AEIdeas

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Discussion: (20 comments)

  1. Like the analysis but a single x-factor political and regulatory issue is skewing the economic analysis and behaviour in the economy. In a word, Obamacare. Its burdens and disincentives are so insidious it alone can bring down the whole economy to a 2014 recession and stunt growth for a decade or more if not repealed. Tax and monetary “policy” analysis needs to look inside at this single most destructive regulatory burden not only on Health care , 1/6th of the economy, but it impact on 100% of employers, x-cronies who get exemptions.

  2. No, we’re not all Keynesians — far from it. But, Keynes needs to be read de novo (and Hayek too), with an emphasis on who each was and where he came from.

    “Six blind men went to see the elephant…”

    As for Jim’s proposed “solution,” why at the heart of these “cures” is always more bank fraud? Is Jim a shill for the banking industry? Because the perquisite being advocated certainly makes no sense to the rest of us.

  3. Isn’t the way GDP is calculated manipulated by Keynesian economics? The way they count all government expenditures as GDP growth. So if the government spend 32% of GDP, that translates to 32% of GDP activity. Example I saw was a Private sector job for $100,000 counts zero towards GDP and a $100,000 government job counts $100,000 towards GDP.

    So if you have a $1 Trillion stimulus, technically, no matter what, it’ll count as a 0.6% bump in GDP regardless of how poorly the money is handled.

    1. They only count government’s purchases of goods and services, amounting to an annualized $983.2 billion in Friday’s report.

      1. But doesn’t employment by the government count as a government purchase?

  4. Todd Mason

    “Krugman: My opponents are evil.”

    Kinda hard to read this blog and not see demonization from the other direction. The underemployed may go to the Wal Mart SuperCenter at midnight so no one sees them use food stamps to feed their family, but here the guy is still a shiftless mooch who wants a free ride at the expense of “job creators” (who could solve the guy’s problem by — drumroll please — creating jobs.)

    Ditto for monetarists. Yes, overtime at the Bureau of Engraving and Printing is an alternative to stimulus. But four years later it is yet to be proven as an EFFECTIVE alternative.

  5. ” The underemployed may go to the Wal Mart SuperCenter at midnight so no one sees them use food stamps to feed their family..”

    Oh, call a time traveling whaaambulance to take you back to the 1980’s when they still used actual food stamps.
    Just about every convenience store I go into nowadays prominently displays a sign that says, “now accepting EBT.”

    “but here the guy is still a shiftless mooch who wants a free ride at the expense of “job creators”

    Or as Todd, (and probably Krugman and Obama in their private moments) calls the productive class, “greedheads.”

    “(who could solve the guy’s problem by — drumroll please — creating jobs.)”

    Yeah, that’s it. They’re not creating jobs out of spite! Good thing Obama’s filling the gap with weatherization programs and direct investments into “green” companies.

    1. Todd Mason

      Perhaps more critical given research on early childhood development, take-up of the Special Supplemental nutrition Program for Women, Infants, and Children (WIC) is just 38 percent among eligible families with children
      ages one to five (Currie 2003).

      This study say shame is the reason one in five of those qualified don’t take food stamps.

      http://www.krannert.purdue.edu/faculty/kjmumfor/papers/stigma.pdf

      Now show me a study that says the “productive class” are not greedheads.

      1. “This study say shame is the reason one in five of those qualified don’t take food stamps.”

        Yes, we call them down on their luck Republicans. Meanwhile, 4 out of 5 don’t have any problems with loading up the “free” food according to your study.
        Obamanomics has nearly doubled the amount of able bodied Americans on food stamps, and doubled food stamp fraud to boot. This really sucks, because as part of the stimulus, food stamp eligibility and allotments were greatly expanded.

        “take-up of the Special Supplemental nutrition Program for Women, Infants, and Children (WIC) is just 38 percent among eligible families with children”

        And it’s still an $80 billion a yr behemoth rife with fraud and abuse. In fact, the USDA is currently “partnered” with Mexico to boost food stamp participation, regardless of legal status: http://www.limitstogrowth.org/articles/2012/07/19/usda-teams-up-with-mexico-to-popularize-food-stamps/

        “Perhaps more critical given research on early childhood development,”

        We have an illegitimacy rate of around 40%. Illegal immigrants currently crank out around 380,000 anchor babies each yr. How about we go to work on those problems, Todd, and the “early childhood development” conundrum will mostly take care of itself.

        1. Todd Mason

          Let’s hear some ideas Paul. I’m open for anything that doesn’t penalize kids for who their parents are. Think of it as Paul’s money spent on PR. http://www.pewsocialtrends.org/2012/08/27/yes-the-rich-are-different/

          No, it’s not just me. 55 percent of respondents said the rich are more likely to be greedy.

          1. “Let’s hear some ideas Paul. I’m open for anything that doesn’t penalize kids for who their parents are.”

            The courts need to “reinterpret” the 14th Amendment, or it needs to be revised, for one thing. That would reduce the lure of sneaking across the border. The border itself needs to be sealed tight. I’m sure you’ve heard the other remedies that would work, but you reject them because they “penalize” kids, instead you favor subsidizing out-of-wedlock births.

            One other thought: people like you on the left, through the War on Poverty, are responsible for the society destroying illegitimacy we have today. The country has pissed away trillions on failed liberal social programs and formerly great cities have been destroyed in the process. Perhaps we should levy a special punitive tax on liberals like Todd as reparations.

            “No, it’s not just me. 55 percent of respondents said the rich are more likely to be greedy.”

            And probably 100% of Democrats. So? Petty jealousies are part of the human condition. “The rich” = anyone who has a nicer house than you. The Obama Age is a grim indicator the problem is only getting worse. Reminds me of Bono’s comparison of Ireland to (pre-Obama) to America:

            ” Ireland has a very different attitude to success than a lot of places, certainly than over here in the United States. In the United States, you look at the guy that lives in the mansion on the hill, and you think, you know, one day, if I work really hard, I could live in that mansion. In Ireland, people look up at the guy in the mansion on the hill and go, one day, I’m going to get that bastard.”

            Or using Todd’s vernacular, “bastard” = “greedhead.”

          2. Todd Mason

            So you have no ideas about how to curb illegitimate births, except perhaps to dismantle social welfare and — surprise — save Paul some tax dollars.

            Your “anchor baby” scare story is a bit flimsy. A citizen age 21 or older can sponsor parents, but that would long, long term planning, eh? A baby born in the US can stop deportation but those exceptions are limited to 4,000/year. http://www.politifact.com/truth-o-meter/statements/2010/aug/06/lindsey-graham/illegal-immigrants-anchor-babies-birthright/

        2. “So you have no ideas about how to curb illegitimate births, except perhaps to dismantle social welfare..”

          So you advocate we continue to incentivize unwed women to have children and pretty much guarantee a life of poverty and burden to the taxpayers. So compassionate you are!

          “surprise — save Paul some tax dollars.”

          Cities are going bust under the dead weight, and there’s that pesky $16 trillion national debt. But Todd says “what me worry?”

          “Your “anchor baby” scare story is a bit flimsy.”
          Your Politifact link was laughable and didn’t dispute anything I said. I didn’t mention “drop-and-leave.” To the contrary, Politifact doesn’t give the numbers, but does say “So there’s ample evidence that many illegal immigrants give birth in the U.S. every year.”

          We would be better off if they did actually leave. Instead, they are getting “free” baby deliveries and signing up for food stamps, Medicaid, and various other programs. It’s an utter disaster. Nothing “flimsy” about it.
          According to the Houston Chronicle, 70% of illegal immigrants in Texas receive some sort of welfare: http://blog.chron.com/txpotomac/2011/04/study-70-of-texas-illegal-immigrant-families-receive-welfare/

          Oh, but I guess you’re going to say it’s all about my pathetic tax dollars.

  6. SeattleSam

    I’ve indirectly seen Krugman’s observation confirmed. When you become very drunk, you can avoid a hangover almost indefinitely if you keep on drinking. Now, when you run our of alcohol or your liver fails . . . .

  7. re: “And yet, the Fed has kept nominal GDP growing on a remarkably steady growth path (albeit, below its pre-crisis trend path)”

    It is interesting to see the language some economics use. Since in reality of course *no*, the Fed didn’t “build it”.. the myriad people in the private sector did. The Fed at most operated in a way to encourage it or not discourage it, and it is appropriate to debate that issue.

    Using the R&R critique as an excuse for backing off austerity is of course silly since even that paper still showed a correlation between higher debt and slower growth.. just not as sharp a dropoff, and a number of other papers show the same.

    The data shows that the faster government spending grows the slower the private economy grows:
    http://www.politicsdebunked.com/article-list/spendingpattern
    and vice versa. Which is cause and which is effect is another issue, but until there is more credible counter evidence it seems safest to avoid more government spending.

    They seriously seem to have trouble with the notion of crowding out, the unseen cost of fiscal stimulus. Regardless of how they try to obfuscate it, each $ an investor has can only be used for one of a limited number of alternatives: lent to the government, invested privately in the US, invested outside the US, or stuffed in a mattress. It is likely if the money isn’t lent to the government, most will be privately invested in the US.

  8. mesa econoguy

    Keynesianism is now officially dead.

    The futile attempt at reviving the economy over the past 4+ years (while stifling it with regulation) has failed.

  9. Rather than Stimulus 2.0, a better economic formula would be (structural tax and spending reform) + (monetary easing) + (targeted programs to deal with the long-term unemployed) = an end to the New Normal.

    How Keynesian of you Jimmy; monetary easing and more targeted programs run by central planners. How about cutting spending by eliminating all federal functions not authorized by the Constitution? How about ending the expenditures on a large standing army that polices the world? How about getting rid of the income tax? And taking away from the Fed the monopoly on money creation by eliminating the legal tender laws? How about getting rid of 99.9% of the regulations that are on the books? Stop advocating tinkering on the edges and start talking about meaningful actions that will make a difference.

  10. Sgt. Friday

    A few comments. I found this post odd. Pethokoukis was positioning himself as a conservative, and here he is going wobbly.

    Also, I read This Time is Different. My takeaway was not this notion of slowing economic growth that admittedly comes from an article. My takeaway was that governments default.

    I took an investment banking class back in the day, and it was reliably stated that Japan, even Japan, did not defaut after WWII. Everyone believed that. Reinhart and Rogoff said not exactly. That was useful.

    So it was not so much that growth would slow, it was that, hey, this is risky. Bad things happen to a country, when your sovereign defaults. See Argentina. (As I remember they have had eight defaults. Way to go Argentina.)

    Look, Krugman got a Nobel Prize. But on his key essay about cities, he has been badly debunked. His trade theory is boring. In short, he didn’t deserve a Nobel Prize.

    Something is clearly wrong with the U.S. economy. But also the European economy. And Japan.

    Maybe this has nothing to do with fiscal or monetary policy.

    Demographics anyone? Culture? Family values?

    1. Maybe this has nothing to do with fiscal or monetary policy.

      Of course it does. As long as some entity can create purchasing power out of thin air savers and workers will be vulnerable to confiscation and the system will incentivize gambling over producing. Jimmy misses the obvious solution because deep down he favours central planning as do most public intellectuals.

    2. “Demographics anyone? Culture? Family values?”

      Yes. A thousand times, yes. All of these are usually overlooked or under weighted by libertarians who mostly have it right on other domestic matters.

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