So I've been playing Nation-States and I was wondering...

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curtis95112
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Re: So I've been playing Nation-States and I was wondering..

Postby curtis95112 » Fri Jan 27, 2012 4:00 am UTC

Shahriyar wrote:Also, another way to make this workable, according to some, would be to diminish the scale of the State into something that can be understood (or at least fathomed) by a single individual.
Spoiler:
I fear that dividing humanity into sovereign nations of that size would result in paralysis (customs! money exchange! different market regulations!), warfare (the most militaristic states are bound to try to invade and assimilate their neighbors, and we'll be back to square one), and starvation (feeding the sorts of populations the world carries nowadays is done mostly though trade, and if trade gets paralyzed...). Of course, one way to avert this would be inter-country treaties, but isn't that just going back to bignationing again?


Yeah, you'd lose all the advantages of economies of scale. And getting the tiny countries to work together basically means you're in a representative democracy again at best.
Mighty Jalapeno wrote:
Tyndmyr wrote:
Роберт wrote:Sure, but at least they hit the intended target that time.

Well, if you shoot enough people, you're bound to get the right one eventually.

Thats the best description of the USA ever.

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Re: So I've been playing Nation-States and I was wondering..

Postby Djehutynakht » Fri Jan 27, 2012 5:49 am UTC

Well, yes. The idea basically is that instead of everyone studying all the issues to vote, instead, we have them do only a little research and decide "okay, based on what I see, I've determined that Candidate X is best to represent me and my interests for Office Y and do a good job of running the nation. I shall now proceed to vote for this person.

Now think... you're saying the representative body isn't that good.

If you can't trust this population to elect decent representatives, are you really going to trust them with the actual policy and laws?
_____________


And, honestly, this would be terrible. Imagine Congressional arguments and ineffectiveness spread across the entire population... plus there's stuff about representative procedure that can't be produced on a national level.


Big bodies are ineffective for getting stuff done. Let's look at the US Congress for example.

The Senate has 100 members
The House has 435 members



The Senate is able to get stuff done much, much easier than the House. Their procedure is loose and flowy and they are small enough to be a deliberative, considerate body where everyone sort of knows what's going on.

The House is so massive that it's almost out of control. They're always in some sort of chaos. They're so big that they have a rigid, controlling rule system. There's just so much going on.... honestly, no House member is proficient in most of the policy. Most of them specialize in one or two fields and rely on a bit of research and the opinions of Committees and fellow party members specializing on the issue in order to decide how to vote.


If a body of 435 members can't keep order in voting, and even those 435 can't be thoroughly informed on everything, do you really expect millions of citizens to be able to?


I could see this possibly... possibly working for the small city states, but never in a big nation. We'd get, literally, nothing done.



Actually, play nationstates a bit more. This will come up. If you give them the option to hold referendums for everything (or maybe even if not) a little later you will recieve the problem that the national votes are so big and costly and downright ineffective that it's hurting your nation.


Nationstates itself refutes your claims!

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Re: So I've been playing Nation-States and I was wondering..

Postby Kisama » Fri Jan 27, 2012 8:20 am UTC

Azrael wrote:
Kisama wrote:And it is actually completely stupid.
[snip]
Anyhow, outright stating the deficit spending is 'stupid' is both uninformed and over-simplistic.

Well, yes, I think I was just being a bit facetious with my response there, sorry. My earlier point about not spending in deficit was meant to counter this:
Game_boy wrote:The problem is the financial decisions. People would just vote for more funding for everything, and less taxation, and then complain when there is a large deficit.

I'm picturing the government being run like a corporation - every citizen would be a shareholder (well, I'd like to say every taxpaying citizen but I don't want a flame war), they vote on important matters, they appoint a board of directors to run things on a day-to-day level. So far that more or less describes your run-of-the-mill democracy, unless I'm quite seriously mistaken? The directors report directly to the shareholders who are damn well expecting a good return on their investments and (I would hope) won't hesitate to axe directors who turn out to be incompetent/corrupt/whatever. Perhaps what I'm really arguing for is a combination of minimizing government, using technology more effectively to make voting easier, more frequent, and apply to more things than just which political party has the most power, and also using technology to provide as much information as possible to the voting public. Yes, I still think you would need a well-educated populace for this to work well. (Arguably the same thing applies to traditional democracy - it's not an insignificant problem when the mob voting in the popularity contest are uneducated or uninformed. Or, I'll concede, that they don't care.) Yes, there would still be many of the same problems - politics killing minds, demagogues telling lies, etc.

To get back to deficit spending - I am of the opinion that being in debt is a Bad ThingTM, for individuals, for companies, and for nations, but I accept that sometimes you do need (want?) to buy something big and pay it off slowly. That's something I admit I hadn't considered when writing my previous post, but I personally think that debt should be avoided as much as possible, not tacitly accepted as a matter of course. In any case, I'm not arguing for a dictatorship but a different democracy, and the system I am tentatively suggesting as a possibly functional political system (which I have certainly not fully worked out in every detail - tsk, nitpickers :P) would allow the voters to decide to take a justifiable loan and spend extra to fund a war or build an awesome theme park or something (or, indeed, the directors could be given the authority in advance to make such a decision if it has to be made quickly) and this would enter the balance sheet as extra funds now, and extra minimum expenditure in the future. The key thing is that the inherent transparency should allow the voters to see that the debt is taken on for a good reason, and see all the figures and graphs showing that the economy is projected to expand to cover needs, and all of that. Maybe I'm far too optimistic about humanity, but I do think that things would be better if the man on the street could say "hey, how can you justify those 12 luxury cars, especially when we're still paying off all those roads we built?" and directly do something about it, rather than vote every few years to choose between a douche or a turd sandwich, both of whom will most likely also be trying to get their own 12 luxury cars, please excuse my apparently paradoxical cynicism.
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Re: So I've been playing Nation-States and I was wondering..

Postby Zamfir » Fri Jan 27, 2012 8:58 am UTC

Kisama wrote:To get back to deficit spending - I am of the opinion that being in debt is a Bad ThingTM,

What's your opinion on savings? In the end, debt is just savings seen from the other side. There are lots of good reasons why people want a place where they can park their savings for a long time without having much to worry about risks, and where high yields are only a bonus, not the reason to save in the first place. Retirement is the big one, especially if you are already retired and won't be able to pay up to compensate for investment losses. Buffers of the banking system are another one: if you put money in a bank, the bank can hardly invest all of it in risky things, they also need buffers of low-risk, low-yield palces to put their money.

Government debt is the main source of low-yield-low-risk places to put your savings. If governments didn't have debt, all those savings would have to invested in more unpredictable stuff, which would be headache for everyone involved. Think of all those "half in bonds, half in stocks" investment advices. There are literally not enough conservative private-market bonds for that to work, if there weren't government bonds.

There are of course places where the government has around zero debt. In such places, you'll find that people own a lot of government bonds of other countries. It's not a trick that scales to the whole world.

tl;dr: A moderate government debt is a good thing for the economy, because it gives people a highly conservative investment vehicle for part of their savings.

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Re: So I've been playing Nation-States and I was wondering..

Postby Antior » Fri Jan 27, 2012 10:41 am UTC

It seems people are agreeing on two things:

- A representative democracy has its problems because it's not direct enough
- A direct democracy has its problems because people are not well-informed.

Well then...
What do you think about Liquid Democracy / Delegative Democracy. It's right in-between and Pirate Parties (especially the Germans) are attempting to implement this using the web.

tldr; It has the advantages of both type of democracies, and less disadvantages than either one.

To put this simply: Every x years their are regular elections to choose delegates, who take part in parliament. Whenever an issue comes up, the delegates do the research the 'old' representatives always do before a debate, then the delegates voice their opinions.

Next, everyone in the country (or: everyone with an active interest in how the country needs to be run, for instance members of the political part(y)(ies) implementing this system) starts with one 'vote of trust' which they either can transfer to a delegate or to anyone else they trust (see the pic in the first reference link). People are not obliged to use the vote, if they don't care about an issue the vote just isn't used. In the end all used 'votes' get transfered to the delegates. The delegates now know how much the people trust them for this issue, and they can use all the votes they received for the parliamentary vote. For instance, if delegate A got 9 votes from people (+ his own vote = 10) and delegate B got 19 votes for people (+ his own = 20), delegate B's final parliamentary vote counts twice as much as Delegate A's.

The delegates are still free to use their votes as they will, but as people put their trust in them, if they suddenly vote opposite of what they preached, they might not ever get votes again.

I feel this should be done only for certain controversial issues, for all daily issues for which the parliament is needed anyway, the delegates act like usual representatives. However, they are always aware that a bad choice might cause people to lose trust in them for the next liquid democracy vote.

The big advantage compared to a representative democracy is that their aren't any so called 'representatives' that go their own way after being voted in office, that just follow whatever lobby that pays the most, and have a nearly free reign for x years till the next election.

Another advantage is that for this to work, transparancy in the government is needed, lobby bribery won't work anymore, and people that are interested in this kind of stuff (such as journalists) can find out what is actually going on in government, there's not much room left for secret talks.

The big advantage compared to a direct democracy is that this entire set-up in which people can vote on all possible solutions to any problem isn't needed. All that's needed is a way to have people choose who gets their vote (for instance, the German software LiquidFeedback can be used for this).

Another advantage is that the final choice is still made by delegates, who did their research, and who DO know what the consequences of the law actually are.

Some references:
http://en.wikipedia.org/wiki/Liquid_democracy#Delegated_voting
http://en.wikipedia.org/wiki/Delegative_Democracy

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Re: So I've been playing Nation-States and I was wondering..

Postby curtis95112 » Fri Jan 27, 2012 10:51 am UTC

But free reign for a few years is important. That's what lets politicians focus on the (relatively) long-term.
Mighty Jalapeno wrote:
Tyndmyr wrote:
Роберт wrote:Sure, but at least they hit the intended target that time.

Well, if you shoot enough people, you're bound to get the right one eventually.

Thats the best description of the USA ever.

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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Fri Jan 27, 2012 1:16 pm UTC

Kisama wrote:To get back to deficit spending - I am of the opinion that being in debt is a Bad ThingTM, for individuals, for companies, and for nations, but I accept that sometimes you do need (want?) to buy something big and pay it off slowly ... but I personally think that debt should be avoided as much as possible, not tacitly accepted as a matter of course.

In that case, you have a personal hang-up regarding debt that is not supported by facts. You might want to avoid trying to architect a government around that hang-up, and instead listen to people who truly understand economics (not me -- the real experts)

Or just take a look at the list of public debt by country and pick your favorite example of a booming economy. I choose Germany, for what's it's worth, at 83% debt to GDP. Maybe you pick China at 20%.

Debt only becomes a problem when servicing the debt hinders your economic unit's goals more than the benefit gained from that debt. Saying that "being in debt is a Bad ThingTM" is a throw-away statement, an emotional response without rational merit. It's the sort of half-thought out catch phrase taught to college freshmen to keep them from running up their newly acquired first credit card.

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Re: So I've been playing Nation-States and I was wondering..

Postby Shahriyar » Sun Jan 29, 2012 8:06 pm UTC

In that case, you have a personal hang-up regarding debt that is not supported by facts. You might want to avoid trying to architect a government around that hang-up, and instead listen to people who truly understand economics (not me -- the real experts)


Not all experts are in agreement on any given topic, far from it. Moreover, an expert is more interested in saying things that will make sure their expertise is solicited again, than in saying things that are true. As surprising as it may sound, those two sets don't overlap 100%.
"He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself." Thomas Payne

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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Sun Jan 29, 2012 10:36 pm UTC

I think what you meant to do there was to link to a prominent economic theory that makes a thorough case against nations carry any debt.

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Re: So I've been playing Nation-States and I was wondering..

Postby Shahriyar » Mon Jan 30, 2012 12:28 am UTC

Then you appear to have parsing problems, or an overactive imagination. I've merely cast a general doubt on the more mainstream economical discourse, since anyone suggesting anything that would be too openly adversarial to the status quo would easily find themselves ostracized. Finding those deviant opinions (and that they ever even had the chance to grow into a "major school") is another matter entirely, and, for a profane such as me, would probably take much more than one afternoon.
"He that would make his own liberty secure must guard even his enemy from oppression; for if he violates this duty he establishes a precedent that will reach to himself." Thomas Payne

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Re: So I've been playing Nation-States and I was wondering..

Postby curtis95112 » Mon Jan 30, 2012 12:34 am UTC

I think Azrael was suggesting that's what you should have done. I don't think he meant it literally.
I (and I'm sure others are too) am curious why you think a self-admitted 'profane' such as yourself have the ability to reasonably cast doubt onto the mainstream economical discourse. I would recommend that you actually study economics before making such grand claims. Or you could make a case that the nature of the doubt you're casting lets you cast it without knowing what you're casting doubt on, but somehow I doubt that.
Mighty Jalapeno wrote:
Tyndmyr wrote:
Роберт wrote:Sure, but at least they hit the intended target that time.

Well, if you shoot enough people, you're bound to get the right one eventually.

Thats the best description of the USA ever.

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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Mon Jan 30, 2012 12:56 am UTC

curtis95112 wrote:I think Azrael was suggesting that's what you should have done.

Indeed.

Variations on "the experts could be wrong" or "there's always someone who disagrees" don't add anything meaningful to the conversation, and barely merit much more of a response than 'No shit, Sherlock'.

So who are they? Why do they take an absolute zero tolerance stance on debit? Do they pass the common sense test? What theories are they using? How is a government supposed to operate? Are they also advocating a significant change in the function of modern governments?

Now, I'm not saying you should have these answers. But even asking the questions is far more relevant than chiming in with empty platitudes.

Seriously, I just showed that the world's most prosperous economies use sovereign debt to one degree or another. If you want to make the claim that they are (or even just could be) doing it wrong, you're going to have to step it up a bit.

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Re: So I've been playing Nation-States and I was wondering..

Postby Dark567 » Mon Jan 30, 2012 3:10 am UTC

Azrael wrote:I think what you meant to do there was to link to a prominent economic theory that makes a thorough case against nations carry any debt.

One of the mainstream prominent current economic schools in fact do very much do such a thing, recommending a balanced budget amendment and zero deficit.
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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Mon Jan 30, 2012 5:04 pm UTC

Dark567 wrote:
Azrael wrote:I think what you meant to do there was to link to a prominent economic theory that makes a thorough case against nations carry any debt.

One of the mainstream prominent current economic schools in fact do very much do such a thing, recommending a balanced budget amendment and zero deficit.

That assumes that the particular New Classical adherents believes in full Ricardian Equivalence and assumes that interest rates are higher than inflation. But reality demonstrates quite thoroughly that the equivalence isn't full -- and that the actors aren't all rational. Which is why (especially after the last crash) that school gets blended with (New) Keynesian in actual policy.

Personally, I like the method frequently adhered to by municipalities -- a balanced yearly budget with bonds for large capital expenditures. It allows the flexibility of buying large things (like schools) before you've raised all the funds up front, but prevents the servicing of that debt from begetting more debit by borrowing for operating expenses. Plus, the 'large things' are itemized and the bond requests can be rejected.

[Either way, look! A meaningful discussion!]

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Re: So I've been playing Nation-States and I was wondering..

Postby Kisama » Tue Jan 31, 2012 10:59 am UTC

Azrael wrote:listen to people who truly understand economics (not me -- the real experts)
I take this as well-intentioned advice to educate myself. Thank you, it's a good suggestion and I will try to carry it out when I have time.
Azrael wrote:You might want to avoid trying to architect a government around that hang-up
But trying to architect a government around my "hang-up" (in future I shall try to remember that personal opinions are not serious business and I shouldn't mention them here) about avoiding debt is not what I'm doing. The government I am daydreaming about is architected around more direct and frequent voter participation in the management of the country. That doesn't preclude taking on some debt if/when it makes economic sense to do so, unless the majority of voters always decide that it doesn't make the most sense to do so. You'll notice that among my list of requirements for a more direct democracy was a more educated and informed public, and after all this discussion about deficits I think we can agree that that needs to include education and information on economics and the economic situation.
Regardless of whether it's optimal to run a government by spending more money than it has, can someone at least concede that that's no reason for frivolous and wasteful expenditure, that the debt should be justified and transparently managed, and that it just might be a good thing if the people who are affected by these decisions have more say in them?

Kisama wrote:including checks and balances such that they can't do something completely stupid like allocate more money than the government has actually raised in revenue...
This doesn't mean "the constitution will forbid government debt", it means inputs should be sanitised such that the ledger won't be unbalanced. "Money raised in revenue" doesn't exclude money from selling government bonds does it?

Zamfir wrote:What's your opinion on savings?

Nope, I've learned my lesson! Any opinions I could state on the matter wouldn't be backed up with citations, expert knowledge, or a rigorous rational derivation, so I won't submit them for debate. In response to the rest of your post though, I do wonder: if the economy and personal investments are so dependent on government debt, how would that be affected by having, say, a minarchist government? With so much less to spend money on, could they provide enough debt for low-risk investments? Or is the answer simply, as you said, that they would buy debt from other countries? I ask, because another part of my postulation was a minimal government for direct democracy to be more feasible.

Edit to add:
Azrael wrote:Personally, I like the method frequently adhered to by municipalities -- a balanced yearly budget with bonds for large capital expenditures. It allows the flexibility of buying large things (like schools) before you've raised all the funds up front, but prevents the servicing of that debt from begetting more debit by borrowing for operating expenses. Plus, the 'large things' are itemized and the bond requests can be rejected.
Wait, I thought that's what I was arguing for too...
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Re: So I've been playing Nation-States and I was wondering..

Postby Zamfir » Tue Jan 31, 2012 12:28 pm UTC

Kisama wrote:Regardless of whether it's optimal to run a government by spending more money than it has, can someone at least concede that that's no reason for frivolous and wasteful expenditure, that the debt should be justified and transparently managed, and that it just might be a good thing if the people who are affected by these decisions have more say in them?

That's easy to concede, since the things I am in favour of are justified and never frivolous and wasteful. Only other people's wishes are. And of course, that's what they think as well.

It's a problem for your more general idea of simplifying government. Pretty much everything that the government does is supported by some people, or it is some kind of compromise between people who wanted even more action and people who wanted less. Any step to simplify government will not be politically neutral, it will be a conscious decision to go against the wishes and ideas of some people and in favour of other people's ideas.

Whatever their flaws, current democracies are at least somewhat bound to the wishes of the people. There are quite some democracies in the world, each with somewhat different internal mechanisms and traditions. Yet all of them end up with highly complicated, pretty far-reaching governments. More complicated in fact than many non-democracies, since democratic governments try to tackle a wider range of social problems and try to take more interests into account.

It's not enough to argue for a simpler government in abstraction. You'll have to point at the many, many actual government functions that you want to exclude, and for each of them you'll have to argue why it's OK to overrule its supporters. Just as exercise, make a start. Think of 10 (non-trivial) government functions that you want to exclude, and consider the reasons why people haven't excluded them yet. How would you cut those 10 actions without grossly violating democratic principles of government?

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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Tue Jan 31, 2012 1:03 pm UTC

Kisama wrote:Edit to add:
Azrael wrote:Personally, I like the method frequently adhered to by municipalities -- a balanced yearly budget with bonds for large capital expenditures. It allows the flexibility of buying large things (like schools) before you've raised all the funds up front, but prevents the servicing of that debt from begetting more debit by borrowing for operating expenses. Plus, the 'large things' are itemized and the bond requests can be rejected.
Wait, I thought that's what I was arguing for too...

Now? Maybe.

But when I called you out earlier? Nope.

Kisama wrote:
including checks and balances such that they can't do something completely stupid like allocate more money than the government has actually raised in revenue...
This doesn't mean "the constitution will forbid government debt", it means inputs should be sanitised such that the ledger won't be unbalanced. "Money raised in revenue" doesn't exclude money from selling government bonds does it?

You know what a bond is, right? It's a promissory note. It's just a loan productized from the borrower's end. Selling bonds is borrowing money. The Treasury securities which are used to finance the US government's deficit spending are bonds.

It's not revenue.

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Re: So I've been playing Nation-States and I was wondering..

Postby Kisama » Tue Jan 31, 2012 2:22 pm UTC

Azrael wrote:
Kisama wrote:Edit to add:
Azrael wrote:Personally, I like the method frequently adhered to by municipalities -- a balanced yearly budget with bonds for large capital expenditures. It allows the flexibility of buying large things (like schools) before you've raised all the funds up front, but prevents the servicing of that debt from begetting more debit by borrowing for operating expenses. Plus, the 'large things' are itemized and the bond requests can be rejected.
Wait, I thought that's what I was arguing for too...

Now? Maybe.

But when I called you out earlier? Nope.

Geez, I already apologised for my one facetious non-argument post, and every post (all two of them) since then has included at least some attempt to clarify that, whatever opinions I foolishly shared, the system I was suggesting wasn't intended to prevent anyone buying things on credit.

Azrael wrote:Selling bonds is borrowing money.

It's not revenue.
Then revenue is the term whose semantics I was disrespecting. The point is that you have money, whatever its source, and you spend it on things. (income money) + (borrowed money) == (total money in) == (things paid for) + (money left over). If the equation doesn't balance then something has gone rather wrong (which is most likely that I wrote it down wrong, but for the sake of argument let's assume it's correct - I'm just saying that the books have to balance, the voters can't just fill in any numbers they want, they have to be sane). I think there is definitely some agreement about the important issues here and I'm just having my poor word choices picked on, which is certainly one way to learn to communicate better, but it's not a very pleasant way.

Zamfir wrote:It's not enough to argue for a simpler government in abstraction. You'll have to point at the many, many actual government functions that you want to exclude, and for each of them you'll have to argue why it's OK to overrule its supporters. Just as exercise, make a start. Think of 10 (non-trivial) government functions that you want to exclude, and consider the reasons why people haven't excluded them yet. How would you cut those 10 actions without grossly violating democratic principles of government?
I didn't want to try to get specific about the government's functionality because I thought this thread was just about the idea of letting citizens vote on more than just which person or group of people are going to have power, and I didn't want it to get derailed into debating the pros and cons of whatever level of governmental power was suggested.

Do you reckon that if we decided, with a few score like-minded people, to go claim some remote island, declare independence, and found a nation based on - let's call it a "constitutional almost-direct democracy" because a Direct Democracy can vote to make murder legal - where the governments functions are initially just protection of our sovereignty and the provision of a sheriff to protect us from domestic thieves and aggressors, then over the years the people would steadily vote more responsibility into the domain of the government, until it was bloated and bureaucratic and had its fingers all up in our civil liberties? If so, then perhaps violating some democratic principles of government might not be such a bad thing?

Antior wrote:What do you think about Liquid Democracy / Delegative Democracy
It sounds awesome, let's do it.
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Re: So I've been playing Nation-States and I was wondering..

Postby Zamfir » Tue Jan 31, 2012 3:49 pm UTC

Kisama wrote: I think there is definitely some agreement about the important issues here and I'm just having my poor word choices picked on, which is certainly one way to learn to communicate better, but it's not a very pleasant way.

Hmm, I feel this is somewhat unfair towards us. If you use words like turd, douche and stupid to describe views and people you disagree with, then you should expect fairly strong responses to your own views. If you then make some mistakes, yeah, people will hit them hard.

But let's forget the past and hopefully continue on a more friendly tone.
Kisama wrote: Do you reckon that if we decided, with a few score like-minded people, to go claim some remote island, declare independence, and found a nation based on - let's call it a "constitutional almost-direct democracy" because a Direct Democracy can vote to make murder legal - where the governments functions are initially just protection of our sovereignty and the provision of a sheriff to protect us from domestic thieves and aggressors, then over the years the people would steadily vote more responsibility into the domain of the government, until it was bloated and bureaucratic and had its fingers all up in our civil liberties? If so, then perhaps violating some democratic principles of government might not be such a bad thing?

If we ignore the practicalities of a pristine state, this still leaves me with some questions:

For one thing, how do you propose to determine the set of actions that people will be allowed vote on? Are the early settlers going to have one big vote on future issues, and then write down once and for all that there won't be a fire brigade or department of education, no matter what future votes say? What if they vote for a department of education right at the start?

Second, how will this be controlled? If 50 years in the future 80% of the people wants public education (or another example of a bad government function), who will stop them? A minarchy is not very attractive if the police lays down the will of a small set of people. Especially since that small set are most likely the rich people who can afford high-quality private services.

And finally, why do you assume that this will protect you from civil liberty incursions? The police and the army are the usual suspects for those things, always as necessary accomplices, but quite often as main responsible parties.

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Re: So I've been playing Nation-States and I was wondering..

Postby Byrel » Wed Feb 01, 2012 1:24 am UTC

Azrael wrote:
Kisama wrote:
Shahriyar wrote:
something completely stupid like allocate more money than the government has actually raised in revenue...

Actually governments actually do that: it's called deficit.
And it is actually completely stupid.

Actually, it's not. Just ask any expert who truly understands economics. The general concept is that your economy can grow more than the interest payments. The easiest real-world household example is how one can actually profit by not over-paying on low interest loans: The money that would have used to pay them off early can be invested elsewhere at a higher return. That being said, there are plenty of risks, limits and caveats that many (most?) governments haven't been managing appropriately.


I understand that borrowing can yield significant investment advantages, because you can (in general) use that money more profitably than saving a low interest-rate expense. Indeed, typical target ARR's for engineering firms range from 20-50%, which is obviously a better use of money than a six-percent bond. (Some of that margin is taken up in poor estimation of return rates, but that doesn't really matter; the point stands.) Corporations do this all the time with great success.

Nevertheless, I must concur that this is bad for a representative democracy, and probably for the half-direct democracy proposed by the OP. The trouble is that neither corporations nor governments can be effectively treated as a black box on issues like this; individual policy-makers have their own incentives and disincentives for making choices. To a first-order approximation, their decisions will be in their own best interest, and only in the interest of the greater whole when circumstances cause their interest to align with the whole.

In general there is a much better set of constraints imposed on your average CEO than on your average congressman. Both of them have the same basic accountability mechanism: all debt, revenue, etc. figures are published to the stock holders, who ultimately hold them accountable for poor judgement. However there are several advantages for the stock holders of the corporate leader. Most of those stockholders (by population) do not directly choose whether to hold that stock. Instead they rely on experts (mutual funds, trusted stock advisors, etc.) to determine whether the CEO is doing his job right. The remaining stockholders are almost all either experts in their own right, or have experts on staff (like investment banks.) It takes a lot of doing to fool that much knowledgeable oversight into accepting a short-term solution. Furthermore, if such a plan should fail, there are very few places for the blame to fall. Due o a corporations typical oligarchical structure, it is usually clear who was responsible for a decision, an it is relatively easy to bring them to account. Overall it is not impossible for the system to fail (see Enron) but it is rare.

On the other hand, a congressman is judged largely by economically unskilled people. That means that wise decisions are easily overlooked, while unwise decisions with short-term gains (see Bush tax cuts, Obama-care, etc. for (controversial) US examples) have immediately obvious, positive effects. So a congressman has an incentive to do things that bring short-term gain to his constituents, without much of an incentive to be concerned about long-term economic problems. Sure, racking up too much debt may mean the interest rate goes up on future borrowing. But how many voters will care? Not as many as will care if you raise the income tax, or decrease elderly medical benefits. When those long-term problems do show up (like the latest US housing bust) it is incredibly hard to identify exactly who was to blame, which greatly limits accountability. All of this is exacerbated by incumbency-favoring election systems, of course.

And I submit that this incentive weakness would be strengthened in a half-direct democracy such as proposed by the OP. Then there would be no way of experts holding the people who make foolish decisions in check. Everyone (or at least a majority of voters) must become sufficiently fluent in economics to understand when going into debt is wise and unwise. I think this is highly unlikely, to say the least.

One way of avoiding this problem is to introduce a hard debt cap. The national debt must be no more than $x billion (or for a more scalable system, x% GDP.) Any hard debt cap is still vulnerable to creative interpretation of course. (Well, this isn't really debt; it's just a quid pro quo with a delay term in it...) Nevertheless, this might well be a reasonable trade-off of a fixed inefficiency (the inability to increase debt as makes economic sense) for a corrupting influence which might (I think, does) cause a larger inefficiency in the long term.

To bring this back to the issue of zero-debt, I submit that any hard debt cap will look like a zero-debt cap in any given budget. The afore-mentioned incentives will cause the government of a democratic (either indirect or half-direct) country to expand the debt to be nearly always at the cap, rather than actually using that buffer sensibly. That further implies that every yearly budget will have practically zero deficit no mater what the cap is. So zero is as good of a place as any in theory. In practice, maybe a country should set it to whatever the current debt is to avoid nasty transient effects.

tl;dr: A hard debt ceiling is one way of curbing irrational spending and vote-buying, which in practice won't be much different from a zero debt ceiling. The inefficiency may be worth the reduced corruption.

Also, thanks for the link to nation-states. I needed Yet Another Addicting Game...

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Azrael
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Re: So I've been playing Nation-States and I was wondering..

Postby Azrael » Wed Feb 01, 2012 1:12 pm UTC

Kisama wrote:
Azrael wrote:Selling bonds is borrowing money.

It's not revenue.
Then revenue is the term whose semantics I was disrespecting. The point is that you have money, whatever its source, and you spend it on things. (income money) + (borrowed money) == (total money in) == (things paid for) + (money left over). If the equation doesn't balance then something has gone rather wrong (which is most likely that I wrote it down wrong, but for the sake of argument let's assume it's correct - I'm just saying that the books have to balance, the voters can't just fill in any numbers they want, they have to be sane). I think there is definitely some agreement about the important issues here and I'm just having my poor word choices picked on, which is certainly one way to learn to communicate better, but it's not a very pleasant way.

You're not being picked on. But words have meanings, and those meanings covey ideas.

The salient point here is that governments already do this exact thing; They borrow money when there isn't any left over and there are still things to pay for. Saying the 'books have to balance' in that way is meaningless, because that they already do. In a more direct democracy it's just the voters that are causing the auto-balance by borrowing, instead of representatives.

There might be a salvation in a balanced-budget requirement and a regulation that couples the deficit expenditure legislation directly to the bond and the relevant tax hike to pay for it (i.e. a war bill that authorizes military force, the issues the bond to pay for it and enacts the income tax hike to service the bond). But that isn't a feature exclusive to direct democracy, either. At the core, if you're trying to limit government debt you have to add another regulatory measure. It doesn't get solved by direct voting. Never mind that it's tremendously fallacious to assume that the public, as a voting block, is going to be well informed and behave rationally.

Byrel wrote:One way of avoiding this problem is to introduce a hard debt cap. The national debt must be no more than $x billion (or for a more scalable system, x% GDP.)

...To bring this back to the issue of zero-debt, I submit that any hard debt cap will look like a zero-debt cap in any given budget.
A valid point, that when coupled with the ongoing US debt-ceiling debates indicates that such hard limits won't work.


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