On Tuesday, the president of these United States called for an end to the “rancorous argument over the proper size of the federal government,” so that he might move forward with his economic agenda uninhibited by “stale political arguments.” It was an interesting moment. The president’s childlike faith in his own ability to direct resources according to his own vision is almost touching in its way, though when the actual costs are accounted for it is terrifying. The president’s understanding of how the economy works is about as sophisticated as was my understanding of anatomy and nutrition at the age of four: Lean this way and we’ll strengthen the middle class, lean that way and we’ll nourish the working poor. He doesn’t even understand the debate that he wants to preempt: It is not only a question of the size of government but a question of what government does.
He only knows what he knows.
The questions we habitually ask —“Is the government spending too much? Is it spending enough?” — are without meaning in and of themselves. It matters what the government is spending on. Spending X percent of GDP to defeat Hitler is one thing, spending it to subsidize Solyndra is another. Government must always be recalibrated in light of current conditions: war or peace, boom or bust, expansion or decay. The debate about the size and scope of government can be “stale” only if you fail to understand that its relevance is constant and eternal.
It will never end, because there will always be those who want to expand it far beyond its abilities to exercise power over others.
The more it doesn’t work, the more they want to double down and do more of what isn’t working. It’s a positive feedback system. And, they never, ever learn from their mistakes. This debate should have been over after Reagan rescued us from the last era of populist delusion.
We lose institutional memory as people age and fall out of the electorate. But, honestly young folks out there: we’ve been here before. The parallels with the years of Carter’s malaise are perfectly nonorthogonal. You may think having more gadgets and social media makes your day in the Sun special, but the fundamentals really have not changed. Because they’re, you know, fundamental. Freedom begets prosperity. Envy and a fetish for control do the opposite. Vote accordingly.
Politicians can steer the economy.
Into the ground.
Anything more subtle, let alone anything positive, is well beyond their capacity.
(If they’d read their Austrians, especially Hayek, they’d know this, simply because it’s theoretically impossible for them to have the knowledge sufficient to “run” an economy.
But none of them know anything about economics; most of them don’t even know bad economics.)
“If they’d read their Austrians, especially Hayek, they’d know this, simply because it’s theoretically impossible for them to have the knowledge sufficient to “run” an economy.”
It’s a non-minimum phase control topology with non-colocated sensors and actuators. It cannot be stable except with a low bandwidth, sluggish response. You don’t even have to know Hayek. Standard control system theory for distributed parameter systems tells us this.
“Standard control system theory for distributed parameter systems tells us this.”
They are even less likely to know about control system theory than they are about Hayek.
Define “they”. The readers of this blog?
“Define “they”. ”
Is that an order?
“They” are the they in the post by Sigisvald:
“If they’d read their Austrians, especially Hayek, they’d know this, simply because it’s theoretically impossible for them to have the knowledge sufficient to “run” an economy.”
Which came from….
Politicians can steer the economy…………..
Pardon me, I should have said “please”.
I just assume readers of this blog might be at least tangentially familiar with control systems – it is a space blog, after all. As with all assumptions, I could be wrong.
Just in case there are those who want to understand better (I can see the intense interest percolating in these comments), a non-minimum phase system typically has large delays between the time a control signal is applied, and the time it responds to that signal. When you have a high bandwidth on such a system, you are reacting to information which has not yet been influenced by your last input. Before long, you are chasing your tail, trying blindly to correct deviations before you even know what they are, and the system goes off into the weeds.
Just so, a governing elite, remote from the day-to-day signals of the marketplace, cannot know the effect its previous interventions had until a long time after and, if it attempts to effect new directions before then, the economy will, at some point, go off into the weeds. That is why the only choices are a sluggish pace, or outright instability.
I don’t know your jargon. Is walking an example of stability or instability?
Also, if stability is needed, is a low bandwidth sluggish response unacceptable? A low bandwidth sluggish response sounds like what you get when you steer a boat (particularly a large boat), and that kind of steering can be acceptable if there is enough room to maneuver.
Walking is an example of conditional stability. It is unstable if your bandwidth is too low, which is why children learning to walk fall down.
“A low bandwidth sluggish response sounds like what you get when you steer a boat (particularly a large boat), and that kind of steering can be acceptable if there is enough room to maneuver.”
An apt analogy. Do you want a large boat (and, like most liberals, presume somehow that you will be at the helm, with the lesser passengers lovingly cared for in steerage) which takes months to get to its destination? Or, would you rather have many smaller speedboats which can get the same number of passengers there in a fraction of the time? Which option do you believe is better if the waters are known to contain icebergs?
Obviously, if you want to run, your bandwidth must be greater still.
We could molest and torture this metaphor. (You want to cross the North Atlantic in a motorboat? The Iranian navy likes speed boats, but the US Navy prefers large ships. And see http://www.transterrestrial.com/?p=53446#comments ) But I’m glad we agree that steering is feasible.
If there are icebergs I want a small boat that can maneuver, not a large one that can’t change course in time. See the Titanic.
Anyways, the US Navy is not the US economy. The US economy is (at least hopefully) lots of individuals making their own free choices about what to buy and sell. The “economy” is really just an emergent phenomenon consisting of those individual decisions, not really an entity in and of itself. The US Navy and the military in general is a top-down organization bringing lots of resources to bear to one at least conceptually limited purpose, the defeat of foreign enemies, and is not an organization consisting of free individuals, but soldiers following orders from the top.
If you think the US economy should resemble the military, then you don’t want free individuals. You’ll be wanting something more like the Soviet Union, whose economy resembled a large Navy ship, where everything was centrally planned and parceled out according to the central government’s control. No free individuals there.
Of course individuals are important, yada, yada, yada, but it amuses me that anyone wants to pursue the large boat metaphor. After the Titantic, people continued to cross iceberg-infested waters almost exclusively in large ships. Since the Titiantic, ships have almost always avoided icebergs, but not due to smaller and more responsive ships. Thinking about how icebergs are now avoided might even be relevant to the Fed’s intervention in the economy and other attempts to steer the economy!
Great. So you want to crawl along at a glacial pace, foregoing the more productive things you could be pursuing, and freeing the people in steerage to pursue their own productive endeavors. Fortunately, not everyone is content whiling away their lives on your ship.
Case in point.
The President proposes a “public option” for retirement savings. Kinda like George W. Bush and Soc Sec individual accounts. He asks Congress to “work with me”, and then he poisons the discussion with a complaint about how “rich people get a tax break on savings” but “the middle class does not” along with a general complaint about “tax breaks for rich people.”
Whatever the merits of increasing “tax rates on the wealthiest Americans” for whatever reason, this topic is the man’s Great White Whale. The tax rates are not an end in themselves but they are a “paste board mask” disguising the malevolent and malicious forces (cough, Grover Norquist — who is pro immigration amnesty last time I checked — the President could advance his political agenda if he understood Triangulation 101).
Maybe, just maybe, tax rates, especially on “the wealthier Americans” need to go up. Maybe the government needs to do more things to help persons in need. But that middle class taxpayers are not getting support in the tax system is just plain wrong, wrong, and I did I say wrong. There is the means-tested Roth IRA. There is the means-tested deductibility (tax deferred principle) of the Traditional IRA. There is the zero-coupon, interest tax-deferred, inflation-indexed Series I Savings Bond. There is the SEP plan for the self-employed. There is the general lowering of income tax rates from the Bush Tax Cuts that President Obama signed into law making permanent.
And suppose the President wants Congress to “work with” him? So he repeats the same old, same old scolds and nags about “tax breaks for the rich”?