09
Apr
10

Not precisely what I wanted to hear

I must admit that, when I wrote the previous post, I’d hoped that I was falling far enough into forest-for-trees hysterical pessimism that one of the real economists who occasionally reads this blog would have gently taken me in hand, pointed out my errors (obvious to a proper expert in the field rather than a sparsely-read glib dilettante), and explained that there is in fact far less to be feared in the future than my narrow and untrained incendiarisms would support.

But.

But instead I find my post highlighted by Eric Crampton’s Google Reader feed — even so, I can maintain hope that he’s pointing me out to others as a bad example of overblown paranoia.  (If that’s the case, I wish he’d left me a comment to the effect of “hahahaha lol n00b”.)

Next I find this mention by Tyler Cowen that value-added taxes aren’t nearly as productive as they’d first appear.  Recall that in the short term I’m a deficit hawk; this is likely to end up as bad news, particularly given the following:

Most damning of all is this post by Arnold Kling:

According to the Committee on the Fiscal Future of the United States, by 2030, U.S. debt will be 117.6 percent of GDP, roughly the same as that of Greece today. And that is with total non-interest, non-entitlement spending of only 8.5 percent of GDP. (The report pre-dates the Obama Administration, which has substantially increased the path for both debt and spending.)

I have said this before, but the Left’s favorite solution to this, which is bending the health care cost curve between now and 2080, is whistling past the graveyard. We will not get to 2080. Instead, the crisis will come before 2030. If you have not done so already, stare at the table.

So the good news is that we have maybe ten years to unfuck this mess.  I guess the really really good news is that Arnold Kling might be wildly pessimistically wrong.  I don’t want to count on it, but I suppose it might turn out that way, just like a circus full of tiny little monkeys might fly out of my ass.  (I’d prefer the former to the latter.)

Advertisements

2 Responses to “Not precisely what I wanted to hear”


  1. April 11, 2010 at 05:37

    Only overblown paranoia if you figure it’s inevitable or 95% likely. I’d not put more than 10% chance, but without having thought really hard about it. If an asteroid had a 1/10 shot of hitting us, I’d put that in the shared feed too :>

    This is one though where I’ll be outsourcing most of my thinking to Cowen/Kling/Sumner and associates though. They’re all following a fair bit more closely than I’ve been.

    If I had to give my most likely scenario (though very wide confidence interval), it’ll be tax increases leading to increased voter demand for halfways sane measures like bumping up the retirement / medicare entitlement age by a year every two years for a decade combined with more means testing. The state will still be a fair bit larger than now though.

    I also keep hoping that Patri gets his seasteads in good order….

    • April 11, 2010 at 22:16

      If I had to give my most likely scenario (though very wide confidence interval), it’ll be tax increases leading to increased voter demand for halfways sane measures like bumping up the retirement / medicare entitlement age by a year every two years for a decade combined with more means testing. The state will still be a fair bit larger than now though.

      This is pretty much what I expect to see. Thinking about confidence intervals and the like, I’m looking at this less as “the apocalyptic scenario has a 10% chance of happening” and more as “we’re likely to end up with a scenario that’s 10% apocalyptic”. In “debt default” terms (I’ve been reading Reinhart and Rogoff lately), that percentage is roughly equivalent to the hit that previous generations are going to take on their CPP/Social Security/whatever “investments”: 100% apocalyptic means the system crashes and you get nothing; 50% apocalyptic means your generational cohort gets 50% of what it paid into whatever entitlement we’re talking about.

      I have no data to back this up, but I’m guessing that we’re going to end up at about 70% apocalyptic: I-don’t-wanna-hear-it and sunk-cost thinking are going to dominate until it’s bloody obvious that generational entitlements are unsustainable, at which point severe restrictions and high-threshold means testing will be enacted out of basic compassionate impulses. I suspect that these cuts will be more severe than strictly necessary because, as you mention, the state will be a lot larger and the bureaucratic machine established to provide feel-good entitlements to the entire population isn’t going to go away. (“Now more than ever we need strong public institutions to provide essential services to the most needy among us.”)

      Maybe I’m wrong and we’ll do better; if Greece and California (for example) go irretrievably tits-up in the next year or three it might make the Boomerpocalypse harder to ignore and we’ll end up at 50% apocalyptic or better.


Leave a reply; use raw HTML for markup. Please blockquote quotations from the post or other comments.

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


anarchocapitalist agitprop

Be advised

I say fuck a lot

Categories

Archives

Statistics FTW


%d bloggers like this: