# Challenge to Economic Conservatives **URL:** \ **Category:** Great Debates\ **Created:** [August 27, 2009, 10:38pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963 "2009-08-27T22:38:11Z")\ **Posts on this page:** 20\ **Page:** 5
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 29, 2009, 9:50pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/81 "2009-08-29T21:50:03Z")
> [@wmfellows](#): > > My point was not directed at the American economy, and evidently the use of the word monoloplise was misunderstood. Perhaps not, but is there something special about the American economy so your point wouldn’t be applicable? ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 29, 2009, 10:11pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/82 "2009-08-29T22:11:07Z")
> [@Sam\_Stone](#): > > Well, it’s fair to point out that potential issue, but in this case, it’s not true. Rules considered to be ‘economically significant’ (defined as costing more than 100 million dollars per year to implement) increased by 70% since 2001. Sarbanes-Oxley was one of the most expensive regulations ever passed. From [here](http://www.ibdeditorials.com/IBDArticles.aspx?id=261617359733121): i think you misunderstood me. I was not questioning “SOX” - I am well aware of its cost and impact (and consider it a ridiculous over-reaction). Rather, your cite to number of regulations and the registry alone, that’s as empty as the Left citing the number of millionaires. I’d prefer the argument be made better. > [@](#): > > Yes, I understand. But the law of unintended consequences doesn’t care about intentions. What Mark-to-Market did was increase volatility. … You could argue that all mark-to-market did was lift the veil on a whole bunch of bad assets, and that might be correct. Without it, maybe we would have struggled along for years while the problem got worse. But it’s also possible that mark-to-market simply increased volatility and triggered a wave of crises that built on each other until the collapse happened. I’ll skip the accounting debate, as that is a distraction, but I think it sufficient to note that the move to mark to market at least in IAS world came as much from private investors as government. I would hesitate to call mark to market an example of regulatory failure as such. > [@](#): > > When interest rates are held artificially low, capital seeks better returns on investment. That generally means higher risk. Define for me “artificially low” You made a contradictory observation to the “artificially low” hypothesis with respect to your observation re excess Asian savings. Massive excess liquidity seeking return push market rates down everywhere. Pinning the blame on a Central Bank strikes me as a one sided argument. ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [August 29, 2009, 10:35pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/83 "2009-08-29T22:35:07Z")
> [@Voyager](#): > > We need to talk equivalent functionality at the time. Not the same things, but the things in the same places in the stores. Otherwise shoppers for the CPI market basket would have to shop in either Goodwill stores or antique stores. What are buggywhips going for nowadays? > You are also neglecting food prices, which is a lot more stable than a particular food item. Or clothing prices, or energy prices. And there is also a psychological aspect of this. Being able to afford a cassette player when they were new is very different from being able to afford one now, and reflects a totally different social status. > > If this is the only argument you have against the lack of real wage growth, you’ve lost big time. Wage can’t grow. If you balanced out everyone’s money (i.e. true socialism), the lowest income slot would be making maybe a hundred or two more a year. Quibbling about it is silly. But more importantly than that, who gives a fuck about wage? What practical measure is that of anything if it’s not one of quality of life? Now I’m saying that the time lapse between going from the poor of today to the rich of today can be shortened. I can tell you that you can be living like Bill Gates (though admittedly in a smaller house) in five years, or you can be living like him in 50 years but with $100 more a year in wage. Which would you chose? ---
**Author:** ![athelas](https://avatars.discourse-cdn.com/v4/letter/a/5e9695/32.png) [@athelas](https://boards.straightdope.com/u/athelas)\ **Post date:** [August 29, 2009, 11:36pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/84 "2009-08-29T23:36:15Z")
> [@Voyager](#): > > Ah yes, the old “no one is poor because they live better than nobility in the Middle Ages” argument. That’s a heaping pile of shit…And there is also a psychological aspect of this. Being able to afford a cassette player when they were new is very different from being able to afford one now, and reflects a totally different social status. Social status, as you should know, is pretty zero-sum. Therefore it is a pretty weak argument to use in talking about the advancement in the well-being of the poor. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 30, 2009, 12:22am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/85 "2009-08-30T00:22:36Z")
Quite right, and I think much conversation about economic well being confuses social status (a relative measure, and zero sum) with material comfort (arguably an absolute measure). Excessive levelling in social status, as the Soviet / Communist experiment has shown, destroys wealth. I’ll admit though that not enough sharing of the pie probably can reduce potential as well. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 12:43am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/86 "2009-08-30T00:43:19Z")
> [@Sage\_Rat](#): > > Wage can’t grow. If you balanced out everyone’s money (i.e. true socialism), the lowest income slot would be making maybe a hundred or two more a year. Quibbling about it is silly. > > But more importantly than that, who gives a fuck about wage? What practical measure is that of anything if it’s not one of quality of life? Now I’m saying that the time lapse between going from the poor of today to the rich of today can be shortened. I can tell you that you can be living like Bill Gates (though admittedly in a smaller house) in five years, or you can be living like him in 50 years but with $100 more a year in wage. Which would you chose? The former. In 50 years I’ll be dead. We’re clearly not talking about equalizing wages. We’re not talking about living like Bill Gates. We should be talking about how to ensure that no one is living in fear that their next illness will drive them into bankruptcy. We should be talking about how to keep families from homelessness because they’ve lost their house or apartment due to unemployment. I suspect most people would trade a couple of inches from their TV for that, and that is how the poor person, especially the working poor person, of today is more similar to the peasant than the lord. It is power. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 12:47am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/87 "2009-08-30T00:47:13Z")
> [@athelas](#): > > Social status, as you should know, is pretty zero-sum. Therefore it is a pretty weak argument to use in talking about the advancement in the well-being of the poor. I don’t think it is zero-sum at all. The top will be the top whether they are $1 billion or $500 million above the middle class. That share of money flowing down would make a bigger increase in well being of the poor than it would decrease the well being of the rich. Simpler example. Your child, just starting out, has a job that doesn’t pay much, and you are doing very well. Her car dies and needs $500 of repairs. You’ve got it to spare. Does giving her the money increase well being, or keep it the same? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 12:50am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/88 "2009-08-30T00:50:22Z")
> [@wmfellows](#): > > Excessive levelling in social status, as the Soviet / Communist experiment has shown, destroys wealth. I’ll admit though that not enough sharing of the pie probably can reduce potential as well. If you think there was leveling in social status in Communist countries, you don’t know much about them. Ever hear of the stores for party members only? Those on top changed, the gaps didn’t. In any case, who cares about social status? That is not strictly a function of money anyhow. ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [August 30, 2009, 12:59am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/89 "2009-08-30T00:59:39Z")
> [@Voyager](#): > > We should be talking about how to keep families from homelessness because they’ve lost their house or apartment due to unemployment. I suspect most people would trade a couple of inches from their TV for that, I suspect otherwise. People, both poor and middle class would rather have a cell phone than to have that money go towards drinkable water or food for starving children in Africa. Or to be more like your plasma TV analogy… most people would rather have an iPhone instead of a cheaper Motorola so that the difference in money could be applied to make the world a better place. Maybe **Saint Voyager** would make the small sacrifices but I don’t kid myself to think the benevolence extends to the population at large. Just look around at the blatant consumerism. Or am I missing something? ---
**Author:** ![Ruminator](https://avatars.discourse-cdn.com/v4/letter/r/b9bd4f/32.png) [@Ruminator](https://boards.straightdope.com/u/Ruminator)\ **Post date:** [August 30, 2009, 1:03am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/90 "2009-08-30T01:03:50Z")
> [@Voyager](#): > > I don’t think it is zero-sum at all. If one interprets “social status” as a mathematical ranking relative to the group – it is zero sum. If you interpret “social status” to mean wealth redistribution, (which you have described in your reply) then that’s something else. ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 30, 2009, 1:08am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/91 "2009-08-30T01:08:17Z")
> [@Voyager](#): > > If you think there was leveling in social status in Communist countries, you don’t know much about them. Ever hear of the stores for party members only? Those on top changed, the gaps didn’t. > > In any case, who cares about social status? That is not strictly a function of money anyhow. I once lived in one, I know a thing about social status in the former Soviet Block. Yes, indeed, differentiation (re) emerged, but the whole point of the Communist system was initially vast social leveling and the system did in fact do so (ridiculous wage spreads btw labourers and Drs for instance). Of course non-wage party connected So, you apparently don’t know much about the history. Social status is something in any event that drives humans. Deep primitive primate social status perceptions are real drivers. ---
**Author:** ![Hellestal](https://avatars.discourse-cdn.com/v4/letter/h/3ab097/32.png) [@Hellestal](https://boards.straightdope.com/u/Hellestal)\ **Post date:** [August 30, 2009, 1:28am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/92 "2009-08-30T01:28:50Z")
> [@Sage\_Rat](#): > > I haven’t hand waved it away. I suspect that you think that “real wage” means something slightly different than you think it does. > > Think about it. I’ve done more than “think about it”, **Sage Rat**. I’ve studied this very issue, both formally and informally, for more than a decade. I’ve already provided graphs and explained the issue. Despite that, you still hold to your fabricated notions. It doesn’t appear at this point that you have any interest in learning, but you’re still making enough mistakes to confuse the thread, so it’s worth going through your fantasies one last time to correct them. > [@Sage\_Rat](#): > > It’s a given that the price of most products has fallen over the course of the last several decades. This is true only for high-end technological goods. For the prices of other commodities, which make up the bulk of people’s purchases, this is not true. It is false. For the bulk of purchases that people must spend their money on, prices have increased in line with wage increases. > [@Sage\_Rat](#): > > If your assertion that real wage should grow with that, then it should have grown. But of course it doesn’t because the way they calculate it, when a $100 1985 cassette player turns into a $100 2005 iPod, they consider it to be the same product, even though the latter wasn’t something even the most wealthy could have dreamed of owning twenty years earlier. The Bureau of Labor Statistics, which calculates the Consumer Price Index (the most commonly used measure for inflation) **does in fact compensate for the introduction of new goods**. That is already included in the calculations. Is it perfect? No. But it’s still pretty damn good. As a matter of fact, estimates in the 1990s were that real median wages were actually _negative or zero_. As you could see by the graph I’ve already cited, that’s not considered so anymore. Real median wages actually have a positive slope now (though not a very steep one, so they’re still fairly stagnant). There were two statistical refinements that re-interpreted this graph, the first from the Bureau of Economic Analysis, which switched to a chain-linked measure of GDP growth (thus changing the GDP deflator, the other major measure of inflation), and the second from a panel of economists lead by Michael Boskin, who estimated that the Bureau of Labor Statistics was overestimating the CPI by as much as 1% every year because (and pay attention now) _they weren’t doing an adequate job of adjusting their figures for the introduction of new goods and the improvement of older goods_. In other words, your very criticisms were pointed out and accounted for more than ten years ago. And now, yes, it’s acknowledged that medium real income has been slowly increasing, though of course it’s still extremely languid growth, especially compared to the upper income strata. > [@Sage\_Rat](#): > > So again, it’s a given that the prices of things have dropped in comparison to our wage. If you think that this means the “real” wage should have increased by M, then obviously you’re attributing more information to be included in “real wage” than is really there. I’m using the actual definition. The information included in “real wage” is robust thanks to years of statistical refinement. It’s not perfect, but it is extremely good. Your issues are valid ones, of course. Where you err, repeatedly, is in thinking that you’re somehow unique in considering these problems. You’re not. These issues have been the source of statistical wrangling for a very long time, and the number crunchers do in fact compensate for them, despite your tenacious belief to the contrary. ---
**Author:** ![Sage\_Rat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/sage_rat/32/399_2.png) [@Sage\_Rat](https://boards.straightdope.com/u/Sage_Rat)\ **Post date:** [August 30, 2009, 1:43am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/93 "2009-08-30T01:43:22Z")
> [@Voyager](#): > > The former. In 50 years I’ll be dead. > > We’re clearly not talking about equalizing wages. We’re not talking about living like Bill Gates. We should be talking about how to ensure that no one is living in fear that their next illness will drive them into bankruptcy. We should be talking about how to keep families from homelessness because they’ve lost their house or apartment due to unemployment. I suspect most people would trade a couple of inches from their TV for that, and that is how the poor person, especially the working poor person, of today is more similar to the peasant than the lord. It is power. People don’t trade the distance from their TV from that, is precisely the issue. If you walk into the house of a person who is at the bottom of the heap and they have a TV and nintendo, a drying machine, and other luxuries as well as being overweight, smoke and drink beer, but they haven’t bought insurance, that’s them opting for the present instead of the future. I can buy health insurance for myself for $66 a month according to [eHealthInsurance.com](http://eHealthInsurance.com). Minimum wage in my state is $8.55 an hour. If I work a 40 hour week, I’m making $1368 a month. Subtracting taxes, let’s say that’s really about $1000 a month. I pay $500 for an apartment, [$150 in food](http://www.cnpp.usda.gov/Publications/FoodPlans/2007/CostofFoodJun07.pdf), another $100 in electricity, phone, and water bills, $72 for a monthly bus pass, and I’ve still got $178 left. If I buy insurance at $66, I’ve _still_ got $112 left. I can add dental insurance for less than $10 a month. What takes health insurance from people is smoking and alcohol (both very expensive), overeating, luxury items, gambling, and otherwise poor money management. Why not have the government step in and just manage everyone’s income who can’t manage it themselves? Why make me have to lower the rate at which new medicines are created, to go into purchasing two six packs of beer a week for people who should have been buying insurance? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 3:31am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/94 "2009-08-30T03:31:02Z")
> [@Ruminator](#): > > I suspect otherwise. People, both poor and middle class would rather have a cell phone than to have that money go towards drinkable water or food for starving children in Africa. > > Or to be more like your plasma TV analogy… most people would rather have an iPhone instead of a cheaper Motorola so that the difference in money could be applied to make the world a better place. > > Maybe **Saint Voyager** would make the small sacrifices but I don’t kid myself to think the benevolence extends to the population at large. Just look around at the blatant consumerism. Or am I missing something? I was referring to their own well being, not others. I didn’t just pop out of the cabbage patch. What you said is exactly why the idea of cutting taxes to give more money to people so they can give it to charity doesn’t work very well. I wonder how much charitable giving would go down without the hefty tax benefits? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 3:54am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/95 "2009-08-30T03:54:49Z")
> [@Sage\_Rat](#): > > People don’t trade the distance from their TV from that, is precisely the issue. If you walk into the house of a person who is at the bottom of the heap and they have a TV and nintendo, a drying machine, and other luxuries as well as being overweight, smoke and drink beer, but they haven’t bought insurance, that’s them opting for the present instead of the future. > > I can buy health insurance for myself for $66 a month according to [eHealthInsurance.com](http://eHealthInsurance.com). Minimum wage in my state is $8.55 an hour. If I work a 40 hour week, I’m making $1368 a month. Subtracting taxes, let’s say that’s really about $1000 a month. I pay $500 for an apartment, [$150 in food](http://www.cnpp.usda.gov/Publications/FoodPlans/2007/CostofFoodJun07.pdf), another $100 in electricity, phone, and water bills, $72 for a monthly bus pass, and I’ve still got $178 left. If I buy insurance at $66, I’ve _still_ got $112 left. I can add dental insurance for less than $10 a month. > > What takes health insurance from people is smoking and alcohol (both very expensive), overeating, luxury items, gambling, and otherwise poor money management. Why not have the government step in and just manage everyone’s income who can’t manage it themselves? Why make me have to lower the rate at which new medicines are created, to go into purchasing two six packs of beer a week for people who should have been buying insurance? It’s cheaper to eat food to make you overweight than to eat healthy food. Carbs don’t cost as much as protein. What exactly does your health insurance cover? I just bought insurance for my daughter who is 23, in the prime of health, and in the pool associated with the university. I see from looking at esurance that most of the plans around that price range have $2500 deductibles. Ready to pay 2.5 months worth of take home pay on doctors’ bills before your insurance kicks in? I also looked for a generic family of 4. I found one for $166 a month - but with a $5K family deductible. Neither has drug coverage. $5,000 will set your working poor wage earner back a bit, especially if the wage earner gets sick and doesn’t have a lot of sick days. So I’m not impressed. My employer paid (partly) plan is a lot better than any of these - but I’m one of the haves. Maybe our guy isn’t buying beer with his extra money, he’s buying diapers. None of this is going to affect the rate that new medicines are created. In fact, if we had a UHC plan where the drug companies didn’t advertise, they’d get created twice as fast, since their marketing costs are higher than their R&D costs. Not to mention that a lot of new drugs are being developed by startups which then get bought up by Big Pharma. But no, I’m sure you think that everyone who has gone bankrupt due to big medical bills are just drunks with big TVs, who’d be doing fine if they just worked a bit harder. Ah, the milk of human kindness flows so strongly in the veins of the conservative. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [August 30, 2009, 4:06am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/96 "2009-08-30T04:06:57Z")
> [@wmfellows](#): > > Social status is something in any event that drives humans. Deep primitive primate social status perceptions are real drivers. Was the social status gap smaller in the '90s along with the smaller wage gap? I don’t think so. I wouldn’t expect it to. I’ll happily accept a social status gap if those on the lower end of it get health insurance. Deal? Hell, I’ve seen big status gaps in graduate departments where all students make exactly the same amount of money. And my status as a PhD student in Louisiana made me a lot closer in status to some rich oil guys than my pitiful stipend could account for. So I still don’t understand what social status has to do with this issue. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 30, 2009, 4:15am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/97 "2009-08-30T04:15:40Z")
> [@Dick\_Dastardly](#): > > Let’s not confuse the issue with talking about spending, which will always increase every year, let’s just look at revenues. Here are some actual numbers to help you understand how tax revenues have gone recently and the historical context. > > These numbers are all in hundreds of billions : > > 1970 > 192.8 > > 1980 > 517.1 > > 1990 > 1,032.1 > > 1991 > 1055.1 > > 1992 > 1,091.3 > > 1993 > 1154.5 > > 1994 > 1,258.7 > > 1995 > 1,351.9 > > 1996 > 1,453.2 > > 1997 > 1579.4 > > 1998 > 1,722.0 > > 1999 > 1,827.6 > 2000 > 2,025.5 > > So you can see the tiny increase in revenues under Bush is actually a fiscal disaster for the US budget. Historically tax revenues roughly double every ten years, something you can see above and at the link below. In the 1970s they almost tripled. > > Anyway Bush took office in 2001 and enacted tax cuts which were backdated to the start of that financial year. Tax revenues should be on target to roughly double plus we see some of that Laffer increase on top of the doubling, right? Here are the numbers, again in hundreds of billions$ : > > 2000: 2025.5 > > _Bush tax cut_ > > 2001 : 1991.4 > > 2002 : 1853.4 > > _Bush tax cut_ > > 2003 : 1782.5 > > 2004 : 1880.3 > > 2005 : 2153.9 > > 2006 : 2407.3 > > 2007 : 2568.2 > > And the official 2008 number isn’t out yet but it’ll obviously be below the 2007 number due to the recession, financial meltdown etc. > [http://209.85.229.132/search?q=cache...es&hl=en&gl=uk](http://209.85.229.132/search?q=cache...es&hl=en&gl=uk) Conveniently, choosing even decades happens to help the numbers significantly. Bush’s numbers go from 2000 to 2007. If you look at the numbers from 1990 to 1997, you see almost the same increase. If you go from 1980 to 1987, you see a significantly smaller increase. Much depends on where in the various business cycles you choose to pick your start and end dates. But in any event, you simply can’t wave away spending as if it’s irrelevant to the discussion, because spending was clearly much more responsible for Bush’s deficits than was lack of revenue. Using your same time spans, let’s look at government spending. Total outlays: 1980: 590.94 billion 1990: 1.032 trillion. 2000: 1.789 trillion. 2008: 2.524 trillion. Spending increase between 1980 and 1990: 441 billion Spending increase between 1990 and 2000: 757 billion Spending increase in 8 years of Bush administration: 1.193 trillion Or looked at by yearly average: Average annual increase between 1980 and 1990: 44.1 billion dollars Average annual increase between 1990 and 2000: 75.7 billion dollars Average annual increase between 2000 and 2008: 149 billion dollars Spending increases under the Bush administration were more than 3 times greater than in the 1980’s, and about twice as great as in the 1990’s. And that doesn’t include TARP. The deficit is not a revenue problem. Spending is out of control in the U.S. And of course, under the current administration it’s absolutely exploding. In Canada, revenue went up by a similar ratio as it did in the United States between 2000 and 2007 (59% vs 55%). The difference is that we held spending increases to slightly lower than our GDP growth. The result is that we run budget surpluses and have been paying down our debt. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [August 30, 2009, 4:38am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/98 "2009-08-30T04:38:58Z")
> [@Dick\_Dastardly](#): > > Which economists are arguing that it was a good idea to let Citi et al use their customers’ deposits to get involved in the derivatives markets? It turns out not to have been such a good idea after all, what with the big commercial banks needing to be bailed out for hundreds of billions and probably still all being insolvent and everything. > > Let’s start with all the Asian money that you correctly point out was looking for a home. The home a lot of it and all the other world surplus money found was in various mortgage-backed securities. Now there’s nothing wrong with MBSs, they’ve been around a long time. But there was only a certain amount of them and still a ton of money looking for a home, so a bunch of things happened to accomodate all that cash. > > Firstly there had to be more mortgages to make securities out of, so in 2003 the Bush administration scrapped a huge stack of mortgage regulations, actually taking a chainsaw and tree shears to a paper stack of regulations at a press conference attended by a bunch of regulators, people who were generally banking lobbyists who’d spent their careers trying to get regulation scrapped and were now appointed by Bush to do the regulating in a fox/henhouse strategy to deal with financial regulation. Here’s a picture of the presser : > > [http://www.papolicyblog.com/pablog/chainsaw.jpg](http://www.papolicyblog.com/pablog/chainsaw.jpg) Yeah, I see that picture made the rounds of the lefty blogosphere. But exactly which mortgage regulations were watered down? Do you have a bill number so I can look it up? Because I can’t find it. Before we assign blame, we have to look at the details of the bill and actually analyze why it might have done damage. But I can’t find any details. I DID find [this](http://online.wsj.com/article/SB106851042414562400.html?mod=googlewsj) from the same year: > [@](#): > > With an election year coming, most public officials prefer to make nice with just about everyone. So give White House chief economist N. Gregory Mankiw full marks for daring to tell the truth about Fannie Mae and Freddie Mac last week. The mortgage giants were not amused, which means we’re getting somewhere. > > Mr. Mankiw did taxpayers a service by wading into the debate over how to monitor these companies that have become repositories of enormous financial risk. Fannie in particular has marshaled its political troops to stop a bill in Congress that would transfer its regulation to the Treasury Department from a feckless unit of HUD. Fannie prefers feckless. > > In his speech last week, Mr. Mankiw explained a few undeniable facts that Fannie spokesmen like to deny. One is that the “perception” that the federal government guarantees Fannie’s debt creates an “implicit subsidy.” Mr. Mankiw cited evidence showing that, instead of helping home-owners by reducing mortgage rates, most of this subsidy is pocketed by Fannie itself: “It goes to executive compensation and to shareholder profits.” > > Worse, “the subsidy creates a source of systemic risk for our financial system.” This is because “the subsidy has allowed” the companies “to become gigantic,” with their debt more than tripling to $2.2 trillion from 1995 to 2002. On present trends, their debt will soon surpass the privately held debt of about $3.2 trillion of the entire federal government. > … > \*\*Congressman Barney Frank criticized Mr. Mankiw because he is worried about the tiny little matter of safety and soundness rather than “concern about housing.” \*\* > [@](#): > > What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no. Oh, come on. The Bush administration was raising the alarm on this stuff from almost day one. The major opposition came from Democrats. Barney Frank was willing to ‘roll the dice’ in the interests of selling as many homes as possible to poor people. The Democrats championed the Community Reinvestment Act, which pressured bankers into lowering lending standards. Look, I’m not trying to claim that private industry was blameless, and I will acknowledge that the U.S.'s regulatory standards may not have been up to snuff. But this wasn’t a ‘Bush Administration’ problem. The U.S. government has been on a mission to push as many people into home ownership as it could, dating from the time the mortgage interest deduction was introduced. Democrats were the ones leading the charge in the 1990’s and 2000’s, as they discovered that the GSE’s could be used as an instrument of social policy to move more people into home ownership. It was the Democrats who turned a blind eye to the need for financial regulation in the 2000’s - not the Bush administration. The administration repeatedly sent people to the hill to plead for reform of the GSE’s and to help rein in out-of-control mortgage lending. It was the Democrats who resisted. ---
**Author:** ![athelas](https://avatars.discourse-cdn.com/v4/letter/a/5e9695/32.png) [@athelas](https://boards.straightdope.com/u/athelas)\ **Post date:** [August 30, 2009, 4:46am UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/99 "2009-08-30T04:46:43Z")
> [@Voyager](#): > > Was the social status gap smaller in the '90s along with the smaller wage gap? I don’t think so. I wouldn’t expect it to. Unfortunately, your beloved 1990s was a period of [increasing income inequality.](http://www.mindcontagion.org/images/usginiindex_ltgry.png) ---
**Author:** ![wmfellows](https://avatars.discourse-cdn.com/v4/letter/w/c2a13f/32.png) [@wmfellows](https://boards.straightdope.com/u/wmfellows)\ **Post date:** [August 30, 2009, 1:29pm UTC](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963/100 "2009-08-30T13:29:34Z")
> [@Sam\_Stone](#): > > Yeah, I see that picture made the rounds of the lefty blogosphere. But exactly which mortgage regulations were watered down? Do you have a bill number so I can look it up? Because I can’t find it. Before we assign blame, we have to look at the details of the bill and actually analyze why it might have done damage. But I can’t find any details. I believe Stone that the factual part of the claim was with respect, if I recall this correctly, to blocked regulation of mortgage brokers. That might be a correct claim or Lefty dreaming, but I believe this would be the item. > [@](#): > > The Democrats championed the Community Reinvestment Act, which pressured bankers into lowering lending standards. You keep doing this, and it’s **borderline dishonest if not lying.** Every bit of data I have seen on US lending, the majority of lending that was a problem was via entities not even subject to this community lending act. I believe that community lending act has been in place in the us for 30-40 years. It’s a dishonest argument in my book to point to it as the driver for lowered lending standards. I’m skipping the rest but to my outside eye your argument looks every bit as partisan and skewed as the Lefties. Saddens me to see such. [Previous page](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963.md?page=4) [Next page](https://boards.straightdope.com/t/challenge-to-economic-conservatives/507963.md?page=6)