The Center of the Universe

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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Armo trader post

Posted by WARREN MOSLER on February 22nd, 2012

Interview link here

12 Responses to “Armo trader post”

  1. Monica Smith Says:

    Talking about money is great, if only because money is the measuring stick by which we assess our trade and exchange. However, the Armo Trader’s conclusion that the solution to our misunderstandings about how the economy works is to get money out of politics is wrong, IMHO.
    A few people using lots of money to create misperceptions and spread lies about candidates for public office is bad. Candidates letting themselves be bought and misrepresented by people, who have lots of money to spend on mischief, is also bad. But, in neither case is restricting other people from spending money to spread the truth the answer. Spreading truth is even more expensive than spreading lies because lies are often consistent with already established prejudice. And prejudice is really hard to erase, if only because the brain prefers confirmation to news.

    If we are to have better candidates for public office, people who can’t easily promote themselves by spreading lies, then their access to money should probably be restricted. That can be done by limiting them to accepting donations from individual citizens who are also qualified to vote for them. People spending the money they’ve amassed spreading lies about themselves can’t be avoided, but getting them to spend it is not all bad.

    If candidates for public office are to be regulated, then that’s to whom the regulations should be applied. And if legislators aren’t willing to legislate to regulate themselves, then they ought not be hired to legislate. Right?
    Just as it makes no sense to pass laws that regulate doctors, when it’s the behavior of randy men that needs to be countered, and it makes no sense to regulate teachers when students don’t learn, laws that regulate voters when politicians are flawed are clearly designed to fail.
    That scofflaw lawmakers pass laws at which they can scoff should not come as a surprise, but it can be stopped.
    Lawmakers are elected to provide for the general welfare, not deprive people of their rights and tout austerity as a boon.

    Reply

    Save America Reply:

    @Monica Smith, The corruption is beyond comment at this point. http://www.republicreport.org Even Bill Black turns red in the face these days of all the fraud and no high profile exec perp walks taking place anywhere. You Monica have the same problem as everyone else, thinking we can fix this patchwork of a mess of government with bandaids, when what is required is an entire government reset. Why try to patchwork this old jalopy of a government when we can have a brand spanking new MT 900 modern designed government that works better?

    http://www.fcpp.org/publication.php/1134

    We Need 250 States
    Arnold Kling
    “It is always costly to ensure that agents [government officials] act on behalf of the citizens and that they do not use their power to extract rents from their constituents…

    The costs of monitoring agents increase not only with the geographic size of the collective but also with the number of people in the collective. This is because in a larger collective each member captures a smaller share of the rents created by collective enforcement and therefore has less incentive to monitor the agent…With the stake in the collective inversely related to group size, we can expect less monitoring and more rent seeking and rent extraction as group size increases.” — Terry L. Anderson and Peter J. Hill, The not so Wild, Wild West, p. 30

    Terry Anderson and Peter Hill make an argument that suggests that democracy does not scale well. As the size of the constituency group gets large, the politician becomes less accountable. Politicians find it easier to extract rents and abuse powers.

    The end-of-session legislative victories for President Bush and the GOP illustrate the problem. CAFTA passed, but with large concessions to special interests that threaten to undermine the trade benefits. The energy bill was an exercise in pork, as was the transportation bill. To anyone outside of the political/lobbyist complex, it was an all-too-typically dismal legislative performance.

    Lack of accountability is one political characteristic that is clearly bipartisan. For example, take my government in Montgomery County, Maryland, which has been controlled by Democrats for decades. The nine-member County Council answers only to special-interest constituencies, primarily public sector unions. I see little hope of changing that. My county is a poster child for what Steven Malanga described as The Real Engine of Blue America.
    “What makes these cities so Blue is a multifaceted liberal coalition that ranges from old-style industrial unionists and culturally liberal intellectuals, journalists, and entertainers to tort lawyers, feminists, and even politically correct financiers. But within this coalition, one group stands out as increasingly powerful and not quite in step with the old politics of the Left: those who benefit from an expanding government, including public-sector employees, workers at organizations that survive off government money, and those who receive government benefits. In cities, especially, this group has seized power from the taxpayers, as the vast expansion of the public sector that has taken place since the beginning of the War on Poverty has finally reached a tipping point.”
    Thanks to these interest groups, we enjoy a high bureaucrat-to-student ratio in our schools, a “living wage” law to protect public-sector workers, and anti-Walmart zoning to protect other union members. The County Council even wants to provide public workers with imported low-cost pharmaceuticals from Canada, notwithstanding the fact that one of the most important private-sector industries in the County is biotech research.

    I would like a government that is modest in its exercise of power, and in which special interests are not excessively powerful. Instead, at all levels of government, I see the opposite. What can be done?

    I think that Anderson and Hill offer a clue. The sheer size of modern electoral constituencies makes politics a matter of financial muscle and mass marketing. Only with smaller electoral constituencies would the incentive structure change to reduce the arrogance and rent-seeking of elected officials and powerful interest groups.

    We Need 250 States

    In 1790, the largest state in the union, Virginia, had a population of under 700,000. Today, Montgomery County has a population of over 900,000. Our nine-member County Council answers to about the same number of registered voters as the entire House of Representatives of the United States at the time of the founding of the Republic.

    We cannot have an accountable democracy with such large political units. We need to break the political entities in the United States down to a manageable size.

    Instead of the present 50 states, the largest of which have more than 30 million people each, we should break the country into 250 states, with 1.2 million people each. Some rural states would increase in geographic area. At the other end of the population density scale, the largest metropolitan areas would be divided into multiple states.

    Each of the 250 states should have two Representatives and one Senator. However, the Representatives and Senators should not be elected directly by the people. The Constitution originally called for Senators to be elected by state legislatures. We should go back to that, and, because of the growth in the population at large, we should adopt such a system for Representatives, also. Representatives and Senators should be elected by state legislatures, so that the accountability of Congressional legislators is not diluted. The state legislators who elect Representatives and Senators will have an incentive to monitor them.

    Each of the 250 states should be divided into 400 towns of 3,000 people each. Overall, there will be 100,000 such towns in the United States. Each town should elect a town council of 5 people, as well as one representative to the state legislature.

    Limits to Arrogance

    In a town of 3,000 people, there is not much scope for political arrogance. You cannot redistribute resources to one group while muting political opposition from others.

    Even at a state level, with 1.2 million people, it will be much harder for a small interest group to extract rents without having a noticeable impact on others. Moreover, with each town represented in the legislature, towns will be wary of giving benefits that are enjoyed primarily by small subsets of towns.

    Town councils will handle zoning issues, schools, parking enforcement, and public safety. Councils may find it helpful to negotiate with neighboring councils in order to resolve common issues and share resources.

    States will handle courts, roads, water, and other public infrastructure. In densely-populated areas, some states may have to negotiate with one another to do this effectively.

    My conjecture is that small state and local government units will tend to use private contractors to supply services. Perhaps a regime of vigorous competitive bidding would evolve, and suppliers that failed to perform might be dropped. How different that would be for most government services, where incompetent workers are almost impossible to fire.

    At the Federal level, incumbency and name recognition will not be nearly as helpful in election campaigns. Congressional seats should be more competitive. Pork barrel politics may be less effective, because it may be easier for state legislators (who elect Congresspersons in this scheme) to punish excessive spenders.

    Thought Experiment

    There are two components to this reform proposal. One component is to reduce the size of the local units of government. My thinking is that this would increase the power of ordinary voters and reduce the power of special interests.

    The other idea is to “layer” the electoral process for Congressmen and Senators. The problem with direct democracy is that each legislator represents too many voters, so that accountability does not take place. Instead, I am proposing that we “elect the electors.” That is, we would vote for state legislators, who in turn would vote for Congressmen and Senators. The number of state legislators would be sufficiently small that mass-market, money-driven politics would be less important. Direct persuasion would be more important.

    I believe that at all levels of government, both the use and abuse of power would be lessened. The private sector would enjoy greater freedom.

    Reply

    Clonal Antibody Reply:

    @Save America,

    The problem with the 250 state idea is the fact that most states today are anchored by one or two very large metropolitan areas. How are these metropolitan areas going to be divided into states?

    Reply

    Monica Smith Reply:

    @Save America, Some people are abusers. The size of the arena in which they are allowed to operate makes no difference because the abuser will exploit whatever venue s/he encounters.
    Why do people abuse? I expect it’s because they are deficient and do not know how to transform and use resources to their benefit with destroying them. Their ability to survive depends on being able to cajole or coerce sustenance from someone else.
    Unfortunately, in some people, all instincts turn into obsessions. And when that happens, whether the object is power or drugs, there has to be an intervention. So, when authority stands silent in the face of abuse, it becomes complicit. If we are honest we call it corrupt.
    However, most of what Wall Street did with our currency was entirely legal. So, if the citizens have suffered abuse, it’s because the legislators were/are corrupt. What we’ve got on Capitol Hill, and to a lesser extent in the 50 states, is scofflaws who legislate for just one purpose–to secure their position as petty potentates. The notion of being public servants simply doesn’t sit well with them. Which is why they issue edicts they don’t expect to be obeyed and dole out tax cuts they expect to be repaid in ballots.
    The money is not at fault. The money tells us which ones are corrupt.

    Reply

  2. Chewitup Says:

    Warren,
    His comments on Buddy Roemer mirror your situation re: running for high office. How do we get big money out of politics? Especially. When 95% of our elected representatives are bought and paid for by Big Money. (Maybe Breibart needs a new “Big Money” section on his website).

    Reply

    Save America Reply:

    @Chewitup, Our current government is an old horse and carriage buggy, and the buggy whip makers have bought off the driver, and mosler comes along with this MT900 that can work a lot better than the horse and carriage, but the CITIZENS that need to change the status quo aren’t even aware of the BIG PICTURE problems. They are still lost down in groupthink that if they just send someone like Warren to a senate seat, stuff can get fixed. They still haven’t ascended to the FOREST level of thinking and realized the way the entire government is currently structured may have worked 100 years ago, but doesn’t work for 350 million citizens today. Why are we on this hold horse and carriage government that is rotten to the core? I want my MT900 government, its 2012 already, why can’t more people say its time to dissolve DC in its current form and replace it with something better like arnold kling talks about above? The people get the government they deserve. Sorry folks, sending warren to DC will not change the core problems, and anyone here who really believes that doesn’t have a good grasp of the big picture.

    Reply

    chewitup Reply:

    @Save America,
    A good start may be term limits to get rid of career glad handing politicians. Guys like Warren and Buddy Roemer or Trump or any other person of accomplishment who my wish to serve the public for a short time could meet and debate real public purpose. People that know what real productivity and real investment are all about.
    (MT900 government will never happen, but good solid dependable Ford 150 pickup government would suffice, rather than the ridiculous Chevy Volt crony government we have now.)

    Reply

    Save America Reply:

    @chewitup, “MT900 government will never happen”

    Scene fades to 1700′s era british nobleman looking over at his butler in Central London:

    Can you believe those silly colonists, thinking they can exist without the protection of the King and his Empire. My lands gifted to me by the crown in Georgia will always be in our family, silly colonists, you can’t change the status quo.

    Butler pours him another glass of fine scottish glencoe liqour….

    Then scene fades to Muslim Woman right before the Arab Spring:

    Silly daughter, it is not allah’s will for our kings to be overthrown and ousted from power, it can never happen, shut up and go do your chores….

    Daughter texts her friends on facebook how out of touch momma is and goes and joins the revolution….

    History proves you wrong many times chewitup…

    WARREN MOSLER Reply:

    a good start might be along the lines of my proposal that there are no limits on contributions but 40% of every contribution goes to the opposition.

    Reply

    chewitup Reply:

    @WARREN MOSLER,
    That seems to already happen with Goldman etal. They play both sides expertly.

    Reply

    WARREN MOSLER Reply:

    except it’s currently voluntary. making it compulsory makes all the difference

    Monica Smith Reply:

    @WARREN MOSLER, Regulations should focus on the recipients or extractors, rather than the donors. What corporation is going to make gifts that aren’t extorted? Indeed, when one considers the size of the donations relative to the funds on hand, it’s clear that they’re mere tokens of fealty–a promise that the votes will follow, or be detained. Which ever the polls suggest.
    The rich boys who get suckered into buying a lame race horse are another matter.
    But, politics is a service industry that keep the economy ticking right along. It’s non-fattening, usually not lethal and entertaining, to boot. What more do you want?
    Competent legislators? Then you’re going to have to reform the initial selection process. To my way of thinking, it’s the political parties that have fallen down on the job. And it’s not because the organizational infrastructure is not in place. Mostly it’s because incumbents have been allowed to dominate the parties on the national and state levels.

    Reply

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