Tuesday, January 31, 2012

Me Vs. The Libertarians - Round 57

The Argument:

Imagine you are in a family, and you have a dozen or so brothers and sisters. You all work. You are children of a single parent.
Your father, presumably very wise, tells you children that instead of having to stretch your meager paychecks across many different bills, that he will pay all your expenses. He requires that you contribute about a third of your paychecks to him (maybe a little more or a little less depending on what you make), but he’ll cover any expenses you accrue. Your school, your doctor visits, your car payments. No matter what you rack up, he’s going to pay.
So naturally you live a little beyond your means. You drive a car that’s more expensive than you would if you were looking at your own money, you eat out more often, etc. But the bills always get paid, so this seems like a good system.
Then one day… one day you find out that your dear old Dad doesn’t even have a job. He’s been paying all those bills (and his own, too!) with a combination of the part of your paychecks he collects (which of course isn’t enough) and putting the rest on credit cards. Massive, massive credit card debt has accrued as a result of this.
And that debt is still there when he dies, since he never had any way of paying it off. And you inherit it, because that’s the way debt works.
Welcome to government.

My Response

This is an example of a heuristic argument. I might be playing devil's advocate a bit here, considering I am a firm believer in paying debts on time, as I always have. However, your emotions tell you that debt is inherently a bad thing, so the government should not have one. However, this is in conflict with reality. For one, you present the common fallacy of comparing the federal deficit to a household budget, and there are a few holes in this. I recently read an article that showed that the US has only NOT had a federal debt for something like 5 or 6 out of the last 60 or 70 years. Despite monetary standard, political party in power, economic boom or recession, the debt is nearly always present, and has not stopped our way of life in its tracks.

In addition, while dad can die, The United States probably won't. When you say that the debt will be passed on to our children I guess you are technically correct, but it really just means next year's congress will have a budget deficit, and the next year's after that, and the next year's after that. It doesn't mean that a Chinese army is going to kidnap our population and throw us into debtor's prison, or repossess the state of Delaware. Operating in debt is a worldwide phenomenon, and if every monetary institution were suddenly and abruptly forced to balance their budgets, society as we know it WOULD cease to exist. Even the giant corporations that you hold in such high esteem operate with high leverage, the term for the ratio of actual liquidity to debt. When the bubble burst in '08, many of the investment banks were operating with ridiculously large ratios such as $40 of debt for every $1 of liquidity, but to a certain extent, nearly all profitable business operate in such a manner to a much smaller degree.

I also heard a piece today about how Newt is talking about returning to the gold standard, as if it were the magic bullet to control the deficit. While its probably true that it would control inflation by limiting the Fed's ability to just print more money, it's by no means a sure thing. Gold's value is subject to demand by countries, investors, and speculators, the same as any other commodity in the world. As Wyatt Cynac said when asked by Jon Stewart "But what about gold?", he responded, "Turns out, gold is just a shiny metal, Jon."

The problem is, wealth is an abstract concept. Therefore, so is debt. Now, debt may have real world consequences, such as a bank forces me out of my house into a smaller apartment, or Big Jimmy Breakabone (Break-a-bo-nay) comes by and pops me in the knee cap, but the actual debt I owe is as subjective as the value of the paper money I have in my wallet, my high yield mutual fund, or the gas in my lawnmower. (In reality I have only one of these things. Try to guess which!) Operating in debt is the way that our global economy works. China, or US Bondholders (who actually hold more of our debt than the Chinese ever will) cannot file some paperwork and force the population of America out of the country into a smaller one. It could be that humanity as a whole is exploiting the absurdity of such a system, flaunting the fact that despite the negative numbers on the balance sheets, life goes on much as before. Its easy to point to current events and say "Look at Greece! Look at what happens when a country racks up debt!". But countries have become destitute before, and they will become so again. This is not an argument against debt. After all, let's face it, Greece has been around since the Bronze Age. They've seen worse.

In addition, your example above takes for granted certain social values. It takes for granted the fact that anyone who has their basic necessities provided for will doubtless take advantage of this and live outside of their means. Its also sort of hints at the fact that of course dad couldn't afford to pay all those bills, and you were stupid to think that he could. Well, I believe these are very American assumptions. On the second point, in socialist democracies, government can, in many cases, afford to pay for these basic necessities like healthcare, maternity leave, etc, because income and sales taxes are very high, sometimes around 50-60%. In this country, we would equate taxes like that to the equivalent of the king of England bursting into your room on your wedding night to screw your new wife. We've been conditioned by our society to view contributing to the advancement of said society as a fundamental breech of our rights, and that nothing should be so abhorrent as parting with some of our money, no matter how beneficial the effects. I know you are in strong agreement with this, as you are a product of this society yourself. However, this is not a genetic imperative, it is a sociological one. As to the first point, this is not the case either. People in Spain and Germany aren't gorging themselves into obesity because the government pays their bills, that's us! We have a comparably small social safety net, and yet its we Americans who are living beyond our means, buying new cars and becoming the fattest fucks on the planet. Again, this is a product of our consumer based society. High taxes are seen as a violation of our rights because we have been told all our lives that buying equals freedom. It shouldn't take long to strip this down and discover the absurdity. I, for one, feel that a mandatory six weeks of vacation a year is more akin to freedom than two weeks and a new TV, but that's just me.

Anyway, back to the debt argument. I submit that the case against it is overblown and disproportionate to reality. Its easy for a presidential candidate to get a roomful of applause when he promises to "Git this country out of debt!", but such promises go far beyond the President's power in the first place, and in the second place, that applause would dry up quickly when the people providing it realize just what exactly our country's debt is providing them. So, I will use an argument you often use with me. Since debt is the status quo, as long as my creditors are happy with the terms of my borrowing and I can keep up the lifestyle to which I am accustomed in said debt without anyone else coming to harm, who are YOU to say that I ever need to pay it off? That anyone needs to pay it off? That the United States has to pay it off? This is simply the new perspective on an old concept, nothing more. And it is the world we live in.

However, while I feel these arguments are valid, I myself pay my debts on time.

Thursday, January 5, 2012

Capitalism At 40,000 Feet

This week, the president signed into law what I believe is called the "Americans Go To Jail Forever Without Trial" Act. So now, if you are suspected of doing anything terror related, such as bombing a government building or accidentally going to the Al Qaeda website while searching for Al Qadim, you can legally be held in a secret prison forever with no trial. As I understand it. Anyway, to balance out this rape of American liberty, he also did a good thing. He used some weird loopholes to finally dodge congressional opposition and force-appoint a head of the new Consumer Protection Agency so that this agency can actually start working to, well, protect consumers. So, like anything that actually benefits the public, this met with a dumpload of opposition from Senate Republicans, both on the grounds that it circumvents the sacred institution of filibustering every item of government business to death, and that the appointment makes the role of government too powerful because it might tell businesses to stop ripping people off.

The detractors have the notion that ever telling businesses they can't do a thing (ie regulations) is an affront to freedom (unlike real affronts to freedom like indefinite detention without trial, because that keeps us safe from terrorists). That the government passing laws about what businesses can and can't do is somehow antithetical to the very notion of what America should be. Well, let's look at a real life example of an industry that, in my mind, gets away with murder as far as misleading consumers is concerned. The problem is, people are so used to being bent over by this industry that we now take it as a matter of course.

A few months ago, a group of us all took a flight to Atlanta. Same exact flight, same exact section, and most of the seats were even right next to each other. My friend and his wife paid $205 each for round trip tickets, whereas I, having bought mine a week later, paid $350. Other people, having all bought tickets at different times, each paid different prices. You see, airlines now use complicated computer algorithms to basically randomize their prices, making it nearly impossible for any two people to pay the same price for the same ticket. This is obviously bullshit, but people have become so accustomed to going online and hunting for hours on third party websites like Orbitz to be that 1 lucky winner who actually gets a fair price for a flight. That's not even to mention all the fees that pop up later that aren't listed in the flight price. When did it become cool with everybody to have to pay to actually take your stuff with you when you go somewhere? I'm supposed to pay extra for the "luxury" of not buying a wardrobe of new clothes every time I land in a different city? Thanks to cool new innovations like these checked bag fees, I got to watch as an old fat tattoo biker guy literally punched his luggage until it fit into the same compartment as my reasonably sized carry-on. That's one way to save $20; punch your crap into mine til everything's broken. Still, its not even his fault, really. Its theirs.

I don't know, maybe its something about the majesty (or necessity) of air travel that makes people tolerate this garbage. I guess the vast majority of people don't fly every day, so they might just expect to be put through the ringer once a year for vacation or something. But let's make a comparison. Let's say you meet me for lunch at my favorite upscale restaurant, McDonalds. When you get there, I've already ordered and sat down, because I'm a rude asshole. You walk up to the counter and get the same thing I did: #1, supersized, with a Diet Coke (cause we're on diets). You join me at the table and say:

"Hey jerk. Thanks for waiting."

"I'm sorry man/dude/cuz/bro/lady-bro, I was STARVING. This was the best $2.05 I ever spent. It's gonna be soooo good *nom nom nom*."

"Wait, what? You paid $2.05 for a #1, supersized, with a Diet Coke cause we're on diets? They just charged me $3.50! They must have fucked up. I'll go talk to the lady."

"Don't bother homes/busta/dudet/she-homes, its too late now. You should have gone on Burgetz.com, like I did, to find the best time to order a #1. They get way more expensive the closer it gets to dinnertime, or lunch time, or holidays. I ordered mine at 3:22 AM last Tuesday."

"That makes no fucking sense! Its the same exact thing!"

"Oh, well, I also saved fifty cents cause I had two connecting orders."

"Wait, what?"

"Yea, I had to pick up the fries in Westmont, then there was a 15 minute layover in Cherry Hill while they changed the syrup tanks on the Diet Coke. No way I'm drinking regular Coke, I'm on a diet. Then I got the Big Mac here."

"Wow, that's a lot of effort just to save a marginal percentage of the price, but I still feel like I just got slapped in the balls/hooters by the company. Oh, hold on, I forgot ketchup."

"Oh yea, I also signed up for my 17th credit card when I got here, so they waived my ketchup fee! I'm the smartest!"

"But ketchup is free! How can they charge extra for something that almost every single person in the restaurant needs!?"

"Ketchup was free..."

Using the above example, we can see how fucking ridiculous it is for two people getting EXACTLY the same thing at EXACTLY the same place to have an absurd differential in the price they paid. "But Lou," you may say, "You can't compare airline tickets to fast food! They're completely different industries, with different expenses and concerns!"

First of all, I can compare anything I want, so go screw yourself. Both restaurants and airlines have costs of doing business that need to be factored into any business model, but I bet you'd be furious if every meal you ordered could potentially vary by 100% of the price depending on what day you ordered it and on how many places you were willing to go to in order to get it. Yet, this is exactly how airlines treat their customers every day. The "free market" has done nothing to curb this abuse, because random price fluctuations are such a great idea that every airline does it! Just you try to shop around, sucker!

But God forbid we try to regulate this fucking nonsense, because that would mean that Government is too big, and we don't want to infringe on corporations' rights to ram us on a bed of spikes by being as deceitful as humanly possible about the real price of their products. There are actually some regulations being passed this year regarding some of these issues, but of course they are being fought in court tooth and nail by the airlines as an attack against their "right to free speech". Come on! How can any sane person who has been hit with secret fees, bogus prices, or having their bag punched into an overhead compartment realistically say that it wouldn't be a good thing to have the government step in and make them tell the truth for once?

And keep in mind, if it wasn't for government regulations, there wouldn't be a weekend.