From: wag5@quads.uchicago.edu (john peter wagner)
Newsgroups: alt.politics.bush,alt.politics.clinton
Subject: Re: That Pesky $4 Trillion Debt!
Date: 16 Oct 92 05:49:09 GMT
Reply-To: wag5@midway.uchicago.edu
Distribution: na
Organization: University of Chicago Computing Organizations

In article <Bw6G41.oM@nic.umass.edu> csulaima@titan.ucc.umass.edu (CYNTHIA R SULAIMAN) writes:
>In article <92289.141356JFL4@psuvm.psu.edu> <JFL4@psuvm.psu.edu> writes:
>>
>>In article <1992Oct15.043121.862@muddcs.claremont.edu>,
>>weverett@jarthur.claremont.edu (William M. Everett) says:
>>>
>>>When that democratic president was then in office, there was also a
>>>democratic congress. This is widely quoted as a reason why a democratic
>>>congress and a democratic president are a *REALLY* bad idea. When a
>>>Republican president took office, things improved.
>>
>>Funny, I don't remember that the country was $4 trillion in the hole when
>>we had a Democratic President and Democratic Congress.  Guess we need a
>>Republican President to *really* crank-up the spending!
>>
>
>Weren't the first 2 years of the Republican President with a Republic
>Congress???  (1980-1982)

	No.  The Reagan years saw 6 years of the SENATE having a
narrow majority. If the HOUSE, which has always been Democrat run,
does not want a bill, it can simply cancel it. Remember, both houses
must pass a bill.  Notice also that these years showed what we call
the 'wondrous Reagan years' of economic growth.  After both houses
became Democrat, add a few years for things to sink in, and today we
have the shitty economic situation we are in.  Basically the Senate
has been a house which is more along the lines of the 'elite'-it would
be closer to the presidency in terms of 'qualifications' or 'political
potency' of the individual members than in the House of Representatives.
The House of Representatives would be closer to the people, and thus
would be the domain of simplistic thinking, i.e. the Democrat party,
in the sense that less 'deep thinking' or consideration goes into
the weighing of a Representative than say, a Senator or President by
the people.  Of course with this new presidential election that
seems to be thrown into question given the virtually unknown status
of two of the competitors in the federal scene.
		       The Deficit is an interesting thing.  We say
it is very bad on the economy; but why?  Because we must pay taxes
to pay off the interest on the original chunk borrowed. What is interest?
It is the opportunity cost of the money if it had been applied in
to the best possible alternative application, plus some consideration
causing the shift.  When a business borrows money, and agrees to repay
principal(the amount owed) with interest, it is assuming that it can generate
more revenew on that money than the interest charged on that money.
People with new ideas borrow money, and take some calculated risk trying
to maximize the possibility of their being able to repay that debt with
interest, through advanced technology or new ideas, government protection,
some special niche that would make them uniquely capable of surpassing
the opportunity cost, etc.  High interest in a stable economy, where
the currency is not being monkeyed with through taxation or funny
monetary policy, indicates that the economy has developed itself
in such a way that individuals with ideas can make especially high
repayments on those ideas(incidentally, this can be attributed
to government protection and intervention or cutting-edge technology
).  Remember that this money is coming from someplace, and in the free
market, assuming there is a law against murder or some analogue, that
place would be from uncompetitive business. Why?  The customer used
to buy 'widgets' from company A- now company B can do it cheaper and
 so the money goes to company B rather than company A.  Company A,
to survive, copies company B, but now the market supply has been increased.
Thus the consumers have more money to invest in further novel ideas
or entrepreneurialisms.  This is Goethe's Faust who never stops
learning, and a cycle that never stops catering to the consumer.
	What does this have to do with the deficit and the economy?
Well, we have taken Caesar's coin and now we play with it in the abovementioned
game.  Unfortunately, Caesar interjects himself and takes some of the
coin from the system.  Caesar cannot participate in the system, government
cannot participate in the system, since its main element is the power
of the sword, which violates the initial condition of the beneficial
competitive economic system, except according to Rousseau(0), the
initial conditions are created by the sword, since it is greater than
individual infractors. This interjection is LESS efficient or productive
than a comparable system without this bleeding.  Thus, in competition,
a market with the taxing government compared to a market with a less
taxing government in free market competition would suffer if only those
terms differentiated them.  Thus we have trouble competing with Mexico
since our costs in taxes are higher, and we may not be able to play
ball with Mexico, but in the end will be surpassed and have to rely
on militancy, much as the Soviet Union and China had done, to retain dominance
or some such appearance.
	The deficit illustrates the effect of the taxation by government
upon the economic system. As long as the costs of government outweigh
the benefits, the economy will be hurt relative to competitors with
cost-effective governments because the opportunity of the drained
money will be removed. The interest on the deficit is an example
of the removed opportunity by the government on the economy.  Taxation
would give us worse consequences for two reasons; 1)the effects of
taxation would not become as easily apparent as the $4trillion, for
example, and 2)The government must eventually cut costs, i.e.,
become less inefficient, in order to pay off the deficit.  There is
no other way short of taxation, which is obviously politically difficult,
to pay off the debt.  3), I forgot to mention, the government
RETURNS that money to the economy in guaranteed bond payments. Thus
our government bonds help to provide a buffer in harsh economic
times for the people who buy bonds.  Taxes are not paid off.(Gee,
I guess we thought last years tax was too high. Sorry. Here's your
money back. Yah Right.)
	To conclude, the biggest threat of the deficit is to the 
politicians and bureaucrats who rest on the blood money drained
by the government from the economy.  That is, their porkbarrel
expenditures come under threat. It is no wonder that Democrats
prefer taxation, with its increased unseen destruction to the economy,
to borrowing, which rests on the premise of eventually cutting expenditures
assuming free market non-violent international competition.
	If you want to copy this and give it to people who are
uninformed about the nature of economics, please feel free and
feel free also to modify any errors in grammar or spelling which
I am sure in my haste I have made. Thank You.

				John
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