I hope this isn’t accurate…

By skepticlawyer

… But I have a nasty feeling it is.

billion_dollar_960

22 Comments

  1. David Stalker
    Posted September 1, 2009 at 12:21 pm | Permalink

    If the above figures are true, then its little wonder a large percentage of the worlds population is starving to death.
    If we do not radically change the way we think, then our very existence is under threat.

  2. Posted September 1, 2009 at 1:32 pm | Permalink

    Res ipsa loquitur. Sadly.

  3. Posted September 1, 2009 at 5:30 pm | Permalink

    I’d like to see Global Pharmaceutical market broken down further into sub-categories one of which would be ‘legal drug market’.

    Just look at that Iraq War. Can we bill the Oil Industry at some point? Or Dick Cheney personally. I’d like to see Dick Cheney working at McDonald’s. Alongside James Packer about a year from now.

    No. McDonald’s uniforms are waayy too stylish and dignified for Cheney. Something where you have to dress like a big turkey and kids can kick your bum.

  4. Posted September 1, 2009 at 5:49 pm | Permalink

    It’s the way the modern spends utterly dwarf the Marshall Plan that blows me away. Something has happened to make us way less efficient at spending public money since then…

  5. Posted September 1, 2009 at 6:48 pm | Permalink

    Something has happened to make us way less efficient at spending public money since then
    .
    Yes in the 40s and 50s Americans were well-educated, thrifty, hard-working and skeptical people.

    Today they resemble what happens to porridge after hungry dogs have been at it.

  6. Posted September 1, 2009 at 8:03 pm | Permalink

    [email protected] said “Something has happened to make us way less efficient at spending public money since then”

    I’d say rise of profiteering from outsourced services (even for core traditional functions like military action) with poor governance, and the rise of shonkier public-private partnership funding model has something to do with it. And the financial system bailout is soooo big… I wonder if this, together with polluter subsidies, should be grouped together with the heading “moral hazard funding”

  7. Posted September 1, 2009 at 10:41 pm | Permalink

    It would be nice and convenient to apply an ideological prism to this, but it doesn’t hold. The Marshall Plan contracts were awarded overwhelmingly to private interests: smaller firms in Germany, larger ones (the remains of the zaibatsu) in Japan. I don’t doubt, however, that where contracts went to government bodies, they were managed efficiently.

    My point is a different one: both public and private bodies have lost the skill of thrift. Now that may be due to rent-seeking and moral hazard, but if so, then something in governance — both public and private — is seriously awry. I do think much of the worst of the financial crisis was precipitated by a naive belief that because industrial capitalism makes so many people rich, it could make everyone rich. I don’t like to say this, but it may be that a decently large number of people will not only always be poor, but can’t be anything other than poor.

    We can confer longer life and better education and more opportunities thanks to free market capitalism… but anything more than that blows up in our faces. It either kills millions (the failed socialist experiment) or it costs billions (the sub-prime precipitated GFC).

  8. jc
    Posted September 2, 2009 at 1:46 pm | Permalink

    I usually turn off when they wheel out the kids, especially the starving ones in these comparison studies.

    Look, the Marshall plan was never the big policy it publicized as. The real policy that got things working was a semblance of agreement between Western Countries (but primarily the US) allowing relatively open markets to trade and relative stability in the monetary regime.

    I’m libertarian, however I recognize the bank bailout may have been needed especially after the Lehman collapse, as the news at the time was that the payments system was about to implode. If that happened civilization as we know it would have ended. I’m not being dramatic when I say this, as it seems to be true.

    It could have meant basic things like restocking of supermarkets could have stopped, as no one would be certain they would get paid. The daily conveyor belt of the payments system looked like it was going to stop in the matter of hours.

  9. Tim Quilty
    Posted September 2, 2009 at 4:02 pm | Permalink

    I think a lot of the soaring costs of everything by comparison is tied to rapidly rising labour costs in developed countries. This soaks up most of everything. Public sector wages rising in tandem with the private sector, Managers wanting to pay themselves more and larger bonuses to keep a decent % gap between them and the workers.

    In other words greatly improved standards of living. And with all the money endlessly rolling in, why would anyone be thrifty?

  10. Posted September 2, 2009 at 5:31 pm | Permalink

    It’s the way the modern spends utterly dwarf the Marshall Plan that blows me away. Something has happened to make us way less efficient at spending public money since then..

    I wonder what.

    I noticed that too. But the Marshall Plan was about rebuilding real stuff in the real world. The GFC bail-outs were about rescuing a financial sector which has long been dwarfing the ‘real’ economy with the various fancy numbers games. A factor? I wouldn’t know.

    My point is a different one: both public and private bodies have lost the skill of thrift.

    Yeah I agree. I think it goes all the way from individual up. Usually does. The trouble with democracies is that govt become incresingly required to supply an increasingly spoilt population with increasing amounts of swag. When Carter and reagan went head to head, Carter was telling everyone that America had to tighten its belt and wean itself off imported oil. Reagan told people to Hell with that. (It would’ve been fine if it wasn’t for Dubya’s evangelism.) But Carter was right it’s just that after ten years of despiriting rifts, stagflation and social disruption and four years of, well, Jimmy Carter (preceded by Ford and Nixon; Yikes!)…

    The Seppos were having none of the belt tightening schpiel and gave Carter the boot. They then forgot that borrowing dulleth husbandry.

  11. su
    Posted September 2, 2009 at 6:19 pm | Permalink

    David Kilcullen has been in the media a fair bit lately, talking about Iraq and Afghanistan. I saw the telecast of a press club talk today where he spoke about the difficulty of restructuring defence because all of that military hardware, underutilized in conflicts like Iraq and Afghanistan, entail the employment of very large numbers of people. He quoted a whole heap of comparison figures for spending on conventional warfare vs counterinsurgency which were very striking. It is cheaper to fund a defence dep heavier in counterinsurgency and lighter in the conventional warfare area, but you have to wear massive job losses in the process. Shades of Ike, perhaps?

  12. Posted September 2, 2009 at 8:31 pm | Permalink

    [email protected] spoke of ideological comforts and thrift.

    Yes, SL, I may be a lefty, but if the governance is good and requirements are well-defined, things can be done efficiently by any party.

    And the thrift bit you (and others) mention is spot on… and may have something to do with the bigwigs loving the “we think this is so important we are throwing $X at it”, without getting the metrics and targets well defined. When the desired outcome has less to do with the problem and how to fix it, but more to do with the headline the public will read the day after the announcement of the spend, then it’s no wonder things might be done less effectively now.

    And on spends that aren’t “sexy”, it’s easier to avoid spending twice as big for ten times the ROI so “budget balance” looks good.

    (And on modern privatized warfare, I think the best illustration was in Iraq, where the guy putting the mashed spuds on the plates of the actual warfighters was on big multiples of the warfighter salaries.)

  13. skepticlawyer
    Posted September 2, 2009 at 10:19 pm | Permalink

    I think everyone has managed to scope out a fair bit of the truth here. FWIW I suspect JC is right about the seriousness of the GFC; lots of firms — and this isn’t a recent thing — use a version of JIT funding that means that stuff goes on the shelves before it’s paid for and credit is needed to get it there.

    I’ve got a good mate who works in defence who points out that we actually still need quite a bit of the conventional military hardware, and that it’s possible to go over the top with the counter-insurgency model. I’ll see if I can get him to make a comment because I think it makes sense.

    I agree with Tim too about ballooning wages playing a large role in this, coupled with the perception that the good times were never going to end. LE and I have discussed off-line that some jobs are simply not worth what we pay for them, and that the only reason we pay what we do is because there isn’t a true free market in labour. Now some economists do argue for a free (or at least freer) market in labour, although it is generally recognised that doing so would involve crashing the welfare state in those countries that have one (this includes wealth transfers, like free education and healthcare, not just direct transfers like welfare cheques).

    When it comes to privatisation, I’m generally a fan — the state has its fingers in far too many pies, especially in the UK — however, I’m also of the view that where the evidence is in that the state works better (defence and the justice system, for example), then these bodies should be wholly state owned and managed. I’m therefore opposed to private prisons, and to much private military contracting.

    These are core state competencies, and — as Hayek points out — they are things with a very specific outcome in mind, and when that’s the case, the state tends to do them better. In things like health and education, by contrast, the outcomes are determined by individuals, not the state, and the state is subject to insurmountable problems of information asymmetry in managing them (because it can never know what all those individuals prefer).

    Of course, you get people trying to have the best of both worlds — like the Yanks with socialised medicine for the elderly and insurance companies never subjected to true market discipline for everyone else — but what you get is actually the worst of both worlds. The American system is both inefficient and expensive. The NHS is just inefficient — but until recently — hasn’t been very expensive. That it is becoming more expensive is a function of demography and lifestyle more than anything else.

    Whoa, long comment… but the thread’s an interesting one.

  14. John Greenfield
    Posted September 3, 2009 at 10:45 am | Permalink

    Adrien

    Yes in the 40s and 50s Americans were well-educated, thrifty, hard-working and skeptical people.

    Today they resemble what happens to porridge after hungry dogs have been at it

    It is interesting how the Rapidly Disappearing GFC brought out all these pundit and bar-room historians claiming the great chnage you note was simply a consequence of de-throning the alleged reign of John Maynard Keynes!

    Of course, the Shangri-La you describe was ‘achieved’ by requiring Jim Crow Laws, and all the other racial/ethnic/cultural sequestration. The collapse of those walls pimped via the laugh-track of multiculti has reaped a bitter harvest. Nevertheless, apart from John Quiggin, does any human being really want to return to the 1940s/50s/60s?

  15. John Greenfield
    Posted September 3, 2009 at 10:56 am | Permalink

    SL

    Something has happened to make us way less efficient at spending public money since then…

    Are we really way more efficient? I just think that since the 1960s, the wealth creation machine that is western liberal civilisation has thrown up such an extraordinary orgy of money that way, way dwarves even the mammoth spending in this diagram.

    I think (though I might be wrong) you would be one to agree with an objection I have to invocations of “public money”. To me, “public money” is money from the profit of “public” enterprise. That is, “public money” comes from state-owned enterprises. All the rest is private money borrowed. The current deficits will not be repaid from amazingly profitable state-owned banks, auto companies, steel, agribusiness, etc. The money is either borrowed from private individuals and/or companies and repaid from the taxes of each of us and companies.

  16. John Greenfield
    Posted September 3, 2009 at 10:58 am | Permalink

    Er, that first sentence of course should read INefficient.

  17. Adrien
    Posted September 3, 2009 at 3:14 pm | Permalink

    John

    There are many arguments for the decline of various virtues in the States since the middle of the century. These usually are convenient to the speaker’s ideology. I tend to thing that human beings spend their entire lives getting it together and then letting it go pear-shaped and back again.

    Civilizations do this on a grander scale.

  18. Posted September 3, 2009 at 5:13 pm | Permalink

    The current deficits will not be repaid from amazingly profitable state-owned banks, auto companies, steel, agribusiness, etc. The money is either borrowed from private individuals and/or companies and repaid from the taxes of each of us and companies.

    Yes, exactly.

  19. John Greenfield
    Posted September 4, 2009 at 1:14 pm | Permalink

    SL

    Sometimes, I feel like The Rapture has actually happened and I have been left behind. Australian public discourse is saturated with riffs such “the government bailed out KKKism”. men and women in their fifties and sixties many with Ph.Ds and few with blatant signs of madness really do believe this.

    It did no such thing, as it creates/earns bugger all. What the magnaminous government did was use its monopoly on the legitimate use of violence to garnashee tens of billions of dollars from each and every Australian citizen and business.

  20. John
    Posted September 13, 2009 at 9:46 am | Permalink

    It’s the way the modern spends utterly dwarf the Marshall Plan that blows me away. Something has happened to make us way less efficient at spending public money since then…

    Perhaps it is all the “consultants” that are called onto committees? Or a gradual process of one upmanship – they said they’ll spend this much to fix the problem, we’ll spend more.

    There might be a complexity issue here. In these days it takes so much longer to wade through the mountain ranges of literature, the various voices clamouring for attention, the need to appease to many interest groups, and that there are now so many “economic entities”, be these commercial or government ones, that the cost of getting things done just keeps growing.

    Or it could simply be directly proportional to the amount of legislative issues that must now be addressed.

  21. Posted September 13, 2009 at 7:13 pm | Permalink

    In these days it takes so much longer to wade through the mountain ranges of literature, the various voices clamouring for attention, the need to appease to many interest groups, and that there are now so many “economic entities”, be these commercial or government ones, that the cost of getting things done just keeps growing.

    Much of this represents rent-seeking on a grand scale and is, I suspect, accurate. It’s all rather sad, when you think about it.

    Once again apologies for failing to let people out of the spammer in a timely fashion; I’m on my own at present and not checking the blog as regularly as I’d like.

  22. John Greenfield
    Posted September 14, 2009 at 2:13 pm | Permalink

    So true. Just look at the scandalous rent-seeking by “consultants” in the provision of housing to NT Aborigines.

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