Tuesday, April 09, 2013

Wow! P-Kroog Kicks It OLD School!

You have to give P-Kroog credit.  He is a traditionalist, resurrecting the ridiculous 1950s "debt is just money we owe to ourselves" line, arguing that the size of the debt can't possibly matter.

This piece--by my main man Burt Abrams--does a good job of responding on the merits of the immediate question.

But there is a deeper problem.  James Buchanan actually thoroughly debunked the "what me worry?" line a long time ago.  It's a settled question, and the debt is only a symptom of trouble.  LeBron explained why, quite clearly.  The problem may not be the deficit, per se, though that could eventually be trouble.  The problem is that there is a permanent disconnect between spending and revenue.  The fisc become a fishery, and we overfish common pool resources.


Hasdrubal said...

While it's good to hear (and not really surprising) that our roads and bridges are improving, I wonder if the fraction of GDP spent on infrastructure is a really accurate measure. If you assume Germany is spending the same fraction of GDP as we are (3.3%), but GDP/area investment will differ:

Germany is (3.3%*$3.4trillion/357,000km^2) = $314/km^2

But US investment is (3.3%*$15.7trillion/9,800,000km^2) = $53/km^2

So Germany is spending _six times_ as much per square kilometer than the US is even if they spend the same fraction of GDP. (And it shows; farm roads in Nordrhein Westphalia are equivalent to brand new streets in Minneapolis, and farm roads in MN are dirt.)

Of ourse, THAT brings up the point that the US is far, far less densly populated than most other OECD countries. Do we need stoplights out in farm country where the majority of the traffic is tractors? No way. And more different parts of the US are paved differently: County roads in OH are paved, not as well as in Germany, but they're generally in pretty good shape.

All in all, I don't think it's reasonable to get in a pissing contest over how much we spend on infrastructure compared to other countries. Especially since, in my experience, Europeans really don't understand how big the US is, and Americans who compare us to European countries don't understand that. And it's a hugely important fact.

Pelsmin said...

And Kroog seems to think that jobs is jobs -- they're all the same. In fact, there are two very different kinds of jobs:
1)The kind that result from two private parties making a business decision to hire a person/work for a company. This kind, in the long run, on the whole, creates wealth. The labor provides more in value than it cost the employer and more than it was worth the to worker. Win-win.
2) The kind that results from government hiring people. These can be necessary jobs like cops and soldiers, who don't generate wealth but are a necessary cost to create an environment where others can create it. Or they can be jobs like building highways and bridges, which may or may not create wealth; hard to say when it's OPM being spent, but less likely to create wealth than privately transacted construction.

Tom said...

Pelsmin forgot the third kind of job: the regulators and busy bodys in (mostly) government whose only work is to destroy wealth. "We're gonna take your dough and use it to smack you around!"

Also, while some soldiers may be necessary, the gross over abundance of military spending we have just encourages nitwit politicians to "use" them, destroying even more wealth. Lose, lose, LOSE.

Pelsmin said...

Fair enough, Tom. I was describing my idea of Utopia, where government only wastes money because it's inefficient in hiring people to do work like building bridges, and destroys wealth by confiscating money and spending it in unfortunately necessary ways, like hiring cops to maintain public order.
I wouldn't take exception with your view that this is a benign view of government that overlooks the reality of government-led wealth destruction.