We Keep Warning You

August 23, 2013

I’ve got to admit that when I saw cigarettes at $5.62/pack in Indiana, I was tempted to start smuggling and pay for some of the gas I was using on vacation. And I am pretty darned sure that a lot of Chicago smokers have noticed this as well. The price difference for a carton of cancer sticks pays for half a tank of gas. Do the math.

Emery

August 23, 2013

In the US these days you see very few college students or graduates under 40 smoking. Smoking has become anti-aspirational; only the poor and the old smoke. That’s a tremendous switch from 30-40 years ago. When a character smokes in a movie these days it’s signalling that he’s weak and a loser, is poor and uneducated, or is a Nihilist headed for an early death. Smoking is just not cool anymore. The combination of intensive anti-tobacco education for 9-12 year olds and restrictions on tobacco advertising and marketing have had profound long-term effects. I fully expect the US numbers to fall further as the older generation of smokers wheezes their final gasps. Smokers are treated as addicts who smell bad these days, i.e. with a mixture of sympathy and contempt. Some Asians I have known (Japanese, Korean, Taiwanese) have told me that they and their peers started smoking as part of an aspirational effort to be more American (jeans, cigarettes, Rock and Roll). Then they came to America and were surprised to find that Americans didn’t smoke anymore.

It took decades of efforts for the US to bring about this change, but with the benefit of looking at American and other countries’ successful programs, I think developing countries could have success much quicker. It would be so nice to see rising economic powers avoid America’s path where for the better part of a century cigarettes were an aspirational product, first for men then women, but all I can see is country after country allowing tobacco companies to repeat the American experience.

Powhatan Mingo

August 23, 2013

There are no requirements for a legislature or its members to act rationally. Politics has no teleology.

Emery

August 23, 2013

I’m very tolerant of people’s attitudes, in general, and I will fight the good libertarian fight for those who wish to do stupid things that hurt themselves, because we should all be free to be stupid.

walter hanson

August 24, 2013

This comes from the group that think we’re not damaging the state economy with the warehouse tax or the tax increase on the rich.

Also wasn’t this signed by the governor who thought that electronic pull tabs will pay for the stadium. He diverted the funds from this so called tax increase to pay for the stadium. Now he’s 0 for 2 for looking for a reliable funding source for the stadium.

Walter Hanson
Minneapolis, MN

Powhatan Mingo

August 24, 2013

This comes from the group that think we’re not damaging the state economy with the warehouse tax or the tax increase on the rich.

Profit=Revenue-Cost. In liberal la-la land you can increase cost w/o affecting Profit. Part of their war on economics. And business. And the American people.

Emery

August 24, 2013

The problem is only simple if it only has to be solved to satisfy 1 person and not 300 million Americans. The questions that need to be answered are fundamental, and they are the questions that we have been avoiding for 30-50 years (depending on who’s counting) by raising spending without raising taxes, relying on bursts of wealth creation when we can and debt when we can’t.

The questions that need to be answered are:
1. How large should the federal government be?
2. How large an economic transfer should be made from working people to the elderly? Is the government acting simply to reduce poverty, or to accomplish some other objective through universal entitlements?
3. How much should individuals be forced to share in the cost of health care for others? How much should an individual have to pay before the government helps pay their health care bills?
4. What are the things that the federal government does that it doesn’t really need to do? Which programs, subsidies and tax breaks can be eliminated?
5. Should the United States continue to play the role of global hegemon? Are we prepared to accept the alternative?

Come to a consensus on those 5 issues, and balancing the budget is a matter of simple math. But that’s the problem, of course. There is a wide disagreement on many of these issues amongst 300 million Americans. My solution is to pare back the federal government to a minimum, and let each state try to find a consensus, but there are plenty who would disagree with that too.

J. Ewing

August 24, 2013

You have two problems underlying the 5 questions. First, there is the problem that somebody discovered taxes can be a means of altering behavior, rather than simply generating the revenue required to fund the necessary and desirable functions of government. Second, since there is no end to the amount of good that can be done with somebody else’s money, liberals in government will never stop taxing anything that moves. Or doesn’t.

Emery

August 24, 2013

We are running an unsustainable deficit: Rank in order your preferences for solving this problem.
a) raise taxes
b) reduce pensions for the elderly and disabled
c) reduce spending on healthcare for the elderly
d) reduce spending on healthcare and food for the poor
d) reduce defense spending
e) reduce agricultural and industrial subsidies
f) reduce spending on public education
g) reduce spending on the unemployed
Now that would produce some interesting results, especially if broken down by party affiliation, age, or income. People always choose to reduce spending when its a general concept, but when asked to rank priorities, how many program cuts rank above raising taxes? I think the public would rank d and e very high, and perhaps g, but it would be interesting to see how many people would cut back on spending on old folks and health care before raising taxes. I bet you nobody would rank cutting education high, yet that is what most state governments are doing now.

Powhatan Mingo

August 24, 2013

d(2),e,f.
In that order.

Chuck

August 25, 2013

Emory,
The Univ of Minnesota just spent $3700 on an orgasm conference.

Moorehead State just spent $10,000 bringing domestic terrorist Billy Ayres to speak on their campus.

State of Minnesota just spend an additonal $8,000,000 to bring in an out-of-state construction firm, after a Minnesota company gave the best bid and meet the highest requirments, to build an approach to the St Croix bridge, because the out of state firm said they will bring in more people from other states with darker hues to their skin

KSTP reports the huge large some of money on Minnesota EBT cars are being spent in Chicago liquor stores.

The 1,600,000,000, Southwest light rail corridor is to include stations with showers, among many other strange luxuries.

Minnesota just paid a lady $10,000 to put up a door in her backyard as part of the arts funding.

So, you say we should cut policemen first when it comes to gov’t spending?

TheFedSucks

August 25, 2013

@Emery #1. The Fed shouldn’t “help” the economy. All this does is make bad judgment permeate the public and private sector. #2. Government should not provide non-public goods.

This is how we get the most aggregate “social justice” and prosperity.

J. Ewing

August 25, 2013

To mis-paraphrase Keith Ellison, Government already has plenty of money, they just need to spend it with a little intelligence. Reform Medicare and Medicaid (including eliminating Obamacare) and you will have more people insured, and receiving better care, at something like 1/2 the cost of the current system. Reform Social Security and you will have more people retiring earlier with more money in their stash, AND the economy will grow faster. Reform education and you can do a better job for about 20% less than what is being spent today. Reform welfare and you can cut the rolls and expense by at least 2/3. Change unemployment to a work program and you can reduce the expenditures by roughly 1/3 with negligible adverse impact. Anything else?

walter hanson

August 25, 2013

Chuck:

Here are the problems with spending:

Every two weeks I struggle to get enough gas in the car while I pay my bills because I have to carefully spend my money.

I haven’t had a real vacation in years because I have to carefully spend my money.

I don’t have a whole bunch of people saying hey that will be a great idea to spend money when it isn’t.

In short they don’t care because it’s not really their money that they’re spending.

Walter Hanson
Minneapolis, MN

Emery

August 25, 2013

@TheFedSucks
Driving long term rates lower is a supply side solution to a demand problem. The Fed has done what it can. At this point all it can do is to state that it intends to keep rates low until demand improves and unemployment decreases. Only Congress can (try to) directly create demand.

Emery

August 25, 2013

@J. Ewing
The smart way to be addressing the debt today is to be looking at long term reform of the entitlements to the elderly that are the long term threats to budget balancing. Making a major change in either pensions or health care is likely to involve immediate additional expenses (buying somebody off) followed by long term savings. This would be the perfect time, for instance to implement universal (but rationed) healthcare to replace Medicare and Medicaid or individual retirement accounts to replace Social Security. The expensive transition would be expansionary and stimulative now, when we need it, but would be a big step towards solving long term budget issues, which would build confidence more than any short term hair shirt austerity program that the current debt ceiling theater is likely to produce.

Powhatan Mingo

August 25, 2013

J.Ewing-
It is important to differentiate between state spending and federal spending. States have to be responsible. Feds do not.
Every reform you mention will be fought by the interests that are making money off of the current system. When the feds can borrow money at near 0 percent, there is no discipline. There is no a choice between guns and butter, not now. You can have both.

Emery

August 25, 2013

I agree. States have to act rationally as they are required to have balanced budgets. I am a big fan of block grants to the states for both Medicare and Medicaid, with substantial liberty to allow states to reign in costs (or raise taxes) as they choose. I’m not convinced that there is a readily adoptable model out there suitable for Americans, and the 50 states have always been laboratory for the best of our social programs. The political difficulties experienced by Obamacare are much lessened when each state can choose its own way (Massachusetts can nationalize medicine, Texas can send everyone a check and tell them to take care of themselves, and the other 48 will try something in between). The US is too big, and opinion is too diverse, for one solution to fit all. Note that in Canada, health care is a provincial responsibility, with the feds paying about half in a redistributionist manner.

kel

August 25, 2013

Emery squeaked: “The smart way to be addressing the debt today is to be looking at long term reform of the entitlements to the elderly that are the long term threats to budget balancing. “

You might want to rethink your enthusiasm for kicking old people to the curb.
If as you claim you are about age 50, your life expectancy at this point is somewhere between 87 & 89 years which means if you want to live a lifestyle that is a modest 50% ( the majority of retirees are looking at 150% of poverty level) of your current lifestyle you WILL need to have a (real) current net worth of at least $8.79 million. If you have that bully for you! If not you should rethink your willingness to strip other people of means because your personality doesn’t lend itself well to begging.

If you really want to address the problem, instead of picking on the old the halt and lame, you could look at reigning in a govt that spends 40 cents of every dollar of revenue paying the interest on the national debt. At $1T+ per year of additional debt that’ll be $.50/per dollar of revenue in no time and cutting off Medicare completely will have only a trivial effect on that revenue to payments curve. The real entitlement problem is the money-lenders.

Emery

August 25, 2013

You can’t reform Medicare because to do so is an attach on seniors, which they will fight. You can’t means test Medicare because middle class seniors (the ones who vote the most) know that they will be paying more. But if you offer Medicare to all, reform is absolutely essential, and it will be harder for the seniors to argue about means testing when the young are paying 80% of the premiums and the old are taking 80% of the services.

So if you are a conservative, you start by offering Medicare to all. You make the annual dues for young people astronomical for the full plan, so you offer them cheaper versions of Medicare which are not fee-for-service, or high deductible and co-pay, and/or run through private insurers. Then you tell the seniors that they have to move to the cheaper versions of Medicare if they want to avoid fees, fees which are means tested. This will take a decade or more, but if we don’t pursue a path like this, the politics become impossible.
The takeaway lesson is that you can’t privatize or otherwise reform Medicare unless you make it universal, first.

Powhatan Mingo

August 25, 2013

Emery, block grants are fine as long as it redistributes money from state to state. When the fed distributes grants to states based on its ability to print money, you get into trouble, fast. The federal government will begin to believe that it has legitimate interests that are separate from the 50 states and cannot be found in the constitution — it might even go so far as to believe that federal government, not the states or the school district, is responsible for the educational outcomes of citizens, or that it is the federal government’s job to make sure that men over fifty get a colonoscopy every decade.
I know, it seems like I’m off in fantasy, land, doesn’t it?
Imagine! The distant, federal government, the least democratically directed of our levels of government, deciding what should appear in your school district’s textbooks, how many schooldays there should be in each year, or how often you should have a physical exam! It would be lunacy!

Emery

August 25, 2013

Kel, Health care is such a big driver of the long-term deficit problem that it is fair to say that with health care fixed, the rest is easy, and without health care fixed, the problem is impossible.

Re: “The real entitlement problem is the money-lenders.”
I presume you’re referring to bailouts.
Keynesians like Paul Krugman wish us to spend more, drive up debt, and then inflate it away. This taxes debt and property holders at the expense of the over-borrowed. The alternative is to allow the over-borrowed to declare bankruptcy, and write off bad debts, at the expense of bank shareholders (or the government if you’re Ireland). The Keynesians argue that theirs is the better alternative because the greater liquidity generated will jumpstart the economy. In a purely macroeconomic sense, I’m sure that’s what the models say, but it continues the cycles of the last 30 years, where whenever the stock market plunges, shareholders are bailed out, whenever counter parties are threatened, banks are bailed out, etc. It is time to draw a line in the sand. If you borrow too much and you lose your gamble (whatever it may be), then you lose. The problem of one-sided bets extends well beyond financiers. We have to start allowing gamblers to lose when it is their time to lose, or there will only be more gamblers at the table whenever the next game starts. So balance the budget, and let people go bust. There will be pain either way, but we just might solve some underlying problems if we broke the cycle of bailouts.

TheFedSucks

Comments

52 responses to “We Keep Warning You”

Leave a Reply