RSS Feed MenuGood for Newt for calling his own.
Here are some things we should be talking about:
1) A 5-year extension of the Bush tax cuts. This is no time to be raising taxes. While the ideology of the governing party rules out making the Bush tax cuts permanent, economics tells us that short extensions do no good at all. Shoving off the expiration date from 2011 to 2013 will make no difference. Five years at least. There will be time in the next administration to think through the revenue reforms we need to achieve budget balance in future: consumption taxes or energy taxes, not taxes on saving, work and investment.
2) Military re-equipment. Our John Guardiano has been arguing here that re-equipping the armed forces after a decade of exhausting war can provide stimulus to some of the economy’s high technology sectors, badly battered by the collapse in business investment. We’re hearing a lot of 1930s analogies these days. Consider this one: the FDR bill that had the most dramatic impact on employment was his Naval bill of 1938, a then-astounding $1 billion for new ships and naval aircraft. That money helped pull the economy out of the “second depression” of 1937. A military capital budget could help sustain both employment and necessary rearmament over the difficult months ahead.
3) An exchange rate deal. The dollar has declined against the yen and euro, as it needs to do. Through complex central bank operations, China has thus far managed to push its currency down in tandem with the dollar. This is good news for Chinese exporters: their goods stay cheap in American stores. But for everybody else in China, the currency decline implies inflation ahead: Unlike the recession-struggling U.S., China is growing and super-abundant liquidity translates into asset bubbles and soaring consumer prices. In its own interest, China needs to revalue its currency sooner or later. Trade inducements from the U.S. might help nudge that decision forward to “sooner.”
4) An immigration slowdown. The job growth of the past year heavily disproportionately benefited immigrant rather than native-born labor, as economist Ed Rubinstein has shown. Federal stimulus dollars are headed toward immigrant-heavy sectors: construction above all. Given the especially appalling unemployment numbers among young black males, we need to be acting decisively to ensure that U.S. taxpayer dollars provide relief to U.S. nationals.
5) Avoid direct federal job creation. These programs become dead ends: see especially the sorry history of the Comprehensive Employment and Training Act. Created in 1973 to expand a program created in the Kennedy administration (!) to help workers displaced by automation (!!), CETA rapidly devolved into a permanent holding tank for lightly committed workers.
6) TARP 2. I know, I know: everybody hates TARP. But 14 months after the Lehman crash, credit remains ultra-tight, in great measure because the books of banks and other lending institutions are clogged with bad debts. Inability to produce a plan to clear these bad debts remains failure 1 of the Obama administration domestic policy … a better TARP remains today as it has always been a prerequisite for rapid recovery. Otherwise we are in a Japan-like situation of hoping that general economic improvement will turn bad assets into good. That can happen too, but it takes time – and nobody should wish to dawdle.
sinz54 // Nov 30, 2009 at 4:10 pm
WillyP: Do you mean to imply that recessions are, really, just the infantile public refusing to spend?
Some recessions are; some aren’t.
Right now, the public isn’t spending because a) 17% of them are either unemployed or under-employed, and have to save their money just for the necessities of life; b) credit remains tight, even for those who are still employed and even for those businesses which are still solvent.
Grizelda // Nov 30, 2009 at 4:10 pm
WillyP – Stockholm just called – they want to give you ANOTHER Nobel Prize….
ottovbvs // Nov 30, 2009 at 4:11 pm
24 WillyP // Nov 30, 2009 at 3:58 pm
” And might I add, the Keynesians, so often accusing the free marketers of rigid adherence to ideology (while never spelling out why this is the case, of course), ”
……NEVER?…..go buy Bruce Bartlett’s book and he’ll spell it out for you
ottovbvs // Nov 30, 2009 at 4:14 pm
…….Gingrich is a joke…….this is another of his stunts in a desperate attempt to attract attention and prove he’s “relevant.”
WillyP // Nov 30, 2009 at 4:15 pm
otto, I realize in your mind that no economist, past or present, approaches the eminence of Bruce Bartlett. But then again, that’s your mind we’re talking about, isn’t it?…
WillyP // Nov 30, 2009 at 4:17 pm
sinz, so in other words – the public needs JOBS! which the PRIVATE, not public, sector, creates!
hence, reduce spending and reduce taxes! a growing economy means growing PRODUCTION, something a free market does far more efficiently and smoothly than a centrally commanded system!
WillyP // Nov 30, 2009 at 4:36 pm
grizelda, i have done nothing but interpret the work of intelligent free market economists and provide a much needed alternative options to those provided by the cranks that abound on this forum. their claims are completely unsubstantiated, and you can tell it because they never bother to intelligently refute my logic.
they are poor economists, and worse students of history. otto’s a liberal, and sinz doesn’t know up from down when it comes to economics!
ottovbvs // Nov 30, 2009 at 4:37 pm
30 WillyP // Nov 30, 2009 at 4:15 pm
“otto, I realize in your mind that no economist, past or present, approaches the eminence of Bruce Bartlett. But then again, that’s your mind we’re talking about, isn’t it?…”
You said:
” And might I add, the Keynesians, so often accusing the free marketers of rigid adherence to ideology (while never spelling out why this is the case, of course), ”
……You said NEVER which is self evident nonsense……I just gave you an example of a well known conservative economist who is currently spelling it out in a book available in your local bookstore…….he’s certainly an honest conservative who knows what he’s talking about…… neither of which apply to you I’m afraid…..not that that is going to stop you continuing to demonstrate the paucity of your economic knowledge
ottovbvs // Nov 30, 2009 at 4:40 pm
32 WillyP // Nov 30, 2009 at 4:36 pm
“grizelda, i have done nothing but interpret the work of intelligent free market economists and provide a much needed alternative options to those provided by the cranks that abound on this forum. their claims are completely unsubstantiated, and you can tell it because they never bother to intelligently refute my logic.”
……It would be hard to make this guy up wouldn’t it…..I just refuted an absolutely clear claim you made and your response was to attack me…….. not admit your error
LFC // Nov 30, 2009 at 4:50 pm
WillyP said… sinz, so in other words – the public needs JOBS! which the PRIVATE, not public, sector, creates! hence, reduce spending and reduce taxes! a growing economy means growing PRODUCTION, something a free market does far more efficiently and smoothly than a centrally commanded system!
So you call for reduction of taxes. This might mean corporate taxes to grow jobs in an economy when few companies are making a profit to be taxed in the first place. If so, that would be really, really dumb. Or it could mean individual taxes, which we’ve already seen is being used for debt reduction, not spending.
But you don’t want gov’t spending, which is 100% SPENDING. Instead, you want to cut gov’t spending at the worst time there is to cut it.
BTW, since you don’t seem to understand the concept, increased gov’t spending is spending that goes to private industry. It’s not money exchanged between gov’t agencies. This increases demand, which also increases hiring. That’s because that companies must hire to take advantage of the demand.
Thanks, but no thanks to your “bridge to nowhere”.
WillyP // Nov 30, 2009 at 4:54 pm
otto, first of all, the mighty bruce bartlett is an historian by training, not an economist. a wikipedia search would tell you that.
second, i don’t care what the man is – my beef is with his system, not him.
third, do you find any relevance in classical economics? do you find any relevance in free market economics? i tend to think not – i think you find inexplicable bliss in the keynesian system.
of my paucity of knowledge, does it matter to you that i am in broad agreement with such economists as:
1)Mises
2)Rothbard
3)Hazlitt
4)Huerta de Soto
5)Hayek
6)Reisman
and in large part agree with the doctrines advanced by:
7)smith (spontaneous order – “invisible hand”)
8)ricardo (comparative advantage)
9)turgot (benefits of the unregulated commercial society to social order and prosperity)
10)j.b. say (say’s law)
11)hume (price specie flow mechanism)
no, it doesn’t. they’re not keynesians, so to you they’re not worth their weight in salt!
WillyP // Nov 30, 2009 at 4:58 pm
otto, you told me to read a book. you did not give me a claim to refute.
WillyP // Nov 30, 2009 at 5:32 pm
LFC , you are the new witchdoctor in town i guess… take a minute to consider the following:
spending, you might as well learn early, is not what constitutes, and is not the way to, wealth. wealth is created by the act of production. when a government spends money it does so in one of 3 ways:
1) direct taxation
2) borrowing
3) inflation (printing money, or, in recent times monetizing debt)
so you see, it is a false phrase “government spending.” for the government to spend, it must first take away from the private (i.e., non-governmental) sector. that act either deprives the private sector directly, in the case of taxation; indirectly by crowding out, in the case of borrowing; or surreptitiously (and most destructively) by inflation.
to clear up what “spending” is, and save your potentially a lifetime of confusion (see otto and sinz), let me clarify the options that one is presented with in the real world:
1) save money – that is, put it in bank, do not spend to consume or invest
2) spend money on consumptive goods
3) invest money – money is lent at interest, or invested into equities
it is worth noting that currently our banks, which purport to be savings banks, lend the money put into savings accounts. most of the time they can get away with this (creating credit money), but not always (that’s what causes bank runs). in our supposed enlightenment, we’ve essentially outlawed the bank run, and replaced it with the FDIC and Federal Reserve. being that there is no free lunch, what happens, in practice, is that banks get to socialize losses by inflating the dollar supply.
you can only do one of those three things – this is tautology. when the keynesian says, “there is not enough spending!,” they are really railing against the so-called “hoarders.” to these people, saving money causes further layoffs, further reducing spending, leading to what they call a deflationary spiral, or in layman’s terms, the “paradox of thrift.”
the keynesian does not realize that prices adjust, and will tend to move downward as more people increase their cash reserves. a new equilibrium will be established, in this vulgar “deflationary” period. moreover, the keynesian does not even recognize that people are acting correctly – that in a time of recession, which itself is merely the lifting of the veil of prosperity created by credit inflation, saving is NECESSARY and helpful. instead, he makes villains of the “hoarders,” and says that a wise gov’t can make the best use of private money.
so you see, when you recommend government increase its spending, i see it for what it truly is AND CAN ONLY BE – less money in private hands, i.e., higher taxes. so the schizophrenia sets in for the neo-keynesians – reduce taxes and increase spending. well, sorry, you can’t do both – they are by definition opposites.
ottovbvs // Nov 30, 2009 at 5:51 pm
37 WillyP // Nov 30, 2009 at 4:58 pm
otto, you told me to read a book. you did not give me a claim to refute.
You said:
” And might I add, the Keynesians, so often accusing the free marketers of rigid adherence to ideology (while never spelling out why this is the case, of course), ”
……Unfortunately you’re such a liar you forget how many porkies you tell
WillyP // Nov 30, 2009 at 5:57 pm
lol, now i’m a liar.
i realize you’re approaching ancient age wise (i’m only 18, remember), but could you grow up and actually say something of substance rather than complain? how about you tell everybody how you can increase government spending without decreasing private spending?
of course i realize you’re in no position to debate, and i therefore fully doubt you’ll do anything but call me an assortment of names.
ottovbvs // Nov 30, 2009 at 6:12 pm
40 WillyP // Nov 30, 2009 at 5:57 pm
“lol, now i’m a liar.”
……you repeatedly tell lies either explicity or implicitly so I don’t know what else to call you…..in this case you made a claim that was a preposterous and easily disprovable lie and I called you on it by giving an example of a conservative, not a liberal, who has made a career as practising economist and economic commentator and who has recently come to appreciate the merits of Keynesianism….it’s really that simple……your lack of economic knowledge despite your vast, and it is indeed gargantuan, conceit is fairly clear I’d have said, and your bizarre theories risible, but self awareness is not alas one of your merits
ottovbvs // Nov 30, 2009 at 6:18 pm
36 WillyP // Nov 30, 2009 at 4:54 pm
“third, do you find any relevance in classical economics?’
…….of course……some of their theories have proved correct and others haven’t…..the same is true of Keynes…….the fact is that Keynes has on the whole proved much more right than most of them in the context of a globalised economy and that is why his ideas with some classical adjustments underpin the entire world system of economic management……you may hate all this but it’s a fact
WillyP // Nov 30, 2009 at 9:24 pm
eh, i don’t think that the argument of “it is the way it is for a reason” is defensible in this case. i can’t argue with you – governments around the world are (largely) keynesian. that’s true and i’ve never said anything to the contrary.
i’m sure you’re a swell fellow. i can’t understand, however, how someone is so married to the idea of keynesianism that they would not bother to investigate other schools of thought. you’re entitled to be a liberal, as much as anyone else is entitled to be of their own personal persuasion. although, i admit i find it a hard pill to swallow that commentators are so rashly irresponsible as to not bother to intelligently defend their position, which, in this case, happens to be the status quo. it frankly doesn’t help my entire opinion of mankind. that’s my issue to deal with, i reckon.
nonetheless, i think i will be proved correct through the happenings of reality. on friday, we will get more unemployment figures, most likely higher than predicted. and the price of gold will continue to climb. at some point these forces will stop; i’d rather they stopped several months ago, but the interventionism will guarantees to prolong the ride.
ottovbvs // Dec 1, 2009 at 12:16 pm
WillyP // Nov 30, 2009 at 9:24 pm
“eh, i don’t think that the argument of “it is the way it is for a reason” is defensible in this case. i can’t argue with you – governments around the world are (largely) keynesian. that’s true and i’ve never said anything to the contrary.”
……..there you go again…..on several occasions on different threads you’ve denied the existence of proven economic phenomenons like deflationary spirals……… and it’s entirely defensible upon the grounds that in the main and used judiciously Keynesianism works unlike some of the more extreme theories of Hazlitt and co which have proved either flawed or rely on predictions of the sky falling at some point……I’m afraid I don’t have your propensity to deny reality as for example in the matter of gold which is one of your idee fixe’s ……I agree with Uncle Warren that it’s role is basically irrational but like him I don’t deny it’s efficacy
WillyP // Dec 1, 2009 at 2:51 pm
says otto,
“on several occasions on different threads you’ve denied the existence of proven economic phenomenons like deflationary spirals……… and it’s entirely defensible upon the grounds that in the main and used judiciously Keynesianism works unlike some of the more extreme theories of Hazlitt and co which have proved either flawed or rely on predictions of the sky falling at some point……”
You sound like the Inquisitor! “On several occasions, this pernicious limb of Satan has denied the existence of ORIGINAL SIN, errr, DEFLFATIONARY SPIRALS!” (to paraphrase Leonard Bernstein’s musical Candide).
I don’t deny that something roughly close to what is called a “deflationary spiral” exists, though it is certainly dramatized language. What I deny is that a) they are normal market phenomena, existent inherently in a system that does not include credit inflation b) Keynesianism can do anything to stunt the ultimate effects. What it can do is prolong and spread the effects, making things (in my estimation, any by any measurable amount) worse. That’s because Keynesianism, if I can speak bluntly, is government sanctioned bad accounting. (While we’re on the point, Socialism is, in one respect, the abolition of meaningful accounting.)
If by papering over losses you could cure an economy, the Soviet Union would have never collapsed! Accounting facilitates economy, and if you begin blurring the language of business, the effects will be the same as blurring any other language – miscommunication, leading to miscoordination, and a clumsy, non-efficient economic engine. Like Socialism, Keynesianism is a terrific method for encouraging economic destructionism because it essentially cripples the efficacy of the profit/loss system. I’ll leave you with a quote from Goethe:
“Double entry bookkeeping is one of the most beautiful discoveries of the human spirit…It came from the same spirit which produced the systems of Galileo and Newton and the subject matter of modem physics and chemistry. By the same means, it organized perceptions into a system, and one can characterize it as the first Cosmos constructed purely on the basis of mechanistic thought…Without too much difficulty, we can recognize in double-entry bookkeeping the ideas of gravitation, or the circulation of the blood and of the conservation of matter.”
I’m sure you’ll say that’s all blather.
ottovbvs // Dec 1, 2009 at 3:10 pm
45 WillyP // Dec 1, 2009 at 2:51 pm
……I’m afraid this largely vacuous reply is all too typical of your…..yes……blather is not an inappropriate term…..how the heck did Lennie Bernstein get in on the act?……I suppose it’sat least progress that you admit the existence of the deflationary spirals that you had previously denied but as ever it’s hedged around with all kinds of nonsensical casuistry…….since we’re bringing in literary quotations I think one of Disraeli’s (on Gladstone) seems to apply to you “Exuberated by the power of his own verbosity.” ……of course Gladstone was a great man while you are just a silly one
WillyP // Dec 1, 2009 at 3:22 pm
I’m not sure what you do/did for a living, but it’s interesting how quickly you dismiss the power of inaccurate accounting to muck up economies. You’ think after Worldcom and Enron the general public would become aware of the importance of accurate bookkeeping, but apparently this is not so.
you’re a bother who doesn’t realized when he’s outsmarted, much less outclassed. i’m not saying i am self-educated or even a modestly educated (I have a degree from a fine institution), but is this what Cambridge does to its students?