2016 US Presidential Election

[SkyPikachu]

I don't want to make a new topic for this but Australia just had a leadership spill and Tony Abbott who I never met a person who liked got kicked out for Malcolm Turnbull.

Probably doesn't effects America though.

[Jordan]

I've been feeling conflicted lately because the more I read about Sanders' promises and plans, the more unsure I become of their economic viability. Or more to the point, I don't think that his agenda is economically viable at all. I think he needs to tone down the rhetoric and focus on some core adjustments. Possibly he could work toward gradual change on the major welfare issues?

I don't think Sanders' plan can work as it stands right now. He is promising too much with hardly any sound strategy to raise the revenue. He also does not seem interested in cutting defense spending, which in my opinion he would need to do in order to finance reform efforts.

Part of my support for him comes from the fact that he is willing to tackle issues that no other candidate cares about, such as the need to deal with runaway campaign financing by interest groups. It also comes from disgust I have toward Hillary Clinton and many of the Republican candidates.

[TheGreatNads]

^Government does not need tax revenues to finance spending. That's not how the system works. Financing government spending is a non-issue. Sometimes I wonder where people think money comes from, and I wonder whether they ever think about where they think money comes from. Do people think Japan, with government debt at over 200% of GDP are going to run out of money or something(yes they do)? You spend first, tax later. Not the other way around. It's impossible to do it the other way around.

(On the subject of taxes Sanders does have some proposals like taxing high frequency trading, which might make sense from a social engineering motivation, but not from a fiscal one. I don't support taxing high frequency trading anyway.)

Not that there aren't plenty of other issues with Sanders' policies. Like his ideas about expanding labor unions or enacting more protectionist trade policies. Stupid. When combined with a minimum wage increase(which by itself isn't a bad policy maybe) they would be utterly ludicrous. All based on a "lost cause" of manufacturing jobs in the U.S. They're gone, they're never coming back, today tons of U.S. manufacturing plants operate at less than full capacity, not many young people want to work in them, it's hopeless. And all the talk about how NAFTA or some other bogeyman is responsible, you can see those tired tropes on Sanders' website, they're so stupid they're hardly worth engaging with. Funnily enough there have been Republicans barking up this tree(albeit from a different angle) as well during the debates, about how we need to bring back good manufacturing jobs. Not going to happen. Keep dreaming.

He also goes through the usual business about how we need to deal with climate change by spending more on "green" energy sources, which isn't going to make a big difference.

Of course, most likely Sanders would never be able to get support for his policies even if he was President, but that's another story. All the talk about "can Sanders win a general election" says little about his ability to actually enact policies even if he was elected.

[Jordan]

Government does not need tax revenues to finance spending. That's not how the system works. Financing government spending is a non-issue. Sometimes I wonder where people think money comes from, and I wonder whether they ever think about where they think money comes from. Do people think Japan, with government debt at over 200% of GDP are going to run out of money or something(yes they do)? You spend first, tax later. Not the other way around. It's impossible to do it the other way around.

I don't understand where he's going to get his money from in general. He doesn't want to reduce spending anywhere else, yet wants to increase it across the board even though we don't have it. As far as I understand, the way a budget works is that you have to cut spending from somewhere in order to put it somewhere else or you need to raise revenue somehow.

[TheGreatNads]

I don't understand where he's going to get his money from in general. He doesn't want to reduce spending anywhere else, yet wants to increase it across the board even though we don't have it.

Where do you think money comes from? Do you think government mines dollar bills out of the ground or something? It's not so, government creates money. Literally. And not only government. Banks create credit which itself is a form of money. You could go further too. Where do you think frequent flyer miles come from, or PSN points, or Bitcoins etc.? A currency issuer creates money out of nothing. So government doesn't get money from anywhere.

Unless I'm misunderstanding you and what you're saying is you don't understand how Sanders is going to get support for spending increases(which would explain the talk of cutting one thing and putting money elsewhere), the answer to your statement is that the money will come from nowhere. It's a bit like asking where a scorekeeper in a card game gets the point values they give out from. The scorekeeper just creates them. Government is a scorekeeper. If they want to increase the money supply, they do it. If they want to increase fiscal spending they increase the money supply and spend it.

[Jordan]

The government can print more money, but that increases inflation which causes many other problems. There has to be some consideration as to how much the government is willing to spend.

[TheGreatNads]

The government can print more money, but that increases inflation which causes many other problems. There has to be some consideration as to how much the government is willing to spend.

This common belief isn't true either. For starters, there's a difference between creating money and spending that money. So you can create all sorts of credit, and if it just sits in the Central Bank as excess reserves, there is no reason to believe it causes inflation(and in fact the experience of numerous countries under quantitative easing programs is counter evidence to any monetarist or other loon who claims it does, deflation in Japan being the most obvious example). This point isn't relevant to Bernie Sanders but it is worth making when someone implies government printing more money by itself causes inflation.

Secondarily, there's not a one to one relationship between the amount government spends(or the size of the money supply, though that point is implied in the previous paragraph) and inflation. You can look at this empirically if you like, but really the only point here is that the causes of inflation are not that simple. Incidentally, in the U.S. case, oil prices tend to correlate with inflation more than anything else, which is no surprise because we are a fossil fueled civilization.

Finally, even if you assume a priori that the fiscal increases Sanders wants will increase inflation unless the government cuts elsewhere, it's really a question of magnitude. Government after all sets inflation targets, it's not usually that deflation is desired or anything. It's a question of run away inflation that is too high. For the question of magnitude, but also to buttress my point about a lack of a one to one relationship, let me just point you to some historical data*.

We were able to have a Vietnam War, Great Society programs, Social Security and health care expansions, all sorts of massive expansions of government, the budget tripling in less than 20 years. What was inflation? It was 1-3% most years, that's within the target we currently are supposed to want inflation to be(and this by the way during a time of high growth). We didn't have high inflation until the oil shock of the 1970s. That ended in the early 1980s, and yearly average inflation hasn't hit above 6% once since 1982, and has been in the 1-3% range most years. In other words, quite stable, even when expensive wars were launched in the Middle East etc.

Now to go back to the 50s-60s period, although I could focus on other periods, I think it's fair to say that what Bernie Sanders is proposing isn't so massive an increase of expenditure as compared to the Vietnam War, the Great Society programs, etc. And if you look, those government expansions didn't launch massive inflation(I would go even further and point out that really, government has expanded massively in the post war era, inflation except for a period in the 70s-80s when there were oil shocks, has actually been stable), so why would we expect Sanders' programs to do so? It sure looks to me empirically like the U.S. government would have to try very, very hard to create runaway inflation just by expanding social programs.

I agree that there has to be consideration as to how much government is willing to spend, so then you get into a question of what are the likely impacts of increases in fiscal spending for the purpose of launching the types of programs Bernie Sanders has campaigned on(although obviously inflation is just one concern, and to me, a minor one in this case). Well, we don't know exactly what those numbers would be, but I would suggest based on historical experience that the chances of them creating an inflation problem are low. The U.S. government has increased spending massively in the post WW2 era and the U.S. has remained one of the largest economies in the world and with quite stable inflation rates throughout most of that period.

I don't really think anything more needs to be said. Inflation doesn't seem to me to be much of a threat here. There is a difference between being concerned about the appropriate amount government should spend(or the appropriate size of government, or the appropriate tax rate, however you want to look at it) and being concerned that any increase in government spending will bad. The latter position is basically an ideological one, where empirical data is probably irrelevant. I'm all for evaluating particular programs, but the source of funding is not an issue.

Also, if I was a partisan Democrat, which I'm not(but I'll make the point anyway since I think it makes sense) I would be asking why is it that it's only when a progressive Democrat comes in with proposals to expand social programs do we hear about inflation or funding issues etc.? Somehow, mysteriously, that concern is rarely voiced when a war mongering Republican comes in and wants to invade a country with a massively expensive war(as opposed to more cheap methods like drones and selective bombings and other cheaper ways of murdering people). Funny isn't it?

*
https://www.whitehouse.gov/sites/defaul ... s/hist.pdf for spending
http://www.usinflationcalculator.com/in ... ion-rates/ for inflation

[Jordan]

I stand corrected then. I was under the impression that if you increase the money supply and increase spending, it would result in some inflation issues. I'm aware that some inflation isn't necessarily a bad thing and that inflation has increased in the past without much issue, but to me it seemed like if Sanders was going to start throwing a lot more money into social spending, it would cause issues.

As far as the war/defense spending vs. social spending inflation issue, defense spending has always been a concern to me, though. I think it's excessive and needs to be docked somewhere, even if that does create some problems and possibly result in loss of jobs.

[TheGreatNads]

As far as the war/defense spending vs. social spending inflation issue, defense spending has always been a concern to me, though. I think it's excessive and needs to be docked somewhere, even if that does create some problems and possibly result in loss of jobs.

Yeah, I understand that, I wasn't actually intending to accuse you with that last paragraph. I was just making a point about how it's funny that only certain types of spending increases lead to those economic arguments being made.

[Jordan]

No comments on the debate?

I thought even very early on that Clinton was doing pretty well. She took a lot of tough questions and handled most fairly decently.

I didn't think Sanders was very aggressive, which was surprising since he had the most to gain by tackling Clinton on some of their policy differences. O'Malley oddly came across as more aggressive during the debate, and in general kind of impressed me.

Webb and Chafee were a joke, especially Chafee. Webb had some good insights for the foreign policy section of the debate, but slipped after that in my opinion.