What's the reason austerity is needed again?

[Ailedhoo]

Yeah well, I really don't care. My family been poor most of my life and we have to work hard and no one is giving us a hand out. So go work for it like me and my family does.

The last sentance is a judgement most noted. You know my background? You know my employment status? Of my efforts? If the answers are "yes" then what method was it you used to research me up?

...and your "don't care" argument is seem to dodge the issue raised.

 

[del62]

While the Banks do have to take some responsibility for the mess we are in and the way some of them have done well out of this is obsene, but just blaming the banks kind of gives the irresponsible over spending of governments a free pass.

 

[Cutlass]

A lot of things, and the answer varies from country to country. Naturally the bank bailouts, in the places where they happened, were a huge strain on public finances.

But the permanent cuts and tweaks which are needed in a lot of entitlement programs in many countries are not the result of bailouts, but of the fact that they were on an unsustainable path. Look at the US. Between 2011 and 2025, the number of retirees on Social Security will grow by nearly 50 percent to 66 million people; Medicare experiences a similar rise. The resulting spending surge perpetuates huge budget deficits. The Congressional Budget Office estimates that present policies would result in cumulative deficits of $10 trillion from 2013 to 2022. So austerity is needed with or without bailouts (and no, you can't solve that by milking the rich - see here)

The only part of the US entitlement system that has a problem that trivial tweaks can't deal with is health care. And that means not a cut in spending is needed, but a reform of that sector of the economy as a whole.

They'll "pay their share" through income tax hikes and will lose part of their net worth as the stocks they own fail to pick up in a weak economy. Some of them will become even richer, though.

But of course the point of any sensible policy-makes is not to punish the rich, but rather to adopt policies that will raise the general welfare. Several policies aimed at "punishing the bankers" would do more harm than good for the general population, so why pursue them?

The problems with this are, first, we are not, nor is anyone planning, to punish the rich, and second, the rich really do deserve to be punished, because the problems are their actions.

Right now consumption may be low, but over the last years consumption in the US was too high and savings too low, leading to low investment and growth.

If consumption was actually high, then you have no explanation for the lack of investment. I mean, literally no explanation. Capital was dirt cheap. Taxes hadn't been lower in 60 years. Labor was cheap. Regulations unenforced when not removed entirely. And yet no investment. The only explanation that holds up for the lack of investment is the lack of demand for the products that investment might have created.

 

[luiz]

The only part of the US entitlement system that has a problem that trivial tweaks can't deal with is health care. And that means not a cut in spending is needed, but a reform of that sector of the economy as a whole.

As you can read in the article I mentioned, the problem is hardly trivial and amounts to a 10 trillion dollar additional deficit in the next decade.

The problems with this are, first, we are not, nor is anyone planning, to punish the rich, and second, the rich really do deserve to be punished, because the problems are their actions.

Some people do seem to want to punish the rich, such François Hollande. And of course to say that "the rich" are responsible for the crisis is a sweeping over-generalization. A very small percentage even among the top 1% had any influence in the making of the crisis.

If consumption was actually high, then you have no explanation for the lack of investment. I mean, literally no explanation. Capital was dirt cheap. Taxes hadn't been lower in 60 years. Labor was cheap. Regulations unenforced when not removed entirely. And yet no investment. The only explanation that holds up for the lack of investment is the lack of demand for the products that investment might have created.

Consumption was very high, that's not my opinion, it's a fact which can been verified by looking at consumption / GDP. Too much consumption does lead to little investment, because for there to be investment there must be savings, and for there to be savings people can't spend all their money. And the US of the last year was a country of maxed-out credit cards, not of thrifty investors.

 

[Core Imposter]

Why would anyone invest here to make products here, when we can't produce products here that can compete with cheap imports?

Of course this is being corrected by market forces.

 

[Core Imposter]

My wife was just in the hospital and everything that was done there was focused on "covering my arse", from the nurses that were fretting about their jobs, to the incredibly ridiculos policies to the treatment regimen.

The costs are driven by two factors, government funding and the threat of lawsuits. We will never fix the spiral in costs until we have tort reform and introduce market forces to control costs.

That is the reform of the health care sector you need Cutlass.

 

[galdre]

tort reform is a red herring, and 'market forces' won't fix anything. Get rid of the insurance companies, give us a national health insurance, and make all providers non-profit, then we'll save $$$ on health care.

 

[Cutlass]

As you can read in the article I mentioned, the problem is hardly trivial and amounts to a 10 trillion dollar additional deficit in the next decade.

Other than health care, there's not really a serious problem on the fiscal side that can be fixed with fiscal problems. The problem with Social Security is minor. The problem with the rest of income security is that income is far too low. Trying to fix a problem by making that problem worse never works.

Some people do seem to want to punish the rich, such François Hollande. And of course to say that "the rich" are responsible for the crisis is a sweeping over-generalization. A very small percentage even among the top 1% had any influence in the making of the crisis.

Ok, a couple of people in France. Not my problem. But to claim the crisis is not caused by the rich in the US is utterly ridiculous on the face of it.

Consumption was very high, that's not my opinion, it's a fact which can been verified by looking at consumption / GDP. Too much consumption does lead to little investment, because for there to be investment there must be savings, and for there to be savings people can't spend all their money. And the US of the last year was a country of maxed-out credit cards, not of thrifty investors.

This rests on the ludicrous contention that there was some shortage of investable capital or that capital was expensive. And yet we had bubble after bubble because we were drowning in a sea of cheap capital that could not find business investments to make.

My wife was just in the hospital and everything that was done there was focused on "covering my arse", from the nurses that were fretting about their jobs, to the incredibly ridiculos policies to the treatment regimen.

The costs are driven by two factors, government funding and the threat of lawsuits. We will never fix the spiral in costs until we have tort reform and introduce market forces to control costs.

That is the reform of the health care sector you need Cutlass.

So you have never been exposed to the US health care system? Are you a Russian?

Lawsuits are trivial in American medicine, The whole costs of medical malpractice is no more than 2% of all health care costs. And lawsuits are a small part of that.

 

[ELITEOFWARMAN8]

The last sentance is a judgement most noted. You know my background? You know my employment status? Of my efforts? If the answers are "yes" then what method was it you used to research me up?

...and your "don't care" argument is seem to dodge the issue raised.

No and why should I?

 

[luiz]

Other than health care, there's not really a serious problem on the fiscal side that can be fixed with fiscal problems. The problem with Social Security is minor. The problem with the rest of income security is that income is far too low. Trying to fix a problem by making that problem worse never works.

But there is a problem with healthcare costs, and there is a problem with Social Security. An aging population requires some degree of austerity regardless of any bailout.

Ok, a couple of people in France. Not my problem. But to claim the crisis is not caused by the rich in the US is utterly ridiculous on the face of it.

Some very powerful politicians and the OP, which is why I mentioned it.
And of course, to say that "the rich" is as I said a gross over-generalization. How did your average successful businessman cause this crisis? Or brain surgeon?

This rests on the ludicrous contention that there was some shortage of investable capital or that capital was expensive. And yet we had bubble after bubble because we were drowning in a sea of cheap capital that could not find business investments to make.

Well, we don't have to argue. Look at the historic pattern of US consumption as a share of GDP:

Isn't it clear that in recent years the US has been spending way more than typical (except for the Depression / WW2 period)?

And the other side of course is that the American people was saving too little:

 

[aelf]

A simple question for you, my noble class-warrior:
Who do you think would suffer most, if a bank went belly-up?

Who's complaining about the bailout itself?

The problem is the architects of the financial meltdown mostly got away scott free. Nobody was prosecuted or in the least bit punished. Certain groups are satisfied that they, naturally, lost a lot of money in the process, while lots of other people saw their lives ruined. And the financial reforms that were supposed to follow? Not nearly enough, according to most reports I've seen. And now those groups are braying about austerity and welfare queens.

So where's the justice in the system? Or is talking about justice engaging in class warfare, noble Randroid?

But of course the point of any sensible policy-makes is not to punish the rich, but rather to adopt policies that will raise the general welfare. Several policies aimed at "punishing the bankers" would do more harm than good for the general population, so why pursue them?

Would you say the same about welfare?

 

[Core Imposter]

Lawsuits are trivial in American medicine, The whole costs of medical malpractice is no more than 2% of all health care costs. And lawsuits are a small part of that.

Thats just wrong. You are quoting some statistic. That doesn't account for the lost productivity that is sacrificed in every possible way to avoid the possibility of a suit. That doesn't account for any of the procedures that are done as a part of defensive medicine. Frankly, you don't know what you are talking about.

 

[hobbsyoyo]

Thats just wrong. You are quoting some statistic. That doesn't account for the lost productivity that is sacrificed in every possible way to avoid the possibility of a suit. That doesn't account for any of the procedures that are done as a part of defensive medicine. Frankly, you don't know what you are talking about.

You shouldn't go that far. If you've read anything of this thread, then you'd know that wasn't the case.

But grumble grumble grumble liberal commiezombies.
Please continue the tirade please.

 

[Leoreth]

So where's the justice in the system? Or is talking about justice engaging in class warfare, noble Randroid?

Um, Yeekim's not an Objectivist. Stay fair.

 

[Core Imposter]

We don't have a lack of demand in the economy, we have a lack of means. That is what happens when you run long periods of loose money-easy credit. Consumption was pulled forward creating megabubbles and, after the bust, credit was withdrawn and the consumer hasn't the means to buy. This can't be fixed, only time will fix it.

Trying to patch it up with additional government spending won't fix it because that works opposite to the deleveraging that must occur. Obama's advisors told him to do the exact wrong thing and he did it. And now the world's central banks are distorting every market which only makes the whole system more dysfunctional. The only Presidential candidate that had it right was Perry, who understood that we need to reduce the footprint of the government and the Fed on the economy. Get the jackboot off the people's necks so they can get up and fix this.

 

[Core Imposter]

The problem is the architects of the financial meltdown mostly got away scott free. Nobody was prosecuted or in the least bit punished. Certain groups are satisfied that they, naturally, lost a lot of money in the process, while lots of other people saw their lives ruined. And the financial reforms that were supposed to follow? Not nearly enough, according to most reports I've seen. And now those groups are braying about austerity and welfare queens.

I agree with you to the extent that I think the heads of the Five Families and many other banksters should be publically hanged. Right on Wall Street.

And the fraud laws ought to be changed to include minimum terms like fifty years.

As far as the structure goes, break them up into commerical banks and investment banks. Institutions that are so large as to threaten the system should not exist. The complex maze of regulations and regulators in place now has as much chance of working as I do of growing functional tits.

 

[hobbsyoyo]

^^^ Hey, something that makes sense that I can agree with!

From MisterCooper! Yay!

 

[aelf]

Um, Yeekim's not an Objectivist. Stay fair.

I'm not a "class warrior" either.

 

[Cutlass]

Thats just wrong. You are quoting some statistic. That doesn't account for the lost productivity that is sacrificed in every possible way to avoid the possibility of a suit. That doesn't account for any of the procedures that are done as a part of defensive medicine. Frankly, you don't know what you are talking about.

Actually, it does count 100% of the costs to the health care sector of the economy. "Defensive medicine" doesn't actually happen, so that's a strawman.

Summary

In 2004 we accused President Bush of using "dubious statistics" to support his claim that limiting malpractice awards to injured patients could save the economy between $60 billion and $108 billion per year. Ever since, we’ve said most independent research indicated little if any savings from limiting malpractice liability, and just a few weeks ago we quoted the Congressional Budget Office as saying that only negligible savings could be expected.

Now CBO has revised its opinion, based on new evidence. Citing recent studies, including two new economic papers published only last month, CBO concludes that limiting malpractice liability would reduce total national health care spending by about one-half of 1 percent, or about $11 billion this year. That would save taxpayers about $41 billion over the next decade in lower Medicare, Medicaid and other federal spending for health care.

That’s still not close to what Bush claimed five years ago, and what some Republicans are still claiming. But it’s a significant point in favor of a health care proposal that is generally opposed by Democrats.

Rest of article HERE

So as you see, malpractice reform could save the nation at maximum one half of one percent of total health care costs. Trivial money for the vast destruction of private property and lives that you want to unleash. Comrade!

 

[Cutlass]

But there is a problem with healthcare costs, and there is a problem with Social Security. An aging population requires some degree of austerity regardless of any bailout.

I don't see any reason that would be true. Any austerity would be harmful far out of proportion to any benefit. The fix for SS is trivial, and only politics makes it hard. The fix for health care is much harder, but again it is politics, not money, which is the problem. In order to save money, the government has to take much more control of the system. But that does not mean a reduction in health services. private sector waste in the system is something like 5-7% of GDP.

Some very powerful politicians and the OP, which is why I mentioned it.
And of course, to say that "the rich" is as I said a gross over-generalization. How did your average successful businessman cause this crisis? Or brain surgeon?

It wasn't universal, but on average the wealthy pushed the politics of the US to the right, supporting more conservative Democrats and Republicans.

You reap what you sow.

Well, we don't have to argue. Look at the historic pattern of US consumption as a share of GDP:

Isn't it clear that in recent years the US has been spending way more than typical (except for the Depression / WW2 period)?

And the other side of course is that the American people was saving too little:

That doesn't answer the question: Given that capital was cheap as dirt, given that we were drowning in money that we couldn't find anything to do with, given that labor was weak, given that regulations to all intent and purposes had ceased to exist, given all of that, why did businesses generally refuse to invest? Every single factor tells you that there should have been a surge in business investment, and yet there was effectively none.

And you do not have an explanation for that that does not require you to accept that your theories are wrong.