Eleventh-hour negotiations aren't uncommon in Washington, D.C., but the most recent duel over the debt limit seems especially tense. Unless its debt ceiling is raised from its current $14.3 trillion, or its budget is miraculously balanced, the U.S. will default on its financial obligations on August 2, leading to a credit downgrade, delayed government payments and other serious economic troubles.Debt default is an outcome that's almost unanimously opposed, so the failure of decision-making feels especially frustrating. With such complex political gamesmanship at play, neuroscience and game theory may offer some insight into the stalemate, suggesting that a sense of moral superiority could be disrupting a natural tendency to cooperate.From an immediate political perspective, the primary cause of the standoff is that Republicans won't raise the debt ceiling without major spending cuts, and they're unwilling to accept any tax increases as part of a deal. Needless to say, this position is a nonstarter for negotiation with the Democrats, many of whom want to increase tax revenues to ease the degree of the draconian cuts. At some point, a mutual decision will be made, leading both parties either to claim at least partial victory or to pass the responsibility to someone else.Viewed with scientific detachment, whatever compromise eventually emerges will be a remarkable product of the complex neuronal calculus that goes into collectivedecision-making. Each brain in the House and Senate is trying to master an intricate game of strategy. Risk is being measured against payoff, stakes are being continually reassessed, and all of these calculations are updated fluidly as new information becomes available. Moreover, each congressional brain has to run a simulation of other brains to determine whether cooperation is likely—a feat with its own host of computational complexities.
Read the rest at Scientific American: The Neuroscience of the Debt Debate, or Why Cooperation Takes a Backseat to Mistrust
I don't know about the neuroscience angle, but I do remember a time when even Republicans wouldn't seriously try to put Social Security and Medicare "on the table." Now we have Pres. Obama doing that very thing because he so wants to appear "reasonable."
ReplyDeleteI wish someone could explain to me why Republicans can be as ideological and inflexible as it is possible to be, while Democrats must always be non-ideological pragmatists "willing to work with the other side" no matter how senseless or destructive the other side might be.
The reality is, there should be no negotiation around the debt-ceiling. No sane person in the country wants the cuts and Wall Street will eventually yank on some choke chains and the thing will pass. Perhaps Obama is suffering under the delusion that somehow he is pulling in "Independents" with his "reasonableness." Maybe neuroscience can get to the bottom of this while we are still a "first world" country.
It doesn't matter what Republicans, Tea Party and Libertarians do - they are deficit terrorists and they are trying to paint Obama like Carter in 79 - > into a corner.
ReplyDeleteObama was actually kind of smart to offer medicare and SS directly to their plates.
It shows that they have no intention to really do anything about the "deficit" other than using the knowledge of MMT workings as a rouse for rascist procedure against Obama and the nation.
http://krugman.blogs.nytimes.com/2011/07/17/get-them-from-the-greeks/
ReplyDeleteFirst half is totally vapid, but looks like Kruggie is coming around to this idea of monetary sovereignty, though he is still not ready to fully embrace it: "And that’s not even to get into the issue of us having our own currency."
wh10,
ReplyDeleteKrugie will get on board once he finally figures out how to spin it to look like it was his idea and/or that he didnt have it all wrong for so long.... ego at work.
Tom, It would be interesting to find out what other kinds of human behavior stimulated the exact same biological brain responses that the debt debaters exhibit...
Resp,
@matt
ReplyDelete"once he finally figures out how to spin it to look like it was his idea and/or that he didnt have it all wrong for so long.... ego at work"
when MMT catches on can you fathom how much spin is going to be needed to spin them out of this epic mess they have perpetuated. i'm gonna start a PR firm to mend damaged reputations. i'll make a killing.
Craig,
ReplyDeleteTom has indicated that moving forward could take the existing generation to "pass the baton" to the next generation, so this may take some time if this is the way it has to go. (See Neil Howe's 'Fourth Turning')
We perhaps at worst may have to wait until all of the current zombies in the orthodoxy of economic academia finally do the world a favor and expire....
Resp,
@franco
ReplyDelete"current zombies in the orthodoxy of economic academia finally do the world a favor and expire"
i may be naive but i don't think we need to wait for them to expires - although the thought is entertaining. everything is changing at a lightning speed. technology, social change, and mental memes. what's cool is that we are on the vanguard for watching all this stuff happening. can you imagine the revolutionary impact that MMT will have on the world - to me the possibilities are unfathomable. sure we're gonna have flat earthers. even einstein wasn't able to grasp, internalize, agree with quantum physics. we either change with the world or we simply become marginalized and less important.
“I wish someone could explain to me why Republicans can be as ideological and inflexible as it is possible to be, while Democrats must always be non-ideological pragmatists "willing to work with the other side" no matter how senseless or destructive the other side might be.””
ReplyDeleteI will put forth a guess. The Republican party created a Frankenstein monster.
What I mean by that: For about the last 30 years or so, the Republican party has been courting the evangelical vote. That demographic of Americans statistically did not vote historically. Many Republican strategists thought it was a complete waste of resources to court that vote. But inroads were made and by 2000, that group was turning into a base for Republicans. Today that group is probably one of the most dependable and partisan voting groups around and has possibly become the major base of the Republican party. Therefore, that group has major influence on Republican policy and actions.
A major trait of that group is their worldview/outlook – to them, almost every issue has a “good” and “evil” side, with no in-between. That outlook typically leads to an attitude that is bellicose and anti-flexible. So what you explained above is likely just a simple reflection of this attitude.
@ David & Matt,
ReplyDeleteGeorge Lakoff explains politics in terms of cognitive science and what progressives need to do to counter the rhetoric of the right in The Political Mind: Why You Can't Understand 21st-Century American Politics with an 18th-Century Brain (2008).
I've tracked luntz and lackoff for a while. i'm trying to pick up with what they are saying by redefining the frame, hence, change the frame change the game. however, i'm not framing in terms of compassion. i'm framing in operational efficiency and effectiveness - ie. throughput, optimization, utilization. all the metrics any plant management would want to know if he was running a processing plant. thats why i keep coming back to this being a colossal operational failure by management. from an engineers perspective these economists should be fired. the whole lot of them...or i guess "expire" as googleheim proposes :-)
ReplyDeleteThe engineering should be efficient and effective. Efficiency is about means and effectiveness about desired output and goals.
ReplyDelete"Efficiency is doing things right and effectiveness is doing the right things." — attributed to Peter F. Drucker.
MMT combines efficiency (understanding of monetary system operations) and effectiveness (public purpose, common good).
Is it really untenable to go back to 2008 spending-levels? Are we supposed to buy the notion that all spending is good spending? A lot of people are riled about Federal spending because they see the worthless uses of capital the government has been employing since the financial crisis. Is there a MMT rule against smart government spending? Why should citizens simply accept incompetence from Congress with money? Why haven't we done some purposeful infrastructure build-out, rather than these pet project economic band-aids? I think wise ues of capital by the government is far superiour to mere "use of capital". Why should intelligence and stimulus be mutually esclusive?
ReplyDeleteI want:
-Lower Corporate tax rates
-Maintanance of capital gains at the current level
-Elimination of death duties -- why should the government confiscate incentive and wealth? Expecially if the Fed is not spending constrained.
If one attempts to make some lame argument about "the Governemnt gave you this opprotunity/wealth", I say "who created the government?". The government is accountable to the people, not its master.
Crake,
ReplyDelete"A major trait of that group is their worldview/outlook – to them, almost every issue has a “good” and “evil” side, with no in-between."
This is actually how I look at these things (mostly).
And I cannot see how advocating for policies and arrangements that we can see that by design lead to a mass of people being separated from their ability to provide their own means of subsistence can be looked at as anything but "evil".... or perhaps a better word would be what Paul called "lawlessness" (Greek: anomia: UN-law).
M Bachmann (an Evangelical) used the term "tough love" in her economic interview I posted up here the other week, this is a non-scriptural term. "tough love" does not appear in the Greek scriptures.
I believe there is only philos (sp?) and agape (sp?) in the Scriptures and neither can be translated as "tough love"....Bachmann on this one (ie tough love) is literally making her own stuff up.... and this goes on and on . Resp,
@tom good quote. need to file that one away too.
ReplyDeleteKing, a basic principle of MMT is that if unemployment is high and there is an output gap, then the fiscal deficit is too low. The deficit can be increased in two ways, lowering taxes and raising expenditure.
ReplyDeleteThere is a discretionary and non-discretionary aspect to this. The deficit goes up automatically when there is an output gap (economic contraction) because revenue falls, and it also goes up when there is accompanying high unemployment because automatic stabilization kicks in. The largest factor in the current deficit is falling revenue. Revenue falling in contraction and automatic stabilization with higher unemployment is non-discretionary.
If that does not do it, then further action needs to be taken to increase the deficit to offset increased non-government saving desire. The balance between revenue and expenditure is a political issue. This is the discretionary aspect.
The problem here is that politics is skewed by ignorance, ideology, and influence. Until the US gets the money out of politics and closes the revolving door, the bulk of political action is going to be for those that fund now astronomically expensive campaigns.
Where we can have an effect, however, is in removing ignorance and showing the weaknesses in the opposing ideologies. Both sides have their good points and bad ones, too.
In the end, the debates comes down to a difference in values, and this is generally where argument gets bogged down. For example, since the inception of the republic, there has been an ongoing conflict between the federalists and the states' righters.
What MMT would say here is that states' righters should understand that the federal government is the currency issuer and states are currency users. This has far-reaching implications. For states to become currency issuers, a whole new monetary system would be required and a whole new political system on top of it.
If anyone finds the source of that putative Drucker quote, please let me know. It is widely referred to, but I can't track down a citation to his work.
ReplyDelete