More Stimulus
Paul Krugman sounds the alarms about the need for additional stimulus, though he recognizes the political obstacles:
So getting another round of stimulus will be difficult. But it’s essential. [...] So here’s my message to the president: You need to get both your economic team and your political people working on additional stimulus, now. Because if you don’t, you’ll soon be facing your own personal 1937.
Given the political obstacles, I worry about the wisdom of framing it this way. The funds appropriated in ARRA are only now beginning to flow, and the pace will increase over the next few months. A new political campaign for new stimulus couldn’t possibly produce new legislation—much less new actual expenditures—for quite a long time now. So while I’m not 100 percent up to speed on the mechanics of this, it seems to me that the best thing to do is probably to try to achieve additional stimulus through the regular congressional appropriations process that’s going to need to move forward over the next several months one way or the other. Just have congress take some useful programs that are appropriated at less than their authorized level, and jack up the appropriations.
103 Responses to “More Stimulus”
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July 3rd, 2009 at 5:46 pm
I almost tend to to think it’s too late for more stimulus — at least of the kind that can do any good. I think the White House, for instance, isn’t very likely to want to expend political capital over the next few months in the runnup to the final battle on healthcare. Maybe Democrats in Congress can get together in sufficient numbers (meaning 60 in the Senate) and shove something down the Republicans’ throat. But I wouldn’t bet on it. My guess is the White House would be willing to take leadership after healthcare legislation is passed, but by then we’re talking November. For better or worse I fear we’re stuck with a tepid recovery — at least in the early stages. On the bright side I do think the economy is likely to start growing again soon — albeit at a slow pace. I’m not at all surprised by the dismal job numbers. It’s rather like the dark hour before dawn I suspect. My guess is the bulk of the prognosticators are likely correct that GDP will have begun expanding again by the end of summer or some time in the fall — or at latest by year’s end. Hell, I’d almost be tempted to say “no” to more stimulus even if we could get it (and make no mistake I do believe it’s warranted) given the politician costs flowing from the GOP and the mainstream punditocracy going on and on about deficits…
July 3rd, 2009 at 6:12 pm
worry about the wisdom of framing it this way
Krugman’s an economist, making a prediction. Leaders are free to use it or ignore it.
However, he has the right to monitor the economy and make more predictions. Whether they manifest is an opportunity for theory revision in furthering knowledge.
Politicians worry about framing. Matt, are you worrying because you work for a political organization?
July 3rd, 2009 at 6:36 pm
Most intellectually bankrupt economist of a government that is more bankrupt than it’s ever been in history.
Stimulus will ultimately take resources and spend them poorly and in ways that have little future or current benefit. The money needed for a stimulus must eventually be taxed away, and will encourage companies to stop spending today.
Any more money the government spends will just add more pain later.
July 3rd, 2009 at 7:17 pm
There has been a lot of talk recently about how hard it is to pay for Health Care. Why not just make health care reform the stimulus?
July 3rd, 2009 at 7:19 pm
Also Krugman isn’t going to like this but it might be a good idea to create a stimulus entirely through tax cuts. You could for instance temporarily suspend the payroll tax.
July 3rd, 2009 at 7:47 pm
No possible stimulus even if there was broad support for it would be enough. The system is broken on the shoals of too much debt. Any stimulus would just be more borrowed money.
Trying to square this circle is impossible. It’s magical thinking. While trillions have been squandered pretending to prop up the failed debt and the institutions which hold it, barely a single thought has gone into what happens when the maladjusted economy does not restart, and it won’t.
At this very moment the state of California is being downsized by perhaps 25% and there is no alternative. No magic formula which will change it. If the Federal government is days weeks or years away from the same fate is any ones guess but get it into your head that it is coming.
July 3rd, 2009 at 7:50 pm
Shorter: “We’ve tried our preferred approach, but the patient isn’t getting better. Well, this calls for more bleeding!”
Two words come to mind: reality. based.
July 3rd, 2009 at 8:00 pm
Boy, it’s a good thing that Krugman is a crack economist, or he wouldn’t be suggesting even more debt to pile on this year’s nearly $2T hole. Does he think that spending tomorrow’s money is free?
The most amusing part of this whole thing is watching the same people who insisted that Bush’s debt was horrible, terrible, unsustainable (add your own descriptions here) are now on board with piling up hundred dollar bills and lighting them on fire.
At least irony isn’t dead.
July 3rd, 2009 at 8:08 pm
Considering how Congress went out of it’s way to make the “stimulus” pretty unstinulating (little for maintaining state and local government spending, capital for urban infrastructure not operating subsidies, no cut in the payroll tax) why would we expect better this time?
July 3rd, 2009 at 8:13 pm
Shorter: “We’ve tried our preferred approach, but the patient isn’t getting better. Well, this calls for more bleeding!”
Snarky but a complete misrepresentation of Krugman’s point of view.
The correct analogy is not a doctor saying “the therapy is not working so we need more.” Its “the therapy will take several months to take effect but we just got some additional test results and, as I feared, your condition is much worse than we assumed. We need more aggressive therapy”.
You can disagree with this but let’s be clear on Krugman’s POV here.
July 3rd, 2009 at 8:16 pm
That makes sense DJ if there was any solid reason to believe the “therapy” was going to “work” in the first place, or if there were any indication after-the-fact that the therapy was at least kinda-sorta working.
Otherwise, we’re in a situation where no possible evidence could disprove the supposed efficacy of the “therapy”. In other words, bleeding.
July 3rd, 2009 at 8:17 pm
Right, let’s prop the economy up with even more debt. It’s so obvious how well that’s worked out the last 25 years.
July 3rd, 2009 at 8:30 pm
Since I live in California, I may have a particular bias here. But direct aid to the states would be stimulative and essential even if it took 6 months to get it through congress.
The only way we are going to handle the debt problem going forward is through growth. The more time it takes to generate growth, the more difficult it becomes to solve the debt problem. This is not the time to worry about marginal additions to the national debt; that horse left the barn years ago.
July 3rd, 2009 at 8:35 pm
Direct aid to the states will probably backfire – it will teach the profligate states (California, NY come to mind) that there’s no penalty for being stupid: Daddy Warbucks will just bail them out. That kind of thing doesn’t work when parents do it for their kids, and it won’t work for the States either.
States are simply going to have to start figuring out demographic reality – giving generous pensions to state employees sounds nice, but the math doesn’t work out.
July 3rd, 2009 at 8:45 pm
I do not live in California, however I still think it would be a good idea to get them some money (stimulus package, emergency funds, call it what you will.) Having any part of this country (especially one with an economy so large it can make its own fuel efficiency standards) unable to meet basic payroll is a huge disaster when government is pretty much the only spending game in town these days. Kind of shoots the whole “stimulus package” thing in the foot, wouldn’t you say? Truth be told, I’m surprised no one seems to be making much noise about this. I mean, the state of California is officially paying people in IOUs.
Also, I’m pretty sure it is possible to in fact spend your way out of a recession. The question is, are you spending it on sound investments that will improve the nation and ultimately allow us to pay off the debt we have just accrued once the economy recovers (I’m thinking education, health care, the classics that make the GDP grow) or just pissing it away on god knows what. Personally, I vote for heath care. I just hope congress does too.
July 3rd, 2009 at 8:46 pm
The most amusing part of this whole thing is watching the same people who insisted that Bush’s debt was horrible, terrible, unsustainable (add your own descriptions here) are now on board with piling up hundred dollar bills and lighting them on fire.
Krugman criticized the Bush tax cuts for the rich, at a time of growth and with two wars going on. Bush should have increased taxes instead of pandering to his base of millionaires.
Now there is a depression looming, and the only way to prevent it is government spending. Krugman said the first stimulus was too small; he even warned at the time that it would be difficult to ask for more money later on, because Economics-illiterates like JR would point to worsening unemployment to claim “But stimulus didn’t work, look!”. And Krugman was right on all counts.
Direct aid to the states will probably backfire – it will teach the profligate states (California, NY come to mind) that there’s no penalty for being stupid
Then perhaps CA and NY should start by refusing to pay for the poor, stupid red states that year after year get more from the federal government than they give.
July 3rd, 2009 at 8:58 pm
I’m still wondering how the logic on the conservative position plays out. Assuming stimulus doesn’t work, and either does nothing or makes things worse, what are the alternatives?
I’ve heard two basic proposals: do nothing, or reduce taxes. How would either of these actually play out, according to conservative economic estimates?
As I understand it, the concept behind the stimulus is that the economy has been in a negative feedback loop: as money dried up, so did business, which cost jobs, which reduced spending, which hurt business, costing more jobs, etc. By breaking this cycle we can get the economy back on track.
Now, I’m hardly an expert, so my understanding of the economics basically involves applying my own liberal ideological assumptions to an economic position. Yes, I don’t have a problem with the government borrowing money and spending it; I don’t have a problem with raising taxes in the future; I do want to soften the effects of “creative destruction” (if that’s what you want to call the recession).
If the economics were based purely on empiricism, I don’t think we’d see policy being laid out on as partisan lines as we do. Unless, of course, like climate change liberals ARE on the correct side. – I kid. Kind of.
July 3rd, 2009 at 9:05 pm
Otherwise, we’re in a situation where no possible evidence could disprove the supposed efficacy of the “therapy”. In other words, bleeding.
But its not as if Keynesianism is some voodoo concept Krugman came up with on his own and he can just make up criteria on how to judge it a success. There are plenty of economist opponents of Keynesianism who understand what it is and how long they have to wait before they can call it a failure.
I mean, when the Fed kept cutting interest rates all the way to zero, did you worry that monetary policy was some devious trick that Bernanke came up with and that you, personally, have to guard against being hoodwinked?
July 3rd, 2009 at 9:10 pm
My basic theory on this could be summarized as follows:
“Don’t just do something, stand there”
Invariably, government “help” doesn’t help. You want socialized medicine? Look at socialized housing to see how well that will work. You want stimulus? look at the kind of stupid pork barrel politics that pervades defense spending – you’ll see the same thing all over.
Heck, read “Empire Express” to see how well govt stimulus to build the transcontinental railroad worked out in the 19th century. The kinds of waste you see now isn’t new; it’s just on a grander scale.
I’d like to see the govt do less for a simple reason: the less it does, the less waste there is. I’d like to see the military out of most of the countries we have bases in, I’d like to see most federal education spending ended (unless you want to talk about no strings block grants), I’d like to see a lot less of everything.
July 3rd, 2009 at 9:12 pm
But its not as if Keynesianism is some voodoo concept Krugman came up with on his own and he can just make up criteria on how to judge it a success.
Neither was bleeding some voodoo concept that one person came up with on his own. It was believed in by many over some time period. As you can see, this proved nothing.
There are plenty of economist opponents of Keynesianism who understand what it is and how long they have to wait before they can call it a failure.
Enlighten me, how long do I “have to” wait before I can call it a failure? Are there any conceivable real-world events, circumstances, or sets of events & circumstances – even in principle – that would compel you (or Krugman, or Yglesias..) to conclude that stimulus doesn’t work’ rather than ‘I guess we just need more stimulus’?
If so then what are they?
If not, we’re talking about bleeding the patient.
July 3rd, 2009 at 9:33 pm
If you want to be a moron, you can believe any damn thing you please. If you want your babbling to make any sort of sense, you need to wait out the expected 6 to 9 months for Obama’s stimulus to even begin having any effect.
You’d think after the way their nonsense destroyed th economy, conservatards would display some appropriate level of modesty about their level of understanding., But they’re too fucking stupid and full of themselves for that.
Krugman, you fucking idiot, is not saying “this stimulus didn’t work so we need another.” He is saying “the number of jobs which this stimulus quite predictably WILL CREATE is dwarfed by the rate at which the economy is losing jobs, because that rate is much higher than was predicted by the Administration.” That has fuck-all to do with “the stimulus failing”.
July 3rd, 2009 at 9:34 pm
James, it’s too bad your theory wasn’t extended to the Iraqi people – hundreds of thousands of dead and millions of displaced later we see that just fucking standing there was a much better plan.
I have a serious question for you James. Is there anything you aren’t a complete moron about? Below you prop up empty shell of Palin (a candidate not qualified to be mayor of LA, let alone VP), you supported the slaughter of innocent Iraqis, you can’t tell the difference between micro and macro economics…really dude, if I were as stupid about everything as you are I would at least like to think I would be smart enough to shut the hell up and learn from my betters.
July 3rd, 2009 at 9:40 pm
If you want your babbling to make any sort of sense, you need to wait out the expected 6 to 9 months for Obama’s stimulus to even begin having any effect.
Ok then. 6 to 9 months it is (where did this number come from BTW? “Keynesianism”? Oh nevermind). So, in 6 to 9 months, then, can you describe some conceivable conditions that would lead you to conclude ‘didn’t work’ rather than ‘needed more/need more stimulus’?
Anyhow, if one needs to wait 6 to 9 months before declaring failure, then where does Krugman get off saying ‘need more stimulus’ now? Surely he should be required to wait the requisite Keynesian-prescribe 6 to 9 months along with the rest of us….
He is saying “the number of jobs which this stimulus quite predictably WILL CREATE is dwarfed by the rate at which the economy is losing jobs, because that rate is much higher than was predicted by the Administration.” That has fuck-all to do with “the stimulus failing”.
And his evidence for believing in that ‘predictably WILL CREATE’ part is fuck-all.
July 3rd, 2009 at 9:50 pm
No, that would be your understanding of economics.
July 3rd, 2009 at 9:51 pm
Neither was bleeding some voodoo concept that one person came up with on his own. It was believed in by many over some time period. As you can see, this proved nothing.
But the point isn’t whether bleeding was eventually proved right or wrong. Its that it was an argument among physicians of those times and some random shmoe couldn’t just magically tell them that bleeding doesn’t work. Yeah, he could always say “haa, see, your patient died, it doesn’t work” but that would be the kind of smart-alecky analysis which could be applied to a wide variety of treatments, some of which were probably validated later…by physicians.
Enlighten me, how long do I “have to” wait before I can call it a failure?
As per my own argument, how the hell would I know? But I’d be pretty sure you’d be alerted by the increasingly strident pronouncements of Mankiw and other respected economist opponents that the policy has been tried and failed (as opposed to “will fail”). Its not as if you have to trust your personal judgement or that it’d even be wise to.
Did I personally know how to tell whether Saddam had an active nuclear program? No, but there were plenty of experts willing to explain the tell-tale signs of one; how you couldn’t really have it in the basement. Nor did I have to know how long to wait after the war before we could conclusively tell whether Saddam had WMD. It gets pretty obvious when the Bush administration can no longer tell people to just wait a few months with a straight face.
July 3rd, 2009 at 9:57 pm
Anyhow, if one needs to wait 6 to 9 months before declaring failure, then where does Krugman get off saying ‘need more stimulus’ now? Surely he should be required to wait the requisite Keynesian-prescribe 6 to 9 months along with the rest of us…
For the same reason the Fed can cut interest rates consecutively over 2 months even though the effect of the previous cut won’t be known for maybe a year. The Fed is re-assessing the state of the economy NOT the effect of the previous cut.
July 3rd, 2009 at 10:29 pm
To evaluate Krugman’s proposal you should first determine if the stimulus multipliers are getting small or larger.
July 3rd, 2009 at 10:48 pm
#22 – I only supported the Iraq war from the “you broke it, you bought it” standpoint. Unlike Matt, who was happy to support it it early when it was popular, and then unhappy when things got rough, I figured we had a responsibility to try to set things straight after upsetting the apple cart. But hey – you can go on believing that leaving things to the Jihadists in 2006 would have made things better somehow.
The original mistake in Iraq was in 1991 – it would have been better to have either:
– left Iraq alone then, on the grounds that whoever was sitting on the oil would have to sell it anyway
– finished the job of taking Hussein out then
By doing the half-assed thing in 1991, we pretty much guaranteed a future war with Iraq, and it came in 2003. The whole thing could have been avoided in 1991, simply by deciding that Iraq taking Kuwait over was far more of a problem for the Saudis (who have tons of cash) than it was for us.
You – and really, Matt too – are objectively in favor of genocide. If you want to know why, read Orwell’s seminal piece on why pacifists during WWII were objectively pro-fascist. I realize that it makes you feel better to call me a racist – but had we left in 2006, things would be worse in Iraq by a lot than they are now. Believing otherwise is just delusional.
July 3rd, 2009 at 11:44 pm
If you want to know why, read Orwell’s seminal piece on why pacifists during WWII were objectively pro-fascist.
Then read his apology. Which is more than J-Rob, selfish fuck, will ever offer, because he judges every policy by whether it ruffles his cocooned existence, and no Iraqis died on his lawn these past six years.
July 3rd, 2009 at 11:56 pm
You can scream all you want, but the fact that your arguments end up being nothing more than gainsaying and name calling speak volumes. It’s very easy to yell “racist”. In most cases, it’s a lot like yelling “fire” in a crowded theater.
July 4th, 2009 at 12:52 am
James, stop with the bullshit quoting of Orwell. You are no where near smart enough to understand his writing. You aren’t really competent to understand mine – and I’m not as smart as all that.
Your argument boils down to a “he hit me back first” James. It isn’t even as well thought out as a good quality insult-fest. To argue that we were consistently at war from 1991 on requires both a huge disconnect from reality and a kind of bloodthirstiness that only comes from genocidal fuckwits like yourself.
In January of 2003 the only acts of war were being committed by the US and Great Brittan. Target practice against the indigenous people does not a war make. So, you are factually wrong, and predictably stupid.
The fact that you have idiotic excuses for why you to this day support a policy of mass murder in retaliation for crimes by the political class is proof that your characterization of others as genocidal is mere projection.
Under my policy of not committing mass murder in Iraq fewer people would have died, been tortured, and been displaced.
Six years after your dumbfuck idea that Iraq’s people would be better off being bombed into democracy they still have less in the way of services than they did under a brutal dictator. How does that feel James, you monstrous supporter of evil? What does it tell you that your choice for the Iraqi people was mass death and destruction?
No James, the fact that you supported the war on the Iraqi people made you an idiot and a tool. The fact, that after all the devastation wrought by your fuckwittery, you still defend your genocidal war make you unfit for human interaction.
July 4th, 2009 at 1:16 am
Six years after your dumbfuck idea that Iraq’s people would be better off being bombed into democracy they still have less in the way of services than they did under a brutal dictator. How does that feel James, you monstrous supporter of evil?
Fuck me! James, if you supported the war in 2003 based on some stupid idea of “you broke it, you bought it” due to the 1991 Gulf War, then you deserve everything “Not as Stupid” throws at you.
Hell, someone, please say you supported the fricking war because the Arabs hit the US on 9/11 and so the US had to hit the Arabs, any Arabs. That’d at least be understandable and less evil than this pretense of actually wanting to improve Iraqi lives by bombing them.
July 4th, 2009 at 1:31 am
On topic:
Does he think that spending tomorrow’s money is free?
No, in the same way that someone dragged out of a car wreck will generally not forego medical treatment in spite of the prospect of a $100k bill. I happen to agree that it’s politically untenable for lots of reasons, but it’s fascinating to see J-Rob get fiscal constipation after six years of cheering on Bush’s coke, hookers and high explosives party. Then again, he could keep mowing his lawn and looking out for undesirables heading down the street, and that’s all that matters.
July 4th, 2009 at 1:46 am
I am going to ignore the loonies discussing debt and inflation in this thread, but I will assess MYs’ logic here. It is clear the the stimulus is far too short and ineffective to truly end the hemorrhage. Your first conclusion, that we should use the appropriating process to effectively produce more stimulus is not too bad, but a few problems exist. First, the most effective stimulus would occur through a robust highway/transit bill – because of the level of infrastructure spending. But the Obama administration, as the author knows, has made it clear that not only do they oppose a new bill, but they actually want to merely extend the existing authorization – safetea-lu – which is effectively less valuable than it was in 2005. So the administration is not going to follow Matt’s advice, making his political prognostications less valuable than Krugman’s. Further, the current infrastructure spending programs are distributed by “formula,” just as the ARRA is; meaning that they will disburse money just as slowly.
All of this begs the question: how do we stimulate the economy effectively? Clearly, a number of ways would include state-aid, social service, but also, and more profoundly a WPA style jobs program. The fact is that the process of “letting” construction projects is too slow and to create jobs and fill pockets for spending, we need a quicker means of employing workers. So, while I think the “politics” of doing something so radical may not currently exist, I do think they may if jobs keep vanquishing. And when they do, we must really put people to work in an expedited manner, rather than through the current process. From the appropriations process to the actual expenditure, too much time is lost. And the American people cant wait much longer.
July 4th, 2009 at 2:00 am
If $800B is too small, then what is too large? Should the president not worry about the debt at all? Oh, yeah, there’s a multiplier! Then why not an $800 trillion stimulus package!? That ought to get things going, right?
The same logic flies right over the people arguing for a higher minimum wage. If raising the minimum wage has little or no effect on the economy or employment, why only raise it a few dollars? Why not benefit more people and raise it a hundred dollars?
Same logic. All I hear are crickets.
Just get it passed, we’ll handle the consequences later! Yay!
July 4th, 2009 at 2:05 am
Re: You want socialized medicine? Look at socialized housing to see how well that will work
Look at socialized national defense and how awful that is. Yep, we should go back to private armies, the way things were back in the golden age of AD 700.
July 4th, 2009 at 2:55 am
We have one single-payer universal care system already, it’s called Medicare. It works way better than its private competitors.
July 4th, 2009 at 6:37 am
DJ
Its that it was an argument among physicians of those times and some random shmoe couldn’t just magically tell them that bleeding doesn’t work.
Sure they could have, some probably did, and probably should have more, in retrospect. They would have been right, and the ‘physicians’ (those who favored bleeding) would have been wrong. What would have been your objection? They’re not ‘experts’ and the ‘physicians’ are? So we have to keep doing the bleeding, regardless of evidence, till the ‘physicians’ come around?
But that’s kinda exactly what I’m saying is going on, right? Are you trying to refute or buttress my point?
Yeah, he could always say “haa, see, your patient died, it doesn’t work” but that would be the kind of smart-alecky analysis which could be applied to a wide variety of treatments, some of which were probably validated later…by physicians.
True. And so to separate the good treatments from the bad, one could use, say, scientific methods to gauge whether a given treatment is working. Valid treatments would, by definition, always reveal themselves to work. But for this method to work, ‘the treatment works’ would have to actually be treated as a falsifiable concept, NOT an axiomatic one.
My concern here, and the irony (given the pretensions to being “REALITY-BASED” from this same crowd a couple years ago), is that the efficacy of the “stimulus” treatment is unfalsifiable. Admit it, there is literally no conceivable set of conditions that would compel Krugman or Yglesias, or probably you, to conclude ’stimulus is actually just not a great idea in the first place’ rather than ‘we need more/didn’t have enough stimulus’. And this is why stimulus, to stimulus fans, is like bleeding.
If there is such a set of conditions, I’m still waiting to hear it described or outlined.
But I’d be pretty sure you’d be alerted by the increasingly strident pronouncements of Mankiw and other respected economist opponents that the policy has been tried and failed (as opposed to “will fail”).
Okay, let me just say ‘will fail’ then. Better?
For the same reason the Fed can cut interest rates consecutively over 2 months even though the effect of the previous cut won’t be known for maybe a year. The Fed is re-assessing the state of the economy NOT the effect of the previous cut.
Hmm. Are you sure you want to point to recent Fed rate policy as a successful model of the sort of thinking and control-theory approach you evidently advocate? Best,
July 4th, 2009 at 7:37 am
Hmm. Are you sure you want to point to recent Fed rate policy as a successful model of the sort of thinking and control-theory approach you evidently advocate? Best,
Oh, for Pete’s sake, the whole point is that it’d be beyond stupid for me to pretend that I can personally assess Fed monetary policy based on criteria like “unfalsifiability”. Sure, if I believed the entire economic profession is in Bernanke’s pocket or the whole field is illegitimate, I might have no choice but to rely on my own brilliance. But if not, such an approach has the same chance of being right as a stopped clock.
True. And so to separate the good treatments from the bad, one could use, say, scientific methods to gauge whether a given treatment is working. Valid treatments would, by definition, always reveal themselves to work.
No, they don’t. Which is why its so hard for physicians t just magically discard the “bad” treatments and just stick with the correct ones. You seem to think that people today know bleeding doesn’t work purely thru good ole fashioned horse-sense or maybe by just conducting a couple of tests in their basement.
July 4th, 2009 at 7:42 am
How difficult would getting a payroll tax cut be? Not very.
July 4th, 2009 at 7:53 am
Bob, you just got a payroll tax cut.
July 4th, 2009 at 9:12 am
The people who predicted the meltdown are morons who got lucky. Nouriel Roubini? Moron. Marc Faber? Foreigner. Mikhail Khazin? A stinking Russian. Nassim Nicholas Taleb? There are only white swans in the Northern Hemisphere, pal. Peter Schiff? CNBC continues to laugh at you -deride you for the exacting nature of your prognostications. And rightly so.
Who cares what these people think? They are all worthless doomsayers. Not surprisingly, they are all now predicting, in unison, that unless drastic action is taken we can forget about entering a Great Depression and instead expect to exist in a new paradigm that makes the Great Depression look like a tupperware party. Troublemakers and rabble rousers, pay no attention to these clowns.
As for Krugman? Don’t trust him. He is really a Communist in Marxist clothing.
July 4th, 2009 at 9:12 am
Another stimulus would be pointless when you have state legislatures declining additional funds for unemployment insurance. That’s what happened in Florida and Pennsylvania. It also doesn’t help that many localities are slow-walking the stimulus funds. It also should be pointed out that many rightwing talking heads are telling people to go out and shop.
July 4th, 2009 at 9:30 am
#16: Krugman criticized the Bush tax cuts for the rich, at a time of growth and with two wars going on. Bush should have increased taxes instead of pandering to his base of millionaires.
No, he should have stopped the bleeping war in bleeping Iraq!!!!!
#18I mean, when the Fed kept cutting interest rates all the way to zero, did you worry that monetary policy was some devious trick that Bernanke came up with and that you, personally, have to guard against being hoodwinked?
Except for the part about Bernanke being the first guy to come up with this idea, this is exactly what I believe.
#42: Not surprisingly, they are all now predicting, in unison, that unless drastic action is taken we can forget about entering a Great Depression and instead expect to exist in a new paradigm that makes the Great Depression look like a tupperware party.
It should be pointed out that the “drastic action” that Austrian-schoolers like Peter Schiff would favor is MUCH, MUCH different from the drastic action that Keynesians like Krugman would favor.
July 4th, 2009 at 9:47 am
Socialized militaries are what you might call a necessary evil. Socialized medicine is an unnecessary one
July 4th, 2009 at 10:36 am
Right. Chemotherapy always works. Oops! Must not be a valid treatment.
But it’s good to know that you agree that Supply Side economics, deregulation, tax cuts, ‘the free market’ ideology have all been falsified. Given that they have been falsified, what’s left? Keynesian stimulus? What else?
July 4th, 2009 at 10:37 am
EDIT
Another stimulus would be pointless when you have state legislatures declining additional funds for unemployment insurance. That’s what happened in Florida and Pennsylvania. It also doesn’t help that many localities are slow-walking the stimulus funds. It also should be pointed out that many rightwing talking heads or talk show hosts are telling people to not consume.
July 4th, 2009 at 10:46 am
@44 Galvester: “It should be pointed out that the “drastic action” that Austrian-schoolers like Peter Schiff would favor is MUCH, MUCH different from the drastic action that Keynesians like Krugman would favor.”
True.
July 4th, 2009 at 10:59 am
DJ,
the whole point is that it’d be beyond stupid for me to pretend that I can personally assess Fed monetary policy based on criteria like “unfalsifiability”.
On what criteria do you assess such things then? Back to the subject at hand: on what criteria do you (it appears) agree with Krugman and Yglesias that ‘we need more stimulus’? If you really believe what you’re saying here, you should be at best agnostic about whether more stimulus is needed or will work. Right?
Even more to the point: on what criteria are they basing that conclusion? Answer: because the patient isn’t healthy yet and doesn’t look like he’s getting healthy anytime soon. Hence: more bleeding.
Sure, if I believed the entire economic profession is in Bernanke’s pocket or the whole field is illegitimate,
What “whole field”? It is not the “whole field” of economics that is saying ‘we need more stimulus’. It is, well, Paul Krugman and like-minded. Not everyone agrees. You weren’t aware? Or choose to ignore? Which?
[valid treatments work] No, they don’t.
Um, yes they do. That would follow from the definition of ‘work’. I stated a tautology.
Hint: by ‘work’ I don’t mean to imply ‘instantly cure 100% of everyone’. That would be a very narrow reading of what it means for a treatment to work.
Which is why its so hard for physicians t just magically discard the “bad” treatments and just stick with the correct ones.
Well, it’s especially hard if they are not even open to the possibility that the treatment doesn’t work at all, i.e., if they have an attitude that as long as the patient isn’t getting better, he needs more bleeding.
You seem to think that people today know bleeding doesn’t work purely thru good ole fashioned horse-sense or maybe by just conducting a couple of tests in their basement.
No, people know bleeding doesn’t work because they don’t have an axiomatic belief that it does, and a sufficient # of them (apparently) allowed real-world evidence of its failure to work to affect their view of bleeding as a treatment, instead of constantly doubling down on the bleeding in the face of its failures.
The same, unfortunately, cannot be said for those ’stimulus’ advocates, most of whom, in delicious irony, spent the last five years lovingly styling themselves the ‘reality-based community’ yet now have a predetermined a priori view that ’stimulus’ is what is needed, a view that is utterly impervious to and uninformed by reality.
Again: Is there ANY conceivable evidence or future set of circumstances WHATSOEVER that would lead you, or other ’stimulus’ advocates, to conclude ‘hmm maybe stimulus just isn’t what is needed, maybe there was something wrong with the theory that it was’ rather than ‘more stimulus’? This has gotta be the third time I’ve asked.
ScentOfViolets,
Right. Chemotherapy always works. Oops! Must not be a valid treatment.
You too are reading my usage of ‘works’ far too narrowly….see above.
Best,
July 4th, 2009 at 11:08 am
@ 45. J.R.
Interesting concession. I’ve always thought the right’s exception for “big government” defense spending was ideologically telling. I think the argument is very strong – what could be more important than physically protecting the country. Same for police.
But it basically comes down to providing a public good service that couldn’t be done adequately – guaranteeing coverage to all – by the private sector. But this is where the left gets its pry bar in: the same is true for many other aspects of social spending. Roads, schools, libraries, care for elderly and mentally ill, etc.
The crux is that with military spending, the assumption is that everyone has a right to physical protection, and so the “evil” is necessitated by a guarantee of access. The left applies this very same logic – a “necessary evil” to the guarantee of access to other social goods. It certainly isn’t as black and white as paying a guy with a gun to stay on the lookout for threats. But it does have its own logic, based fundamentally in the belief that people are products of their social situation, and hence certain equalizing measures should be introduced into the social contract: education, libraries, parks, progressive taxation, etc.
“Evil”, sure – government is clumsy and wasteful – but necessary in line with how human behavior and wealth creation is conceived.
July 4th, 2009 at 11:10 am
You all remember Paul Krugman describing the American Recover and Reinvestment Act that eventually passed Congress as “our preferred approach,” right? All of those columns he wrote saying it was precisely the correct size, perfectly targeted, and insisting that absolutely no further stimulus would be needed – you remember those, right? Hypocrite!
Hi, I’m James Robertson, and I don’t know what the term “counter-cyclical” means. OK, I do, but I’m going to pretend not to, so I can shout “Hypocrite!”
July 4th, 2009 at 11:12 am
No, I’m not. You’re trying to have it both ways. I don’t see anything in the ‘above’ that contradicts this, so you’re going to have to be a little more explicit if such is the case.
I also don’t see where you admit that Supply Side, tax cuts, deregulation, etc have been falsified as economic prescriptives.
So. Keynesian stimulus is ‘unfalsifiable’, yet you won’t let go of other theories that have been demonstrably falsified. That about the size of it?
July 4th, 2009 at 11:32 am
joe from Lowell,
You all remember Paul Krugman describing the American Recover and Reinvestment Act that eventually passed Congress as “our preferred approach,” right? [...]
Clearly I was talking about the concept of ’stimulus’ in general, not whether Krugman agreed with every single aspect of ARRA. But nice (if a bit weird) approach, trying to narrow/confine my statement into an easy straw-man.
ScentOfViolets,
I also don’t see where you admit that Supply Side, tax cuts, deregulation, etc have been falsified as economic prescriptives.
Right. You may have tried to change the subject to those other things, but I don’t have to play along.
So. Keynesian stimulus is ‘unfalsifiable’, yet you won’t let go of other theories that have been demonstrably falsified. That about the size of it?
Not at all. I didn’t mention or address any of those other ‘theories’ either way, and you have no way of knowing from my statements here where I stand on them at all.
But let’s say you were right that I favored e.g. ‘Supply Side’ (whatever that means) and that it has been falsified. All that would mean is that I would be wrong (and inconsistent compared to my statements re: ’stimulus’) about that.
But this – my inconsistency/wrongness on some other issue – would not actually add up to an argument that the ’stimulus’ advocates are correct or that their constant doubling-down approach is rational. You thought it would? Yikes.
July 4th, 2009 at 11:44 am
[...] blogging, economics, timewasters, Yglesias For those curious, see me waste tons of time in this Matthew Yglesias thread below a post about how we need more [...]
July 4th, 2009 at 11:47 am
You know, all of this talk about leeding reminds me of a conversation I once had with someone who compared Austrian economics to the old medical practice of bleeding.
I later thought up a good response to that: You’re right, except that in this case, the patient has hematochromatosis!
July 4th, 2009 at 11:48 am
Sonic Charmer,
The straw man is your characterization of the ARRA as Paul Krugman’s “preferred approach.” This is a lie. A distortion of the facts. An easily provable misrepresentation of the truth. A false position you assigned to him, one that he doesn’t actually argue, for the purpose of having an easier position than his real one to argue against.
In fact, back in reality, Krugman was making precisely this criticism of the ARRA before it was even passed, writing post after post and column after column about it being too small, and an other round of stimulus probably being necessary.
Do you not know this, or are you playing dumb for political effect?
July 4th, 2009 at 11:53 am
Paul Krugman, February 17: Stimulus Too Small, Second Package Likely
Paul Krugman, March 8, in the New York Times: Yet many economists, myself included, actually argued that the plan was too small and too cautious.
Shall I keep going?
July 4th, 2009 at 12:14 pm
What “whole field”? It is not the “whole field” of economics that is saying ‘we need more stimulus’. It is, well, Paul Krugman and like-minded. Not everyone agrees. You weren’t aware? Or choose to ignore? Which?
Yes, I know that the whole field of economics is not saying we need more stimulus. So why do you appear to believe that Mankiw or any of other economists who oppose the stimulus can’t be trusted to tell you WHEN it HAS actually failed? Unless you don’t trust ANY economist at all.
You don’t have to operate like a Birther, insisting that the entire Republican operation was too venal or too stupid to check Obama’s eligibility and they have to personally make sure that his birth certificate is legit and prevent Obama from hoodwinking the people.
July 4th, 2009 at 12:17 pm
The straw man is your characterization of the ARRA as Paul Krugman’s “preferred approach.”
What ‘characterization of the ARRA’ would that be? You will search this thread in vain to find me mentioning ARRA before you did. It may be easier to prove my statements are ‘lies’ when you get to just make them up, but I’m not sure what is accomplished in the doing.
In fact, back in reality, Krugman was making precisely this criticism of the ARRA before it was even passed
Of course he was. I would too if I were a bleeding ’stimulus’ advocate, just to cover my bases. You know,
1. Advocate ’stimulus’ till something like ’stimulus’ gets close to passing,
2. Whatever is on the table, say it’s ‘not enough, but we have to try something, so let’s pass it’.
This way if it works you can take credit and if it doesn’t you can say it ‘wasn’t enough’, so all your bases are covered. And whaddya know! We are now into the ‘not enough’ part of the decision tree. What a surprise.
July 4th, 2009 at 12:30 pm
To illustrate my previous point, Sonic Charmer, here’s a link to a post by Greg Mankiw, addressing precisely the accountability issue
http://gregmankiw.blogspot.com/2009/05/accountability.html
Notice, BTW, that even he concedes that the government’s interpretation is not goal-shifting but inherent to tbe business-at-hand.
But that’s incidental to my point, which is that you don’t have to keep going on about “bleeding”, acting as if Obama administration are a snake-oil salesman, just making stuff up as they go along with no qualified professionals willing to call them on it.
July 4th, 2009 at 12:42 pm
What ‘characterization of the ARRA’ would that be? You will search this thread in vain to find me mentioning ARRA before you did.
WTF? This is a thread about the stimulus, which was written down in Congress and titled the American Recovery and Reinvestment Act. This is a thread about the American Recovery and Reinvestment Act. Every word you have written has been your characterization of the stimulus, aka the ARRA.
In this post, the italicized part is referring to the ARRA:
I’m just stunned. You’re suddenly not talking about the stimulus?
July 4th, 2009 at 12:43 pm
But that’s incidental to my point, which is that you don’t have to keep going on about “bleeding”
You’re right, I don’t have to. I don’t have to read what ’stimulus’ advocates write at all, let alone post under them.
But it seems worth doing unless/until someone can actually answer my question re: what conceivable set of circumstances exactly would lead y’all to conclude ‘doesn’t work’ rather than ‘needs more’. Unless/until that happens, the analogy holds.
p.s. BTW I must be reading the intent/point of that Mankiw post differently than you did.
July 4th, 2009 at 12:45 pm
joe from Lowell,
This is a thread about the American Recovery and Reinvestment Act. Every word you have written has been your characterization of the stimulus, aka the ARRA.
I didn’t know ’stimulus’ and ARRA were synonyms. Fascinating.
July 4th, 2009 at 12:45 pm
Wow.
So, even though he publicly criticized the ARRA at the time, predicted this, and is saying exactly the same thing now he was saying then, you’re refusing to admit that the ARRA as enacted was not his “preferred approach.”
July 4th, 2009 at 12:46 pm
p.s. Do you really not understand the difference between (1) a general concept and (2) a particular instantiation of that concept? Or are you just pretending not to because this is the argument tactic you’ve chosen to pursue to the fiery end?
July 4th, 2009 at 12:46 pm
Sonic, you give Krugman and Yglesias too much credit. Their ultimate goal is to increase government involvement, whatever the justification. Just look at how they cite the problems with health care, all caused by government involvement, as reasoning for more government intervention. It’s an ideology that ignores basic realities and plugs it’s ears in the face of evidence of it’s failures. It’s almost comical how quickly the discussion devolves in “conservatards” (really? is this the best you can do?) and “knuckle-draggers”.
July 4th, 2009 at 12:51 pm
Oh, Sonic. This is going to hurt:
Paul Krugman, January 6, 2009, well before there was anything on the table, much less close to passing – indeed, before Obama was inaugurated:
July 4th, 2009 at 12:54 pm
And I’m really at a loss to understand what Joe is blabbering about. It’s fairly simple, Krugman calls for stimulus, in fact write multiple post how it doesn’t matter one bit what the money is spent on, as long as it’s lit on fire as quickly as possible. Covers all his bases by saying it’s too small, but good enough, and Liberals deify him as the savior or humanity for the skills of your average car salesman.
July 4th, 2009 at 12:59 pm
p.s. BTW I must be reading the intent/point of that Mankiw post differently than you did.
The point of Mankiw’s post is this:
“To be clear, this lack of accountability is not a feature on this specific administration but is, instead, a reflection of the inherent uncertainties associated with macroeconomics.”
So when you say
But it seems worth doing unless/until someone can actually answer my question re: what conceivable set of circumstances exactly would lead y’all to conclude ‘doesn’t work’ rather than ‘needs more’.
its a silly way to approach things. You act as if the unfalsifiability charge is a brilliant way to expose the sham behind Obama’s plan. As Mankiw makes clear, in the short-term pretty much any macro approach would be unfalsifiable. So if you could, you’d stick with the tried-and-true, like interest rate cuts. But we can’t do that. So the Obama admin is trying stimulus.
Mankiw doesn’t believe in it but since he’s an actual economist, he can’t make criticisms like the following:
1. Advocate ’stimulus’ till something like ’stimulus’ gets close to passing,
2. Whatever is on the table, say it’s ‘not enough, but we have to try something, so let’s pass it’.
without throwing his credibility out the window. He understand very well that Krugman’s interpretation that
“Another interpretation is that the baseline was worse than they believed at the time.”
is a perfectly sensible alternative and not some sham goal-shifting as you seem to think. See the difference?
July 4th, 2009 at 1:01 pm
I understand it just fine. Why, I understand it so well that I had no trouble whatsoever realizing that you were attempting to argue here:
– that the consequences of the “particular instantiation of the concept” of stimulus spending known as the ARRA refute the general concept of stimulus spending. After all, “We’ve” not tried “the general concept of stimulus spending, we’ve tried a particular instantiation of it. You are the one using language like “our preferred approach” and “more bleeding” to blur the distinction between the stimulus which has been enacted and the general concept of stimulus.
I’m just calling you on it.
July 4th, 2009 at 1:05 pm
We believe you!
And here’s where you become a hack: when, in response to an argument Krugman has long made about the size of the stimulus, you attempt to reframe his argument as being about a yes/no question.
You got a cite on that? Because I think your think you’re just lying.
July 4th, 2009 at 1:18 pm
joe from Lowell
you’re refusing to admit that the ARRA as enacted was not his “preferred approach.”
Not at all nor did I ever say or intend to say ‘ARRA as enacted’ was his preferred approach. ‘Stimulus’ was.
Do I really have to draw you a Venn diagram? Take out a blank sheet of paper. Write ‘Policies’ in the corner. Draw a circle. In the circle write ‘Stimulus Policies’. Outside of the circle write ‘Non-Stimulus Policies’. Did Krugman prefer an approach inside the circle or outside the circle? All I intended to say, and said, was that it was inside.
Now, somewhere inside the circle make a dot and label it ‘ARRA’. I agree and know full well that Krugman’s preferred policy was not that dot. Never thought or intended or said otherwise. But it was still inside the circle.
Thanks for distorting my statements into so much of a straw-man that you made me go into all that, though.
Oh, Sonic. This is going to hurt: Paul Krugman, January 6, 2009, [...bla...]
You read that as debunking rather than confirming my point, do you? How odd.
July 4th, 2009 at 1:23 pm
Sonic Charmer, being condescending only works if your argument holds water. Joe has pegged your idiocy perfectly. You have been arguing against the concept of stimulus because of a specific implementation of stimulus. It is what those of us who understand words and their usage call “dishonest.”
That in doing so you have misrepresented the arguments of Krugman is what those of us who understand the hatred of anti-government types like yourself call “typical.”
July 4th, 2009 at 1:28 pm
DJ
You act as if the unfalsifiability charge is a brilliant way to expose the sham behind Obama’s plan.
Not exactly. It’s more about exposing the hollowness and imperviousness-to-reality behind the support for ‘Obama’s plan’ (a phrase I’m using reluctantly, under protest BTW), among people like Matthew Yglesias, and presumably yourself.
As Mankiw makes clear, in the short-term pretty much any macro approach would be unfalsifiable.
Brilliant. So you don’t even dispute what I’m saying, you just think unfalsifiability is a general property of macroeconomics. Well, that changes everything!
[Mankiw] “Another interpretation is that the baseline was worse than they believed at the time.” is a perfectly sensible alternative and not some sham goal-shifting as you seem to think. See the difference?
I guess the difference is, I don’t read Mankiw as being all that enthusiastic about/resigned to this property of macroeconomics, let alone that he considers shifting-the-baseline a ‘perfectly sensible alternative’ per se. Indeed, if you click through to a prior post he links to, he asks essentially the same question I’ve been asking:
What’s the answer? Still waiting,
July 4th, 2009 at 1:31 pm
You have been arguing against the concept of stimulus because of a specific implementation of stimulus.
Not at all! I may think ’stimulus’ is nonsense, but I’m open to the possibility that I’m wrong, and ready (and, under the circumstances, hoping!) to observe evidence that I’m wrong.
Seen none so far.
Meanwhile, are you open to the possibility that ’stimulus’ is nonsense, and ready to observe evidence of this? Because it doesn’t seem so. Instead what I see is that continued bad economic news is perpetually greeted with ‘more stimulus’. I presume this will continue to be the stance until the economy finally does recover (which it will sooner or later).
In other words, there is no conceivable set of circumstances that could lead you to conclude that ’stimulus’ as such is/was a bad idea rather than needed medicine. Come on, aren’t I correct about that?
July 4th, 2009 at 1:31 pm
Oh, and DJ, oddly, while he doesn’t seem to support James’ lunatic idea that we’ve been at war with Eurasia since 1991, my other good friend Will Allen has the same bizarre “we had to commit mass murder for their own good” argument about Iraq. Which explains his echo of the “objectively pro-Saddam” argument he tries whenever I remind him what a monster he is for that sick argument.
July 4th, 2009 at 1:40 pm
Sonic Charmer’s argument:
Come on, is there some requirement that anti-stimulus arguments be based on such idiocy?
July 4th, 2009 at 1:49 pm
Indeed, if you click through to a prior post he links to, he asks essentially the same question I’ve been asking:
Going forward, what macroeconomic data would you have to observe before you concluded that the stimulus bill has been a failure?
He’s making the point that its useless to require quarterly reports on the employment effects of the stimulus if you don’t agree on how to interpret it? Unlike you, he’s not using the question as a snarky attack on stimulus proponents. He’s saying if you don’t have a good plan for accountability, why pretend that these quarterly reports do anything at all?
He concedes that the lack of accountability may be inherent to the situation so he doesn’t do this:
What’s the answer? Still waiting
July 4th, 2009 at 1:59 pm
‘Not as stupid…’ likens my argument to a situation in which someone suggests that I spend money for housing. That’s a fascinating analogy, because when it comes to housing, ’spending money’ is by and large (except under idiosyncratic/exceptional circumstances) the only way to get it. There’s no arsenal of alternative approaches or suggestions for getting housing besides ’spending money’. There’s just ’spending money’ and the question of how much to spend.
Is this true when it comes to ’stimulus’? Is ’stimulus’ the only possible approach to helping an ailing economy? It would appear from his choice of analogy that this is what ‘Not as stupid…’ believes. That ’stimulus’, axiomatically, is the only possible approach – and the only operative question is how much ’stimulus’.
The funny part here is that’s precisely equivalent to my criticism of ’stimulus’ proponents. To the extent that you agree that Not as stupid’s analogy is a sound one, you fit my criticism.
July 4th, 2009 at 2:09 pm
How is it so hard for people to understand that government spending bids away resources from productive industries and only deepens the long term effects of a depression? You can’t just take a little K and combine it with a little L and have a fully functioning economy.
The only way to truly stimulate an economy is to reduce governments share of it.
July 4th, 2009 at 2:10 pm
Socialized militaries are what you might call a necessary evil. Socialized medicine is an unnecessary one
Slightly longer J-Rob: having poor people shoot other poor people for me is a necessary evil. Having poor people get affordable medical treatment is an unnecessary one.
July 4th, 2009 at 2:17 pm
the problems with health care, all caused by government involvement
Non sequitur. Unsurprising, given that Nathan is a very stupid corporatist ideologue.
July 4th, 2009 at 2:47 pm
I think what Sonic is trying to do here is try to claim that conventional economics is ‘just as faith-based’ as the sort he prefers. Yes, despite thirty-odd years of trying tax cuts, deregulation, etc, Sonic still thinks these sort of nostrums are just what the doctor ordered.
Tell you what, Sonic. Give the Keynesian approach the same amount of time you’ve given to your preferred brand. If unemployment is still around ten percent or higher, and if GDP is still only growing at, say, half a percent a year, then yes, I’d say the Keynesian brand would have been falsified.
Of course, that’s what all of us non-diehard, non-dishonest types think. You want to call off the experiment, poor and incomplete as it is and crow as if your side has won some sort of victory. And if we disagree, you’re going to call us hypocrites, people who don’t really believe in the scientific method, and who are just as apt to believe in unfalsifiable hypotheses as you are. Frankly, I have no problem with that label . . . as long as it’s you that’s trying to pin it on.
You, on the other hand, are nothing but a stone dishonest hypocrite. There is nothing that can convince you that your voodoo economic theories are nothing but purest hokum designed to separate the rubes from their money.
July 4th, 2009 at 3:12 pm
Are you done?
If you could enlighten me, what corporations share my views?
July 4th, 2009 at 3:18 pm
So what was the Union of Soviet Socialist Republics?
July 4th, 2009 at 4:23 pm
ScentOfViolets
I think what Sonic is trying to do here is try to claim that conventional economics is ‘just as faith-based’ as the sort he prefers. Yes, despite thirty-odd years of trying tax cuts, deregulation, etc, Sonic still thinks these sort of nostrums are just what the doctor ordered.
Fascinating, you’re still trying to read my mind/guess/invent as to what ’sort of economics’ I prefer even though I haven’t divulged anything of the sort here and that’s not what I’m talking about.
Give the Keynesian approach the same amount of time you’ve given to your preferred brand.
Enlighten me, what’s ‘my preferred brand’ and how much time have I ‘given it’?
You want to call off the experiment,
Are you talking about the experiment where we engage in something we call ’stimulus’ (while constantly sandbagging by saying ‘this is probably not enough’ in order to cover our bets), if it looks like it’s not working we periodically double-down on the ’stimulus’, repeat, and if/when things get better congratulate ourselves? Sort of misnomer to call that ‘experiment’ when there’s nothing to falsify.
It would be more accurate to say I want us to call off the religion, except as Nathan pointed out earlier, to some extent many of the proponents don’t sincerely believe in it (not sure whether this applies to you).
But more concisely, what I really want is for us to call off the bleeding.
July 4th, 2009 at 6:57 pm
Ahem.
We can read the thread, you know. We can see what you wrote this morning.
You can keep striking this pose all you want. Nobody is confused here. I’m not misunderstanding your point, I’m refuting it.
July 4th, 2009 at 7:04 pm
It’s not difficult to understand at all. It’s just not true. I understand your false, incorrect argument just fine.
In a depressed economy, the government isn’t bidding away resources from productive industries, because those industries are broke, and have no intention of bidding on resources (investing in expanding or even maintaining their purchases of resources and labor), because there is little or no demand for what those industries produce.
In such a situation, government spending doesn’t compete for resources (and labor!) that private industry is seeking; it is putting idle capacity to use.
July 4th, 2009 at 7:09 pm
An example of the government bidding away resources from private industry would be defense spending during economic boom times. Think of how many private-sector engineering jobs in California went begging between 1995 and 2001 as defense contractors hired those engineers to do government work.
I’ve long wondered if there might be some way to make defense spending more counter-cyclical. Perhaps Congress can pass ten-year projected budgets for certain aspects of the defense budget, and leave it up to the president’s discretion whether to spend the actual money appropriated this year in this calendar year, or put it off for a few years until a recession hits.
July 4th, 2009 at 7:33 pm
Everything you say about medicine applies to food. Plenty of people eat food that’s bad for them; are you going to propose that we nationalize food next, to make sure that we have fairness there, too?
July 4th, 2009 at 7:50 pm
This is the most absurd self serving explanation I’ve heard of the stimulus yet. Last I checked 95% of the economy is doing just fine. Any spending by the government will prop up prices above their market levels.
July 4th, 2009 at 9:52 pm
I’ve come to the conclusion that Krugman can’t be as dumb as he seems. I’m certain that he really does not believe the Keynesian nonsense that he spouts. He understands that he’s merely a very well paid propagandist for the financial elite. He is probably as astonished as I am at the vast number of noodle-brains who buy into his long discredited nostrums. Dilute the currency further? Borrow even more money that can’t be paid back from the Chinese for “stimulus”. Ludicrous.
I’ve also decided that the reason you “progressives” don’t understand Austrian Economics is because you aren’t smart enough nor do you have the attention span necessary to get through even the first 25 seconds of the Austrian Business Cycle Theory.
Krugman has never demonstrated that he understands it. Brad DeLong certainly doesn’t.
July 5th, 2009 at 1:43 am
@ 92. Bob
I’ve also decided that the reason you “progressives” don’t understand Austrian Economics is because you aren’t smart enough nor do you have the attention span necessary to get through even the first 25 seconds of the Austrian Business Cycle Theory.
You do realize those two reasons are ad hominem?
There is certainly a truth somewhere. Unfortunately the economics will still be sitting on top of “progressive” and “conservative”. I’m sure that your acceptance of Austrian Economics has more to do with it simply being the most objectively logical position – unless you are somehow the only person on the planet who does not bring a vast set of assumptions and opinions about morality and human behavior.
And you still may be 100% correct. But my point is that it would likely have to do more with cultural chance than any inherent intellectual acuity on your part. People have been arguing about this stuff for decades. Remember, “out of the mainstream” puts you up against thousands of highly intelligent PhDs. Just saying.
July 5th, 2009 at 1:47 am
Sorry, completely bungled a sentence. Should have read:
“I’m sure there is more to your acceptance of Austrian Economics than it simply being the most objectively logical position – unless you are somehow the only person on the planet who does not bring a vast set of assumptions and opinions about morality and human behavior.”
Oops!
July 5th, 2009 at 11:01 am
Since I ceased being a conformist (a redundant term in this context) Democratic Socialist in 1973, I’ve been waiting for a critic of the Austrian Business Cycle Theory (ABCT) to actually understand it. I supposed it’s conceivable that we may be wrong and the Krugmanite Keynesians might be right, but the Keynesians wouldn’t know the ABCT if it bit them in the ass. Tom Woods, who wrote the great book “Meltdown”, notes that Mr. Yglesias himself hasn’t a clue about the ABCT:
July 5th, 2009 at 3:32 pm
Both my parents were sociologist, I voted for Kerry, and I called George Bush (and later Sarah Palin) an idiot every chance I got. I think women should have the right to abort fetuses and gay people should be able to marry. Yet, to most of the posters here I am another right-wing-nut.
Without intellectual acuity I would still be following the same Keynesian nonsense that got us into economic trouble in the first place. As an engineer, I can’t accept the idea that we will just conjure prosperity out of printing more money. The more empirical evidence I read, the more I am convinced most externalities and market failures are generally a result of or greatly amplified by government intervention.
My guess if you were to ask most new Libertarians, they came to college bleeding heart liberals, and left with an understanding of how the world actually works.
July 5th, 2009 at 5:45 pm
95 & 96 – I certainly make no claim of understanding either Keynesian or Austrian econ well enough to truly debate the merit of either. But my point is still that economics has so many variables and built-in partisan assumptions that to chalk up disagreement to intellectual inadequacy on either side is ridiculous and pointless really.
Nathan, I’m not sure how being an engineer qualifies you to understanding anything about economics – anymore than it would help you understand psychology or sociology. You’re obviously intelligent. But absolute geniuses can be completely wrong, right?
I can personally attest to coming out of college much more conservative than I went in – well, at least more realistic and grounded in reality. But so far in the jobs I’ve worked, areas I’ve lived, people I’ve met and children I’ve taught – I’ve seen my core values validated over and over. But again, this could simply be the prism thorough which I see the world, and there was another answer I wasn’t seeing.
Honestly though, whether it was people dying of AIDS in projects, brain-injured adults in clinics, schizophrenics, or second-language students with parents in prison and on drugs, the government wasn’t doing a very good job at intervening – and libertarians weren’t exactly beating down the door to guarantee their well-being.
I mean that’s a picture of how I want society to look, and what we should pay for. The economic bullshit helps tell us how to effectively do it, but the starting assumption must be clarified to begin with. 99% of the time it isn’t. People waste their time on message boards, on cable shows, writing newspaper or journal articles or policy and its all meaningless unless we can agree on first principles.
July 5th, 2009 at 7:22 pm
Sonic Charmer, pretending that he didn’t understand the analogy then lies and suggests it supports his complete intellectual failure. In a second attempt at demonstrating to this nitwit I present the following scene:
And then Sonic Charmer declares that those who support Dr. Krugman are dishonest. What a fuckhead.
July 5th, 2009 at 7:25 pm
Nathan, if you had even the vaguest inkling of how the world works you couldn’t possibly be a libertarian. Do you know why libertarians don’t have a viable political party? Because no rational person thinks that the government should concern itself solely with property rights. Libertarianism is the political philosophy of those with too much money and too little sense of how much was handed to them. It is the default philosophy of spoiled children.
July 5th, 2009 at 9:30 pm
First of all, it isn’t an explanation of the stimulus, it’s a rebuttal to your point that government spending, by definition, bids away resources that the private sector demanded.
Second, are you actually going to claim that there isn’t idle capacity in a depressed economy?
July 5th, 2009 at 9:34 pm
Keynesian economic policy would have had us tightening the money supply and running surpluses from 2002-2008. I hardly think the Bush administration’s economic policies during the growth of the bubble were Keynesian, and it was clearly the bursting of that bubble economy and the fallout of that burst in the financial sector that set off this economic trouble.
July 5th, 2009 at 11:18 pm
The analogy to the evil Krugman providing blood to a sick patient is misplaced. A proper analogy would be to a physician rushing to help a sick and anemic patient who needs vitamins and healthy food. Krugman beats and disables the doctor and also robs him. Krugman then uses the money to buy crack cocaine and crystal meth which he gives to the patient for a quick energy boost. When the drugs wear off, the patient is even sicker than before, and the doctor who might have helped him is disabled and unavailable to help.
The only “stimulus” available to Krugman is monetary dilution by the central bank, taxing others and borrowing. The bank, here the FED, creates money out of thin air. Those getting the new money first are stealing the purchasing power of those holding the existing stock of money. This also totally screws up the investment structure of the economy and when it fails, everyone is poorer than before. There’s your meth analogy. The money dilution also lowers wages of workers perhaps making them more employable at a lower wage. There’s your monetary stimulus. The government might also borrow trillions more from the Chinese or tax the successful. The borrowed money must be repaid. The only proper source of investment is SAVINGS. But monetary dilution robs people of their savings. There’s robbing the doctor.
According to Keynes and Krugman, the fact that the doctor or the brilliant entrepreneur has been laid low or disabled by previous Keynesian shenanigans means that the government must borrow and spend like a drunken sailor to replace the investment not being made by the disabled doctor or entrepreneur. According to Krugman, paying a bunch of fat union guys to throw cold patch on a crumbling freeway in Detroit at $40 per hour is just like the entrepreneur creating both a brilliant new electronic device and an accompanying investment structure to bring device to the public at an affordable price. Neither Keynes nor Krugman understand capital structure. Roger Garrison does understand and created some excellent Power Point presentations explaining where Keynes goes wrong and how Hayek eviscerated Keynesianism decades ago. Keynes considers investment as a simple (and simple minded) aggregate. In Austrian theory, investment is a complex STRUCTURE. Keynes’s theorizing–in terms of an aggregate rather than in terms of a structure–underlies Hayek’s charge that “Mr. Keynes’s aggregates conceal the most fundamental mechanisms of change.” While most macroeconomic theories deal with THE labor market and THE wage rate, Austrian theory allows for stage-specific labor markets. With a change in the interest rate (determined BY THE MARKET!), stage-specific wage rates change in a pattern rather than change uniformly.
It is clear from history that the government, which caused the artificial boom and bust, must do nothing to cure it other than to slash spending and slash tax rates. Consider the 1920-1922 depression. Between the second quarter of 1920 to the third quarter of 1921, wholesale prices fell 44%. Factory employment and industrial production fell 30%. The Fed raised the discount rate from 4% to 7% and then back to 4%. The Harding government did basically nothing in the way of so called Keynesian stimulus. Harding specifically and intentionally did nothing to interfere with falling wages and prices. Further, Federal spending declined from $6.3 billion in 1920 to $5 billion in 1921 and $3.3 billion in 1922. Tax rates, meanwhile, were slashed—for every income group. And over the course of the 1920s, the national debt was reduced by one third. The crisis was over quickly. Thomas Woods has an interesting article on this.
There is no evidentiary, historical or logical basis to either fear deflation or to expect Keynesian “stimulus” to produce anything other than misery, poverty and economic dislocation.
Check the historical tax rates here.
Note how the rates rise to ridiculous levels starting in 1932 under Hoover and keep going up. No wonder the depression lasted until FDR died and Congress slashed spending by 2/3 after WW II.
July 6th, 2009 at 11:33 am
So the absence of something is cause for discounting it? What about all those years of human civilization without democracy? Was it because the supra-rational collective thought machine deemed it irrational musing of spoiled rich kids?
Your point is not totally incorrect. Capitalism has made the average person wealthy enough that we can sit around and argue policies without starving. How is it that I’m relatively average for our times, but still in the top .1% of people ever born?
You seem to lack an understanding of what got us here or was “handed to” us.