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Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?


To: geode00 who wrote (177190)12/6/2005 12:03:53 AM
From: SiouxPal  Read Replies (1) | Respond to of 281500
 
You are the Poet Laureate of Silicon Investor.



To: geode00 who wrote (177190)12/6/2005 12:22:08 AM
From: mistermj  Read Replies (4) | Respond to of 281500
 
You just assume that a budget surplus is a good thing. Its more nuanced than that.
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The Need for a Budget Deficit

.
The following article, We Need a Bigger Budget "Deficit" was written by the Nobel Laureate William Vickrey** and published August 6, 1993:
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We are not going to get out of the economic doldrums as long as we continue to be obsessed with the unreasoned ideological goal of reducing the so-called deficit.
The So-Called Budget "Deficit"

The "deficit" is not an economic sin but an economic necessity. Its most important function is to be the means whereby purchasing power not spent on consumption, nor recycled into income by the private creation of net capital, is recycled into purchasing power by government borrowing and spending. Purchasing power not so recycled becomes non-purchase, non-sales, non-production, and unemployment.

A Private Capital Approach to Full Employment

We have not had a satisfactory approach to full employment, except in wartime, since 1926. Over much of this century trends in the ratio of profitable private capital to national product have been downward, as a result of capital saving innovation such as fiber optics, the trend to light industry away from steel mills and other heavy industry, and the increasing importance of services. Prospects are that for the foreseeable future the capacity of private industry to find profitable use for private capital will be not much greater than two years of gross domestic product.

On the other hand aspirations of individuals to acquire assets to provide for retirement and other purposes have been growing, due to longer life expectancy, higher retirement aspiration levels, the loosening of family ties, the development of expensive medical technologies, and other factors. Current aspirations appear to be moving towards three years or more of gross domestic product. This leaves a gap to be filled by government debt of about one year of gross domestic product.

Government Debt to Fill the Gap the Private Sector Cannot Fill

If we aspire to a satisfactory level of full employment by 1998, whereby anyone not too finicky about the type of work could find a job at a living wage within 48 hours, this will, if we assume inflation to average about 3%, call for a gross domestic product of about 10 trillion dollars. To fill the gap between the asset aspirations of individuals at this level of income and the ability of the private sector to provide assets, the supply of government securities would have to rise to 10 trillion dollars, implying a level of income recycling by governments of about one trillion a year on the average over the next five years.

Paying for the Debt that Fills the Gap

Once this level is reached, to continue in equilibrium the supply of government securities will need to grow pari passu with the gross domestic product, to correspond to the gap between the demand of the population for assets and the provision of assets by the private sector. Whatever interest charges on the debt are not financed out of this growth in the debt can more than be met out of savings in unemployment insurance payments, and the increased tax revenues derived from the larger national product at rates no greater than at present. A 10 trillion debt with a full employment economy will be far easier to deal with than a 5 trillion debt with an economy in the doldrums.

What if the Gap is Not Filled?

If governments fail to fill the gap and meet the demand for assets by issuing an adequate volume of securities, the attempt by individuals to acquire assets by non-spending will cause a reduction in sales, temporary investment in excess inventories, cutbacks in orders, unemployment, and reduced national income and product. This may be partially offset by the bidding up of asset values, leading to a certain amount of additional spending out of capital gains, but the "saving" imbedded in these capital gains does not involve the creation of new capital or the employment of individuals in construction.

The reduction in interest rates could in principle increase "deepening" types of investment in labor-saving technology, but after the initial stimulus the effect on employment tends to be negative. Little "widening" investment is likely to take place regardless of reduced interest rates if the market for the product is not there. There is a serious danger that the bidding up of asset prices could create a bubble of unsustainable values that is likely to collapse disastrously, as occurred in 1929 after the budget surpluses of the preceding years. Sooner or later a reduction in production and national income will set in until the reduction in income reduces the demand for assets to conform to the supply.

Tangible Real Effects

Reducing the "deficit" may reduce the debt of the government, but it also reduces the supply of assets people want to acquire to take care of their security needs. Reducing the "deficit" does not improve the real heritage left for the future, rather it impairs that heritage by leaving a legacy of inexperienced workers, impaired infrastructure, and reduced investment in plants because of reduced demand for the products, to say nothing of the impact of unemployment on health, delinquency, crime, and broken homes.

The "deficit" is not even calculated on a businesslike basis. It makes no distinction between current account and capital account items. If GM, AT&T, and the nation's households had been compelled to "balance their budget" calculated in the way the federal budget is calculated, we would now have many fewer automobiles, telephones, and houses.

Individual Saving (Absent Strong Demand) is Counterproductive

Urging individuals to save more is counterproductive. Individual saving does not mean that funds are created out of thin air to put into savings accounts or the capital market; for most individuals savings is non-spending which becomes the non-income and reduced savings of the vendor. Funds are transferred from the bank account of the vendor to the account of the saver, there is no increase in total money in the bank, and no facilitation of investment, while reduced market demand will actually discourage investment. Savings are neither a prerequisite nor an inducement for investment. Rather, non-spending by reducing market demand lowers incentives to invest.

Profitable Investment and Saving

On the other hand if a businessman can show good prospects for profitable investment he can nearly always get credit and proceed with the investment, which will constitute an increase in someone's wealth which is ipso facto savings. Supply does not create its own demand as soon as some of the income generated is saved, but investment does create its own savings, and more.

Inflation and Full Employment

Eventually, in all likelihood, we will have to find some way of dealing with the threat of an unacceptably high rate of inflation that does not involve the maintenance of what Marxists used to call "the reserve army of the unemployed." For the moment, however, that threat seems sufficiently remote that we could proceed with the first steps towards full employment and deal with that bridge when we come to it. There has been no dearth of plans for controlling inflation in ways that preserve the essence of free markets.

We Have the Resources but Don't Use Them

The administration is trying to bring the Titanic into harbor with a canoe paddle, while Congress is arguing over whether to use an oar or a paddle, and the Perot's and budget balancers seem eager to lash the helm hard-a-starboard towards the iceberg. Some of the argument seems to be over which foot is the better one to shoot ourselves in. We have the resources in terms of idle manpower and idle plants to do so much, while the preachers of austerity, most of whom are in little danger of themselves suffering any serious consequences, keep telling us to tighten our belts and refrain from using the resources that lie idle all around us.

Alexander Hamilton and William Jennings Bryan

Alexander Hamilton once wrote "A national debt, if it be not excessive, would be for us a national treasure." William Jennings Bryan used to declaim, "You shall not crucify mankind upon a cross of gold." Today's cross is not made of gold, but is concocted of a web of obfuscatory financial rectitude from which human values have been expunged.
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**William Vickrey, one of America's most respected economists, received the Nobel Prize for economics in 1996. Sadly he died of a heart attack at the age of 82, just 3 days after the announcement.

wfhummel.cnchost.com



To: geode00 who wrote (177190)12/6/2005 12:42:31 AM
From: stockman_scott  Read Replies (2) | Respond to of 281500
 
Ten ways to argue about the war

salon.com

How to talk back to die-hard war supporters.

By Michael Schwartz

Dec. 06, 2005 | I often receive e-mails -- pro and con -- about my postings on the war in Iraq, and I try to respond to any substantive questions or critiques offered. But when I received an e-mail titled "10 Questions," in response to a TomDispatch commentary detailing the arguments for immediate withdrawal, I must admit my heart sank -- the questions were familiar, but the answers were complex and I was in no mood to spend the time needed to respond properly.

After a couple of days, however, I began to warm to the idea of writing short but pointed responses to these common criticisms of antiwar positions because, I realized, they are the bread and butter of daily Iraq discourse in our country. When the war comes up in the media or in casual conversation, these are the issues raised by those who think we have to "stay the course" -- and among those who oppose the war, these are the lurking, unspoken questions that haunt our discussions. So here are my best brief answers to these key issues in the crucial, ongoing debate over Iraq.

"I read your article on withdrawal of American troops," my correspondent began, "and questioned the lack of discussion of the following..." (His comments are in bold.)

1. Nothing was mentioned about improvements in Iraq (elections, water and energy, schools). No Saddam to fear! Water and energy delivery as well as schools are worse off than before the U.S. invasion. Ditto for the state of hospitals (and medical supplies), highways and oil production. Elections are a positive change, but the elected government does not have more than a semblance of actual sovereignty, and therefore the Iraqi people have no power to make real choices about their future. One critical example: The Shiite/Kurdish political coalition now in power ran on a platform whose primary promise was that, if elected, they would set and enforce a timetable for American withdrawal. As soon as they took power, they reneged on this promise (apparently under pressure from the United States). They have also proved quite incapable of fulfilling their other campaign promises about restoring services and rebuilding the country; and for that reason (as well as others), their constituents (primarily the Shiites) are becoming ever more disillusioned. In the most recent polls, Shiite Iraqis now are about 70 percent in favor of U.S. withdrawal.

2. Nothing was mentioned about Iraqis who want the U.S. to remain (especially the Kurds and the majority of Iraqi women). Among the three principal ethno-religious groups in Iraq, the Sunnis (about a fifth of the population) are almost unanimous in their opposition to the American presence, while around 70 percent of the Shiites (themselves about 60 percent of the population) want the United States to withdraw. Hence, even before we consider the Kurds, the majority of Iraqis are in favor of a full-scale American departure "as soon as possible." It is true that the Kurds (about 20 percent of the population) favor the United States remaining. However, they have their own militias, and many of them do not want significant numbers of American troops in their territory. (The U.S. presence there is small scale at the moment.) What they desire is a U.S. occupation for someone else, not themselves. I think we can safely say that the vast majority of Iraqis oppose the presence of U.S. troops.

I know of no study indicating that Iraqi women favor the U.S. presence. Perhaps you are referring to the fact that large numbers of women in Iraq are upset and angry over the erosion of their rights since the fall of Saddam. I know some commentators claim that the U.S. presence is insurance against further erosion of those rights, but everything I have read indicates that a significant number of Iraqi women (like all other Iraqis) blame the Bush administration for these policies. After all, the Americans installed in power (and continue to support) the political forces spearheading anti-woman policies in the country. Polling data does not indicate that any sizable group of Sunni or Shiite women support a continued U.S. presence.

3. Nothing was mentioned about the benefits of the U.S. military gaining valuable experience and knowledge daily. Certainly, the U.S. gains military and political "experience" from the war, as from any war, but at the expense of many deaths (2,127) and injuries (at least 15,704) to American soldiers. Beyond these publicly listed casualty figures lie the endless ways in which the lives of our soldiers are permanently damaged: On Nov. 26, for example, the New York Times reported on a recent Army study indicating that 17 percent of all personnel sent to Iraq have "serious symptoms of depression, anxiety, or post-traumatic stress disorder." Since about a million American troops have now seen service in Iraq, approximately 170,000 have gained the "experience" of having a severe mental problem. Moreover, the war experience in Iraq has proved so demoralizing to the military that many of the best soldiers are leaving at the end of their tours, instead of staying on in active or reserve status. This is undermining the viability of the military, long term.

U.S. casualties, of course, have been dwarfed by the damage done to the Iraqi people. Between 25,000 and 40,000 Iraqi civilians are dying each year -- and multitudes are injured. We are wrecking the country's infrastructure.

Certainly there is a better way to gain experience than this.

4. Nothing was mentioned about the future benefits of a strong democracy in the Middle East. We can all agree that a strong democracy in the Middle East would have huge benefits for Iraq and for its neighbors as well as for the rest of the world. If I thought that our actions there were helping to bring this about, perhaps I might also believe that the benefits of an active democracy outweighed at least some of the many problems we have been creating. But from the beginning, the talk of democracy was a hollow mantra, just one of a group of public rationalizations for a war motivated by the Bush administration's desire to dominate Middle Eastern politics and economics. The U.S. government has never actually relinquished sovereignty to the Iraqi government.

5. Nothing was mentioned about the future benefits of oil reserves. Though the Bush administration denies it, many observers agree with you that access to Iraqi oil was a major motivation for the war. But we need to understand the nature of this motivation. Even before the invasion, when U.N. sanctions were still in place against Saddam Hussein's regime, American oil companies could (and, in many cases, did) buy Iraqi oil at market price. The issue was never "access" to Iraqi oil in the sense of simply being able to buy it. The Bush administration was thinking about other kinds of energy access, including controlling the heartland of the word's main future oil supplies and giving American oil companies privileged access to Iraqi oil reserves. (See, for example, the recent report by the Global Policy Forum.) It's my contention that such privileged "access" for U.S. oil companies would not help the American people. Moreover, such privileged access would have deprived the Iraqis of their right to use the oil to their own benefit -- something they desperately need now that the Saddam Hussein regime, 12 years of brutal sanctions, and the current war have gutted the country.

The best approach for us (but not necessarily for the American oil companies) would be to buy our oil on the open market, put our research money into conservation and renewable fuels instead of military adventures, and avoid trying to get "control" of something that doesn't belong to us.

6. Nothing was mentioned about what fundamentalist Muslims would like to achieve. I assume that, when you refer to "fundamentalist Muslims," you are referring to terrorists, including those in Iraq and those who attacked the World Trade Center, the London tube, and the Madrid trains. First, I have to disagree with this identification of the terrorists (who are indeed fundamentalist) with all fundamentalist Muslims. That would be the same as characterizing those who bombed the Oklahoma City Federal Building as "fundamentalist Christians" and then implying that the destruction of such buildings is what all fundamentalist Christians yearn to achieve.

Second, I disagree with the implicit argument that somehow withdrawal will allow the terrorists to dominate Iraqi society and impose a horrible regime on an Iraq bent on attacking its neighbors and the United States. A large part of my commentary in favor of withdrawal was devoted to debunking this prevalent idea. I think I made a reasonably good case for the possibility that Bush administration actions in Iraq are creating and strengthening the terrorist groups within the Iraqi resistance. The longer the United States stays, the more the Islamic terrorists there are likely gain strength; the sooner the United States leaves, the more quickly the resistance will subside, and -- with it -- support for terrorism. The administration's Iraqi occupation policies are the equivalent of a nightmarish self-fulfilling prophesy.

7. Nothing was mentioned about the results of the U.S. evacuation from Southeast Asia (over a million killed within 5 years). I think we need to disentangle two different events involving the (forced) American departure from Southeast Asia. First, there was Vietnam, where it was always predicted that a horrendous bloodbath would follow any American withdrawal. Indeed, there were certainly deaths there after the U.S. left, and many refugees fled the country, some for the United States. But whatever these figures may have been, they were dwarfed by the incredible bloodbath that the U.S. created by being in Vietnam in the first place. Reputable sources suggest that millions of Vietnamese died (and countless others were permanently wounded) during the war years. We must conclude, therefore, that in Vietnam our departure actually resulted in a drastic decline in the levels of violence, and – sometime afterward – an end to the havoc and destruction; not to speak of the fact that, for years now, the United States has had plenty of "credibility" in Vietnam.

Second, there was the holocaust in Cambodia, which may well have resulted in a million or more deaths. This was also, however, a complex consequence of the U.S. presence in Southeast Asia, not a result of our departure. Cambodia had a stable, neutral government until the Nixon administration launched massive secret bombings against its territory, invaded the country, destabilized the regime, and set in motion the grim unraveling that led to the rise of the murderous Khmer Rouge. If the U.S. had withdrawn from Vietnam in 1965 or 1968, that holocaust would quite certainly never have happened.

The situation in Iraq is not that dissimilar. If the U.S. withdraws soon, there is at least a reasonable chance that the violence will subside quickly and that peace and stability in the region might ever so slowly take hold. The longer the U.S. stays – further destroying the Iraqi infrastructure and destabilizing neighboring regimes (like Syria and Iran) – the more likely it is that horrific civil wars and other forms of brutality will indeed occur.

8. Nothing was mentioned about the reputation of the U.S. if it retreats. Don't forget the quotes about Somalia from Osama Bin Laden. "Cut and Run." Here we agree. If the U.S. withdraws, this "retreat" will undermine U.S. credibility whenever, in the future, an administration threatens to use military power to force another country to submit to its demands (and may also, as after Vietnam, make Americans far more wary about sending troops abroad to fight presidential wars of choice). I think there are two important implications that derive from this observation.

The first is that this has, in fact, already happened. The most crystalline case making this point is that of Iran, whose leaders were much more compliant to U.S. demands /before/ the Iraq invasion than now that they have seen how the Iraqi resistance has frustrated our military. In fact, the invasion of Iraq has probably done more to strengthen the oppressive Iranian regime, domestically and in the Middle East, than any set of events in the past quarter-century. In other words – from your point of view – the longer the Bush administration stays and flounders, the more it undermines its ability to use the threat of military intervention to force other countries to conform to its demands.

From my point of view – and this is the second implication I want to point out – the undermining of U.S. credibility is one of the few good things that has resulted from the war in Iraq. I do not believe that anything positive is likely to come from American military adventures; quite the contrary, the Bush administration (and the Clinton, earlier Bush, and Reagan administrations) have used military power to impose bad policies on other countries. We would be much better off, I believe, with the multi-polar world that many Americans advocate (and this administration loathes the very thought of), in which no single state (including the U.S.) could impose itself on others without at least the support of a great many others. We would be far better off in a multitude of ways if our country stopped spending more on its military than the rest of the world combined and started spending some of that money on things that would actually improve the welfare of our people.

9. Nothing was mentioned about Germany, Japan, Korea, and the former Yugoslavia. Should we get out of those? Where was the prewar planning to get out of all those locations. Did Lincoln have a prewar plan to leave the South? I agree that some wars, some interventions, and some occupations can be positive things (without evaluating the particulars of the examples you offer). That does not mean that all, or even most, of them are good. The invasion, occupation, and destruction of Iraq is neither justified, nor moral.

10. Nothing was mentioned about 9/11, where we were attacked by fundamentalist Muslims. How do we change their attitudes? This query rests on two premises: The first belongs to the Bush administration and was part of the package of lies and intelligence manipulations that it used to hustle Congress and the American people into war – the claim that Saddam Hussein's regime and the terrorists who attacked the United States on Sept. 11, 2001, had anything in common or any ties whatsoever. They didn't, and the truth is that 9/11, important as it was, really should have nothing to do with Iraq and no place in any discussion of the war there – or at least that was certainly true until George Bush and his advisers managed almost single-handedly to recreate Iraq as the "central theater in the war on terror."

The second premise is one held by many Americans – that the only way to change the attitudes of those who are fighting the U.S. involves "whipping their ass," which rests on another commonly held opinion – that "these people only understand force." Attitudes are never changed in this way. Every serious scholar who studies terrorism agrees on this essential point: Terrorism arises from the misery that many people are forced to live in or in close proximity to. It is misguided and criminal, but it nevertheless derives from complaints people have about their daily lives, about the humiliations they experience in the larger social and political worlds they inhabit, and about the apparent impossibility of changing these circumstances.

This article was originally published at Tomdispatch.



To: geode00 who wrote (177190)12/7/2005 12:21:42 AM
From: Hawkmoon  Read Replies (3) | Respond to of 281500
 
Under Clinton/Gore we had a budget SURPLUS.

Oh yeah?? So how come we all didn't the surplus back??

You'd think the Federal Deficit would have decreased during the Clinton Administration if we were running a "surplus"..

The only thing that was running a surplus was social security revenues...

And guess where surplus SS revenues went?? Yep.. they got put in the Social Security Trust Fund, which then hands out T-Bills (also called Govt DEBT) and the money went to the politicians to be spent.

Social Security running a surplus is a BAD THING!!! People should be permitted to take any excess SS revenues and place them into private savings and investment accounts.

Republicans are the most corrupt political organization ever.

Ever been to Chicago? Daly's Chicago in the 60's and 70's was also pretty frickin' corrupt..

And what about that "Big Dig" up in that democratic haven, Boston?? Billions of dollars over budget..

And then we have the Louisiana Leevee scandals where apparently they may have been just a bit of waste, fraud, and abuse involved there, which resulted in hundreds of people dead from Katrina when the levee collapsed.

Now tell me Louisiana is a Republican state..

Hawk