments will offer incentives for finishing jobs ahead of schedule, and impose penalties for delays.  The combination works well for getting projects done in a timely manner.  But probably should be employed with a warranty to ensure the speed of accomplishment isn’t done by cutting corners.

            And honestly I think much of the delay in projects like Cali’s high speed line is caused by on-going political opposition; both among those who dislike such projects on general principles and those who are engaging in NIMBYism. The problem isn’t the actual getting it done so much as the ever getting it started after it’s been agreed upon, because such agreements are never taken as the end of the battle, but just the onset of a new stage in the battle.Report

            • Avatar Kimmi in reply to James Hanley says:

              Because anything that benefits a city more than the country must be systematically defunded.

              Even if it means abandoning the county’s blind and deaf citizens.

              Sorry, a bit more local than you were expecting…

              The main problem with “let’s fund it” is that if a Republican ever gets elected, anywhere, he can shut down the whole thing (witness Ohio’s governor throwing away funds for trains)Report

            • Avatar greginak in reply to James Hanley says:

              Several years ago a big highway project was completed ( Rt 287 in north NJ) near where i worked. They finished under budget because they had developed some new process to do something or other. They announced they were going to open the highway almost a year earlier then planned. All the towns along the route of the highway freaked. They said they weren’t ready for the new road and sued the state to have them delay the opening even though the road was done.

               Report

          • Avatar DensityDuck in reply to Mark Thompson says:

            “[W]hy does government contracting in the US seem to regularly run so exorbitantly over-budget? ”

            Because government does cost estimates like someone saying “I need a Porsche, and I want to spend ten thousand dollars for it”.  Later that day they come home with a Porsche and complain about how car dealers regularly run so exorbitantly over-budget.Report

        • Avatar Simon K in reply to Burt Likko says:

          I don’t think its as simple as graft. I sort of know some of the people trying to make high speed rail work, through other political campaigns, and they’re decent people, not thieves, and don’t stand to profit personally. I can’t speak for the contractors, of course.

          The baffling thing to me is that obviously being able to get on a train in San Francisco or San Jose (or even Redwood City, which I can walk to) and be in Los Angeles in 2.5 hours would be economically huge. Anyone half competent should be able to make an operating profit at least. But the project as now described  – initially only in the central valley, no passengers for 10 years, supposed to run on Caltrain track (HTF is that supposed to work – there’s one track, how does a train doing 125mph share it with one that stops every 5 minutes?) is just crazy. How do you go from obviously useful thing to plan that’s just obviously crazy, when the people involved are people of generally good will? Beats me.

          The same thing regularly happens in England if its any comfort. The channel tunnel rail link was a national humiliation for 20 years until it was finally upgraded to high speed a few years ago. There’s something in Anglo Saxon poilitical culture than rebels against grand projets, I thinkReport

          • Avatar James Hanley in reply to Simon K says:

            There’s something in Anglo Saxon poilitical culture than rebels against grand projets, I think

            It’s not necessarily a bad instinct.  Not that it can’t be taken too far.Report

      • Avatar James K in reply to Nob Akimoto says:

        I do love that you spell “austerity program” as programme, it does give me a sense that we commune with people from all over!

        Of course, it would only be an “austerity program” if it were coded up on a computer 🙂

        1) You say “the only major concern would actually be Medicare cost containment in the next 20-30 year horizon” as if Medicare (and Social Security to a lesser extent) wasn’t 90% of the problem.  It’s not the money being spent now that’s the problem, it’s the money that going to be spent in the coming decades that will ruin the US government.

        2) It’s true the World Bank and IMF have bad track records, though that’s probably because they’ve been given a job no one knows how to do successfully.

        3) I think the potential government investments (especially the way politicians define investment) are much more numerous than you do.

        4) In the short run yes, but the real problem if future spending, not current spending.Report

    • Avatar Kimmi in reply to James K says:

      The economic devastation created by our lack of infrastructure investments in the past 50 years or will only get worse over time.

      Witness the great northeast blackout. Witness the bridges collapsing — witness entire highways being destroyed.Report

  3. Avatar Brandon Berg says:

    Regarding point 3, one problem is that we can say we’re going to spend now and save later, but it’s very likely that we’ll spend now and spend more later. You take spending cuts wherever you can get them, because it’s really hard to get them under any circumstances.

    Also, don’t these ultra-low rates only apply to short-term debt? If we take on a bunch of debt now, doesn’t that expose us (well, expose us more) to an increase in interest rates when it comes time to roll it over?Report

    • On your first point.
      The assumption I’m making in suggesting the investments in certain types of spending be made now are two fold. 1. There are a number of infrastructure projects that will need money in the next 10-15 years. 2. These infrastructure projects are a one time (or at least limited time) expenditure, compared to on-going federal expenditure programs like Medicaid, CHIP, Head Start, etc.
      That is to say, stinting on them now doesn’t really change your baseline budget, because they’re not going to be there anyway, and won’t change your future budget, because you can only build so many highspeed rail corridors, or broadband backbones, or wind farms. It’s similar to the costs involving electrifying rural America.
      Now, if it’ll take the sweetener of cutting some sort of expenditure programs in the here and now to get this going? Well, I guess I can make that trade, but as I noted in my reply to James, I’d also think it’d be fine to add sunset clauses to everything to make sure it’d expire after a while.

      On the second.
      This simply means that getting the $1000 to spend today is better than that hypothetical sum sometime down the line. Because in the meantime you get utility from whatever you spent that $1000 on (assuming it’s a durable good) or invested it in (assuming say human capital expenditure) rather than waiting without it until you can get it later. Essentially the “Net Present Value” calculation would compare the fact that you’d be paying more in interest down the line than if you just borrowed it then versus the benefits you’d gain by doing it now. There’s a reasonable cost benefit analysis to be done here, but from the studies I’ve read most of the weighing comes down in favor of doing the spending now.Report

  4. Avatar Will H. says:

    Ok, here’s my take on this:

    1). I am very sensitive to this argument. But I think this also shows a need to direct outlays with an eye toward returns.
    And it doesn’t address the issue of cost-shifting to the states.
    Federal monies make up 15.9% of Illinois’ gross receipts into the general fund. Health & Social Services takes up 40.2%of the general fund. Obamacare will effectively squeeze the state’s budget even more, unless the feds come off some money.
    On the other hand, Illinois could do without federal money by increasing its sales tax to 11%. The sales tax is lower than Missouri, which seems prone to local sales tax initiatives; so about half of the places you go in Missouri will have a higher sales tax than the standard rate.
    Public utilities are tax at a fairly low rate in Illinois, and escaped increases in the last round of budget wrangling.
    There are a number of options.

    2). Nations that told their creditors to get stuffed generally were doing a lot worse than we are now.
    As Gwar put it in the song “Slaughterama”
    When your life is sh!t, then you haven’t got much to lose.
    We’re not quite there yet.

    3). …and if we can pay it back with rapidly deflated dollars, so much the better!
    But I see more urgent needs than having a free Band-Aid station at every street corner so that people can just go pick up a Band-Aid whenever they need one.
    When bridges start falling down on traffic below, that’s usually a sign that something went terribly wrong.

    4). They may not die, but you can certainly kick the sh!t out of them.

    5). I spent over a year-and-a-half trying to explain the difference between monetarism and Keynesianism to a bunch of random Tea Partiers.
    I’m worn.Report

    • Nob Akimoto Nob Akimoto in reply to Will H. says:

      1. So long as the states continue to have balanced budget amendments, they are effectively locked to the feds to make up for counter-cyclical budget shortfalls. Now whether or not this is a good idea is something I’m a bit agnostic about. Now clearly the European experience suggests having multiple nexuses of government debt is not a good idea. If for example we allowed all the states to issue US dollar denominated foreign debt, we might soon run into substantial problems. Indeed we already have state and local governments doing the next best thing, either through bond finances, or in some extreme cases the use of infrastructure development “Funds” which are investment vehicles designed to operate/run public utilities/infrastructure for a set period in exchange for debt financing construction.

      2. Oh, I’m certainly not debating that. Now, granted…I’d imagine the creditors have a lot more to lose right now. Look for all intents and purposes US debt is used to buy stuff. Now, once you have the stuff, you can probably just say “well if you want it back, come take it.” So long of course as you hold substantial amounts of military hardware and nuclear weapons, just simply invading and grabbing gold from Fort Knox is probably not a viable solution. Therefore, the creditors could be stuck holding a lot of paper that’s not worth a lot. Not that I see this as a possibility at the moment…but still. There’s a lot leverage against the US than there was against Indonesia or South Korea…or even Italy.

      3. I’m still thinking on the I-35 bridge collapse a few years ago. There’s clearly a need in the US for a comprehensive investment in some road/bridge refitting, plus airport and high speed rail expansion. Replacing a lot of the local flights with high speed rail, particularly in areas like central Texas would make a lot of sense. (Of course Southwest would flip…)

      4. Well yes. But I’m doubting the US will actually be in a position to get the shit kicked out of it anytime soon. But I’ve been wrong of course.

      5. Perhaps if you explained that Milton Friedman is one and J.K. Galbraith the other….Report

    • Avatar Matty in reply to Will H. says:

      I spent over a year-and-a-half trying to explain the difference between monetarism and Keynesianism to a bunch of random Tea Partiers.
      I’m worn.

      Just show them this, its how I learnt about it.Report

      • Avatar Anne in reply to Matty says:

        That’a brilliant!Report

      • Avatar Simon K in reply to Matty says:

        Hayek wasn’t a monetarist. For modern purposes the difference between monetarists and keynesians is almost none. The right is now some kind of neo-classical and the left is neo-keynesian.Report

        • Avatar James K in reply to Simon K says:

          Yes, for some reason everyone thinks Classical and Keynesian macroeconomics is some kind of massive ideological rift, like we were still in the 1960s.Report

          • Avatar James Hanley in reply to James K says:

            Well, for one, we know that intellectual frontiers trickle down slowly to the general public, so it’s not surprising the public’s a few decades behind. In fact my favorite popular econ book, New Ideas from Dead Economists tends to leave the impression that the two are still widely separated.

            Second, the country’s most well-known, prominent, and outspoken economist (PK) publicly reinforces this rift in his opinion columns, even though close attention to his writings reveals how very much he represents the melding of the two theories. He’d do a real service if he’d use his platform to teach instead of preach.

            (FWIW, it’s only during the recent U.S. fiscal crisis, as I followed the debate and went back to re-read some of Krugman’s work that I realized how fundamentally monetarist most Keynesians are now.  I’m still trying to figure out how Keynesian most monetarists are, but the monetarist I run into most often is Scott Sumner, who’s an unrepentant hard-core monetarist with no sympathy at all for fiscal  policy.)Report

            • Avatar Will H. in reply to James Hanley says:

              It’s been about 20 years since I’ve sat in an econ class, so I think I’m doing fairly well as far as retention is concerned.

              As for your point #1, specialization practically demands it. I’ve seen developments in technology within my own field, but I have no interest in keeping up with every field. It’s not feasible.

              As for point #2, Krugman is indeed the nation’s premier economist at the moment, Nobel and all. He’s still a disingenuous hack, no matter how many Nobels he might have. I used to watch This Week all the time, and I have seen George F. Will make Krugman look like a complete idiot week after week, and often with very little effort; and Will is no mental giant. To me, this calls Krugman’s value into doubt.

              Combine that with the fact that divinity studies are arguably more accurate in their predictions with greater regularity than that of economists, and the value of maintaining the bleeding edge knowledge of developments in the field is somewhat questionable.

              Opportunity costs.Report

        • Avatar Will H. in reply to Simon K says:

          I would enumerate the major schools of economic thought as:
          Keynesian
          monetarist – Friedman
          Austrian – Mises

          I think I would group Hayek more with Mises.

          Anything of note that I missed?Report

  5. Avatar Murali says:

    Dude, this and the comments so far make this one of the most intelligent and informative posts on the league so far.Report

  6. Avatar Kimmi says:

    Robust growth predicted”

    …um really? I see billions poured into our economy from a mild winter. Conjurebag’s calling for a stallout, and possible recession (which is far better than his December prediction, mind — again mild winter).Report

  7. Avatar Kimmi says:

    Debt is a form of leverage for a government. We allow NormalPeople to leverage up to at least 3x their income (my area, with its high taxes and low housing prices), if not 5x(your area, probably).

    Japan isn’t at 3x, and neither is the US. We’re at 1x. That’s not too shabby, all things considered.

    Iceland? That’s when the leverage gets devastating.Report

    • Avatar wardsmith in reply to Kimmi says:

      A “normal” person gets to buy a house that is 3X their annual wages because of the underlying monetary value of the HOUSE. A “normal” person can NOT get a signature loan based solely on the good faith and credit of said normal person at anything /approaching/ 5X their annual pay.

      Government debt is backed by nothing other than the good faith and credit of said government. Dollar bills are quite literally debt instruments, by definition (look up the meaning of the word “note”).Report

  8. Avatar Jason Kuznicki says:

    The problem with Keynesian stimulus is that the democratic process ensures that it never works out the way the textbooks say.

    When times are bad, politicians demand deficit spending as a countercyclical measure.  In this, they are following the books’ advice, and the people agree.

    When times are good, politicians declare that they shouldn’t let the opportunity go to waste — the time to spend on big projects is now!  And the people still agree.

    “Deficit in bad times, surplus in good” becomes “deficit all the time, with a debt that we can’t sustain.”  The fact that nations don’t grow old is immaterial — they can and do get taxed into stagnation, and that’s the choice the 00s and 10s have made for the coming decades.

    This isn’t just a matter of some finite number of infrastructure projects, either.  There are always more wars to be fought, more neat new military geegaws, more green jobs to be “created,” and more medical bills of some sort to pay.  You’re plumbing a bottomless pit, and the fact that you’ve only got 10′ of rope on hand doesn’t change things in the least.Report

    • Avatar Kimmi in reply to Jason Kuznicki says:

      So. Ideally, we pay oodles of money at once, to create new markets, and then don’t mind so much about the ongoing cost (of the TVA, for instance), because it is well paid for by the taxes on the corporations.

      Gore wanted to pay down the deficit. Clinton did his part. I’m not surprised that they weren’t super popular, but I think if GE and Disney want the deficit cut, they can pull off the political will.Report

      • Avatar Burt Likko in reply to Kimmi says:

        Seems to me that Clinton was quite popular. He weathered scandals and impeachments and presided over very good economic times while running a budget surplus as Keynes would have said he should. The only critique of Clinton’s economic policy in retrospect seems to be that he didn’t build up the surplus into a war chest to prepare for coming bad times. This, however, seems like a well-nigh impossible task for anyone given the democratic pressures on our government (as Jason noted above).Report

    • Avatar James Hanley in reply to Jason Kuznicki says:

      Ditto what Jason said. Keynes’ essential problem was that he had a very simplistic view of government.  He wholly failed to understand that politicians respond to incentives.Report

    • Avatar Patrick Cahalan in reply to Jason Kuznicki says:

      I just want to say that I’m tickled that somebody used the phrase “neat new military geegaws”.Report

    • Avatar DensityDuck in reply to Jason Kuznicki says:

      “more neat new military geegaws”

      like that silly GPS thing that nobody ever uses

      or hey, how about those dumbass weather satellites.  “oooh look imma take pitchers’a CLOUDS, woooooo”Report

      • Avatar Kimmi in reply to DensityDuck says:

        the anti-GW crowd is touting weather sats? seems perverse to me…Report

      • Avatar Patrick Cahalan in reply to DensityDuck says:

        Duck, feel free to go through the military budget and justify it someday.  Write a series of guest posts.  I’d love to hear your overall assessment of efficacy, you might even make me revisit my opinion on the defense budget.

        Until then, your one-off comments about successes without looking at any of the long, myriad list of failures is of zero overall value.Report

        • Avatar DensityDuck in reply to Patrick Cahalan says:

          The statement was “neat new military geegaws”, like nothing that defense research ever did had a useful application, which is a preposterously silly statement that deserves a response.

          “oh but there’s waste in the military!”  no shit, Sherlock. There’s waste everywhere in the government, and if we’re making a list then military R&D won’t be the first or the worst.Report

      • Avatar Jason Kuznicki in reply to DensityDuck says:

        I say:  Military spending can sometimes be wasteful.

        You say:  Often it isn’t.

        I repeat:  Military spending can sometimes be wasteful.

        Want to go another round?Report

        • Avatar DensityDuck in reply to Jason Kuznicki says:

          “I say:  Military spending can sometimes be wasteful.”

          Wasn’t what you said.Report

          • Avatar Jason Kuznicki in reply to DensityDuck says:

            Once more, as literally as possible:

            Jason:    “There are always more… neat new military geegaws…”  (Logically:  Some military expenses are wasteful.  Or simply:  Some P are Q.)

            DD:  “like that silly GPS thing that nobody ever uses”  (Logically: Some P are not Q.)

            Jason, again:  Some P are Q.

            How many more rounds would you like to go?

            Report

            • Avatar DensityDuck in reply to Jason Kuznicki says:

              It’s not what you said.

              Repeatedly saying something different won’t make that become what you said.Report

              • Avatar Kimmi in reply to DensityDuck says:

                no, but you’re supposed to understand that it was what he meant to say. and have the good grace to acknowledge that he phrased it poorly.

                Naturally, when the shoe’s on the other foot, Jason accuses me of distorting truth…Report

              • Avatar Jason Kuznicki in reply to Kimmi says:

                There’s a world of difference between “military spending can become wasteful” (me) and “here are some economic numbers that I totally invented, then lied about totally inventing” (you).

                There are always neat new military geegaws.  Even after it’s stopped being sensible to spend more on them.

                Given that the entire context of the post was “sometimes the government can spend too much,” I don’t find this a big stretch.Report

              • Avatar BlaiseP in reply to Jason Kuznicki says:

                A whole iteration of fighter jets was developed, essentially based on one radar track.   In 1971, a MiG Foxbat’s turbines got in trouble and began to overspeed.   So this poor Soviet bastard goes tearing over Israel at Mach 3.2 in the last few seconds of his life, fwooooosh!  Crashed in Syria somewhere.

                Boy howdy.   Nothing doing but the USA had to have a whole new generation of faster fighters.   Never mind that air-to-air and surface-to-air missiles were the new tactical high ground and faster fighters were not cost effective, the billions and billions spent on ever-faster fighters — based on this one radar track — beggars imagination.Report

              • Avatar DensityDuck in reply to BlaiseP says:

                According to every study that’s been published, if your mission is to put explosives on a target then speed always beats stealth.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                Sadly, no, armchair warrior.   According to every ambush I’ve ever conducted (don’t suppose you have) every study notwithstanding, I find stealth to be hugely more successful than speed.   The need for speed is required to get out of that situation.Report

              • Avatar DensityDuck in reply to BlaiseP says:

                “I find stealth to be hugely more successful than speed.”

                You can spend five minutes sneaking up to the guy so you can stab him in the neck.  Or you could shoot him.  “But shooting him makes a lot of noise!”  Yeah, and in the high-technology state conflict where speed-versus-stealth is meaningful to air attack, you don’t care.  Nobody’s going to think that the all emitters at Ching Chuan Kang simultaneously blew up by accident.  “But if they see you coming then they’ll launch nukes even if they can’t stop your attack!”  Not at DEFCON 4 they won’t.

                Stealth makes you harder to spot, but maybe you don’t care about being spotted, and if that’s the case then speed is a much better guarantor of success.

                Note that if your speed isn’t all that much, then yes, stealth is better.  If you don’t have a gun–or a load of Mach-20 cruise missiles–then sure, go stealth.  You use what you’ve got.  But ever since the fact of stealth was revealed, it became a lot less useful strategically.Report

              • Avatar BlaiseP in reply to BlaiseP says:

                The humble IED has killed more Americans than anything else of late.   For all the billions wasted on shinier, pointier airplanes for the White Scarf crowd at USAF and USN, the last time anyone engaged in air-to-air combat, the Israelis gave the Syrians a pounding from over the horizon, with cheap missiles that flew farther.

                Nobody’s making jet-powered drones.   We’re flying those drones at about 100 nautical miles per hour.   Whole lot cheaper than that hangar queen F-35 at $236 million unit cost. Which still isn’t flying, may I add in passing, though it’s been in development since the mid-90s.

                See, the strike aircraft has become irrelevant in modern warfare. It’s the modern equivalent of the battleship. Quit wasting money on it. Speed….. hee hee. “Every study that’s been published” doesn’t sum up to an equivalent pile of chicken doo-doo and the rooster on top of it, crowing his lungs out. Want to put explosive on a target? These days, it sort helps to actually know something about the people you’re dropping it on and make sure you’re dropping on the right folks, not exactly a speedy process. That’s how wars actually get won. “Every published study” might serve our troops well enough, thrown into a Franklin stove on some chilly outpost.Report

              • Avatar DensityDuck in reply to BlaiseP says:

                I guess this is as much of an agreement that I was right as I’m ever likely to get.  Beloved Old Babbling Grandpa BlaiseP drowns the conversation in irrelevancies and homespun cynical wisdom, and hopes we all forget the original topic.Report

              • Avatar Kimmi in reply to Jason Kuznicki says:

                Dude, back up. I was talking about my comment “people with money don’t buy treasuries” (or something of that bent), which I proceeded to back  up in detail with substantial quotes from other sources. If you’re going to call me a liar for talking about things that I substantiate, then I’m going to plonk you again. Because, man, that is overboard.Report

              • Avatar BlaiseP in reply to Kimmi says:

                Everyone who pays Social Security buys treasuries.Report

              • Avatar Jason Kuznicki in reply to Kimmi says:

                Please just plonk me again.  Please.  I mean it.

                Let’s review.

                You said — I quote — “nobody with money invests [in the United States] — too safe, doesn’t earn them nearly as much.”

                In response, I asked you to explain the bond market.  In that market, when very many people want to invest, the returns necessarily decline.  Complaining about “nobody” investing in bonds because the yield is too low is like saying “nobody goes to that restaurant because it’s too crowded.”

                Add to this the fact that American Treasury bonds are the very clearest current example of a low-yield and highly-popular investment, and there’s really only one decent thing left for you to do:  Admit you goofed.

                Did you admit it?  Nope.  Instead, you wrote:

                Did I say nobody with money? I meant nobody with -American- money. American dollars and debt make a great hedge if you live in say Europe.

                This too is wrong, because Americans have been very avid buyers of American bonds.  As, in fact, I showed.

                Fate now gave you a third opportunity to make an error, and you grasped it with both hands, writing:

                Dumb Money, aka boomers, don’t count as people “with money”

                Which, well, whatever.  Just go.  Plonk me.  It won’t be the first time, but I can always hope it might be the last.

                 Report

  9. Avatar DensityDuck says:

    “Infrastructure built today starts contributing today. ”

    And if we could build infrastructure today, that would mean something.  But infrastructure built “today” is actually infrastructure announced today, built three years from now, and paid for by a tax that sticks around for so long that even after it’s paid for the thing it built we’re all used to it and it becomes part of the general revenues (and, probably, gets used to pay the retirement pensions of police and firefighters who are busy pricing the original residents out of some Arizona neighborhood.)

    Remember “shovel ready”?

    “3.  Present Value (PV) combined with historically low central banking interest rates means it would be criminal folly to NOT borrow and spend now.”

    You sound like someone trying to sell me on the virtues of a no-down interest-only adjustable-rate mortgage.Report

    • Avatar Kimmi in reply to DensityDuck says:

      Not in my hometown. But hell, I suppose spreading some kitty litter over a footpath, or painting on a bike lane, isn’t what you wanted to be hearing about.

      Some things are cheap and easy to get done. Switching to LED lightbulbs. Saveatonofmoney.

      Infrastructure doesn’t always need to mean starting from scratch.Report

      • Avatar DensityDuck in reply to Kimmi says:

        “I suppose spreading some kitty litter over a footpath, or painting on a bike lane, isn’t what you wanted to be hearing about.”

        What’s your environmental impact statement for spreading that kitty litter?  How are you sure it’ll stay on the path and not go into the local creek and kill all the fish?  How do you guarantee that you aren’t creating an impermeable surface that will create a runoff issue?

        Who’s your supplier?  Are they Chinese or American?  Do they use sustainably-sourced raw materials gathered in a nonexploitative way by a minority-owned small business?  And does your contractor conform to ISO 9001 standards?  (You did put the job out for competitive bids, right?)

        Painting on a bike lane?  You’re looking at years of traffic studies to address the effect of reducing roadway for current users (not to mention the safety implications of putting fast-moving cars right next to slow-moving bicycles.)

        Switching to LED bulbs?  First you have to do a study to show that the bulbs will, in fact, save energy for the same amount of illumination.  Then you have to ensure environmental compatibility–if the bulbs break, do they spray cadmium and mercury all over the place?  Can they stand up to twenty years of diurnal and seasonal temperature variations?  What happens if a bird lands on one, or a wind-blown stick hits it?  If we change one can we throw it in a dumpster or do we have to dispose of it as HAZMAT?  Do we get a warranty on the bulbs, or do we buy a stockpile, or do we do both?  And who’s the supplier, and who’s the installer, and who gets the maintenance contract?

        And thensuddenly it’s two years later and the money’s all gone, and somehow all the new jobs and new stuff never happened.Report

        • Avatar Kimmi in reply to DensityDuck says:

          1) … do you want me to pull it? I can, but…

          2) WHAT fucking fish???? They are all DEAD because of the SEWAGE that routinely pours into the run (stream for yinz not from PA).

          3) THIS corrects the LAST path, which not only was completely washed away by 4 inches of rain (real bad downpour). Do I need to mention the barricades we have up so that people don’t walk on teh part of the hillside that is subsiding?

          4) I’m pretty sure park services did this themselves, or close enough to it. Dunno. you wanna look it up?

          5) Okay, WHAT studies need to be done to remove a bit of street parking nobody in their right mind uses (they got driveways), and put a ‘safety lane’ for bikes going up a hard (for bikes) hill? Jimminy Dingus, they do this for trucks all the time!

          6) The companies routinely do their own studies. Ya, Win.

          7) Hence why we switch to LED bulbs, and not CFLs. This does not take TIME to figure out. It takes Kidneys, which you seem to lack.

          8) 20 years? how long do you think conventional street lights last???

          9) it’s like he’s never heard of a prototype, don’t switch ’em all at once….

          Nu, I should have mentioned planting trees.Report

  10. Avatar Kimmi says:

    Who bought during the bubble?

    Who bought at bottom?

    I know who called things right, and who didn’t.Report

  11. Avatar Jeff says:

    If we take Present Value seriously, then if we have near-zero interest rates, there’s actually something close to a negative interest valuation going on here. The Net Present Value for infrastructure spending right now is about as high as it’ll get. Building or repairing roads, investing in energy production (whatever form it might take), improving infrastructure, school buildings, etc etc. all of that is the cheapest it’s likely to ever be in our lifetimes.

    Infrastructure built today starts contributing today. Not ten years down the line. If you wait now, for those ten years, even if you saved x amount from the deficit, you’d still have the reckon everything from inflation to the (potential) rise in the fed rate.

    Now you’re sounding like a Slacktivist!  WARNING: Progressive politics from a liberal evangelical…Report

  12. Avatar Morat20 says:

    I’m not entirely sure on why we need austerity. Running to the Clinton Era tax rates — a time that was hardly “over taxed” — wrapping up Afghanistan,  and returning to “not being in a recession” would practically balance the budget all by itself.

    Health care remains a problem, but “austerity” is only a solution to that if we go for the “screw the old people” plan. (And even then, as time marches on, that’s going to screw more and more people). Luckily the US has a lot of slack in the system that other countries — which went with far more cost effective and efficient solutions — don’t.

    I think it’s austerity for austerity’s sake. Generally coupled with tax cuts for the rich.

    Why, you know, “raising taxes” is not a consideration is beyond me. Unlike Joe American, struggling with his household budget, the US Government CAN give itself a raise. Especially since it’s spent the last 5 decades taking harsh pay cuts. On purpose.Report

    • Avatar DensityDuck in reply to Morat20 says:

      “Why, you know, “raising taxes” is not a consideration is beyond me. ”

      Raising taxes to solve revenue problems is like eating more cake to make yourself stronger.  Because, after all, strong people are larger than weak people, and therefore larger people are stronger.Report

    • Avatar Kimmi in reply to Morat20 says:

      Screw the old people’s the only plan we got. It’s just how we’re gonna screw ’em.

      Inflation or “austerity” either way they burn.

       Report

  13. Avatar wardsmith says:

    I find it amusing that the same crowd who waxes eloquent about the “value” of such ridiculously failed policy dressed in economics drag as the Solyndra investment jumps all over military spending as if it is the big pariah here. Yes, a ton of money gets spent on military geegaws and much of it is wasteful by the very premise of military thinking, to wit a bomb serves no particularly useful purpose until it blows up (if then). The military builds weapons and weapon delivery systems, but the majority of the military budget is still wages for military and civilian employees. Just because a portion of the budget disappears into a black hole called Osprey, doesn’t mean there aren’t thousands of employees directly benefiting from the program. The Keynesians here should be proud. You can’t have it both ways, claiming that gov’t spending is great when spent on infrastructure and horrible when spent on military. Either it is great to spend money or it isn’t.

    Off the top of my head I can think of a few value-creators generated from military investment that have reaped BILLIONS if not trillions in returns to the general economy. Shall a I name a few?

    • Spread spectrum radio (actually invented by Hedy Lamar) is used in 100% of the wireless devices you are familiar with from your WiFi computer gadgets to your cell phones.
    • GPS already covered, but it will soon change the way airplanes are routed through our system
    • Lasers used in industrial applications and communications
    • Computers: The first ones were paid for and built by the military for codebreaking and trajectory calculations
    • Aeronautics: autopilot, radar, pressurized cabins, fly by wire, ILS, VOR, night vision, FLIR much much more
    • Encryption, decryption, public private key, MD5 etc.
    • Virtual reality, augmentation, prosthetics, artificial skin, antibiotics

    I could go on, but I think I’ve made my point. Even “wasteful” spending can seem valuable in hindsight. Like VC’s the military might invest in 10 programs and only see fruit from one of them, but the results are 10X or better.

     Report

    • Nob Akimoto Nob Akimoto in reply to wardsmith says:

      …say what?

      I don’t recall making any point anywhere near this…the only thing that even came close was Jason’s comment on military geegaws, and he’s about as far from a Keynesian as you can get.Report

      • Avatar wardsmith in reply to Nob Akimoto says:

        Nob, I came down here because the formatting was getting too pinched up where the argument about military spending was occurring. I don’t stay in my sandbox very well, some of the interlocutors I’m mentally dealing with here aren’t even on this thread, yet. Others definitely are.Report

        • Avatar Patrick Cahalan in reply to wardsmith says:

          Okay, this is going to be the second big post series I’m going to have to write.  Ward, challenge provisionally accepted.

          You’ll have to give me time, this is going to take a long, long while.  Your list is a good jumping off point, my only quibble is that the NSA came up with key exchange well before the public market did, but Diffie-Hellman exchange is what we use, and it was developed independently primarily because the NSA certainly wasn’t going to let *that* cat out of the bag.

          There are some major points to look at in this story.  One, what innovations were unlocked by primarily defense-related expenditures that were unlikely to be unlocked “relatively soon” (or at all) by nonmilitary research.  I can think of one obvious one that I’d grant outright.  I’m not sure if I can think of another one off the top of my head, though.  Two, what innovations were unlocked by primarily defense-related expenditures that became robust technologies before they were transferred to the private sector.  Radar, for example, was going to happen any way you slice it – too many RF nuts in the early 20th century – but WWII did hurry things along quite a bit and what we had as radar in 1946 certainly looked different than it would have without WWII (of course, you can say the same thing about airplanes).  Three, you’ve got innovations that were unlocked by the private sector and became fairly robust and then got injected into the military and got hypercharged.

          Innovation requires a bunch of conditions to occur simultaneously in technology, particularly materials science, energy and engineering.  When those conditions come about, though, innovative things tend to come out the other end no matter who is footing the bill.  Not that NASA/the DOD/DARPA don’t get part of the credit here, but it’s not quite all as cut and dried as “if it weren’t for defense expenditures, none of this stuff would have ever happened.”

          (Not that I’m claiming that this is your claim, to be sure).Report

    • Avatar greginak in reply to wardsmith says:

      Wow Ward, government spending on technology and research really does kick ass. We agree.Report

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