I Thought About Debt for A While and I Wondered: Why is it Still Here?

    So I was thinking about debt and thinking about policy and these kinds of questions recently.  Part of this is brought about by our current policy debate with respect to the debt and how to handle it.  Part of it is my own success at conquering my own student debt, especially when so many of my current generation grapple with the reality of student loan debt.  Debt is certainly a serious topic of discussion and one that is worth thinking about how we wish to grapple with it.  How we as a country choose to handle debt is going to dictate our current policy along with future policy.  Whether those policies deal with the welfare state or whether it is tax policy, rhetoric featuring the debt is likely to play a role at the very least.  Given those reasons, it is not unreasonable to think about debt or want to talk about it.  At the same time, it makes me wonder why we still have debt, or rather, why sovereign nations still choose to run debt.

    First, let me say that I don't have a real issue with our current debt policy as it stands.  I'm not concerned that it's going to eat us alive or murder our children while we watch.  I understand that there are times in peoples lives where debt is necessary.  Student loans are an excellent example of one.  Your earning potential is lower at age eighteen with only a high school diploma than it is after 4 years of college.  At least, that was the case when the economy was good.  It still is the case, just not as readily apparent.  People also go into debt when they purchase a home via a mortgage.  This too can be a sound practice as a home can build equity and over the lifetime of its use can outweigh the initial debt incurred.  You get a house in between those two events so it's even better.  These are just two instances of debt that can be useful in addition to the various times we use credit cards and the like.  I feel like a lot of the moralizing about debt obscures the fact that it can be very useful in our own lives.  I also mention these examples to show that households, like governments, will go into debt at different points and do not always balance their incomes and expenses every single year.  Having said that, I've begun to wonder why sovereign nations go into debt nowadays.

    One reason I have to go into debt when making certain purchases is that I can't print money to give to people.  It's illegal.  At the same time, the United States is not under those same constrictions.  The US government is the sole source of dollar bills in the world, and those dollars are suitable for the paying of all debts public and private.  It seems to me that if the Federal Government wanted to make up for the difference between revenues and expenses, it could just print money of that amount if it wanted to.  There's no law barring it, the Constitution would be fine with it, and the money would be legal tender that people are required to accept, it would still function as a medium of exchange.  So why is it that at the end of the fiscal year, when tax revenues do not match congressional outlays, the Federal Government has to issue debt to make up the difference?  Here's the answer the government gives to kids, not satisfying to me.

    I'm sure whoever is reading this might think I'm taking crazy pills.  Of course the government has to use debt, it can't just print money and give it to people and expect them think it's worth anything.  The problem with that statement is that it's exactly what the US government and governments around the world have been doing for roughly 40-50 years.  (I suppose libertarians could complain about this but I don't see them not accepting the money given to them.) The US has been doing it since 1971 when Nixon cancelled the direct convertibility of dollars to an equal amount of gold.  Every major world currency from the dollar to the pound to the euro to the yen to the renminbi is fiat.  So yes, the government prints money and distributes it through the economy for people to spend on goods and services.  People keep accepting it and don't seem too concerned about its source.  So if we accept that money, and it's good for paying off debt and all that good stuff, why don't we just print it when we have deficits.

    Part of this is due to history.  Though fiat currency dates back to 11th Century China, most nations had backed currency for most of their history.  By backed currency, I mean that they could be exchanged for a set amount of gold or silver(usually).   In those conditions, more money couldn't be created because there was a finite supply of whatever was backing it.  It could be the case that sovereign nations with their own currency keep debt out of habit.  It could be the case that they don't simply want to print a bunch of money for fear that it might alienate current creditors, though that seems like a weird concern given that they could print their own money rather than take out a loan.  Debt may still be necessary for international transactions because while printed money is good in their respective countries, it may not be accepted in other places.  This last argument may be off the mark considering the fact that China saw an uptick in the use of US dollars in 2013. It could be the case that governments want to prevent inflation by avoiding the mass printing of money.  This seems like it could be right, but then it ignores the fact that debt is just cash by other means.  So if pumping a bunch of freshly minted money into the economy is going to cause inflation so would pumping a bunch of borrowed money.  It could be the case that the US government, and others, wants to keep a system of debt and taxation to control for inflation and that's really the best guess I have at this point. 

    I'm sure there is an academic answer out there somewhere.  Modern Monetary Theory might have an answer but I can't find it.  When I look to the internet with this question, I'm often bombarded with talk of hyperinflation and how we should just switch to gold.  I pretty much ignore those kinds of sites because they aren't going to answer the question I have.

We Really Let Ourselves Go

    This occurred some time ago, but it's been sticking in my head for awhile.  Take a look at the following video:

    On its surface, it's a cool look to the past at a great show in Soul Train merged with the modern music of Daft Punk.  Many things could be said about the timelessness of cool or  that modern music is nothing more than the appropriation of the past, but the first thing that struck me was that everyone in this video is quite thin.  I know that we're supposed to be bombarded with images of thinness causing eating disorders and what with all the concern over obesity being on the rise, saying that people in the past were thin is no great revelatory statement.  I think about myself sometimes when I think about fitness.  I am 6'0'' and 175 lbs.  My BMI comes in at the normal range of 23.7.  If you were to see me walking around the street you would probably think nothing of my weight and probably consider me to be quite thin, if a little ill-defined and possibly flabby.  Throw me in the Soul Train Gang and I suddenly become overweight, hell, they might just call me fat. (Part of my weight is that I like beer and eating fast food occasionally, sometimes more than occasionally.  I should change that but I enjoy them quite a bit.)

    I'm not sure how I'm supposed to feel about the changes to thinness in America.  Obesity is really an issue that we should grapple with due to the numerous health implications that stem from it.  At the same time, how?  Everything is getting fatter.  Not to mention that we, as humans, appear to suck at staying thin.  A lot of changes have been made to our lifestyles that has led to our packing on the pounds.  We're more sedentary, we spend more time in front of computers or televisions, we eat a bunch of junk.  In order to turn this from your standard blog post about weight I felt the need to explore some mental exercises.  You see, when someone on the internet talks about weight or obesity there are only a hand full of ways that it can go.  I have to call us a nation of fatties and talk about diet and exercise or I have to talk about how our fixation with obesity is undermining people's health by inducing eating disorders.  I'm going to try avoiding those responses because there are places to read about that elsewhere.  Neither statement is without some validity, I just don't feel like writing about them. 

   I guess when I think about  weight loss in the United States I generally think that there needs to be some sort of policy solution.  I say this for the same reason I support various policies regarding social insurance.  I have a sense that while it is indeed possible on an individual level to persevere and triumph over the various adversities that arise in life, we kind of suck at it and tend to fail on a rather large scale.  For instance, it is indeed possible to properly save for a retirement but it is exceedingly difficult and many fail to.  Hence my support of Social Security.  I could be convinced that some kind of similar policy solution may be needed with respect to obesity.  The policy itself could not be the same as insurance because I don't see how one could insure against obesity, but there could be some solutions to take at the national policy level. 

    One step that could be taken could be with regards to how we actually produce food.  I know picking on factory farming and GMOs is always popular, that's not the direction I am necessarily heading in.  There's been a fair amount of news recently that showed that food companies have gone to great lengths to scientifically engineer food to be even better to us.  For all of the remarks people have made about fast food or junk food, it does have a certain appeal to it that is hard to replicate.  No matter how much I like my own homemade milkshakes with almond milk and reduced fat ice cream, they're still not quite like a shamrock shake.  The food is good, and it is designed to make us want more.  While it seems weird that we should attempt to halt businesses from improving their product, it also seems like their improvements have done demonstrable harm to people's health.  We already take steps to limit the health impact of cigarettes, alcohol, gambling, and soft drinks, will junk food join it next?  I can't say that I would be totally opposed to some kind of plan to limit the access of junk food or push/make companies into changing how they produce it.  We could conceivably come up with policies that rewarded health and fitness.  We have policies that reward home ownership, marriage, and fecundity. 

    I think many will object to this kind of policy plan because it seems like another imposition on individual autonomy by paternalistic forces.  You can look at the reaction to Mayor Bloomberg's plan to tax large fountain drinks.  I also think that people generally feel that fatness, more so than alcoholism, smoking, or gambling is a sign that you lack self control.  Obesity is a punishment that is visited upon the idle and the indolent.  While this could very well be true, I just don't see life as a morality play.  If given the option, people are going to continue eating junk food and grow fat largely because they cannot help themselves.  The control necessary for a sustained plan of diet and exercise is probably beyond many people's grasp because it requires such a total change.  People who are on successful and sustained diet and exercise regimes bear the hallmark of Born-Again Christians.  Not exactly a large group.  Instead of dooming people to a life of heart disease and diabetes, it would be better to intervene on the food production line.  As a final point, I doubt those dancers on Soul Train were on a diet. 

Blogging is Hard and I Should Try Harder

    I've been on hiatus for quite some time and that's largely been because I've opted to do other things with my time.  I still thought about politics and I still had opinions that I voiced in a ranting like manner, I just never posted anything because I just didn't.  Blogging is a difficult habit to get into and, like so many other things, once the initial passion fades you quit.  I want to get back though. I need to practice writing. I need to find and hone my voice as a writer, as well as my mind as a thinker.  It's not like I stopped looking at blogs or focusing on the news, I'm actually kind of surprised at how much time I'll spend reading the blogs of others and come away with new thoughts.  I just generally read those things and then proceed to pace around the house thinking aloud looking for all intents and purposes like a crazy person.  (As an aside, I think we could make the mentally ill look more sane by providing them wooden pipes and glasses with a book thrown in for affect. )

    When it comes to blogging there is much that seems so easy to access.  You could basically make a blog at the drop of a hat and Google has a fair amount of neat features that makes it easy to actually create a non-crappy blog with all kinds of bells and whistles.  Simultaneously, it seems like there are so many blogs out there that are of dubious quality that it should be easy to just pick up the keyboard and become an internet sensation with a reasonable level of talent.  Then you realize that actually being able to write and have something that is worth reading can be really hard.  People have taste.  Simultaneously there are bloggers out there who are sublime.  (Aside part two, how did he find himself on the transformational study abroad trip.  Makes mine look like crap.  He has these profound observations on the nature of himself and his role in the universe, I got white supremacists.) They write poetically, they write cogently, they have recipes that are delicious.  All kinds of cool things happen in the blogosphere and it can be disheartening to try to make one's voice heard in the raucous arena of the internet.  So much of it is so vast that something good may never be found and when you find something captivating you may not want to wade through the dreck of cyberspace to find something else.  We choose our internet hang outs and stick to them much like we would in real life. 

    At the end of the day, I want to write more.  I want to have some kind of portfolio of my thoughts and arguments.  Looking back at my earlier writing, I also want to be less of a hack.  I have this lofty ideal of my own intellectual prowess but going over my old posts, well, they're less than inspiring.  In addition, my brother-in-law started a blog and I'm nothing if not competitive.  I will bury him under my prose!

The Limits of Campaign Finance Reform

            I’ve been reading an interesting law review article by Jill E. Fisch entitled “How Do Corporations Play Politics?: The FedEx Story.”  The article, though a little old and missing some new developments, discusses the manners in which a corporation can influence politics and how a lot of the methods do not involve just spending money.  In addition, Fisch makes the argument that contributing money, spending money on PACs, and things of that nature don’t have the huge kind of impact on political outcomes that many people associate with spending large sums of money.  Before I get into what I took away from this article, if you have access to JSTOR or EBSCOHost, and you have the time and desire to read a really long law review article, I’d suggest this one.

            What I took away from this article is that simply tweaking campaign finance rules to put limits on the amount of money that a corporation can spend, is insufficient to address the influence that corporations can have on politics. Fisch uses FedEx as an example of the variety of different things that a corporation can do outside of simply spending money on PACs and campaign contributions. FedEx bought the naming rights for Redskins stadium, allows for Congressman to use their planes for quicker travel, uses the planes for humanitarian work, and other activities to raise their political profile.  In addition to all of that, the president of FedEx regularly appeared before Congress to testify about various issues as well as hire lobbyists and experts to do the same.  A lot of activity that influences policy outcomes doesn’t appear to have anything to do with spending large amounts of money on elections or advertising.  The ability for corporations, both for profit and non-profit, to gather experts, produce policy papers, testify before Congress and other such activities play a large role in policy outcomes, but wouldn’t be affected by campaign finance reform.  Fisch has an example of FedEx campaigning for deregulation of air freight in the 70’s, but only spending around $8500, a sum that I could put together if I really wanted to wipe out my savings.  They got what they wanted anyways, demonstrating that money isn’t necessarily the most important factor. 

            I do want to make something clear, having vast sums of money helps with performing the actions mentioned above.  Having money allows for you to hire lobbyists, experts, and raise your political profile enough to influence politics, but none of these activities would be impacted by campaign finance reform.  Not all of these activities are bad exactly.  I like the idea of the Sierra Club or the ACLU having the funds on hand to hire experts or lobbyists to influence politics.  I’m not sure that I even have an issue with FedEx testifying before Congress with regards to deregulation.  Businesses do have political interests and they should have the ability to act on those interests.  Campaign finance reform could limit contributions to candidates and could limit the amount of money that could be spent on ad campaigns, but probably could not limit the amount of money that is spent on lobbying, or limit the money spent on raising one’s political profile, or limit the access to power that comes from holding vast sums of money.

            Unless we as a society decide that corporations, including organizations like the NAACP or the UMWA, are not persons and do not have any liberty rights, they are always going to play a huge role in politics.  A role that may diminish the impact that regular citizens have on politics.  Even if we were to simply ban money being spent by business on politics, there is nothing stopping them from forming advocacy groups that would allowed to spend money on their behalf.  I write this out of a sense of depression because I do think that money in politics is an issue, but I just don’t see any viable solutions to fix this issue. 

Farm Subsidies

     With all of the talk about deficit reduction, trimming Federal spending, and the evils of socialism one would think that agricultural subsidies would be in the cross-hairs of Republicans and Democrats alike.  Economists are generally opposed to the practice because it distorts markets, inflates the price of land, overwhelmingly go towards agribusiness, and only goes towards certain crops like corn.  (I especially hate subsidies to corn because not only does it receive subsidies to grow; but there are also subsidies for ethanol AND the US government created an automatic market for ethanol by the passing of laws that mandated it's use in Federal vehicles.  All in all, very much an excellent example of a command economy.)
    As a quick aside, if you ever want to find out if someone is libertarian, talk about guns and farm subsidies, if they like the former and hate the latter they are libertarians.  100% accurate.
    Matt Yglesias has a post about Senator Roy Blunt supporting  agricultural subsidies but not food aid to the poor.  Pretty heartless right?  He's in favor of giving government money to businesses but not poor people?  I'm sure he, and any other supporter of the process, will argue that these are really just small time farmers, and the subsidies are necessary to make sure that we have food whenever we might need it.  The problem with this argument is that it's not what farm subsidies do.  Farm subsidies actually aid bigger businesses than they do smaller ones because of the increase in land prices.  There is something to be said about the history of food production and how it would go through a boom and bust cycle in the past, the solution to this is not to simply give out yearly subsidies.  It would be far better to have emergency funds on hand to purchase food on the international market than to simply give farmers money to grow a ton of crops regardless of whether or not the market is there to pay for all of them.  In addition, it makes more sense to subsidize the purchase of food rather than the production because that way people will always be able to buy said food, meaning there will always be a market for what the farmers produce. 
    Farm subsidies are one of those government programs that by and large is unpopular, but due to the nature of Congress we get stuck with them.  Congress is structured in such a way so that it tends to favor rural states more than urban ones.  In addition, Democrats and Republicans from these rural states are both largely in favor of agricultural subsidies because their constituents are.  It's a regional policy more than an ideological one.  What really bothers me about this whole affair is that we're likely to see large reductions in funding to a variety of government services that benefit the poor, the middle class, and urban populations; while seeing gratuitous amounts of money still being paid to unnecessary programs in the Department of Defense and to agribusiness.

Egypt. (Or Why I Would Punch Anderson Cooper in the Head Too.)

    I am sure that all of you out there on the internet are aware of what is going on in Egypt.  A couple of other bloggers have written pieces on this subject that I felt did a good job of explaining many of the issues and a particular point made by Jonathon Bernstein over at "A Plain Blog About Politics" made a good deal of sense over how the media chooses to portray the US's role in this issue.  He states:

American press and political reaction to things like this invariably overstate the American role in whatever is going on. The US of course does have a lot to do with Egypt, and it may or may not be true that American policy can influence events there, but US coverage in these situations almost always overestimates that potential influence. That's even more true about statements, as opposed to actions, by US government officials.

    The rest of his post is really good and I do suggest reading it but one thing I want to make a further point on is how we have treated Obama's handling of this situation.  This is one of those situations where being brutally honest on the matter would be disastrous, even though I think it's probably the best way of handling the situation.  The brutally honest answer is that Obama and his State Department probably think democracy is good and would genuinely like it if people everywhere were free to determine their governments but also have to be sang froid about the situation in that they want someone in power who will most likely aid their foreign goals. 

    Could a democratic Egypt achieve both of those things?  Yes, it could and I think everyone, no matter their political stripes would prefer a free and democratic Egypt that supported our political goals (or any nation for that matter) than a dictatorial Egypt that supported our political goals.  The problem is, there's no guarantee that if Egypt becomes a democracy it will support our foreign policy goals.  Obama and his team have to basically keep their options open and be ready to handle whatever comes out of this, and until something comes out of this, they should keep their cards close to the chest.  Ideally, while Robert Gibbs comes out and hews, hems, and haws; Hillary Clinton and the rest of the State Department are secretly working behind the scenes making connections with all potential winners of this power struggle in Egypt whether it's Mubarak, ElBaradei, the Muslim Brotherhood, or some sort of coalition.  In the meantime I think Obama should come out and say the same things he's been saying, all people yearn to be free and deserve to have their voices heard, violence should not be used, etc. etc.  Publicly announcing a cut in aid that goes to the Egyptian military might be a good symbolic gesture that I have not heard.  Some of these actions appear to already be happening as the Washington Post has reported that there is a shift in US government attitudes towards the Muslim Brotherhood. 

    The main thing I have been noticing with all the reporting I have read on the Egypt situation is the degree to which Republicans are going bat shit insane over this issue.  Whether for or against, and most of it is against the demonstrations.  There is constant comparison to the Iranian Uprising, that the Muslim Brotherhood is a terrorist organization that is the equivalent of Al-Qaeda, that people over there need a "firmer" hand.  One would think that they would be crowing with delight, constantly touting the correctness of the Bush Doctrine in that since Iraq has become a democracy, it's blooming everywhere in the Arab world.  Wasn't that the point?

Military Spending

    *I had written this for an internship and I just thought it was pretty solid so I thought I'd share it. I would include a link but you have to be a subscriber to The New Republic to read it all.  Though if you have access to it I'd suggest reading it.

            Gregg Easterbrook’s article within the November 10^th issue of The New Republic, “Waste Land,” is quite timely considering the current atmosphere of professed austerity.  With the coming plans from Republicans, Democrats, and various commissions detailing how best to tackle the gap between spending and revenues, it is useful that such an article detailing the exorbitant amount of money that goes into defense programs of questionable use was published.  Though it is the case that exorbitant spending on the military diverts funding that could go towards other programs, as well as diverts a great deal of taxpayer money towards programs of suspect merit, it raises an interesting question about cutting government programs during an economic downturn.

            When discussing where to cut back on government largesse, the programs that have received the most attention for curtailing seem to be social programs that are intended to help middle and lower class individuals.  Programs like unemployment insurance, libraries, spending on education, health, and other areas have been targeted for cuts.  Many have argued that cuts in these programs would actually worsen the economic situation without substantially helping the deficit.  Bearing that in mind, why not look to a bloated defense budget that has nine carrier strike forces where the rest of the world has none, where jets meant to fight Soviet fighters are still being developed?  A question that arises while reading this article is what kind of impact defense cuts might have on the economy.  Think about it for a moment: many of these programs are constructed and designed throughout the United States employing various workers from highly skilled engineers to less skilled laborers.  While it may be the case that an aeronautical engineer could get a comparable job in the private sector, it would likely be harder for the assembly line worker making an M1 tank to get a job making cars given the current economic situation.  Is that not the same argument that has been made with regards to other government employees in different fields?  Is military spending, in fact, the last refuge of Keynesian economics, though hardly called such by those who support it?

            Admittedly, Easterbrook does not discuss how such massive spending could be an example of Keynesian economic policy, in part because he himself may be opposed to such policies.  Easterbrook is largely against the wasting of tax-payer money and likely considers the notion that wasteful military spending may have a beneficial economic impact highly dubious.  Many of these programs make no military sense and the largest economic benefit is likely to be felt by the handful of companies, the contractors hired, and top military brass who go on to work for the latter two beneficiaries.  However, there are still people lower on the totem pole who do benefit from these programs.  These are the individual workers on an assembly line, construction workers building the various headquarters for the expanding national security bureaucracy, the staff that will be required to take care of these new facilities, and so on and so forth.  These people will, in turn, be paying for groceries, their rent, and nights out with their families and friends, all of which is supposed to increase demand and improve the economy, whether it is a janitor for a school or a janitor for a Northrop-Grumman plant.  The same argument used to support New Deal style work programs could be employed to defend this military spending, to an extent. 

A final critique of this article is the lack of blame to be cast at the feet of constituents.  Easterbrook doles out much of the blame to military brass, to the companies themselves, and to Congressmen who are always looking for a photo-op next to an F-35.  It is fair to say that a lion’s share of the blame should be shouldered by these groups, but constituents have a role to play in this problem as well.  An area in which this military money is spent has a vested interest in keeping the money coming as it directly benefits them.  Just as towns where bases are located heavily resist the removal of that base, so too will towns where new nuclear powered carriers are being built resist any threat to their funding being cut off.  Though many will decry the deficit and the bloated budget, they will not be as much in favor of it when their own economic well-being is at stake.  These individuals have a large interest in massive military spending alongside those who Easterbrook mentions.