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Thoughts from the Frontline

Growth

August 31, 2014

“It's said that power corrupts, but actually it's more true that power attracts the corruptible. The sane are usually attracted by other things than power.”

– David Brin in The Postman

“For every good idea, ten thousand idiotic ones must first be posed, sifted, sniffed, tried, and discarded. A mind that's afraid to toy with the ridiculous will never come up with the brilliantly original."

– David Brin, Orbit interview

As I begin my 15th year of writing Thoughts from the Frontline – some 700-odd newsletters plus 400–500 editions of Outside the Box, 6 books, and scores of special reports – I decided to take a random walk back through some of my writings (and your comments!). With some glaring and notable exceptions that I would like to take off the internet (but won’t because to do so seems somewhat intellectually dishonest), the body…

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Daniel Kennedy 94695649

Today, 4:41 a.m.

Absolutely OUTSTANDING rant!!! Thank You.

See WSJ Article “The Feds Stall Self-Driving Cars”

One major problem with government is incentives. While the private sector is rewarded for efficiently satisfying customers, the public sector is rewarded by loyalty to superiors, and amassing and centralizing power. Every page, every sentence, every word of legislation and regulation is fertilizer that enables public sector bureaucrats to grow the bureaucracy and the power of the state. Public sector bureaucrats are in fact punished for efficiency and problem solving - they lose funding and therefore status and power.

 

Craig Rodby

Today, 4:30 a.m.

This was a very good article, but it said very little in support of Supply Side Economics.

What I read was that debt was the main problem, and Keynesian’s support debt.

When during the Reagan years we had Supply Side “growth” with MASSIVE increases in debt. And if things worked out, as I understand it, the growth would have easily paid back the borrowed money, and that never happened.

We had a balanced budget at the end of 2000 because we simply raised taxes, and we had a massive bubble in the stock market, which with the higher capital gains taxes from short term capital gains gave us the revenue to balance the budget.

But Supply Side Economics is worse than Keynesian, it seems to me, because while it does the same thing in practice as Keynes (more debt), it is logically silly: if lowering taxes gives us so much more tax revenue, we ought to lower them to zero.

Vincent Roach

Today, 2:24 a.m.

John you touch on the key question in all these debates, and that is “what is it that you want to accomplish?”. Too often there is an assumed answer but the assumptions of the various debaters are not the same. If they are the same, then the debate is whether some proposed model or policy will achieve the objective, or achieve it better than some competing idea. In that case it is important to dissect the proposal to be sure it is in line with the goal, that it in fact will work. 

However, the real argument is usually one of objectives even when not obviously so.  Several years ago I was asked to speak to a graduate business class at Boston College, about executive leadership. One of the students asked me if I thought Carly Fiorina (then recently resigned from HP with a $47M parachute) had been successful. I said yes, and the whole class booed.  But I pointed out that if her goal had been to make a lot of money working at HP she had been wildly successful, in that she had grabbed $47M for not a lot of time on the job.  But shouldn’t her goal have been to get HP back on its feet? They asked.  I said, in my world of ethics, the answer should be yes, but that is just my world, and it is not the real world. You always have to ask what goal people say they are pursuing, and what goal the are really pursuing.  Then you can decide whether a debate about strategies and tactics even makes any sense.

If someone wants “social justice” in the material sense, then they can easily promote a consumption-based approach, because it will, for a while, provide more people with more things as time goes along, which is one definition of “growth”.  Of course to make that possible one might have to inflate the currency over time so that people can pay off the debts they incurred to buy all that stuff.  Eventually there comes a day of reckoning, and in a well-designed plan the “rich” get reckoned with. If you agree with the goal, then your only debate will be how much growth one approach provides over the other, how long it can go on before the reckoning, and how likely it is that the rich will pay the price.

One side note here is that if one pursues this kind of goal, innovation is not stifled, but continues to be rewarded.  However, the reward comes from innovating in areas where consumption directs, so that a new weight control drug is produced while a new antibiotic is not.  Correcting such imbalances is partly the role of taxes and regulation, and to limit either of those carries with it one of the dangers of going outside the limits of the model, in this case by assuming the model is comprehensive and not just limited to what is viewed by the masses as a desirable consumable.

Unfortunately most of the serious arguments are really about goals, but they are not advertised as such, so you have people with different goals arguing about how well their theories work to achieve their own goal while assuming that goal is the same as the other side’s.

Even though the real world is incredibly complex, models can be created that are useful. I used to build and exercise models of computer systems and networks, to predict performance and capacity requirements.  The models were very complex but of course not nearly as complex as the reality. As long as I was careful to limit their use to things within the scope of their limits, a lot of useful work got done.  But to try to make the models extend beyond those limits was not just useless, but misleading and dangerous.  The art was in having an accurate feeling about where those boundaries were.

I don’t think it is too difficult to believe that using debt to fund current consumption is going to increase (grow?) current consumption, or that it cannot go on forever, and that when it ends the cost can be unequally shared and the process restarted again.  If that is your goal, then you only need to argue about how to tune up the model and how to use it to direct reality, with sufficient protection against exceeding the limits of its validity. (Leading to unintended consequences)

So what are “we” and “they” trying to accomplish here?  That is the base question, and one not easily answered, because in trying to achieve one’s goals, one often has to disguise or at least hide what those goals are from others, and those who are better at disguise have an edge going in. Food for future thought

william morris 96292593

Yesterday, 9:14 p.m.

Wow. You hit a home run with me.  At 75.  I have seen regulations and government interference at every level.  Local,state and federal help retard my nation…stupid stuff.  Adding costs for no reason except to feather the pockets of the wasteland of bureaucrats…  Local level.  Police and fire. Pensions.  Are so out of control..and if you disagree.  They want to shame us into paying more…the average fireman WORKS. 10 hours of a straight 40 hour.  Shift.  And can retire at 46.  At 75% a year pension dollars….Schools.  Bogged down in discussing handed down crap from federal to state to local confusions.  Hiring people over last 30 years. Most are math zeros.  No concept of addition or subtraction….and the worst.  President JOHNSONS GREAT SOCIETY. Program.    A sad joke on all of us…,with Zero results.  The book the Fourth Turning is worth reading.  Very long but insightful…and the END is near…..bill