Wow.
Bob summarizes the whole discussion in dialog form here. Impressive. I have to admit I only skimmed the first gazillion lines until my lines came up. I was quite happy with Bob's presentation of what I've been saying. Plus I drove David Brooks insane, which is always nice.
Bob introduces new OLG schemes that are also worth looking at carefully. Now instead of one person at the end holding the hot potato when the government redeems the debt, he has everyone after a certain point earning less than 200 over their lifetime by continuing rolling over a portion of the debt at a 100% interest rate (yes you read that right) and taxing to pay for the other portion. So essentially he takes that old tax on Iris and doles it out over time rather than in one go at the end.
UPDATE: What I learned from Bob's dialog is that instead of being fooled by these politicians with empty promises, we should pay for transfers to the elderly with a dedicated tax that puts money in a fund entirely separate from the general fund, and we should hire a bunch of actuaries to keep the program as steady as possible. If only a kickass president in the 1930s thought of that one... oh wait! And it's a good thing too - we needed that wiggle room in the debt five years later to make a real investment in civilization: namely, driving fascists out of Europe, Africa, and Asia (and now we have a new interminable debate topic: democratic pacificism in the face of imperial fascism - can anyone with a pulse support it? I will be arguing the negative, Bob (I presume - as a pacifist himself) will be arguing thte affirmative).
Monday, January 9, 2012
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LOL! Murphy's post was actually pretty funny, Daniel. Perhaps you should do a post like that one day!
ReplyDeleteThis comment has been removed by a blog administrator.
ReplyDeleteDK,
ReplyDeleteBased on your responses and non-responses from "What's In A Name" I'm left with the impressions that:
1) It's possible and impossible that govt debt can impoverish an entire nation.
2) That Baker and Krugman are talking about completely abstracted models of the effects of govt debt, which is why this is confusing people.
3) That you do not consider deficit financing a sneaky way to extract wealth from political ignoramuses that would be impossible through open taxation.
4) That you don't believe that initial forgone investment in the private sector would have costs to the future nation as a whole outside of the costs of the initial transfer to the politically favored.
@ Meh
ReplyDeleteMeh, have you considered you aren't able to keep up?
Sure, Anonymous. Tell me one central element that I should understand that you believe I don't. Make it the one that you're really sure of and that you can most easily communicate. This should be really easy for you and enlightening for me and if you're right, then I won't even read this blog for a month.... let alone comment.
ReplyDeleteDaniel Kuehn wrote:
ReplyDelete...over a portion of the debt at a 100% interest rate (yes you read that right)...
Well, I picked a nice round number because 100% interest meant I wouldn't end up with decimals. I could go through and do the same thing with a 1% interest rate, if you want, it would just make the numbers ugly.
If you want to mock the model for its unrealism, you could also point out that in some generations, there are just two guys. And yet, the next time period, kids emerge. (Yes you read that right.)
That wasn't meant to be mocking at all.
ReplyDelete"And yet, the next time period, kids emerge."
ReplyDeleteThis is how:
http://dilbert.com/strips/comic/1994-10-15/