Comments on: Still Manufacturing Myths Aplenty

By: JohnK

JohnK — Tue, 24 Nov 2009 12:15:00 +0000

In the case of the mill towns without mills, the government has stepped in to take care of the now jobless people, and these social services are paid for in part with foreign debt.
So instead of producing goods to be sold overseas and having that money keep the town alive, we’re selling debt overseas and paying people to do nothing.

Such a system can’t go on forever.

By: Anonymous

Anonymous — Tue, 24 Nov 2009 08:17:00 +0000

Barbarossa,I just skimmed, because I’m on my way to bed, but even if your assertion that service jobs can’t be exported is true, I don’t see that it matters. The debt will be paid by the US government taxing the shit out of producers, even if those producers are only producing services for their fellow Americans.And, even if our economy was driven by heavy industry selling locomotives to Bolivia, the debt will be repaid by the government taxing the shit out of locomotive builders.

By: Barbarossa

Barbarossa — Tue, 24 Nov 2009 07:59:00 +0000

“bo” is actually me. Damn, I must have been drinking longer than I thought.

By: Barbarossa

Barbarossa — Tue, 24 Nov 2009 07:55:00 +0000

And don’t forget, we, unlike every other country or any involved in a theoretical model, can repay our debts in our own currency. Surely, that has some effect on the outcome.

By: Barbarossa

Barbarossa — Tue, 24 Nov 2009 07:51:00 +0000

And it’s not like most of this debt was actually accumulated for investment purposes, in which case it might legitimately be said that the debt was a “good” thing or “indeterminately good or bad.” So much of the debt was not done on the free market, but was done by foreign central banks/governments and/or through our own central bank/government. And any debt that our government incurs can rightly be categorized as wasteful consumption, something on which Mises, certainly Hayek, would agree. Foreigners see Treasuries as “investments” because they are “guaranteed” by the U.S. taxpayer, but Austrians of course know that government expenditure and debt can never be considered investment in any real sense, only in a faux or illusory sense, as has been the case with foreign creditors. Though they may perceive such debt as investment, it is only investment insofar as it is able parasitically to drain the productive sectors of the economy through taxation or inflation, and thus such debt, if continually increased, can never be sustainable. Even if foreign central banks (read: non-free market entities) weren’t such major purchasers of T-bills and our debt was purchased entirely by private economic actors, such purchases would nonetheless remain non-free market and would therefore be tantamount to wasteful consumption expenditure as well as a real loss to the productive sector. I’ve been drinking, so I hope at least some of this makes sense, but I won’t begrudge anyone who shuts me down or dismisses me simply as an alcoholic.