Democracies can't live in perpetual stimulus

The British government has run a budget surplus in only six of the 37 years since 1975. The American government has run a budget surplus in only five of the 52 years since 1960. The Canadian government has run a budget surplus in only 10 of the 46 years since 1966. As Hudson Institute scholar Christopher DeMuth asserts in a prescient paper, Debt and Democracy, Keynesian doctrine – surpluses in the good years, deficits in the bad – has morphed in the advanced democracies into perpetual stimulus. As a result, the exponential accumulation of debt means that the next generation, people still unborn, could theoretically be required to pay all of their lifetime incomes in taxes merely to make the interest payments on an enormous debt.

Link

Is it an intentional bankrupting of our future, or simply a desire for instant gratification? Why can't so many nations figure out that you can't live beyond your means indefinitely?

First of all, it is an unwritten "law" of politics NOT to deal with reality.

You run on a platform of "We are sooooo screwed unless we address these problems and take immediate and corrective action" and you can just go ahead and start writing your concession speech right away.

As to the bigger picture, watch The Secret of Oz, an award-winning two hour documentary available on youtube:



“Whoever controls the volume of money in our country is absolute master of all
industry and commerce...when you realize that the entire system is very easily
controlled, one way or another, by a few powerful men at the top, you will not
have to be told how periods of inflation and depression originate.” ~ President James A. Garfield

BTW, President Garfield was assassinated shortly after this quote.

Originally posted by BobM88

The British government has run a budget surplus in only six of the 37 years since 1975. The American government has run a budget surplus in only five of the 52 years since 1960. The Canadian government has run a budget surplus in only 10 of the 46 years since 1966. As Hudson Institute scholar Christopher DeMuth asserts in a prescient paper, Debt and Democracy, Keynesian doctrine – surpluses in the good years, deficits in the bad – has morphed in the advanced democracies into perpetual stimulus. As a result, the exponential accumulation of debt means that the next generation, people still unborn, could theoretically be required to pay all of their lifetime incomes in taxes merely to make the interest payments on an enormous debt.

Link

Is it an intentional bankrupting of our future, or simply a desire for instant gratification? Why can't so many nations figure out that you can't live beyond your means indefinitely?

Hi.

Your post interested me enough to log in after a few months of silence and comment on your post.

Firstly, I think what is at question here is not democracy itself, but rather the economic and financial behavior of the democracies in terms of debt and borrowing. That is being specific.

Democracies have survived well over two thousand years in one form or another. Winston Churchill once said that "democracy is the worst form of government apart from all the others". I whole heartedly agree with him. In terms of the freedoms, wealth, lifestyles and rights of the common people and the progression and advancement of cultures in arts and sciences there has never been a kinder form of civility and order.

I would argue that the issue is not related to democracy as such, but rather to the economic policies of states and the international pressures placed on governments by organizations like the IMF, The World Bank and of course the international bankers.

Thanks again for your post. This is the single most important issue facing us presently in the democracies of the world and other forms of governments, too. We are all "in business" with each other now and increasingly co-dependant. It matters to everyone great and small because it is all about resources and dispersion of those resources and of course our individual and family wealth, even down to how much we get to eat and earn!

reply to post by BobM88


The use of the word 'stimulus' is misleading.

Although he had been a supporter of the New Democratic Party in earlier years, he entered politics as the Libertarian Party of Canada's candidate in the 1982 by-election in the riding of Leeds–Grenville. He won 13.4% of the vote, which was the highest percentage vote ever garnered by a Libertarian Party of Canada candidate, either then or since.[citation needed] In May 1982, he became the party's leader, but resigned in 1983 in order to continue his career in journalism

en.wikipedia.org...
This is an opinion piece from a conservative libertarian propagandist.

The world is turning socialist so the MSM is freaking the hell out. Capitalists want to sell off the rest of our governments assests and privatize them all. Capitalists/conservatives/libertarians want to make sure the public does not even own a road or a park.

Socialists want to take back our utilities and our assets.

A deficit does not equal a 'stimulus'. This is just sensational misleading aganda driven nonsense. Canada is a good battle ground for the socialist. The students protests show that. There is a European influence to their society but the MSM is capitalist. It is funny to read 'The Wall Street Journal' or some capitalist bs talk about the BRICS or nations like Argentina nationalizing oil. They are freaked out. We are on the brink of a new age of McCarthyism.

edit- I agree with what you are saying thofh. Governments have to plan a budget and stick to it. We all have to to it.

reply to post by Revolution9


Hi! I didn't read the article as questioning democracy as an institution, but rather questioning the spending practices of democratic nations. That was just my take on it...I think the focus was on democracies because DeMuth's paper, (which is what this article was referencing) was titled "Debt and Democracy, Keynesian doctrine – surpluses in the good years, deficits in the bad" For whatever reason, he apparently chose to focus on the (over)spending of democracies.

I agree, it really is of great concern to all.

reply to post by Germanicus


I'll wait 'til a few more nations turn socialist 'til I wholeheartedly agree that the world is turning socialist... But I get your point.

Regardless, I'm not quite sure why you take issue with this article, it reinforces what I believe is one of your core beliefs...that the US has recklessly and irresponsibly overspent for years. What am I missing here?

Originally posted by BobM88
reply to post by Germanicus

 

I'll wait 'til a few more nations turn socialist 'til I wholeheartedly agree that the world is turning socialist... But I get your point.

Regardless, I'm not quite sure why you take issue with this article, it reinforces what I believe is one of your core beliefs...that the US has recklessly and irresponsibly overspent for years. What am I missing here?

Well the use of the word stimulus is key. Capitalists/libertarians/conservatives want austerity for the middle class and the poor. Austerity also helps destroy and remaining power that unions had. ( not that I care about unions. Unions are an invention of the capitalist ).

So the guy is trying to say that a stimulus equals a deficit. That is not true. Wayne Swan used a stimulus to stimulate the Australian economy during the GFC and he won an award as Finance Minister of theYear. Public works projects are also a great short term boost until long term solutions steady the ship.

All MSM is capitalist. In Europe and America/Canada/UK/Australia. They are pushing for Austerity. Greece has shown that Austerity only makes an economy worse. Capitalists want Austerity for the middle class and low socio economic families/individuals and they want Privatization of everything and they want a lower corporate tax rate. This opinion piece links 'stimulus' with 'deficit'. He does it on purpose.

He is trying to make the point that Austerity equals a surplus and Stimulus equals a decicit. It is not true.

There are many solutions that do not involve austerity. A surplus can be achieved without austerity.


edit- nationalization of certain resources and industries is a simple solution.Nationalization is what keeps corporatists awake at night. Imagine nationalizing oil like most sensible nations do for a start.

Governments waste a great deal of money as well on pure incompetence on themselves. Military budgets should be cut for sure too.

reply to post by Germanicus


You may be correct, but you may be mistaken too. I believe what the author was saying is that continuing to stimulus spend will lead to debt.

Put it this way: You pointed out that Wayne Swan oversaw a stimulus into the Australian economy that worked very well. Correct me if I'm wrong, but I'd guess that that stimulus has come and gone. Meaning that the funds used in the stimulus are spent now, or nearly so, and probably no plans for another since it worked? However, if he continued to introduce one stimulus after another, it would be a continual expenditure stream. If there was no revenue coming in to replace it, you would obviously have debt.

I don't read this as saying a stimulus alone leads to debt. I read this as he is likening a stimulus to entitlement spending because both are government expenses. Note the mention of Sweden:

an example of a democratic state – “where the welfare state is alive and well and government debt is low” – that properly balances spending and taxes.

I do note he follows with a nod towards austerity by saying most electorates won't tolerate the taxation required to maintain entitlement spending as it currently stands in a manner that balances a national budget.

Whether or not that's true probably varies from nation to nation, but the economics is the same: Many nations deficit spend rather than do whatever should be done, be that nationalization of industries or austerity.

reply to post by BobM88

However, if he continued to introduce one stimulus after another, it would be a continual expenditure stream. If there was no revenue coming in to replace it, you would obviously have debt.

But that is not what has taken place. The history of all of those western nations is not a history of constant stimulus. So he is being misleading. Government incompetence and front ended policy is to blame. Not stimulus.

Libertarians are funny. They hate taxes but they think that a government should only generate revenue from taxes.

Government assets turn a profit. We need to take them back so governments do not need to tax the hell out of us. Libertarians are pretty much calling for higher taxes by calling for privatization of public assets. They are funny.

The use of the terms 'welfare state' and wealth redistribution' show how propagandaish this opinion piece is. I googled his name after reading only the headline. I knew that he was a conservative propagandist. We have a guy that is similar in Australia called Piers Ackerman. Their agendas are clear.

Originally posted by Germanicus
reply to post by BobM88

 

However, if he continued to introduce one stimulus after another, it would be a continual expenditure stream. If there was no revenue coming in to replace it, you would obviously have debt.

But that is not what has taken place. The history of all of those western nations is not a history of constant stimulus. So he is being misleading. Government incompetence and front ended policy is to blame. Not stimulus.

That's exactly the point I was trying to make. If he's using the word stimulus intentionally to place in people's minds that stimulus' (stimuli?) cause deficits absolutely, I agree, he's being misleading. Again, I simply read it as he used it as a lazy analogy.

Piers Ackerman...that name's actually familiar to me. I'll google him to see why that is.

reply to post by BobM88

Piers Ackerman is a jackass.

We all agree government spending is a serious concern though hey.

I cant understand how advanced societies cant set and run a budget. Its absurd really.

Originally posted by Germanicus
reply to post by BobM88

 

Piers Ackerman is a jackass.

We all agree government spending is a serious concern though hey.

I cant understand how advanced societies cant set and run a budget. Its absurd really.

Agreed...and in my OP I asked "is it intentional?" Well, obviously it is, right? It's not done accidentally...but the question is why? It's odd that a single person can be brilliant, yet a group of people (like a government) can be completely without a clue. Or worse, and I know that the truth is this: they're mostly greedy, selfish, self-serving people out only for their own gain.

reply to post by BobM88

Or worse, and I know that the truth is this: they're mostly greedy, selfish, self-serving people out only for their own gain.

Exactly. And yet they are always calling for an increase in salary and pensions. The benifits they get in Australia are ludicrous.

They say they need more to attract the best people. So they are pretty much admiting that they are a bunch of loser. They always say that if you pay peanuts you get monkeys. That line is in every article I read about them wanting more money. I would think you would get elephants with peanuts and monkeys would like bananas We pay a fortune for greedy monkeys.

reply to post by Germanicus


They say that here too..."best and brightest"....it makes me wonder why things are so ##ed up if they're so brilliant!
Our congress gets pretty good bennies too:

Congressional Pay, Benefits, Retirement

reply to post by BobM88


I believe the only way forward is to either force the few who have all the money tied up to return it somehow to workers or print enough money to pay off all the debt along with a law forcing the government to never again aquire debt. Of course the last idea would cause inflation and drive the dollar way down but they may be the medicine we have to take to prevent complete failure.

Taxing the rich is not the way forward but...there must be a way to keep most of the money in the largest part of society the middle class. When few people have all the money there is no demand for goods which means there is no reason to manufacture things which result in less jobs which results in less profits for corporations.

The middle class MUST have money to spend to keep employment up. If Warren Buffet returned several of his billions to the many thousands of employees who worked in the buisnesses he profited from. Those who recieve the money would go out and buy homes, cars, HD TV's, education etc... all those billions sitting in Mr. Buffets account is potential finanical energy just sitting there.

Take this thought and apply it to all the elites money and the economy and jobs would explode.

I am not saying to not reward hard work and luck it just needs to be spread out more for the system to self sustain.

The Rich have won! Now the game board needs to be cleared and we all start over else it all fails even for the RIch. If US economy colapses the money the Rich have will just be paper and digits in a computer.

We must find a middle of the road way to keep the economy cycle fair to not only improve the lives of average Americans but also to keep it from dying.

Obama is doing it wrong. He thinks giving the money to the government to spread out is the way to go but that fails as well. Romney is wrong he thinks giving the wealthy even more will make things right. Neither party is willing to do what it will take to fix our economy so failure is certain no matter who you vote for other than maybe someone like Ron Paul.

reply to post by Xeven


I couldn't agree more...as you said, put most of the money in the hands of most of the people, and the economy would be rolling!