Mises on “We Owe the Debt to Ourselves”
Wow, did I blog about this back when we had the fall of Western civilization? Anyway Mises–in a footnote of course–could have saved all of us a month of hassle:
The most popular of these doctrines is crystallized in the phrase: A public debt is no burden because we owe it to ourselves. If this were true, then the wholesale obliteration of the public debt would be an innocuous operation, a mere act of bookkeeping and accountancy. The fact is that the public debt embodies claims of people who have in the past entrusted funds to the govern- ment against all those who are daily producing new wealth. It burdens the pro- ducing strata for the benefit of another part of the people. It is possible to free the producers of new wealth from this burden by collecting the taxes required for the payments exclusively from the bondholders. But this means undisguised repudiation.–Human Action, Scholar’s Edition, p. 229
That guy needs to start a blog.
Could you imagine if a guy like Mises or Rothbard were alive in the digital age? Unfortunately, I think that they would follow a path similar to those Chinese kids who play video games for days without eating or sleeping.
Now I’m picturing Rothbard and Mises getting lost in WoW.
Keynesians vs. Austrians in a Call of Duty clan match would be absolutely epic.
“Attack a level 2 orc? But surely engaging in peaceful commerce with him would be far more fruitful?”
I would pay for Rothbard-Callahan.
On the other hand, it would have deprived us of the one moment in the history of the blogosphere where one side demonstrably and decisively won, purely on the strength of immutable logic. Although I think I have an idealised version of events in my head that goes something like this:
Baker, Krugman et al: X is completely and obviously true, and anyone who denies X is a moron.
Nick Rowe: Here is a simple counter-example to X. I thought everyone knew X was wrong since 1973.
Bob Murphy: Goodness me, what a compelling counter-example. I need to change my textbook.
Baker, Krugman et al: You’re wrong. X is an analytic identity. You guys really are idiots.
Murphy et al: Here are a million versions of the counter-example.
Baker, Krugman et al: *change topic, and never speak of this again*
This is how it always is.
Richard Williamson except Krugman didn’t change the topic or never speak of it again. He just never acknowledged the debate by actual economists, only from some journalist that didn’t do a good job challenging Krugman’s position.
Otherwise, I like your summary.
Completely off-topic, any update on the Murphy-Sumner debate?
Wow, I had forgotten how good that previous post you linked was. It really brings out how frustrating the pro-debt (indifferent-to-debt) crowd is at times!
“could have saved all of us a month of hassle”
Would it have?
Who in the debate took the counter-position to this claim by Mises?
http://krugman.blogs.nytimes.com/2011/12/28/debt-is-mostly-money-we-owe-to-ourselves/
Yes, I know the posts involved in the earlier discussion.
This, from Krugman, is largely Mises’s point right: “That’s not to say that high debt can’t cause problems — it certainly can. But these are problems of distribution and incentives, not the burden of debt as is commonly understood.”
In other words, it’s a straw man to say that people out there think “debt doesn’t matter”. Everyone agrees debt matters. There is some disagreement on how it matters, but I think everyone in the discussion I’ve seen agrees with the specific points that Mises makes here.
In other words, it’s a straw man to say that people out there think “debt doesn’t matter”. Everyone agrees debt matters.
OK, but you are refuting an argument no one has made.
The specific argument Mises addresses:
“A public debt is no burden because we owe it to ourselves.”
Krugman states this almost verbatim:
“the debt we create is basically money we owe to ourselves”
And this is why it’s so frustrating to have intellectual dialogue with you, Daniel_Kuehn. You won’t even recognize when a disagreement exists, preferring to explain it away rather than dig to find the point of divergence.
Huh? DK was responding to the claim that folks on his side are indifferent-to-debt. He suggests that is a straw-man. How is defending himself from what he sees as a straw man mere irenic blathering?
[M_F can thank me for sending him word-googling! :)]
Right, that’s the problem: “everything” is a strawman, everyone already agrees, everyone has reasonable positions, why are you making such a fuss? Of course no one ever said anything absurd, there’s no disagreement here, please stop arguing.
Needless to say, that’s not quite what’s going on…
OK well let me play along for a moment then. Saying DK or Krugman or Landsburg do not care about the debt really is a straw man. They care about the incentive distortions and the redistribution. They do not care about any extra supposed ‘burden’ caused by borrowing *as opposed to taxing*. That was the crux: that borrowing is burdening in a way that taxing is not. And Landman/Krugsburg (they were indistinguisghable bosons on the issue) deny this. And did it I think without contradicting the Mises quote.
Right, Ken_B, that’s what I was saying all along, of course I agree with that!
Dang, I did have to google the word irenic! Thanks.
Not a word that gets much use on FreeAdvice ….
Has that word been a part of your vocabulary for some time, or have you just acquired it? Perhaps you had heard it a while ago, but the chance to use it correctly didn’t present itself until just now?
Words are funny, especially the way we acquire and use them. “Irenic” is certainly new to me.
Quite a while. I have a pretty big vocabulary, and I like words. For example I came across ‘riparian’ recently when reading and knew what it meant. (From reading Wind in the Willows as a kid I think.) (It means dwellers on a riverbank.) (There’s a word for everything in English. Wittol is a good example)
This is what’s so frustrating about having a dialogue with you, Silas Barta. You won’t even recognize when a disagreement doesn’t exist, preferring to make one up rather than dig to find the point of agreement.
Daniel, clearly Paul Krugman was criticizing some particular perspective when he wrote a column titled “nobody understands debt,” right? And clearly Mises had someone in mind when he wrote “this viewpoint is crystallized in the phrase ‘we owe it to ourselves'” right? I’m saying Mises and Krugman fall into those respective camps, that were the target of each other’s criticism.
I think DK is missing a key point. Mises says the debt ” burdens the producing strata for the benefit of another part of the people”.
This is true even if the “producing strata” did not take out or benefit from the loan. That’s part of Mises’s point I think. DK thinks Mises is just confused on this but I think Mises has identified an important point. No matter how the money was spent the burden falls on the producing strata, reducing production.
Daniel_Kuehn, that tu quoque doesn’t work, since the “point of agreement” is not a single point, but an uninteresting set of points of (countably) infinite cardinality, and so is wholly unhelpful, especially considering that the purpose of these discussions is to identify what we’re actually debating over and who (if anyone) is right.
Even if it does turn out that we were all “really” agreeing, you still need to identify where the miscommunication originated, and why it felt like a disagreement. (See Yudkowsky’s Dissolving the question
Of course, we can pretty much rule out (contra your absurd insistence) that the different contributors are “really” in agreement, considering that they pretty clearly have different policy recommendations, at least in counterfactual cases.
Thanks for giving me the link where Krugman agrees with Mises, though. Saved me the trouble of digging it up again when Bob eventually challenges me on this (Roddis and MF probably would have too, of course, but I probably wouldn’t bother to respond to them).
I don’t know why they bother responding to you.
Honing of one’s craft? DK provides excellent fodder for the occasional smackdown.
I thought about this for a long time after the initial debate, and I think I found another source of absolute burden on future generations that was not addressed before by anyone. I think that foisting a mandatory, coercive wealth transfer scheme on the unborn, even though it will result in equal and offsetting transfers, will nevertheless end up hurting everyone, not just those who have to pay on net.
I say this because I hold that initiations of violence ultimately harms everyone’s prosperity, even if there are short term gains made by those who initiate violence. The more violent a population, the fewer gains can be made by all, even if we can pinpoint short term gains for every loss. I think the coercive transfer imposes costs that have no equivalent gains. It would be like the difference between Robinson Crusoe torturing Friday every day, where Crusoe gains at the expense of Friday, but only in the short term, and Crusoe and Friday peacefully producing and exchanging, thus making greater gains for each other in the long run.
Peace makes everyone materially better off. Violence generates losses that are unseen, even if we can identify Crusoe gaining a coconut due to initiating violence against Friday, thus making it seem like there is no net loss.
I think everyone in the last debate (including myself up until now) ignored what is unseen.
Imagine a group of people visiting a pacifist town or village, and then introducing violence into otherwise peaceful affairs. While we can say “Each loss to the victims of violence is matched by gains to those initiating violence”, I don’t think it would be correct to say that the individuals in this town or village are experiencing the same net utility as before. I think it is more accurate to say that introducing violence into this town has made everyone worse off. For the visiting group could have peacefully interacted with the individuals in the town and everyone could have made mutual gains. But with violence, that potential wealth is forever lost, never to be seen.
I think the same thing is true for burdening future generations with debt. Sure, we can say it’s a pure wealth transfer in the short term, but because there is an introduction of additional coercion that would not have existed otherwise, I think we can reasonably argue that future generations are indeed worse off in the absolute sense.
————
I don’t think Krugman quite agrees with Mises, because I think Mises held the same view as mine above, although I am not sure.
Mises would not have agreed with this statement Krugman made:
“the debt we create is basically money we owe to ourselves, and the burden it imposes does not involve a real transfer of resources.”
I think the statement Mises made that Murphy linked to, specifically the statement “It burdens the producing strata for the benefit of another part of the people”, shows that Mises held that there is indeed a real transfer of resources. Not between generations (excluding cohorts) of course, but within a given generation.
I also don’t think that Mises would have agreed that future generations are not burdened at all. I think Mises also recognized that violence ends up hurting everyone, not just those who are directly victimized.
I am quite sure I said that in those posts. There is this real additional difference between borrowing and taxing for future generations you mention above.
When it is about taxing they have a vote in it and are not forced to accept it like it is with borrowing. It definitely is a burden to be forced into a debt relationship by your grand parents.
But who cares about such small details…
Uhhhhh, skylien, taxes are forced payments, regardless if the majority votes for it.
10 people forcing an 11th to give them his money, is democratic, but still based on force.
————-
Why do so many, SO MANY people believe in the myth that 51 people can do ANYTHING to 49 people, and it won’t be force, solely because the 51 people outnumber the 49?
But libertarianism is based on force too M_F.
Right, just like the Jedi and Sith use lightsabers to get their way in the galaxy.
OK I confess I am mostly just trying to get steam to come out of M_F’s ears, but in fact there is a substantial point here. Libertarians for instance believe in enforcing contracts. They believe in laws against theft and enforcing them. Few Libertarians would allow kidnapping. Even a libertarian dream state requires a certain level of coercion. So M_F’s remark side steps the real issue: how or why is the forced justified? Just saying “oooo force bad” won’t cut it.
Ken B, that is true only if you consider property to be force, which I know that many people do. Due to my belief in natural rights, I don’t consider property force because I would then have to consider my own existence force. What my own opinion of what the purview of libertarianism is is the defining a framework for the just use of force in a world absent of a universal ethic.
Obviously, I am not Joe “Mr. Libertarian” Fetz, but that is my own take on it.
Ken, I actually wrote a blog post about the very thing that you’re talking about.
http://joefetz.com/2012/08/10/force-is-a-must/
Bob, please excuse my shameless self-promotion, but it is relevant to the discussion.
Joseph: I needn’t consider property force, I just need to consider throwing thieves in jail to be force.
“Obviously, I am not Joe “Mr. Libertarian” Fetz, but that is my own take on it.”
Just how many middle names do you have Joe M***** F***** Fetz??
That first reply was in response to you saying that libertarianism is “based on force”. Libertarianism is based upon absolute property rights, so that was what I was talking about when I said “only if you consider property to be force”. Once you have that basis, as well as the NAP, you can then define the just use of force without relying upon ethics.
Only one: Anthony.
@Anthony: I read your linked post and it’s sensible. I read the next one too, so let me clarify. “Rev Bob Murphy” is a snark at Bob’s religiosity, and his atitude toward biblical evidence, not a reflection on his economics.
I see that fallacious understanding of libertarianism very, very often in arguments concerning libertarianism.
The typical thinking goes something like this:
“If we take for granted the existence of violent, non-libertarians, who will simply take what they want when they want it, no matter if what they take was not produced by them, or originally appropriated by them, no matter if the producers do not consent to it, then in order for libertarianism to be practised, force will have to be used against such people, so that they cease taking what they want when they want it. Ergo, libertarianism is indeed based on force. For without force, individual property will simply not be respected and everything you own would be up for grabs by whoever wants it.”
—————–
The flaw in the above understanding is failing to identify acts of taking wealth produced by others without their consent as themselves aggressive actions, and thus the call for such actions to cease as being based on non-aggression, rather than new aggression itself.
Libertarianism is BASED on a cessation of aggression, not new aggression.
In order for your charge that libertarianism is based on force to be legitimate, you’d have to show how libertarianism is intellectually grounded on introducing new aggression where there is none initially. For that is what “based on force” would require. Based on force means one’s actions are grounded upon an ethic of initiating aggression against others.
The libertarian who engages another libertarian would not need to use aggression, let alone initiate aggression, because the other libertarian would be practising the libertarian ethic of non-aggression.
A world of practising libertarians would be a world of non-violence, a world where force is never used, let alone initiated. That would be impossible if libertarianism were based on force as you claimed.
——————-
If I declared to others that should anyone attempt to hit me, or rape me, or in some other way physically aggress against me, that I will respond with defensive force, the philosophy I am utilizing is not itself based on force. It is based on non-violence.
If you want to characterize individual liberty as being based on force, because of the mere existence of threats of and uses of defensive force against initiations of force, then all you would be doing is taken initiations of violence for granted, as an objective law of the universe, when initiations of violence are just non-libertarians practising their ethic of initiating violence.
——————
Suppose all initiators of violence ceased initiating violence, and everyone respected each other’s consent regarding their individual property. If you are willing to say that individuals are practising the libertarian ethic, then you cannot also say that such a world is BASED on force, for
A. There is no force being used; and
B. There is no force being threatened.
You can call this a “utopian” ethic if you wish, but you cannot logically call libertarianism an ethic based on force. Not when it’s universal practise is non-violent.
————
PS I double dog dare you to try the above analysis to show fascist totalitarianism can be non-violent if everyone practised it, just like I showed with libertarianism. Then I’ll nail your ass to the grass.
Ok. As I said, I wasn’t sure what exactly you meant by that, I was merely speculating. However, considering the trend in more mainstream circles, it wasn’t an entirely absurd conclusion to come to. After all, there are many people who call Austrian economics a religion, or at the very least, a non-science.
My last comment was address to Ken B’s comment that libertarianism is based on force.
My last comment was to Ken B regarding the Rev Bob Murphy post on my blog.
Also, Ken B, I updated that post with what you told me here.
@M_F: I could tell, from the steam.
@both of you: ‘property rights’ require enforcement, except in a perfect world. In a perfect world you wouldn’t need property rights. As Joe notes on his blog, you cannot escape force. At least not until Jesus returns.
Ken B:
@M_F: I could tell, from the steam.
I don’t understand. You could tell what from what steam?
Are you admitting to trolling? Trolling is purposefully trying to get an emotional rise out of others you know.
@both of you: ‘property rights’ require enforcement, except in a perfect world.
Enforcement of property rights is not based on force. It’s based on non-force, for violations of property are themselves based on force.
You say “except in a perfect world”, but what you are really referring to, unintentionally, is “except in a libertarian world.”
You are saying force is not used in a libertarian world. Well, that is you admitting that libertarianism is not based on force, but consent.
In a perfect world you wouldn’t need property rights.
That’s false. Wealth is scarce no matter what ethic people ever practise. Property rights would be identified in the very course of human action itself. Every action every individual ever makes, would presuppose scarce property rights to one’s body, and at least one’s standing room, and the wealth that is at least needed to sustain human life.
If any of these should not exist, then humans would not exist.
As Joe notes on his blog, you cannot escape force.
Joe is wrong. Joe’s philosophy is that one cannot escape force because Joe’s philosophy is Plotinean, in that he views the universe as a place of intolerable limitation and exile.
At least not until Jesus returns.
Yawn.
MF, I am not too familiar with Plotinus. Could you elaborate more on what you’re getting at?
Plotinus is the philosopher most responsible for the philosophical view that the universe is a place of inherent conflict, of ontological alienation of the physical self from the real self, or real existence.
For Plotinus, it is the fact that humans are temporal beings that is the most evident deficiency between our empirical selves and our ideal selves. For Plotinus, “to be” means to be immutably and absolutely undifferentiated through time. But humans are born, then we grow, then we shrivel and die. This conflict between real and what Plotinus considered the ideal, is the origin of the philosophical dialectic (not the Socratic form, but the form that Hegel and later Marx utilized).
This philosophical view of inherent conflict with the universe, and hence with the self in the universe, leads to psychological feelings of anxiety and estrangement with the self as it stands in relation to other things. Merely by recognizing the individual self, it immediately becomes apparent that one is not everything else. This makes it appear that one’s freedom is limited, and that to do anything at all, requires force against these limitations. My expansion requires your retreat, and vice versa. It appears as though force is ubiquitous when you view the universe in this way.
There is much, much more to be said about this, but that is an overview of what I am talking about.
I don’t view the universe as having inherent conflict, rather I view it as having a balance of forces (what those are, I don’t know). Also, I view the real self as existing only in the physical world (i.e. I don’t believe in a soul or anything outside of the here and now). Obviously, this also means that I believe that humans are nothing but temporal beings: You’re here for as long as you’re alive, after that you’re just matter.
Regarding everything else you wrote about, I don’t see anything in the universe as separate from the other, because I see everything in the universe as merely pieces of the whole. You, me, everything else, while certainly separate and distinct, are merely parts of a greater whole. All matter is merely bits and pieces of the universe, and all of it is held together by the balancing of forces between the pieces, not the conflict between the pieces.
Now, I will grant you that my existence does exert a force against the other parts of the universe, but that the other parts of the universe also have a balancing counterforce. This doesn’t denote conflict, rather it denotes the balance that makes the universe possible.
I don’t know much about philosophy, but I think that you may have pegged me wrong here.
Joe I was going by what you wrote on your blog.
We have to be clear on what we mean by “force.”
On your blog post, you used force in the ethical sense. That in order for libertarianism to be practised, “force is a must”, and “otherwise they will be disregarded.” That the statement “only voluntary actions are just” is a foolish one, because according to you, “without force, all that will exist in society is a state of lawlessness. There is no justice in that.”
But here on Murphy’s blog, in your response to my babbling on about Plotinus, you’re using “force” in the Newtonian 3rd law sense.
—————–
If we stick to the ethical sense however, then you will see why I think you view the universe as inherently one of conflict.
You say here we humans are living in the universe, in need of some rules of conduct lest injustice prevail, and any ethic, even “non-aggression” libertarianism, requires enforcement, and hence is allegedly based on force. We just have to determine when force is justified and when it is not, but we cannot claim that only voluntary actions are just actions, since after all, libertarians are OK with putting violent criminals in prison involuntarily from the criminal’s perspective!
—————-
What you are not mentioning is that stopping violence from non-libertarians is not the same thing as introducing new violence from libertarians. You cannot say libertarianism is based on force simply because non-libertarians who initiate force are not permitted by libertarians to kill the entire human race unabated, and will be met with defensive force in response.
So, in your words, in order for humans to live in a “just” world, introducing force is allegedly required. The only question is where and how this force is to be introduced.
Yet in the libertarian ethic, force is not called upon to be introduced. Libertarianism is a call for no violence. Libertarianism is an ethic that identifies initiations of force that take place, and calls for their abolition. The only way to stop initiations of force, is to either convince the initiators to stop, or use defensive force against them. Of course force is not called upon against non-violent people, because they are practising libertarianism already.
If everyone practised libertarianism, then no defensive force would be used, and no aggressive force would be initiated.
The fact that so far in human history, individuals have chosen to initiate force, doesn’t mean that an ethic that calls for the abolition of force, is itself based on force.
I don’t know how many times I can say the same thing in different ways, but you’re not right to say that the statement “only voluntary actions are just” is foolish, on the basis that libertarians who say that are OK with using force against initiators of force who would consider the force used against them as “involuntary”. For they would be caught up in a contradiction themselves: Denying the validity of involuntary force against them, while they themselves are initiating involuntary force against others.
Those who cry foul over involuntary force against them, cannot themselves be imposing involuntary force on others, and claim to be advancing a logically consistent ethic.
I immediately assumed that a 100% libertarian world is not realistic, because there will always be some people that will not respect property rights. So, in such a case, force is inevitable, at the very least to protect property. It really doesn’t matter that such force is used to counter an initiating force, because it is still force nonetheless.
What I am trying to avoid is a utopian position (i.e. where all people are libertarian angels). I don’t think that it is helpful to say that force will not exist in a libertarian society, because then you must reject human nature altogether.
BTW, I should mention that I don’t know crap about philosophy and I am not overly intelligent. My strengths with regard to intellectual pursuits lie in logic. I’m not smart, but I’m logical. Basically.
According to my reading of Daniel Kuehn and Gene Callahan, the little Jewish farm on the Polish prairie is an example of “coercion” just like when the Einsatzgruppen come and shoot Grandma, the toddlers and the whole family and dump them in a pit. They can correct me if I misunderstand.
http://factsandotherstubbornthings.blogspot.com/2011/05/gene-callahan-is-wise-man.html
Joseph:
I immediately assumed that a 100% libertarian world is not realistic, because there will always be some people that will not respect property rights.
First off, and this is extremely tangential and not what I want to focus on, I want to ask you why do you assume that? If slavery existed in 1700 AD the world over, and always existed prior as far as historians can tell, would it be correct to assume that slavery will always exist in the future too?
Second, and this is what I want to focus on, what does it mean to say that there will always be some people that will not respect property? You’re of course saying there will always be some people who initiate force, right?
Well, you can’t blame libertarianism for that! You cannot infer force inherent in libertarianism just because non-libertarian actions will always be made by some people. Libertarianism is calling for the abolition of such violence.
It would be like saying pacifism is based on genocide because there will always be human deaths caused by pacifists producing goods that don’t make people immortal and slightly contribute to their deaths, such as selling food with microscopic quantities of mercury, and breathing on people which contributes to their aging through oxidization.
So, in such a case, force is inevitable, at the very least to protect property.
In your argument, force is not “at the very least to protect property”. At the very least, it is your initial assumption that some people will initiate force!
You can’t assume force is inevitable by non-libertarians, and then pin it on libertarians and say libertarianism is based on force. The error you are making is that you are taking force from non-libertarian property violators as a given. Whether or not there will be some non-libertarian actions in the future from those who choose to initiate force, doesn’t stand as a premise for libertarianism being based on force.
It really doesn’t matter that such force is used to counter an initiating force, because it is still force nonetheless.
But that is a consequence of an absence of libertarianism, namely, the property violations.
If there is an absence of libertarian defensive force, it would not turn the non-libertarian initiations of force into voluntary, non-force actions.
What I am trying to avoid is a utopian position (i.e. where all people are libertarian angels). I don’t think that it is helpful to say that force will not exist in a libertarian society, because then you must reject human nature altogether.
But no ethic “exists” in this way. ALL ethics, save “anything goes is ethically justified” are necessarily contrary to what people actually do. Ethics are about what people ought to do. Libertarianism is about what people ought to do. It isn’t a scientific theory of what people do at the time.
You seem to be conflating two different things: what exists and what ought to exist.
You say you want to avoid the utopian position that ethical norms like libertarianism are capable of being put into action. Well, then you must reject ALL ethics as utopian! After all, the only ethic that can be observed as capable of being practised, is “Whatever people succeed in doing, that is the only reasonable non-Utopian ethic, given human nature.”
Notice where avoiding Utopia leads you. It leads you into straight into the status quo of reality in the present, and you must accept every actual action as the only non-Utopian set of actions.
I think it is dystopian to expect violence in the future, just as much as it is utopian to expect peace in the future.
Humans can learn and change their knowledge. Even if we have 1 trillion years of slavery behind us, people can always learn and change their knowledge and release slaves in the future.
Roddis, I just want to point out that I made the distinction that property is not coercion or force, however to protect property force is necessary. The only way that I see out of that is if we lived in a world of perfectly universal ethics, which I see as a utopian position.
MF, I am not saying that force is inherent to libertarianism, I am saying that it is inherent to human nature. Libertarianism merely identifies the just use of force, which I think guys like Walter Block and Murray Rothbard would agree.
Joseph:
Libertarianism merely identifies the just use of force, which I think guys like Walter Block and Murray Rothbard would agree.
When I saw you writing that libertarianism is “based on force”, alarm bells went off because we would have to assume that even mutually exclusive and incompatible ethics are branches out of the same root. But how can contradictory ethics be “based” on the same thing, unless the thing in question is outside ethics altogether?
The only way that mutually exclusive and incompatible thoughts can be connected, is indirectly through something other than the thoughts, but that would abolish the objectivity of the contradictory thoughts.
The link between contradictory thoughts is of course the individual person, who can think of mutually exclusive and contradictory thoughts.
In other words, only by abolishing the entire framework of ethical rules altogether, and making primary the individual’s subjective wants and desires, can mutually exclusive thoughts be reconciled and rooted in the same “base”. The “base” is the individual and whatever the individual does and thinks, regardless of the content of their actions and thoughts.
Joseph:
MF, I am not saying that force is inherent to libertarianism, I am saying that it is inherent to human nature.
You did say that libertarianism is based on force.
Now it seems you’re saying human nature is based on force.
But then how do you explain libertarians?
Where did I say that “libertarianism is based on force”?
JosephFetz: It burdens the pro- ducing strata for the benefit of another part of the people.”
In the posts you made under my name.
Cut&Paste meltdown. I meant to quote JF saying this:
“Where did I say that “libertarianism is based on force”?”
In the posts you made under my name.
Ken B, Oh, the part where I was quoting you?
I mean, I can see that it was a poorly structured sentence, but I did use quotations.
Oh wait, I see now. Yes, you were the one that said it, not me. However, I read your sentence “in the post you you made under my name” to mean the post under your post, and sure enough, that was the one where I quoted you. Sorry, had a brain fart.
Ken, it’s a distinction between aggressive force and defensive force.
@ MF
Oh, I am aware of that. It was poorly worded..
I just tried to make the point that even if you agree that democratic decisions to raise taxes for a transfer of wealth are ok, since everyone has a fair vote in it and it is your fault if you couldn’t convince enough people of the your side, that future generations do not even have a fair vote in this, actually no vote at all.
They are forced without ANY possible measure to stop it. There is really no way of justifying that!
Present generations are literally binding the grandchildren into contracts they might never would approve of.
Should have made that clear, sorry..
Joseph:
Where did I say that “libertarianism is based on force”?
Ken B actually said it, and I thought you were favorably quoting him, plus on your blog you said
“Without force, all that will exist in society is a state of lawlessness. There is no justice in that.”
I think I was shooting from the hip. My bad.
@M_F, JF:
M_F’s last is correct. I think he can put it more forcefully though. I said it, and Joseph’s logic requires it. But Joseph hasn’t followed the logic to its end yet.
skylien:
I just tried to make the point that even if you agree that democratic decisions to raise taxes for a transfer of wealth are ok, since everyone has a fair vote in it and it is your fault if you couldn’t convince enough people of the your side, that future generations do not even have a fair vote in this, actually no vote at all.
They are forced without ANY possible measure to stop it. There is really no way of justifying that!
OK, fair enough.
I would go further and say that the minority are very similar to the unborn, because for both groups of people, contracts are being signed on their behalf, even if there is a lack of consent. Indeed, the more dogmatic among those in the majority actually feel good about the state aggressing against the minority, because they represent individuality and non-conformity, which is intolerable to those who want less diversity and more homogeneity.
@ MF
I fully agree with that, but since on paper it seemingly appears to be a fair game this is much harder to argue against…
Well, the Jedi and the Sith do both use the Force.
I’m confused. I thought the point of the whole overlapping generations thing is that the debt *is* a burden to people in the future.
We owe it to ourselves works fine when the debt is just passed from one NON-overlapping generation to another. Adding overlaps changes everything.
Basically, selling the debt is like selling a “get money from taxpayers” card to future generations… The seller gets to consume the debt today at the expense of the next generation.
A lot of it depends on (1.) what units you are talking about when you look at the incidence of the debt, and (2.) how fast the debt is growing.
What you get out of OLG depends on (1.). I think Bob’s account of me in the little script he wrote and linked to above captures my view on (1.) pretty well.
I agree with Bob on what he says and agree with Krugman on what he says and I was really pissing people off by asserting that they were saying slightly different things.
What units are you thinking of? Bob’s example used apples. Are you saying we need to distinguish present from future apples? Or money from apples?
“The most popular of these doctrines is crystallized in the phrase: A public debt is no burden because we owe it to ourselves. If this were true, then the wholesale obliteration of the public debt would be an innocuous operation, a mere act of bookkeeping and accountancy. “
Saying “public debt is no burden because we owe it to ourselves” means in essence that the repayment of debt today or at any future point in time is simply a redistribution of money/income in society , and, when the money is spent, a redistribution of real goods, services or assets within the society now or at some future point in time. That is how the “living at the expense of future generations” refrain is shown to be nonsense.
Mises’ attempt to refute this by saying that it can’t be since “the wholesale obliteration of the public debt would be an innocuous operation” is an utter non sequitur, since nobody implied, meant or suggested that cancelling it would have no bad effects.
Nobody needs to imply it, because it is logically inextricable from your argument at its root.
Excuse me, “the” argument.
Mises’ attempt to refute this
You idiot. Mises isn’t refuting the “living at the expense of future generations” stance. Calling an non-existent argument a “non sequitur” is the worst claim you’ve made yet, and that’s saying something.
In case you can’t read, Mises said “It burdens the producing strata for the benefit of another part of the people.”
That is in the present tense you looney tune.
Wow. Truly amazing that he could not comprehend that.
LK has an agenda and facts aren’t welcome.
But even on those terms, it’s wrong. Repudiation wouldn’t merely have distribution effects [1], but would be a supply/coordination shock to markets, disrupting expectations and causing people to produce and consume less than they otherwise would have. So something is clearly wrong with the claim, something quite fundamental to how intergenerational debt works.
[1] And indeed “mere distribution” almost always causes a long-term contraction of wealth due to its incentive effects. Thieves *do not* simply divert consumption.
Repudiation wouldn’t merely have distribution effects [1], but would be a supply/coordination shock to markets, disrupting expectations and causing people to produce and consume less than they otherwise would have.
Ah, Silas seems to be sharing the same sentiment.
Yes, but I think it’s footnote [1] itself that we are agreeing on (as far as I can tell), not the bit you quoted.
I think that both the quoted bit and footnote [1] you made are encompassed in my general point that overall productivity will be reduced.
You spoke of some of the particular means by way in which productivity will be reduced, such as supply/coordination shocks and incentives, and I was actually leaning towards the coordination problems to be the means I had in mind.
I suspect there might be others.
Ah. The main agreement between us that I saw was in recognizing that “pure transfers” rarely have the (long term) effect of simply shifting wealth/utility from one to another, but contract long-term wealth for everyone.
Yes, that is the main agreement, however I go further and say it always reduces wealth, not in the physical sense necessarily, but in the subjective value sense.
Oops, forgot to add: this is why even many hard-core libertarians oppose outright repudiation of debt, if it’s possible to transition to a freer society more smoothly.
This whole discussion has been pure semantics. In essence, everybody agrees that you can’t send things back and forth in time. And that’s besically everything that Krugman et al are saying. Even in Dr. Murphy’s table, the total consumption in each period was always the same. So it’s absolutely in line with the “it is a mere matter of redistribution ” story.
The real question is: how is that an argument for debt?
You can send material goods forward in time very easily. Suppose I have a barrel of heating oil in my back shed (as you do), then I could choose to burn that oil tonight and keep warm tonight, or I can choose to leave the oil and wrap up with a blanket tonight. The oil can indefinitely be passed forward into the future.
Similarly, if identical barrels of oil are being produced at a certain rate, and let’s say 20% are stockpiled while the remaining 80% are burnt then we could say that a stream of oil barrels are being fed into the future. If someone decides to dip into the stockpile for some reason then relative to the stream that we originally expected a deficit of oil passes into the future, which is equivalent (in an accounting sense) to oil moving from the future to the past.
We can erode our capital stock and thereby deny future generations the wealth that we have already accumulated, true. But neither do we need any debt for that nor does debt contribute to it. All we would have to do is blow up all power plants or destroy all bridges and buildings and so on. What we could not do is oblige them to produce something in the future and then send it back in time.
In any event, denying someone the benefits of your work is completely different from indebting someone. Libertarians should know the difference between non-cooperation and coersion.
But all this is missing the point of the debate. Look:
Krugman: Don’t worry about the debt, we owe it all to ourselves.
Murphy: No, there are redistibutory effect (including inter-generation shifts)
Krugman: What are you talking about. That’s precisely what I meant by “we owe it to ourselves”
To with Murphy should be saying: “We don’t need Krugman to tell us that we can’t send stuff back in time. Everybody already knew that.”
But instead it seems that you guys are desperate finding the time machine to refute Krugman’s childish nonsense.
My point is, what Krugman is saying is correct but nonsensical. Nobody ever claimed that there was a time machine. Many people have pointed out how debt can have detrimental effects on future generations and Kurgman has said precisely nothing to refute those claims. All he has said is that we don’t have timt machines. The question is, why are we even listening to this nonsense
No Christopher you are simply wrong. Krugman was not including the people alive today, in the same group as the people alive in 200 years, when saying “distributional effects.”
OK let me put it back on you Christopher: What position was Krugman attacking? Were conservative Republicans claiming that the national debt would mean Americans had to pay real goods and services to Martians at some point? Or is it just a foreigner vs. American issue in your mind?
In my opinion, Krugman was attacking a position that nobody ever held, namely, the position that future generations have to literally send stuff back in time. He (maybe deliberately) misstated the republican argument and only refuted his wrong interpretation of it.
And yes, you are right, he did not include people alive today and people alive in 200 years in the same group. But even your inter-generation-argument isn’t in conflict with what he said, because he never talked about individual persons. He doesn’t even care. He looks as the economy as if it was one single body. And if you went back to your table and ignored, as he would, the individual persons, you’d notice that if you sum up all the consumed apples in each period it’s always 100.
Yes you are right, if you look at individuals over their life-span and individual utility, people who happen to be born at a late stage of the game receive a lower life-time utility. But the total aggregate apple output remains. And that’s all he said.
And, in my opinion, the only appropriate answer to that would have been: “so what?”
Keynesians. ‘Hey, as long as we don’t consider the actual *stuff* involved, then it’s not on our radar’.
he never talked about individual persons. He doesn’t even care. He looks as the economy as if it was one single body.
THIS is the core flaw in Krugman’s and all other statist’s thinking. View people as means to some single end, rather than ends in themselves. It is precisely this philosophy, when taken to its logical conclusion, that leads to totalitarianism. Only individualist philosophy can push such oppression back.
“THIS is the core flaw in Krugman’s and all other statist’s thinking.”
Does that mean you agree with my point that there is no contradiction between Murphy’s tables and Krugman’s statement?
Not so fast. Just because Krugman didn’t intend to implicate a particular unstated argument in his own argument, it doesn’t mean that implicated argument is immunized against criticism.
The cohort scenario is an criticism against an implication of Krugman’s general point about generations being no worse off.
Krugman said, “And as Dean says, talking about leaving a burden to our children is especially nonsensical; what we are leaving behind is promises that some of our children will pay money to other children, which is a very different kettle of fish.”
This is clearly false which is shown in Bob’s tables.
By the way, this is not meant to say that your idea wasn’t fascinating. I think the tables were amazing and highlighted a problem that nobody ever thought about. I even played around with my own excel sheets for a couple of days and created different scenarios.
I do, however, disagree with your conclusion, in case I’ve understood your conclusion correctly. I don’t think that your scenario is inevitable. In fact, I created an excel sheet according to your rules of the game where it played out to the exact opposite result. In this sheet, the debt had the effect that the life-time utility of the early born people was lower than of the late-born people. The later someone was born, the more he benefited from the debt.
Christopher I should probably de-escalate the situation. My point is simple: If you go and read what Krugman was saying, and the positions he was attacking, he was (in my mind) clearly trying to say that it was nonsense when people today say things like, “It’s immoral to run up the federal debt. Our grandchildren are ultimately going to pay for our profligacy.”
In my mind, it is 100% clear that Krugman thinks this viewpoint is totally wrong. The only way he could see people who aren’t yet alive, being hurt by the absolute size of the federal debt, is:
(a) deadweight losses from the tax code per se, so that even transferring $1 from Peter to Paul (in the year 2100) makes Peter+Paul poorer collectively,
(b) foreigners own the Treasury debt, so our grandkids in 2100 have to make net payments to non-Americans.
He was totally missing the OLG thing, and it is the OLG thing that makes the layperson Tea Party guy totally right when he says, “If we pay for federal spending today by borrowing, rather than taxing today, we are living at the expense of our grandkids in 2100.”
he was (in my mind) clearly trying to say that it was nonsense when people today say things like, “It’s immoral to run up the federal debt. Our grandchildren are ultimately going to pay for our profligacy.”
Yes, that’s what he said. But you have to look at what he means by “our grandchildren”. From his position that is just a friendly way to circumscribe “the aggregate output of our economy at any given time in the future”.
I’m not sure how to describe this any better. But your differences have really little to do with the actual effects of debt but with the way you see the world and what you deem important. For Krugman, aggregate GDP is what it’s all about in the debt debate. For you it’s individual life utility or something like that. You are really talking two different things – at least that’s my humble impression.
I have a question on the OLG thing.
You can set up a OLG model with a set of assumptions that “show” that any transfer in the present will leave everyone in the future worse off.
You can equally well set up OLG models with assumptions that mean that transfers in the present will make some (or all) people in the future better off.
I’m not sure if you are saying:
A: “look, here is proof that transfers in the present can under some circumstances lead to future generations having lower utility than they otherwise would but not all transfers would have this effect”
or
B: “These OLG models prove that transfers in the present always cause future generations to have lower utility than they otherwise would” .
Can you clarify which you are saying ?
Rob I’m saying option (A).
“Christopher I should probably de-escalate the situation. ”
Admit it Bob. You just wanted to prove that irenic can be a useful word on FreeAdvice!
@Tel: Right, but that is a *spending* decision, not a financing one. I cannot harvest next year’s apples but I can 1) plant a tree or 2) chop down the orchard to make a barn. Again, spending decisions that affect the future production. The question is *aside from incentive effects* can entries in financial ledgers affect the future stream if all the (current) spending decisions are the same. Bob says yes, Krugsburg says no, except in corner cases.
Let us take the entire financial industry and ask ourselves what it does aside from incentive effects ?
Of course, you can’t eat paper money, the only thing it does is provide an incentive for people to change their behaviour (i.e. spending decisions if you want to call it that).
Oil is a perishable good, is it not? Even if it doesn’t perish over time, wouldn’t the fact that future oil is valued differently than present oil, mean that we’re not talking about the same good? Remember, value is subjective, despite the physicality of a good. A Commodore 64 is valued differently in 1982 than it is in 2012. It’s not the same good per se. It all depends on the subject.
I think it would be more accurate to say that you’re holding a changing good, not transferring the same good to the future.
Or maybe I just overturned what constitutes well established economic thinking and talking nonsense.
At very least if I stockpile one barrel of oil today then I know I’ll have the best part of one barrel of oil tomorrow — so there IS a time machine that takes goods from the past into the future. We call it “a warehouse”.
OK, maybe the price of oil has fluctuated by then, the warehouse does not guarantee that the entire economic context is preserved, but I never made the claim that it does. All I’m saying is that material goods do travel in time.
I’ll also follow up with the point that a very large part of human technological ingenuity has revolved around turning naturally occurring perishable goods into less perishable goods — precisely for the purpose of warehousing and thus load-levelling across time.
Consider turning fresh apples into dried apple slices, or frozen apple sauce, or bottles of apple cider, or applejack, calvados, etc. Why would people have put their time and study into inventing all this stuff unless it was an important part of their economy?
Almost like he knew Krugman was coming.
A public debt is no burden because we owe it to ourselves.
By extension, a debt between any two humans is irrelevant because as a whole the human race owes it to itself. Anyhow, as I’ve pointed out before Krugman has actually explained himself on this issue.
http://krugman.blogs.nytimes.com/2010/09/02/inflation-deflation-debt/
As usual Krigman has a bet each way, using the simplistic “we owe it to ourselves” argument for the typical Noddy NYT reader, and the more sophisticated argument about the different intrinsic constraints of debt holders and credit holders for serious discussions.
The answer is that on average, debtors are more likely to be constrained by their balance sheets than creditors. The 1929-33 plunge in prices made heavily mortgaged farmers poorer, while making wealthy people sitting on cash richer; but while the farmers were forced to slash spending to make their payments, the people sitting on cash merely had the option of spending more — an option many didn’t take.
As per typical Keynesian, for this to make any sense at all, you need to presume that all spending is homogeneous, but putting that aside for a moment, consider the Krugman “expert level” argument applied to intergenerational debt. The creditors are typically old, and the debtors are typically young. Krugman’s argument would imply that the old are optional spenders (who may choose to save any excess funds that might become available) while the young are compulsive spenders who will reliably spend everything they have up to whatever maxes out their credit card.
From my personal limited sample space, I know people in their 20’s who absolutely don’t want anything to do with credit cards. I think there’s been a subtle but significant generational shift on that score. They will still borrow money for a house, or maybe for a car, but they are more cautious than previous generations have been. Maybe other people have noticed this.
As a simple minded non-economist, the “we owe it to ourselves” thing seems to net down to:
Murphy borrows $1,000,000,000 from Krugman.
Murphy goes broke — no money, no assets, no nothing.
No worries. The two of them owe the $1,000,000,000 to themselves.
What, oh wise ones, am I missing?
What happens to the assets? If Bob wraps the money in a bundle and makes Krugman a gift of it the results are different than if he spends it building a replica of the Taj Mahal with posiscle sticks and then sets fire to it. What really matters is the spending, how the assets are used, not the financing.
“What really matters is the spending, how the assets are used, not the financing.”
What really matters to whom?
Hell, maybe Bob got a thrill out of blazing posiscle sticks (sic). God bless him.
The putative burden amtters. In the borrow-then-give-back-as-a-aift-then-default scenario there is no burden on future generations, and no lost income compared to what there might have been. In the burning Taj Mahal Kruggers is just SOL and those resources that might have been spent building a house for me were spent giving Bob a thrill.
Reading between your lines I get the answer to “matters to whom” as:”matters to society as a whole,” or perhaps as “matters to Ken B.”
But if instead of loaning the $$ to Murphy Krugman had spent it on his own Popsicle Pyre you still don’t have your house.
It matters to Krugman, or to Murphy’s grandkids when Krugman’s grandkids go after reparations.
Economists generally seem to think of their subject matter as “groups” or “aggregates” or “societies as a whole,” as opposed to the individuals making the decisions and doing the acting in the first place.
Later on in _Human Action_ Mises lets his hair down a little. (pp 843-844, pdf edition @ mises.org)
//
In the process of government interference with saving and investment, Paul in the year 1940 saves by paying one hundred dollars to the national social security institution. He receives in exchange a claim which is virtually an unconditional government IOU. If the government spends the hundred dollars for current expenditure, no additional capital comes into existence, and no increase in the productivity of labor results. The government’s IOU is a check drawn upon the future taxpayers. In 1970 a certain Peter may have to fulfill the government’s promise although he himself does not derive any benefit from thc fact that Paul in 1940 saved one hundred dollars.
Thus it becomes obvious that there is no need to look at Soviet
Russia in order to comprehend the role that public finance plays in
our day. The trumpery argument that the public debt is no burden
because “we owe it to ourselves” is delusive. The Pauls of 1940 do not owe it to themselves. It is the Peters of 1970 who owe it to the Pauls of 1940. The whole system is the acme of the short-run principle. The statesmen of I 940 solve their problems by shifting them to the statesmen of 1970. On that date the statesmen of 1940 will be either dead or elder statesmen glorying in their wonderful achievement, social
security.
//
I guess I’m not being clear. In my scenario where Bob gives PK a gift (snort!) I meant that Bob still owes PK, but legally defaults and the debt is mooted. Now look at that situation. Excpet for a little paperwork it is exactly the same as no loan no spending in the first place. It might have been better to make it a 3 day loan., Bob banks the money, and pays it back. The point is that what really matters is how Bob spends the money.
Ken B, Can’t reply directly to your post, there’s no “reply” next to it.
I understand, or think I do, what you’re saying. I’m the one who must not be clear.
Your last sentence
“The point is that what really matters is how Bob spends the money.”
I don’t know how else to ask it…. “Matters to whom/what?”
If your answer is “The total wealth of society/America/the universe/some model I don’t know about” or something like that, cool.
@Dan Lind: Matters as in has an effect. Bob aregues that borrowing imposes a burden taxing does not. I don’t see it, except when you borrow more than you have. I see the difference flowing from the spending.
This I think is a good argument against borrowing anyway, as borrowing enables sub optimal spanding in a way taxing does not as taxing invites scrutiny.
Ken B. I think I agree with your assessment of the situation regarding the effects of deficit and debt. But Krugman is still wrong in his commentary.
Ok, thanks Ken B. What you’ve been saying makes sense to me now. I have something to rethink.
I was fixated on something that drives me nuts about economists – viewing “the economy” as some sort of machine instead of as the result of the actions of conscious, intelligent, individual human beings bent on achieving ends, like survival and happiness and the thrill of burning popsicles – human beings to whom stuff matters, else they wouldn’t do anything.
I have this weird image of a fully operational alien spaceship (The Economy) that landed in someone’s backyard and there’s a bunch of economists in white coats poking at it and trying to retro-engineer the thing.
.
What really matters is the spending, how the assets are used, not the financing.
But if the financing had no influence on the spending then why even have financing? The whole reason I would take out a car loan is because I want a car. The reason to take out a home loan is because living in a tree is uncomfortable.
No one just borrows money for the sake of having money sit there so they can pay it back some day. That’s just ridiculous.
When discussing principles and effects even ridiculous examples can be useful. Bob cites christianity on the religion threads for instance. Boom-ba!
But the issue was whether borrowing vs taxing placed an addition burden. So the thought experiment is quite relevant in that case. Does the act of borrowing by itself impose a burden?
Sure, if you write on a piece of paper “This is one Zillion pretend dollars” and you send me the note, I can send back an IOU promising to pay one Zillion pretend dollars in five years time.
Come five years we swap back our notes and no one at all is burdened by this action, because no one cares.
I’ll point out that the mere act of squeezing a trigger doesn’t kill a man either. It’s that pesky bullet slamming into his head — but that’s a completely different thing so let’s not talk about that.
The mere act of pushing a button on a nuke launch doesn’t kill anyone either. People might be killed in some unrelated event later on, but they were killed by atoms and stuff… so we can say that pushing buttons is not imposing a burden on anyone.
Clickety, clickety, click.
Your analogy is silly. In the pretend dollars case *no spending occurs*. In the nuke case *things explode*. In both cases it is what happens to resources not account ledgers that really mattters.
You cannot ignore the linkage between cause and effect if you want even a halfway sensible result.
Those account ledgers do no exist in a vacuum.
Dan Lind, well, what they mean is more something like this: If I owe Krugman $100,000 at first, and then $200,000, and then $300,000…and then at the next meeting of the American Economics Association, somebody says, “Whoa! The total indebtedness of our profession has risen to $300,000 in the last few months! We need to stop this trend!”… Then it might sorta make sense if some other guy said, “Nah, economists in general are OK; we owe that debt to ourselves.”
Nobody is denying that if one group owes money to an outside group, that the first group is chafed. That’s why Krugman kept saying to the extent that foreigners hold Treasuries, then indeed the debt matters.
(Of course, this is totally wrong, as Landsburg et al. pointed out at the time. Yet, for some reason Landsburg thought Krugman’s basic position made sense, with this odd non sequitur thrown on. He didn’t see that Krugman was approaching the issue in totally the wrong way.)
Landsburg pointed out that it doesn’t matter *if the foreigners bought the debt* ie lent us the money. What matters, as I pointed out to Dan, is how the money was spent. Productive spending could lead to us being wealthier, unproductive to us being poorer, than compared to the case with no borrowing. But what really matters is how the money was spent, not the fact it was borrowed. Only in some cases, when you go beyonf total wealth etc, did the mer fact of indebtedness matter.
In short it can be a good investment to borrow and spend wisely, and this is true regardless of the (sad) fact that governments rarely do spend that wisely.
Mises is a little sloppy here, of course. “The producing strata” is pretty much the people getting the benefits too. So it is from the producing strata to the producing strata (for the most part).
But of course certain parts of the producing strata are net beneficiaries and net payees, Mises is right to highlight that concern. He anticipates Krugman, who has raised distributional and incentive concerns associated with public debt.
> But of course certain parts of the producing strata are net beneficiaries and net payees, Mises is right to highlight that concern. He anticipates Krugman, who has raised distributional and incentive concerns associated with public debt.
I think the point here is that the money would have to be invested *really well* (like better than the consumption foregone by the next generation) for it to pay off. If the investment is not growing at the same rate that the debt is growing, there is a net loss to future generations.
Well right – the growth rate of debt is really important. But remember that population paying it off is growing too, as is their wealth (often as a result of what the debt is paying for – social and physical infrastructure, etc.).
In other words, it’s a straw man to say that people out there think “debt doesn’t matter”. Everyone agrees debt matters.
The MMTers constantly say that government debt doesn’t matter. And as I constantly remind and thank them, they are such truly great ambassadors of Keynesian first impressions for the general public.
Mises is a little sloppy here, of course. “The producing strata” is pretty much the people getting the benefits too. So it is from the producing strata to the producing strata (for the most part).
Mises was a praxeologist. He looked at human actions more so than human names. In this context, it is justified to distinguish between producing acts and parasitical acts, despite the fact that some names may overlap between the two.
He anticipates Krugman, who has raised distributional and incentive concerns associated with public debt.
You have an interesting way of saying Krugman repeated Mises’ prior largument that was made before Krugman was even born.
The MMTers say Krugman is a wacky deficit dove who wants eventual “austerity”:
http://www.scribd.com/doc/102771844/This-Could-Change-Everything-Copy
Mises is a little sloppy here, of course. “The producing strata” is pretty much the people getting the benefits too.
Daniel_Kuehn, are you high? The whole problem (from the perspective of your intellectual opponents) is that the producing strata *isn’t* getting the benefits, except in a very superficial sense. Even if the other side is wrong about this, you can’t assume it to prove them wrong.
But they’re not wrong, since the overwhelming percentage of these benefits are not infrastructure projects (that at least have a plausible benefit to the producing class), but things like:
– Wealth transfer/vote buying schemes
– Social insurance that defeats the purpose of insurance (Be reckless, we’ll still insure you!)
– Bombing strangers/dark people
– Caging people who put the wrong substances into their bodies
– Making sure people are paying their “fare share”
Now, on what planet is the producing class saying, “OMG, it is *so awesome* to have these benefits showered onto me! I just ~*love*~ when we blow we blow up those weird people. It just totally ROCKS whenever they cage those hippies. And gosh, I just LOVE all this overpriced insurance the government gives me!! Whoo hoo! This is just ~so~ ~awesome~, and I ~love~ these benefits I get as part of the producing class”
Have you seen anyone like that?
Daniel, it’s funny that your reaction to this quotation from Mises was twofold:
(A) First you asked who ever disagreed with it?
(B) Then you disagreed with it.
Moreover, the quibble you have with Mises isn’t some incidental thing…that’s what’s driving the whole result. So it’s not surprising that you accuse Mises of being a little off on that issue, and then miss the whole point Mises (and I and Nick Rowe etc.) have been making.
One last time, for posterity: Krugman was quite clearly saying that the present generation CANNOT IN ANY WAY live at the expense of future generations, via issuing government debt today. He was saying that inheriting a large public debt will simply make our grandkids (say) make transfer payments among themselves. So yes, some grandkids will be richer, others poorer, but that’s a distributional thing within the grandkids. It’s not like we today are somehow consuming more, while our grandkids are consuming less on net.
This analysis is extremely misleading, and wrong if we look at the lifetime utilities/consumption of our grandkids. That’s what the simplistic tables demonstrated.
“This analysis is extremely misleading, and wrong if we look at the lifetime utilities/consumption of our grandkids. That’s what the simplistic tables demonstrated.”
But that’s your argument and not what Mises wrote there, isn’t it? What Mises wrote seems, in fact, quite consistent with what Krugman has been saying.
Besides that, you seem to think that you somehow refuted what Krugman said. My guess is that his answer to you tables would be “Yeah bro, that’s exactly what I’ve been saying all along. Thanks for proving my point.”
Christopher, you think Krugman was trying to make the point that saying we owe it to ourselves is wrong? And he thought it would make sense to title his article Debt Is (Mostly) Money We Owe to Ourselves?
“you think Krugman was trying to make the point that saying we owe it to ourselves is wrong”
No, and neither was Mises.
Hey, can someone tell me how to produce italic characters on this blog?
http://www.w3schools.com/tags/default.asp
Scroll down to the letter i
Click Me!
OK, if you agree that Krugman wasn’t trying to show that “we owe the debt to ourselves” view is wrong, do you agree that he was trying to show it is correct?
On Mises, I’m not sure how you can say he wasn’t trying to show that view was wrong.
On Mises, I’m not sure how you can say he wasn’t trying to show that view was wrong.
Well, as far as I understand that paragraph, Mises doesn’t say that we don’t owe it to ourselves.
Mises says that just because we owe it to ourselves doesn’t mean it’s not a burden to someone (e.g. the producing strata) in the future. In principle, Krugman says the same thing, except that individual burdens on some (especially on producers) don’t seem to bother him very much.
Oh, Bob Murphy, what a stinky can of worms you have brought us back to. I guess that I can put my planned reading on hold for now, I had a hard enough of a time at understanding all of this shit the first time around. I’m sure that we’ll fill every nook and cranny this time around. Heh… thanks.
Bob, this passage by Mises does not discuss inter-generational burdens at all!
Gene, it entirely bypasses the need to even do so. At least, that is the way that I read it.
Let me rephrase that. If we can accept that debt is a burden to producers in any time period (which is what I read from that quote), then the burden is not eliminated by merely adding generations, it is merely shifted to new actors.
That is so, but it doesn’t make Bob’s point at all!
Gene you don’t even think other generations exist. So of course you can’t see Mises talking about them.
Bob, you are being silly: I just talked to my mom on the phone, and my kids are sitting right in front of me.
I think I didn’t “see” Mises talking about other generations because he wasn’t, hey?
Gene wins this one. Not only did Mises not mention other generations look at what he did say, “It burdens the pro- ducing strata for the benefit of another part of the people.” For ‘another part of the people’ means another segment of the *same* people, that being restricted to living ones.
This is disturbing Gene. We are agreeing often now. I trust that appalls you as much as it does me. :
)
If I actually thought there was a chance Gene or Ken B. would change their minds, I would bother arguing the point. But, Ken B. is committed to disagreeing with me, and Gene is committed to digging his heels in against an Austrian ripping on a Keynesian. The deck is stacked against me, and I have other ways to use my time. If you guys don’t want to see it, fine. Just try this: Suppose for the sake of argument that Mises gets exactly the point Nick Rowe (and finally me, after kicking and screaming) were making in that debate. What Mises is saying fits right in. It’s not a smoking gun, but I think your Bayesian prior goes up after reading that passage.
Pulling out to the top level for sanity.
Joseph Anthony Fetz:
“Ken B, Oh, the part where I was quoting you?”
No, the posts that have my name on them but that you made. I was poking a little fun at M_F.
I know I know, too easy, candy/baby. Still.
No, I got it now. I had a brain fart back there, it really stunk. However, I looked at the post that I made underneath your post, and that’s where I quoted you. Thus the confusion. I thought you were telling me the post beneath yours.
I take it back: Gene and Ken, there is indeed a smoking gun here. It’s this:
The fact is that the public debt embodies claims of people who have in the past entrusted funds to the govern- ment against all those who are daily producing new wealth.
I’m pretty sure Mises gets the point that I tried to illustrate with the OLG model.