Figures like this are always measured in inflation-adjusted dollars, but this seems dishonest. Even after adjusting for inflation, there's more money today than there was during World War II.
Wouldn't it be more honest to give these figures in terms of percent of GDP for the years these projects were started?
We don't spend in units of %GDP (you don't see "GDP 0.000001" as the price listed for a Big Mac), so I disagree with that.
As to the inflation adjustments, yes, the Fed's numbers are based on highly massaged price surveys instead of actual monetary inflation, so you're right that the particular numbers are probably off. BUT: given the deflation hitting the USD right now, perhaps not as off as one might suspect?
Buying a Big Mac is a personal investment, it'd be strange to measure that in percent of GDP. But one could imagine measuring it in percent of your yearly wages. You wouldn't do this for a Big Mac, of course, but for a large purchase like a car or a house it's an entirely reasonable way to look at the problem: it allows you to look at it in terms not of dollars (the precise value of which means nothing to the situation) but rather in terms of your ability to pay.
A country-wide investment like a war or a financial plan should be measured in terms of the country's ability to pay, too. We have over twice as many people and over four times as much money as we had during World War two: using investments made by that benchmark makes no sense.
What the hell kind of Marxist crap is that? Thinking like in the eastern bloc is what demolished the soviet economy and won the cold war for the U.S. To paraphrase Screwtape, "let us not fall victim to [their] own propaganda".
Goods produced have costs to produce that are completely independent of the "ability to pay" of the purchasor. When the purchasor can't pay, either the producer takes a loss or the goods don't sell (and subsequent goods are therefore not produced, which's the part that folks like to conveniently ignore), but pricing an economy in terms of the psuedo-moral basis you suggest, in any other terms than producers' costs, is in no way "an entirely reasonable way" to view anything economically except the plight of the particular consumer. Granted, if the producer attempts to price their goods too high above cost, the consumer will chose another producer (assuming a free market, or approximation thereof), but that's different than the sort of universal sliding-scale pricing you suggest.
Otherwise, that's saying that as a big-mac producer (hypothetically), I have to lose money on my product when I sell to the mooks who never did anything to learn a trade and have to keep my fingers crossed that enough lawyers will buy my product that I'll break even.
This sort of thinking is the political core of the Federal Government's pressure on banks to write bad loans so "deserving" folks could have houses without regards to whether or not they could sustain their price, and is the core "something for nothing" ideal that got us into this financial mess in the first place (by guaranteeing that Fannie and Freddie would take dubious loans as long as they were small enough, opening the floodgates for the massive mortgage fraud of the past decade).
The *best* scenario resulting from divorcing the price of things from the cost of things is rent-seeking and shortages; for the worst case you can look at any of a dozen failed economies, most spectacularly Zimbabwe's (who have done more to punish the producer for the sake of the consumer than any nation in recent history).
If the total resources available to a country don't matter when considering what that country can safely do, then what's the baseline economy for how much we can spend? By your argument, anything we couldn't have afforded in 1800 is a bad idea.
Postscriptum: honestly, 24 hours is generous. I've never been able to keep McDonalds food in my system for over half an hour.
8 comments:
Figures like this are always measured in inflation-adjusted dollars, but this seems dishonest. Even after adjusting for inflation, there's more money today than there was during World War II.
Wouldn't it be more honest to give these figures in terms of percent of GDP for the years these projects were started?
We don't spend in units of %GDP (you don't see "GDP 0.000001" as the price listed for a Big Mac), so I disagree with that.
As to the inflation adjustments, yes, the Fed's numbers are based on highly massaged price surveys instead of actual monetary inflation, so you're right that the particular numbers are probably off. BUT: given the deflation hitting the USD right now, perhaps not as off as one might suspect?
Buying a Big Mac is a personal investment, it'd be strange to measure that in percent of GDP. But one could imagine measuring it in percent of your yearly wages. You wouldn't do this for a Big Mac, of course, but for a large purchase like a car or a house it's an entirely reasonable way to look at the problem: it allows you to look at it in terms not of dollars (the precise value of which means nothing to the situation) but rather in terms of your ability to pay.
A country-wide investment like a war or a financial plan should be measured in terms of the country's ability to pay, too. We have over twice as many people and over four times as much money as we had during World War two: using investments made by that benchmark makes no sense.
What the hell kind of Marxist crap is that? Thinking like in the eastern bloc is what demolished the soviet economy and won the cold war for the U.S. To paraphrase Screwtape, "let us not fall victim to [their] own propaganda".
Goods produced have costs to produce that are completely independent of the "ability to pay" of the purchasor. When the purchasor can't pay, either the producer takes a loss or the goods don't sell (and subsequent goods are therefore not produced, which's the part that folks like to conveniently ignore), but pricing an economy in terms of the psuedo-moral basis you suggest, in any other terms than producers' costs, is in no way "an entirely reasonable way" to view anything economically except the plight of the particular consumer. Granted, if the producer attempts to price their goods too high above cost, the consumer will chose another producer (assuming a free market, or approximation thereof), but that's different than the sort of universal sliding-scale pricing you suggest.
Otherwise, that's saying that as a big-mac producer (hypothetically), I have to lose money on my product when I sell to the mooks who never did anything to learn a trade and have to keep my fingers crossed that enough lawyers will buy my product that I'll break even.
This sort of thinking is the political core of the Federal Government's pressure on banks to write bad loans so "deserving" folks could have houses without regards to whether or not they could sustain their price, and is the core "something for nothing" ideal that got us into this financial mess in the first place (by guaranteeing that Fannie and Freddie would take dubious loans as long as they were small enough, opening the floodgates for the massive mortgage fraud of the past decade).
The *best* scenario resulting from divorcing the price of things from the cost of things is rent-seeking and shortages; for the worst case you can look at any of a dozen failed economies, most spectacularly Zimbabwe's (who have done more to punish the producer for the sake of the consumer than any nation in recent history).
P.S. Buying a Big Mac is a lousy personal investment -- less than 24 hours after it's purchased, the municipal government owns it. ;-)
Hell yeah, Jim!
If the total resources available to a country don't matter when considering what that country can safely do, then what's the baseline economy for how much we can spend? By your argument, anything we couldn't have afforded in 1800 is a bad idea.
Postscriptum: honestly, 24 hours is generous. I've never been able to keep McDonalds food in my system for over half an hour.
That's some gratuitous goal-post shifting that I'm not going to bother rebutting: no-one claimed that the total resources of the country don't matter.
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