Twenty Fallacies

[Michael Hardner]

Eighteenth Fallacy: Canadians cannot compete with Chinese/Indian workers

If you discover a new and faster way to drive to work, how does that hurt anyone else in the world?

If the Chinese discover better ways to use their resources, how does that hurt anyone else in the world?

Link.

This has been answered several times in another thread.

It helps everybody on the whole, and hurts individuals who were involved in the previous process.

[August1991]

Deleted

[killjoy]

First Fallacy: The media decides what we think

I was going to disagree with this one if it weren't for the word 'decides'.

To decide would imply planning, conscious determination and purpose and there's next to none of that.

Never the less I would argue that they manage detrimental influence over what we perceive about the world around us with the Frankenstein-collection of details and opinion they tell us is reality.

.

[August1991]

First Fallacy: The media decides what we think

I was going to disagree with this one if it weren't for the word 'decides'.

To decide would imply planning, conscious determination and purpose and there's next to none of that.

Never the less I would argue that they manage detrimental influence over what we perceive about the world around us with the Frankenstein-collection of details and opinion they tell us is reality.

For important matters in your life, marriage, a job promotion, school, you probably manage to obtain information you require to make the best decision you can - it would be simplistic to argue that anyone decides what you think.

For matters far from us and for which we have no control or influence, we care much less about what information we get. Media reports about weather reports on Mars are probably wildly false and biased because no one cares. Local weather reports are far more acccurate because they face much more scrutiny.

[theloniusfleabag]

Dear August1991,

For matters far from us and for which we have no control or influence, we care much less about what information we get. Media reports about weather reports on Mars are probably wildly false and biased because no one cares

Why on earth would (say, NASA) fabricate weather reports from Mars? Why would they spend billions on sending a couple of 'rovers' thre when they could just sit back and make it up from home, for free?

Reminds me of a skit from 'This Hour has 22 Minutes' (though I generally shun TV, it came on after one of the Stanley Cup finals games) where a 'mudder&son' were watching tv. The mom says something like "Look, right there, there's Christopher Reeve, you told me he was dead!"

The son replied "That ain't Christopher Reeve, that's the Mars Lander!" ouch.

[Michael Hardner]

Media reports about weather reports

You must get those digital channels.

Information that pertains to events outside our community might correspond to mythologic, as in Thor, Zeus, Mercury... those guys. It seems real to us, but it's not relevant. And we have as much control over it as the ancients did over the gods.

[geoffrey]

Eleventh Fallacy: Le déséquilibre fiscal is French for "Let's pick Alberta's pocket"

I could be wrong. Do Quebec politicians simply want cash from Albertans?

Maybe it's about sharing something we all own.

Resource ownership is provincial jurisdiction. It is this way for very important reasons, these natural resources have a limited amount of exploitation, and this money must be used for economic diversification once the resources run out. Your argument that it belongs to Canadians is without merit, why would you suggest this? Extending what strange logic I see within that I could say that Alberta should share with the world its oil revenues, since we are all citizens of that.

It seems the catch phrase in provincial politics is to rob Alberta blind these days. You hear it from Charest and McGuinty, for different reasons, but it's there. And its ridiculous. Alberta already contributes vasty more than any other province (per capita) to equilisation, how much more do you want?

Our fiscal conservativism and pro-business policies in the early 90's gave us the situation we have today. Other provinces expect to not to have to suffer and use Alberta's wealth instead. We went through some really thin years, no teachers, no doctors or nurses, in order to have the position we have today. I don't see why other provinces now feel entitled to the rewards of our collective hard work. Every province has very valuable resources, do you actually think the oil and gas magically ends at our borders, Saskatchewan and BC have tons of oil and gas. They choose to be anti-business and now are paying the price.

The attitudes of the rest of Canada outside my province remind me of this fable:

In a field one summer's day a Grasshopper was hopping about, chirping and singing to its heart's content.

An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

"Why not come and chat with me," said the Grasshopper, "instead of toiling and moiling in that way?"

"I am helping to lay up food for the winter," said the Ant, "and recommend you to do the same."

"Why bother about winter?" said the Grasshopper; "We have got plenty of food at present." But the Ant went on its way and continued its toil.

When the winter came the Grasshopper had no food and found itself dying of hunger - while it saw the ants distributing every day corn and grain from the stores they had collected in the summer.

It was hard work and sacrifice that got Alberta our current position. It was planning for the future instead of buying the next election. It was the nearly ridiculous belief Albertans had in Klein and his plan. It was the fact that even through recessions and the lowest of lows during the NEP/Oil Crisis that Alberta still had the highest participation rate in the country.

You have no more right to our oil and gas revenues than we do to Quebec's manufacturing or tourism industries. Just because it's a temporary cash cow makes it attractive for your politicans to attack it, but eventually that hand will get slapped. Canada can't exist in it's current state without Alberta's wealth, averaging Alberta out of our GDP per capita and we are just beyond a developing nation. I'd be careful before other provinces lay claim to it, it's a popular sentiment in Alberta, especially Calgary to cut off the bucks if Quebec/Ontario get too greedy.

And since Calgary controls much of Canada's current wealth (richest region in the entire world), what we have to say means alot now... what a plesant change.

[theloniusfleabag]

Dear geoffrey,

It was hard work and sacrifice that got Alberta our current position.

Lol. Don't forget the skyrocketing price of oil, it ain't KD Lang's coattails oozing money. It isn't the hardworking turnip farmers, either.

Our fiscal conservativism and pro-business policies in the early 90's gave us the situation we have today.

I'll somewhat agree. However, were it not for the skyrocketing price of oil, the sands would not be utilized (yet) to generate the kind of wealth that we are seeing.

Every province has very valuable resources, do you actually think the oil and gas magically ends at our borders, Saskatchewan and BC have tons of oil and gas. They choose to be anti-business and now are paying the price.

Yes, this bit is true, both provinces are pro NDP. However, their mainstays are not oil/gas, but less commercially valued commodities such as timber and wheat.

[Drea]

Yes, this bit is true, both provinces are pro NDP.

No we're not!

Carol Taylor will be the next Liberal* leader and will win against Carole James of the NDP.

*British Columbia Liberals are Conservatives, btw.

However, their mainstays are not oil/gas, but less commercially valued commodities such as timber and wheat.

The BC Libs are looking into offshore drilling and opening up the tar sands in the Peace River area. If the NDP get in (fat chance, but you never know) -- then we can kiss our collective Beautiful-BC-doing-economically-well-butts goodbye!

[Toro]

The NDP have only ever won three elections, and Clarke actually had 3% less of the popular vote when he was elected premier, I believe.

So its difficult to say that BC is an NDP province.

[sharkman]

The NDP have only ever won three elections, and Clarke actually had 3% less of the popular vote when he was elected premier, I believe.

So its difficult to say that BC is an NDP province.

Yes, the only time the NDP won was when the center, and right of center votes were split.

[theloniusfleabag]

Well, I suppose that saying "BC is pro-NDP" isn't exactly correct, but not too far off the mark. They are very 'pro-union', though, and many gov't programs are 'leftist-socialist'. Not that that is a bad thing, mind you, but I am just saying BC and SK are 'to the left' in the grand scheme of things.

[August1991]

Twenty-First Fallacy: All people are equal

Equality! We have created terms like "equality of opportunity" and "equality of outcome". We have slogans such as "equal pay for work of equal value". IMV, this point strikes at the heart of so much confusion about why we have a Charter of Rights. The term "equal rights" comes from the US black protest movements of the 1950s. Indeed, much of what is now known as "political correctness" has a similar origin. (I just watched the wonderful movie 'Gentleman's Agreement'.) My readings of Ignatieff, once through the verbiage, leave me with the impression that he approaches the point as a political scientist.

With so much confusion, where to begin?

All people are equal

That statement is fundamentally false. Some people are better than others and deserve more money, no other system compensations for this worth.

Free trade benifets all parties in the long long run. Patience is a virtue, give it some time. We are getting most of the benifets in the short run though!

If people are not born equal, should the State attempt to make them equal by moving some closer to the finish line? After all, purely by chance and through no fault of our own, we start life's race at different places on the track. If the State corrects for this misfortune, is that wrong?

[August1991]

Resource ownership is provincial jurisdiction. It is this way for very important reasons, these natural resources have a limited amount of exploitation, and this money must be used for economic diversification once the resources run out.

It is one story to explain why the provinces have jurisdiction over the crown's resources. It is another story why the fiscal imbalance is nonsense. It is still another story why natural resource rents should go to the central government, or no government at all. And finally, the story of equalization needs to be simplified.

[Charles Anthony]

Fourth Point: Bad Governments borrow, Good Governments don't

The insight? Unlike a family, a government always spends other people's money. (A government has no money of its own to spend.)

Here is some more insight: just like a family, a government's spending and debt affect the value of its currency and its ability to borrow in the future.

The only question, as any agent should know, is whether "Canada" needs the purchase or not. The where and the how of the purchase is irrelevant.

No. There is an other question: Are we to believe that governments can borrow without limits?

[August1991]

There is an other question: Are we to believe that governments can borrow without limits?

Charles, I'm surprised that you would ask this question. I could turn your question around and ask: Are we to believe that governments can tax without limits?

The limit of a government's ability to borrow is the willingness of lenders to lend and that's dependent on the perceived ability of the government to tax. That was an issue in Argentina and Russia, for example. It is not an issue in Canada or the US.

In a sense, a government that defaults on a bond has implicity turned the bondholder into a taxpayer.

In growth theory, there are rules about optimal rates of accumulation of debt but that's a slightly different matter. With time, the world accumulates more physical capital, infrastructure, ideas, technology while depleting any nonrenewable resources and degrading the environment. What is the optimal rate for this to occur and what role does government play in this? These are broad questions of conjecture.

[Renegade]

If people are not born equal, should the State attempt to make them equal by moving some closer to the finish line? After all, purely by chance and through no fault of our own, we start life's race at different places on the track. If the State corrects for this misfortune, is that wrong?

Yes it's wrong. The state should not have the mandate to equalize for a couple of reasons:

1. What is "equal" is a subjective call. You may start of rich, and I may start of with good looks. Is that equal or not? Should just the wealth be equalized?

2. Why would it be ok for the state to do the equalization but not others? Is it ok for me to rob Bill Gates and donate the money to the starving in Africa using the same justification as the state?

3. Life isn't fair. We should all get used to that without interference from the state as some proxy for God.

[Charles Anthony]

While I am here....

Yes it's wrong.

I agree. All of the above!

There is an other question: Are we to believe that governments can borrow without limits?

Charles, I'm surprised that you would ask this question. I could turn your question around and ask: Are we to believe that governments can tax without limits?

I am surprised too: I do not think you answered my question.

Sure, turn it around. The answer is NO, we can not believe that governments can tax without limits. There are limits to taxation. So what? What am I missing?

The limit of a government's ability to borrow is the willingness of lenders to lend and that's dependent on the perceived ability of the government to tax.

That is only part of the story. The willingness of lenders to lend depends on more: the perceived value of the currency in the future for one. All of those things: debt, taxation, spending, growth, currency value each affect the others.

In a sense, a government that defaults on a bond has implicity turned the bondholder into a taxpayer.

Is that how you defend taxation spending = debt spending?

Here is an other insight rhetorical question: what are the chances that your newly-created-taxpayer-who-started-as-a-bond-holder will borrow again? at the same rate? at the same amount? again and again and again?

What am I missing???

That was an issue in Argentina and Russia, for example. It is not an issue in Canada or the US.

Only in a matter of degree but not in direction.

In growth theory, there are rules about optimal rates of accumulation of debt but that's a slightly different matter. With time, the world accumulates more physical capital, infrastructure, ideas, technology while depleting any nonrenewable resources and degrading the environment. What is the optimal rate for this to occur and what role does government play in this? These are broad questions of conjecture.

Is that the best you can do? Your original statement "Bad Governments borrow, Good Governments don't" is exceedingly broad too.

Here is the deal that you are missing:

Canadian public spending is NOT facing a decision of should we borrow or should we tax.

Canadian spending is facing a decision at the margin: should we borrow more??? and what is the effect on the economy of borrowing more???

[August1991]

The willingness of lenders to lend depends on more: the perceived value of the currency in the future for one. All of those things: debt, taxation, spending, growth, currency value each affect the others.

I don't disagree, but the issue here is whether the government should pay down the debt or cut taxes. I'm not certain if it's clear how currency values enter into that choice.

In a sense, a government that defaults on a bond has implicity turned the bondholder into a taxpayer.

Is that how you defend taxation spending = debt spending?

Here is an other insight rhetorical question: what are the chances that your newly-created-taxpayer-who-started-as-a-bond-holder will borrow again? at the same rate? at the same amount? again and again and again?

What am I missing???

Charles, you're the libertarian-anarchist-whatever - so let me answer in libertarian-speak. The government has the power to confiscate your assets (or any citizen's assets) any time it wants. This changes considerably the whole point of debt.

You seem to think bondholders have a choice in the matter. Well, taxpayers don't have a choice. So that kind of ends the discussion for bondholders, doesn't it.

Imagine for a moment that you had access to all of the bank accounts of all your neighbours. Would it matter to you whether you were in debt or not? No. Would it matter to your bank? No. If you need more money, you just go and take it from a neighbour's bank account. Heck, if your bank is a neighbour, you could just cancel the debt. (That was my flippant point about bondholders becoming taxpayers.)

Charles, the real problem here is not that governments shouldn't borrow. The problem is to understand that government is an institution unlike any other in society. Most people view government finances like much bigger versions of their own family finances, or versions of some sort of cooperative or a corporation. They're not. Governments can spend other's people money. At will.

Even Leanne Domi will have a limit on how much she can spend of her ex-husband's money. With the government, there's no limit. The Swedish government tried to make Ingmar Bergman pay more than his income!

[Renegade]

While I am here....

Yes it's wrong.

I agree. All of the above!

I should add that there is one additional and signficant reason that it is wrong: The state generally uses coercion and threat of violence in order to enact the equalization. It amounts to an "the end justifies the means" excuse. It is the means which is wrong.

[Charles Anthony]

For good measure....

It is the means which is wrong.

Precisely. I do not care if the state attempts to "correct" inequality so long as it does not involve coersion.

Now, back to our regularly scheduled statism....

I'm not certain how currency values enter into that choice.

That is the problem -- but somehow I find it hard to believe that you do not know. Nevertheless, I will try to jog your memory (and for the sake of those who might be getting confused by the burgernomics):

- currency values are affected by monetary policy

- monetary policy is controlled by the same government that borrows, taxes and spends

- monetary policy affects interest rates

- interest rates affect currency values

- interest rates affect projected currency values

- currency values affect future payoffs to lenders

- future projected payoffs to lender affect willingness to lend

- willingness to lend affects government borrowing

- and on and on and on it goes until we are broke

Each of these relationships vary in importance. However, one can not change without affecting the others. Government borrowing affects the economy. Government taxation affects the economy. Each of those affect the economy differently.

You can not say government spending does not matter whether it is through borrowing or taxation. Up to a margin, borrowing will reach a limit and it will have a nefarious effect on the economy when taxation might not. Therefore, the decision to tax or borrow for the sake of spending is not a neutral one on the economy.

Charles, you're the libertarian-anarchist-whatever - so let me answer in libertarian-speak.

If you ask me now, I would simply say that I am a bloody-anarchist. However, sometimes I can smell mumbo-jumbo phoney economics-speak. By the way, I am also a record collector. Can you answer in a language that record collectors speak too -- i.e. plain language?

The government has the power to confiscate your assets (or any citizen's assets) any time it wants. This changes considerably the whole point of debt.

You keep saying that. However, it does not mean government's ability to BORROW is unlimited. Also, it does not change the fact that government borrowing has an affect on the domestic economy. Furthermore, there is nothing exclusive to anarchism in your statement. [Yes, I believe taxation is wrong and it appears that I am defending taxation. I am not. I am saying that increasing debt can stagnate an economy more than taxation at the margin under certain circumstances.]

You seem to think bondholders have a choice in the matter. Well, taxpayers don't have a choice. So that kind of ends the discussion for bondholders, doesn't it.

Wrong.

Bondholders DO have a choice in the matter: they can stop servicing more debt in the future.

The rest of your post avoids this issue.

Imagine for a moment that you had access to all of the bank accounts of all your neighbours. Would it matter to you whether you were in debt or not? No. Would it matter to your bank? No. If you need more money, you just go and take it from a neighbour's bank account.

You keep say this like a mantra but your never answer to the government's continued future ability to borrow.

Charles, the real problem here is not that governments shouldn't borrow. The problem is to understand that government is an institution unlike any other in society. Most people view government finances like much bigger versions of their own family finances, or even versions of some sort of cooperative. They're not. Governments can spend other's people money.

More of the same mantra.

However, still no address to the issue of the government's future ability to borrow continuously.

With the government, there's no limit.

Oh, really?

No limit to borrowing??

[August1991]

.... burgernomics...

Burgernomics? Ah jeesh.

IIRC, the question is how cutting taxes or paying down the debt would affect the exchange rate. My first answer is: it's not clear. My second answer is: who cares.

No limit to borrowing??

Charles, is there a limit to the government's ability to tax? I would say so. That limit is the same limit that applies to the government's ability to borrow.

Bondholders DO have a choice in the matter: they can stop servicing more debt in the future.

The rest of your post avoids this issue.

Would you accept that bondholders will buy bonds if they feel the government has the authority to impose taxes to make payments on the bonds?

So, the government's ability to borrow is limited by its ability to tax. In the case of the Canadian federal government, that means there is no limit (at least in the range of taxation we see now).

I'll repeat for the nth time though - it is not whether the government finances its purchases through taxes or bonds that matters but rather what the government buys. Look at government spending. That's the real story.

[Charles Anthony]

Burgernomics? Ah jeesh.

Yes. It is an artform: the advancement of a political agenda by not telling the entire picture and concealing it behind cluttered gobbledy-gook; a subdivision of macrockonomics.

IIRC, the question is how cutting taxes or paying down the debt would affect the exchange rate.

If you recall correctly??? That seems to be the problem. YOU say THAT is the question for Canada but it is not. I explained why above and you never addressed it. Also, you are using it to justify policy in different circumstances and I call you on that here.

My first answer is: it's not clear. My second answer is: who cares.

Finally!!! The effect on the economy is not clear. Making the statement "tax spending = debt spending" is a fallacy.

I'll repeat for the nth time though - it is not whether the government finances its purchases through taxes or bonds that matters but rather what the government buys. Look at government spending. That's the real story.

No, that is only PART of the story and you are glossing over the rest.

I insist that you are presenting a political opinion on government financial priorities. [Of course, I do that too...] Carry on with your agenda.

[August1991]

Reaching back. I'm fishing around for the last two or three fallacies and I think Renegade is on to something. So, I'll quote you at length, Renegade.

If people are not born equal, should the State attempt to make them equal by moving some closer to the finish line? After all, purely by chance and through no fault of our own, we start life's race at different places on the track. If the State corrects for this misfortune, is that wrong?

Yes it's wrong. The state should not have the mandate to equalize for a couple of reasons:

1. What is "equal" is a subjective call. You may start of rich, and I may start of with good looks. Is that equal or not? Should just the wealth be equalized?

2. Why would it be ok for the state to do the equalization but not others? Is it ok for me to rob Bill Gates and donate the money to the starving in Africa using the same justification as the state?

3. Life isn't fair. We should all get used to that without interference from the state as some proxy for God.

1. Agreed. Equality is subjective. But I think we can all agree that life in a wheelchair or being blind is not easy. It's the equivalent of having your house burn down. Not the end of the world but a hassle. Usually, people have insurance to protect against such misfortune.

2. No other institution can finance this task properly. I think some other institution than government should be involved.

3. Life isn't fair, true. But we shouldn't get used to that fact. Why? Because it's uncivilized. We don't know what the future holds. We don't know how our children or grandchildren will grow up. Before our birth, we didn't know into which families we would be born.

Civilized society, like family, is an insurance scheme in which we share risks. Private markets for such insurance simply don't exist or have numerous problems and just don't work properly.

In plain terms, a child suffers the luck of the draw in getting parents. As a society, we can do better.

Finally!!! The effect on the economy is not clear. Making the statement "tax spending = debt spending" is a fallacy.

Charles, the effects of financing government purchases through taxation or borrowing have short run effects on currency, unemployment and so on. I won't deny that. In the long run, it doesn't matter.

The ability of a government to borrow or the willingness of lenders to lend to a government is critically related to a government's ability to collect taxes.

When German bankers buy Hydro-Quebec bonds at low interst rates, what they look at is Hydro-Quebec's ability to collect revenues from the sales of electricity. The same idea applies to Canadian Government bonds or Ontario Government bonds.

[DarkAngel_]

i live in the states and would like to say that i agree, corparations LOVE war outside our borders, we do not. and what has happened for money or in effect been done obtaining that money, is not a likeable thing, but even then, the end never justifies the means, but new question... what is our end?

also, what is equal? to be at the same place. people are not ever all rich or all poor, but my philosiphy is to be more 'self ruled' then a 'ruled self' that way i can grow and flurish on my own to learn, never throwing my misfortune at the rich or state. and knoledge is the power to act. in that, other; more lazy people would rather wait and pay alot of money waiting for a new spout of knoledge to burst into the world. i am a scientest, but am my own boss, that i can get work is a feat on to itself. but can it not be the same for others who compaire their misfortune to the more fortunate? they can grow but must find their own way, money is just objective, i'm ussually broke so i eat at other places that give it out happly to those who can not afford their own food, or i look for other means to eat; hunting, fishing or gathering plants, we need not be so dependent on the state or gov. to eat. all else is mine that i built or purchused to own or use, that is the increase of living, i have a low standard of living, but without my luxurays it would be even lower, so i support myself, and my mistakes. is that not a way you would live?