Hacker News Reader

Comment by andriesm | Hacker News Reader

I interpret "government should stop spending money they don't have" metaphorically as standing in for "don't spend so much money (especially in economically unproductive ways) that it devalues money and misallocates resources so much that it slows down economic growth".

I think simplistic statements "government should not spend money it doesn't have" or "government should stop spending so much money" are all just the normal average person's way of trying to phrase this fundamental economic truth that anyone with a working brain can intuit.

It's obvious that governments cannot just spend any arbitrary large amount of money without consequence.

It's also obvious to anyone, that just like eating too many calories, it's much easier to overspend than to underspend.

So constant calls for governments to go on monetary diets and "make better food choices" are clearly warranted.

View on HN

> I think simplistic statements "government should not spend money it doesn't have" or "government should stop spending so much money" are all just the normal average person's way of trying to phrase this fundamental economic truth that anyone with a working brain can intuit.

There Is Always a Well-Known Solution to Every Human Problem—Neat, Plausible, and Wrong

> It's also obvious to anyone, that just like eating too many calories, it's much eadier to overspend than to underspend.

You accidentally came up with the best possible illustration for the topic, and it's a really good illustration that actually goes against your argument:

- If you eat too much, you'll get fat and unhealthy.

- If you eat too little, you'll die from starvation.

And you're right, it's exactly the same for government spending: if the government spends too much, it's not good, but if it's spends too little the economy's dead.

Wouldn't an economic indicator for the "right level" be nice? Maintained by some economic research institute (without some obvious agenda)?

Or does that already exist, I just don't know it?

Maybe it's not just one-dimensional though, i.e., it could matter where exactly spending occurs.

There's no such thing as an economic institute without an obvious agenda, and generally no way that we know to compute the optimal spending. And even if there was some way to decide how much to spend, there would still be the insurmountable problem of deciding what to spend this money on.

It's pretty obvious that some uses of money are more useful than others - if the state spent large amounts of money on buying snow and storing it in the sun, that's not going to have the same kind of effect as spending the exact same amount of money on building new roads. But beyond obviously silly examples, no one can really agree on even the basics of the effects of government spending in other areas.

For example, a question like "if the government pays very large pensions and social aids, does that increase the economy as much as spending the same amount of money on subsidizing private business?" is extremely divisive in economic circles - with opposing schools of economics claiming opposite results as the "obvious scientific answer".

Technically there are a few different ways you can potentially eat yourself to death.

Also I'd say the balanced budget "extreme" is more directly analogous to maintaining a balance of calories in versus out, not starvation.

That's too much of a balanced take though than touted by lots of populists.

Germany put it recently into their constitution that new debt is strictly limited, literally called the "debt brake". That overlooks all the nuances you just explained and in the worst case can cripple the German economy. German politics is full of folks demanding the "black zero", meaning essentially no (new) state debt. It's the literal sense, not the metaphorical sense that you are describing. And people buy it, since that's how their household economy works too. They even have a metaphor for that ("schwäbische hausfrau").

It's terrible. The debt brake is just as bad for their economy as the "rent lid" that's very popular among the German left which is crippling their housing sector.

The worst thing about Germany is how the conservatives have brainwashed their citizens into believing that Hitler came to power “because of high inflation” because they wanted people to forget that Hitler came because of their policies (especially Brüning's deflationary policies). And in the end, with the debt break they just constitutionalized the economic policy that put the Nazi to power, and now unsurprisingly the AfD is booming.

Appreciate your defense of me - that is the point I was trying to make :)

I would go into more depth, but I find there are a lot of people that just fundamentally have different views on economics XD

Reply on news.ycombinator.com