Saturday, June 18, 2011

The Poor Man’s Economic Argument

B: I’m a businessman, but only in the loosest of meanings of the word. I don’t spend my nights hovering over financials. I don’t personally oversee hiring, firing, buying- I’m a businessman in the most abstract of terms.

At my level, I speak in generalities. Because when you’re making multi-billion dollar decisions, spreadsheets don’t win people over. You still need those, because other people operating at this level had their own accountants who want to make sure the numbers add up, but to win over the bosses, you have to be able to craft a story.

And I think I finally have one for this economy.

Imagine our economy is a poor man. He works hard, but he doesn’t make enough to pay all his bills. So he’s deeply in debt.

Then he becomes ill. It’s not life-threatening, but it’s that kind of long, lingering illness that will stay with you for weeks, perhaps months, if untreated. He manages to go to work, but his productivity plummets, and his piece-rate wage dips.

So now he’s ill, and having even more difficulty making his bills. He’s worried that perhaps his credit can’t take the hit.

He’s not sure what to do. Medicine, and good food, could help him get healthy faster. It would also mean going deeper into debt. But there’s the chance that if he gets healthy faster, his productivity might go back up fast enough to make up for whatever extra debt he took on. He could even come out of it ahead.

It’s essentially the same argument I’ve been making, and it’s the same one Paul Krugman has, as well- though this is certainly closer to a parable.

DI: But the nutshell, basically, is that austerity during a fiscal crisis might be counterproductive.

B: Exactly. If the economy were healthy, telling the man in our scenario to do more to live within his means would be completely appropriate. But with a frail economy, it is harder to see how doubling-down on shrinking the economy is a good idea.

DI: Okay, you lost me.

B: Government spending doesn’t happen in a vacuum. It goes to contractors and workers who then filter that money to other parts of the economy. If that money suddenly disappears, then it takes money out of the economy. Put another way, a highway construction worker who eats a cheeseburger every day for lunch who gets laid off is no longer buying that cheeseburger. Worse, you’re only partially defraying the costs, since he’s likely to go on unemployment, so you’re still paying for some of his work, only with none of his productivity.

There’s nothing wrong with asking how large a government we should have, what functions it should provide, and how much we’re willing to pay for it. But I’m worried that the spending cuts we’re looking at now, they aren’t helpful, and they may even be like ancient physicians trying to bleed a patient back to health.

DI: I want to come back to your specific formulation, there. You were very deliberate in saying “how much we’re willing to pay” for government. Why was that?

B: Because it’s unfair to say, “this is how much I want to pay” for something. Ideally, government would be free. In a perfect world, food and shelter would be free, too. And when I stop at a burger place, I don’t want to pay seven bucks for a burger- but that’s how much it costs, after paying for the ingredients, the rent, the staff, and a reasonable margin of profit for the owners.

And government exists largely within the same constraints. I don’t want to pay $1300 per person for Medicare, but that’s how expensive it is- and those costs are 40% cheaper than private insurance would be.

There’s tension, between how much we want government to be able to do for us, and how much of that we’re willing to pay for. And that’s certainly a discussion we should be having, on a continual basis that we aren’t.

I see similar problems in discussions of the debt ceiling. A majority of Americans favor not raising the debt ceiling.

I understand those poll results, in the context that people conflate the debt with the budget. But the ceiling isn’t the budget. The ceiling is the credit card bill. These are things that previous Congresses approved, laws already enacted, spending already carried out. This is money owed, money that other people are expecting to come in- that individuals and businesses and potentially entire economies are counting on.

Part of the reason the financial crisis had such reverberations is that people who were responsible, who shouldn’t have been in trouble, suddenly weren’t being paid for services rendered. But the government is several times larger than any failed company- and the splash its default would make is tough to even comprehend.

But the worst problem is that even when the ceiling gets its eventual raise, this grandstanding about not raising the debt limit could drop our credit rating.

DI: Crap. And then our rates go up. And we enter the debt death-spiral basically anyone whose ever been poor or in college is familiar with- and that includes journalists who paid their way through school. But can’t not fixing our debt problems also destroy our credit?

B: This is definitely a danger. But what markets want is long-term sustainability. They want to see that the government is going to be able to keep paying it’s bills. One way to do that is to stop using the heat in the house. The other is to bring home more revenue.

And there’s nothing- save for the Republican leadership- saying we can’t try a combination of both. My preference has always been for finding ways that the government can be leaner, without destroying its ability to help its citizens. And frankly there are a lot of people out there who don’t pay their fair share of the taxes- largely because of a disparity of lobbying power.

DI: Okay, I think we’ve filled out space quota. But you know what happens whenever you rant politically, don’t you? We live-write some more Wonder Woman pilot. The last bit was here, but why don’t you give us a quick, “Last time one Wonder Woman” synopsis.

B: Last time, on Wonder Woman, she punched me through a window to safeguard a woman wanted in connection with a murder investigation. We open on Cale Pharmaceuticals, specifically their Gotham research facility. Diana is dressed in smart business attire, with her hair up in a bun.

DI: Sounds very naughty librarian.

B: She’s only there to observe. She’s with Detective Bullock, overweight and overbearing, with a cadre of uniformed officers. They’re investigating the claims about Kapatellis.

DI: You’re telling, not showing.

B: Diana watches as Veronica Cale, who flew there in her helicopter, argues with Bullock about the validity of his warrant. Her lawyer gave up minutes ago, but she’s still staring angrily at Bullock.

Amanda Waller, Department of Metahuman Affairs. She’s the person you’ll have to take that up with. The ambassador is here as a courtesy; the information for our warrant came from her embassy. Everything else, including the thousand dollar words and the ten-thousand dollar mouthpiece, are above my paygrade. Now if you’ll allow me through, I’d hate to have to charge you with obstruction.

Her lawyer nods, and Cale steps out of the way. Diana and Cale exchange an icy stare, but Diana plays her cards close to the vest. She believes Cale is up to something, but isn’t ready to stake her name and reputation on it. Yet.

We cut to cops looking through lab material. And cut again, to the cops leaving, tails between their legs. Cale is triumphant. Bullock is talking to Diana.



No Kapatellis, none of the equipment you expect to find, either. Looks clean.

You were expecting, what? Frankenstein monsters and imprisoned orphans? This is a pharmaceutical company in Gotham, not the Liberal conception of a third world sweat shop. Now if you’re done, I have a business to run.

Bullock tips his hat at Cale.


Are you going to join in anytime soon?

DI: Sorry. I was transfixed by that accent you were doing for Bullock.


Unless you require anything further, I can start drafting a harassment complaint against the Amazon.

She waves him away with her hand. The solid wall behind her shimmers, and a man, handsome and tall, steps through where it had been.

DI: Behind him, we can see indeed a grotesque menagerie of scientific and surgical apparatuses. Bathed largely in shadow is the face of a young woman.

They only saw what we wanted them to see.


Thank you, Edgar.

DI: We zoom in on that face in the background, as the woman eye opens wide, panicked and afraid. Cut to black.

B: And a commercial break?

DI: You aren’t that lucky. We’re back on the sidewalk. Diana exits the building. We see a black limousine parked on the curb.

B: Don’t.

DI: We here a man’s voice from offscreen, behind Diana.

Diana. I didn’t expect to see you back in Gotham so soon.

DI: She recognizes the voice, and smiles as she turns to see Bruce Wayne.


Bruce, how are the ribs?


You’re breathing heavily.


You have that effect on men.

B: I hate you.

I’m sorry.

DI: He can’t let it go that easily. But then he smiles, wide, because they’re not alone anymore.

Always a pleasure, Madame Ambassador. And I’ll have my office get in touch with yours about that fundraiser.

You shake hands, and yours lingers, just a moment. There’s a lot in that handshake.

And now we mercifully go to commercial.

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