On Peter Morici On the Trade Deficit

"instead it reflects too much irresponsible spending by the same agency - Uncle Sam"

Can you name one instance of irresponsible spending by Uncle Sam? My elderly mother still uses that trick on me by saying I waste my money on junk. She, on the other hand, will go to her grave a rich lady. She might have done some good with her money during her lifetime, rather than sock it away for a thousand rainy days. She even might have given me some money to buy more junk. Junk makes me happy.

Agencies often spend for the sake of spending. If they fail to spend their allotment, they often face a decreased budget the next year. In order to maintain at least the current level of resources, the must spend at the minimum what was set aside for their projects.

Can you name one instance of irresponsible spending by Uncle Sam?

Iraq?

Hmmm... Buying a dinner for your friends - nice. Buying a dinner for your friends on a credit card that is past due and you don't have money to pay off - irresponsible spending.

If "First order of business" was written by a semi-literate journalist, it would be just boring. Written by professor of a business school and a “former chief economist at the U.S. International Trade Commission” – terrifying… How many professors like this are there… how many students they have “educated”…

How about the Medicare Part D, the one that increase the long term liabilities of the federal government by trillions.

trumplet,

Just can't resist the temptation to be obnoxious to you.

Tell us, did you your dear mother get all of her money by stealing from you and your fellow men? That's where your government gets its money, or didn't you know that?

See, if she had given you some, that would be irresponsible spending because like all the socialist pigs at the trough, once they get a taste of free slop they can't stop crowding the trough, and that's your story isn't it.

It takes a moral person with character to say no to stolen goods, even when the stolen goods may make their own life easier.

"Can you name one instance of irresponsible spending by Uncle Sam?"

Posted by: Trumpit | Nov 13, 2008 6:41:52 PM

I can. Everything spent by LBJ on his Great Society.

$600 million to Archer Daniels Midland by President Clinton and the Democrat Congress in 1993, for the advertising of ADM's products overseas.

$300 million to the Popcorn Council of America by Clinton and the same Congress, same year, for the same reason.

20 Billion to the IRS to fix problems with their computers, programs, and collection deficiencies, also by Clinton and the Democrat Congress in the same year.

Oh lord, answering your question is like shooting fish in a barrel!

Those are just some, but by no means all, real quick and easy answers to your ill timed question.

vidyohs,

Please resist that urge next time.

Thank you.

Prof Roberts,

And, here I am being a good boy.

It is your blog and you set the rules, which I have been trying to adhere to since comments were reopened, but gosh I was kinda hoping I'd be asked to give more examples of the insane squandering of the people's money. I can say confidently that, having spent 21 years active duty in the Navy and another 3 as a civilian in Army Communications, I know of enough insane squandering to make us all physically ill.

It isn't an ad hominem attack to call the thug in the alley that just stole your money at gunpoint a lowlife thief. That being true, is it an ad hominem attack to call those that defend the thug's actions lowlife thieves as well?

I can certainly justify rationally every accusation I throw at government, particularly that which ours has morphed into, and am happy to do so.

But as you pointed out in your post to muirgeo, rational arguments that fall on irrational minds are wasted. But that is kinda my point about trumpit as well because in case you haven't noticed, he is a clone of muirgeo, perhaps a tad more articulate and cleverly cute, but a clone none-the-less.

Prof Roberts,

Not to beat the horse now that he is dead, but I feel you should know that my use of the word obnoxious was a tounge in cheek reference to trumpit's ad hominem attack on my sterling character on this thread:

Wintertime Temperatures Cold at the North Pole

Don Boudreaux

You will notice I declined to do the tit for tat thing. I kept my reply to the sarcastic and cleverly hid my contempt for the low level of intelligence shown in trumpit's question. Didn't I?

"J.P. Morgan's announcement that it will rework about $70 billion in mortgages by writing down balances owed and restructuring payments may be the exception that proves the rule."

I'm clearly a fool for buying homes that I can afford with credit not drawn from a large bank close to the Federal Reserve/Treasury. My children will know better.

Can we invert the cause and effect? American dollars must be recycled somehow, those presidential portraits have no intrinsic value under Chinese mattresses. US government debt provides an alternative to using those dollars to purchase US goods and services. It seems at least plausible that the willingness of the US government to take on the foreign debt is a contributing cause to the trade deficit and will have a depressing effect on US industry.

If Toyota sells a car for $25K, it can't sock away $25K (making the deficit minus $25K) because it has to pay transaction costs on that money in the states.

This doesn't change the point, I realize.

The interesting question to me is how much money did it take to get to $25K in the first place, the consumer had to earn much more than that to start with, then Toyota has to account for all the taxes on the back end, and each of their vendors prices their products to include their tax bite and the salesmen need to charge enough commission (including their taxes) so that they net enough to justify the job.

I'd guess at least 8-10 grand of the cost of the car is going to the state anyway, in one form or another, and that doesn't count the 5+ thousand the consumer had to pay in taxes to get to keep the 25K he spent on the car.

"Camry and Toyota" kind of redundant dr. B., but otherwise a pearl of wisdom as usual

LCJ

Good way to make a point and illustrate the potential.

However, my list of “irresponsible (read stupid) spending” by government is of more the personal nature as I saw a lot of what I know up close and either first hand observation or second hand through communications I was privy to.

It has been obvious for a long time that most people really do not have a firm understanding of what government really is, this is particularly true of people such as Dr. George, trumpit, Gil, nunya, sethstorm, and others.

Those people project the idea that government is a warm benevolent, all powerful, all forgiving, all knowing, nurturing, and centrally located God.

Let me now turn my pointer to those people and to anyone else naïve enough to think that way.

Water always follows the path of least resistance and always puddles in low spots. A cesspool is foul but still mostly water.

The cesspool of government flowed out of D.C. long ago and followed the path of least resistance (local governments that welcomed the “free” stuff promised by government) and puddled all across the nation. Those puddles are the multitude of federal agencies and offices found in city after city all across the nation and all around the world, those puddles are any military installation, national guard, police office, FBI-BATF-DEA-INS-and the other alphabet soup agencies, SSA offices, State Dept, in short the nation and world is covered with “government” and all of those puddles have budgets and spend our money pretty much unsupervised and in astounding ways.

The above explanation of what government is will, I hope, in the future aid people in understanding when topics like this come up. “Government” spending and waste happens right next door to us, not just in the distant city of Washington D.C.

I would submit to debate and defend to the death the understanding that every penny spent by “government” on the Branch Davidian, brutal and deadly, fiasco at Waco qualifies as irresponsible spending. Considering that, at any time they wanted, the County Sheriff could have arrested David Koresh as he jogged virtually daily along the public Farm to Market road that ran by the compound.

I can make the same case for the murderous attack on Randy Weaver and family at Ruby Ridge, Idaho.

But beyond that, how’s this? In 1968 I worked in a shack at the NSGA facility Kamiseya, Japan. Our comm. gear was antiquated and difficult to use due to the uncertainty of what frequencies we were on at any given time. To use the stuff required knowledge, skill, and constant calibration beyond anything an outsider could comprehend. We found, just up the road from us, a company that was making a small (cigar box sized) freq meter that had digital readout of the precise frequency it was receiving from a radio. Its price was $1,000. We bought one out of our division fund and put it to work. Within a week it was considered one of the most valuable improvements to our performance ever imagined. Our officers drafted a letter to COMNAVSECGRU detailing our find and its evaluation and suggesting that the freq meter be purchased for each of the other 16 installations using the same antiquated gear we had. CNSG agreed and the purchase was authorized.

Oh no, we did not get a check for $16,000 and drive up the road and buy 16 more freq meters and ship them out within the week. The purchase went through the military procurement system, cost $160,000 and took six months to deliver. Someone tell me, is that irresponsible spending or not?

In 1971 at my base NAVCOMSTA NW, VA., we needed more barracks space for single guys. Top of the line mobile homes 12.5 X 60 had an average purchase price of $8,500 in the Norfolk, Va. Area. The military negotiated a real deal. They leased four mobile homes of the aforementioned size at a cost of $100,000 per year each, total cost $400,000. And, were still stuck with the interior conversion of each so that 8 men could be housed in each. Sum it up, $34,000 could have bought them outright but the government decided to lease at a cost of $400,000 per year and signed an 8 year contract. Someone tell me, is this irresponsible spending?

54 brandnew out of the box conference room chairs, ordered professionally cleaned at a cost of $10 each, simply because the XO of the Tooele Army Depo decided to do it. $540 thrown away. Someone tell me, is this irresponsible spending. Bear in mind that though this is a pretty small amount, this kind of crap is going on everyday in all those cesspool puddles all across the nation and around the world. So multiply $540 by say 2500 and it is a pretty good chuck of change, because if they aren’t cleaning chairs I guarantee you that they are finding some other ingenious way to waste money.

1976, millions wasted in 6th fleet action in the Med, looking for a bad boy sub because CINCMED wanted to impress a Senator at how efficient the Navy was. Meanwhile we, in Rota, Spain, knew exactly where their target was and it was some 300 miles from wher the 6th fleet was searching. We were ordered to keep the info to ourselves and not notify CINCMED because it would embarrass the Admiral. Someone tell me, is this squandering of millions irresponsible spending?

A 18 ton anchor (Cruiser) shipped from Oakland, Ca to Rocky Mountain Flats, CO. because government thought it was funny that a person had made a mistake in one number of the product codes in the supply system, so instead of checking to ask if a nuclear storage facility really wanted an anchor of that magnitude, it was shipped at an enormous cost. Someone tell me, is this irresponsible government spending?

I could go on and on about what I witnessed personally but it would not even scratch the surface of the squander potential of the list sent by LCJ, of course what I cited above is included in that list.

Irresponsible spending by government is so wide spread and so well known that for some one to ask to be shown evidence of “one single case of irresponsible government spending” tells you so much about that person’s motives, ignorance, and agenda.

Apparently we've had a balanced trade in containers, so that imports and exports of stuff was balanced by volume. Containers in, containers out. But now, with America importing less, we're having trouble getting enough containers to ship out exports:

http://www.npr.org/templates/story/story.php?st...>

DB: "If Mr. Morici pays $25,000 cash for a new Camry and Toyota then squirrels those dollars away in a safe, the U.S. trade deficit rises by $25,000 but Americans' debt hasn't risen by a dime as a result."

I don't understand this at all. If Mr. Morici PAYS $25K cash for a car, he is up a car and down $25K in cash. So he can squirrel a car away in a (very large) safe, but he can't "squirrel[] those dollars away in a safe". I'm either misunderstanding (micro) balance of trade or perhaps Don has misstated this??

Is Mr. Morici an American or a foreigner?

RL: I don't understand this at all. If Mr. Morici PAYS $25K cash for a car, he is up a car and down $25K in cash. So he can squirrel a car away in a (very large) safe, but he can't "squirrel[] those dollars away in a safe". I'm either misunderstanding (micro) balance of trade or perhaps Don has misstated this??

Is Mr. Morici an American or a foreigner?

I think Don B.'s statement might have been better written as "...Camry, and Toyota...".

The dollars are being squirreled away by Toyota the company.

Christopher, THANKS!

It's obvious after you point that out. Just totally spaced on it.

The U.S. is dependent on foreign products for its energy, food and leisure needs. Simply put: America is consuming more than it produces. And as this imbalance continues to grow, the long-term risks to the economy become a more severe economic issue.