tag:blogger.com,1999:blog-2098432983500045934.post7610697393517051007..comments2024-03-12T22:19:32.339-04:00Comments on The New Arthurian Economics: Notes for David Graeber's Public InquiryThe Arthurianhttp://www.blogger.com/profile/16501331051089400601noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2098432983500045934.post-24620026670650428332017-10-17T06:27:28.323-04:002017-10-17T06:27:28.323-04:00"Graeber didn't say government debt is le...<br />"Graeber didn't say government debt is less. You are still trying to change the meaning of his statement."<br /><br />I am not "trying to change the meaning of his statement." I am trying to understand and evaluate what Graeber said. He said:<br /><br />1. "there is an inverse relation between public and private debt levels."<br /><br />2. "If the public sector reduces its debt, overall private sector debt goes up."<br /><br />3. "the less the government is in debt, the more everyone else must be."<br /><br />His statements lead me to ask what things can happen if the public sector reduces its debt. I think my question is reasonable and relevant.<br /><br />I agree with you that "Graeber has the causality backwards" in 2008. But you are evaluating actual economic conditions and Graeber is not. Graeber is imposing generalizations on the economy, incorrect generalizations drawn from "sectoral balances" concepts.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-35442611610192184462017-10-16T18:03:41.465-04:002017-10-16T18:03:41.465-04:00"What happens when the government debt is les..."What happens when the government debt is less?"<br /><br />What difference does that make? Graeber didn't say government debt is less. You are still trying to change the meaning of his statement. <br /><br />Personally, I think the evidence suggests that Graeber has the causality backwards. In 2008 when private debt growth collapsed it forced the govt to borrow a lot more. Had the private sector not reduced its borrowing the govt would be less in debt. <br /><br />And that doesn't mean the government debt would be less. It means the govt accumulation of debt would be less than if the private sector had continued to grow its debt at $1 trillion every 3 months.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-5544247433305769672017-10-16T12:59:36.992-04:002017-10-16T12:59:36.992-04:00Jim,
Graeber's sentence: "But the real po...Jim,<br />Graeber's sentence: "But the real point here is, the less the government is in debt, the more everyone else must be."<br /><br />Q: What happens when the government debt is less?<br /><br />Case 1: Total Debt is Constant<br />Total Debt is Constant at 100 units.<br />Last year, government debt was 50.<br />This year, government debt is 46<br /><br />Everyone else's debt increased from 50 to 54.<br />Graeber's sentence is True when Total Debt is Constant.<br /><br />//<br /><br />Case 2: Total Debt is Growing<br />Last year Total Debt was 100<br />This year, Total Debt is 110<br />Last year, government debt was 50.<br />This year, government debt is 46<br /><br />Everyone else's debt increased from 50 to 64<br />Graeber's sentence is True when Total Debt is Increasing.<br /><br />//<br /><br />Case 3: Total Debt is Falling<br />Last year, Total Debt was 100<br />This year, Total Debt is 90<br />Last year, government debt was 50<br /><br />Case 3A<br />This year, government debt is 46<br />Everyone else's debt decreased from 50 to 44<br />Graeber's sentence is False in this case<br /><br />Case 3B<br />This year, government debt is 40<br />Everyone else's debt is unchanged at 50<br />Graeber's sentence is False in this case.<br /><br />Case 3C<br />This year, government debt is 36<br />Everyone else's debt increased from 50 to 54<br />Graeber's sentence is True in this case.<br /><br />//<br /><br />Graeber's sentence is true when Total Debt is Constant or Increasing.<br />But the sentence is not always true when Total Debt is Decreasing<br />As I said in the post: Graeber overlooks the possibility that total debt could be reduced.<br /><br />Mr. Graeber says "The crash happened because of dangerously high levels of private debt". You might think he would be open to the idea of reducing private debt.<br /><br />The scenarios for falling private debt would be similar to those I describe above, except the roles of "government" and "everyone else" would be reversed.<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-18195827582020893402017-10-16T10:34:15.774-04:002017-10-16T10:34:15.774-04:00I didn't mean Graeber thinks debt is not growi...I didn't mean Graeber thinks debt is not growing. I meant that to make his example work, he has to assume that the "debt is not growing" <br /><br />No he does not have to assume such nor does he. Only you have injected that assumption. <br /><br />You wrote: <br />" the less the government is in debt, the more everyone else must be."<br />If total debt is constant, his statement is obviously true. Otherwise, the truth of his statement is in doubt.<br /><br />You seem to conclude that the word "less" means less than Zero. It does not. It is obvious that if the govt increases taxes it will be less in debt than otherwise, but that doesn't imply its debt will be shrinking. It does imply that the private sector will have less to spend and therefore may need to borrow more to maintain the same level of spending. <br /><br /><br />There is plenty that could be criticized without introducing a different meaning to the words.jimnoreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-28869823822754789532017-10-16T09:47:55.861-04:002017-10-16T09:47:55.861-04:00Hey buddy.
"Graeber assumes the exact oppos...Hey buddy. <br /><br />"Graeber assumes the exact opposite. He sees constant growth of debt aggregates. As does Friedman and Congress and most everybody who weighs in on the subject."<br /><br />Yeah, sure, and me too. I didn't mean Graeber thinks debt is not growing. I meant that <i>to make his example work, he has to assume that the "debt is not growing" view is true</i>. That assumption invalidates his example and that part of his argument.<br /><br />Similarly, Friedman has to assume that output does not grow, because the growth of output undermines his argument that "the extra money raises prices". Friedman said inflation follows "the quantity of money <i>relative to output</i>". That means that if output grows enough, the extra money causes NO inflation. Or if output grows some, the extra money causes SOME inflation. But Friedman's position (in his example) is that the extra money ONLY raises prices. And for that to be true, there can be no growth of output.<br /><br />"Graeber observes that when one sector grows faster then the other sector grows slower and visa versa."<br /><br />I think my Graph #1 shows that the "when one sector grows faster then the other sector grows slower" idea is over-simplified and not always true.<br /><br />And whether Graeber holds that view or not, in the article he specifically says "the real point here is, <b>the less the government is in debt, the more everyone else must be</b>." If total debt is constant, his statement is obviously true. Otherwise, the truth of his statement is in doubt.<br /><br />Graeber could have said it the way you did, but he didn't. You can say I'm picking nits here (and maybe I am) but if he is gonna state an idea, he should state it correctly and clearly. So that his meaning is not open to question.<br /><br />Actually I was really happy with this sentence: "Graeber assumes zero change in total debt, so that government debt can only be reduced when some other sector increases its debt." I thought that was really clear. (But then, I wrote it!)<br /><br />I am not arguing against what sectoral balances tell us. I am arguing against incorrect statements about what sectoral balances tell us. It is necessary to simplify ideas, but it is harmful to simplify ideas so much that the simplifications are wrong. "The most important thing is to get the analysis right."<br />The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-2098432983500045934.post-59501857146537894732017-10-16T08:38:52.595-04:002017-10-16T08:38:52.595-04:00"Graeber's mistake is similar. Graeber as..."Graeber's mistake is similar. Graeber assumes zero change in total debt"<br /><br /><br />Actually no. Graeber assumes the exact opposite. He sees constant growth of debt aggregates. As does Friedman and Congress and most everybody who weighs in on the subject. <br />They all assume no growth would mean no expansion of the money supply resulting in economic collapse. He is not endorsing this as good design. He is just stating that is how its designed. <br /><br />Graeber observes that when one sector grows faster then the other sector grows slower and visa versa. <br /><br />https://www.youtube.com/watch?v=LxJW7hl8oqMjimnoreply@blogger.com