Stimulus Wars: Krugman vs. Barro

Nick Gillespie | January 26, 2009

Nobel Prize-winning economist and New York Times columnist Paul Krugman doesn't just accuse people who disagree with him of bad economics but of bad faith: "Any time you hear someone reciting one of these arguments" against various stimulus proposals coming out of the Obama admin, writes Krugman, "write him or her off as a dishonest flack."

Among the lies masquerading as arguments? "That the Obama plan will cost $275,000 per job created." In fact, says Krugman (without bothering to explain why his supposedly more accurate figure is so damn great):

The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000—and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.

That is incredible savings ($215,000 per job!), even before the first Obama stimulus dollar has been spent! Another bad argument, says Krugman, is the idea that

It's always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here's how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets—and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats.

I do not follow the implication above (or is it an inference?). Beyond the weirdness of talking about air travel in this instance, wouldn't people stop flying if there were no air traffic control system? Hence the airlines would have some incentive to provide an ATC system even if the government weren't doing so (and in fact, that's effectively what other nations such as Canada do, where the ATC system has been corporatized). I think the argument that taxpayers are better at spending their money implies that people are not complete fucktards, while the long list of shovel-ready, job-creating pork projects compiled by the U.S. Conference of Mayors drives home what most of us know from daily experience: That other people spend your money less carefully than you usually do.

Krugman concludes, "It's clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts...because a large fraction of any tax cut will simply be saved." I'm not sure what that means, exactly, either, especially if taxpayers saved the cut in, like, you know, a bank, which might make it available to people with businesses or mortgages or what have you. An odd side note to all this: If massive government spending grows the economy, then we should all be millionaires after eight years of Bush rule, shouldn't we?

Krugman's whole bit is here. Read it and then check out Robert Barro's discussion of the government multiplier effect, which is at the heart of Krugman's argument that public spending produces more benefits than private spending. Under the headline "Government Spending Is No Free Lunch,"

I have estimated that World War II raised U.S. defense expenditures by $540 billion (1996 dollars) per year at the peak in 1943-44, amounting to 44% of real GDP. I also estimated that the war raised real GDP by $430 billion per year in 1943-44. Thus, the multiplier was 0.8 (430/540). The other way to put this is that the war lowered components of GDP aside from military purchases. The main declines were in private investment, nonmilitary parts of government purchases, and net exports—personal consumer expenditure changed little. Wartime production siphoned off resources from other economic uses—there was a dampener, rather than a multiplier...

There are reasons to believe that the war-based multiplier of 0.8 substantially overstates the multiplier that applies to peacetime government purchases. For one thing, people would expect the added wartime outlays to be partly temporary (so that consumer demand would not fall a lot). Second, the use of the military draft in wartime has a direct, coercive effect on total employment. Finally, the U.S. economy was already growing rapidly after 1933 (aside from the 1938 recession), and it is probably unfair to ascribe all of the rapid GDP growth from 1941 to 1945 to the added military outlays. In any event, when I attempted to estimate directly the multiplier associated with peacetime government purchases, I got a number insignificantly different from zero.

Barro does counsel tax cuts, especially broad-based cuts or eliminations in marginal rates and corporate income taxes, under the theory that the money freed up will indeed be spent more wisely than the equivalent in public dollars. And on the spending side, he notes that public-spending programs which do not pass muster from a cost-benefit analysis are a mistake because they take more money out of the economy than they put back in. As he notes, nothing that has been learned in macroeconomics since 1936 suggests that there is such a thing as a free lunch.

Whole thing here.

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Seward|1.26.09 @ 12:29PM|#

Nick Gillespie,

I'm not sure what that means, exactly, either, especially if taxpayers saved the cut in, like, you know, a bank, which might make it available to people with businesses or mortgages or what have you.

I suspect that he is referring to Keynes' notion of the Paradox of Thrift.

|1.26.09 @ 12:29PM|#

The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000-and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.

So, even Krugman admits that the jobs to be created under the stimulus are deadweight, coming at a net loss, even when you factor in that we will be recouping part of the cost in taxes.

All we are talking about, then, is the size of the deadweight burden on the economy? This is supposed to be a winning argument, how, exactly?

OK doc, you got me. Would you like to shoot me now, or wait till you get home?

Gilbert Martin|1.26.09 @ 12:30PM|#

I wish some of the so-called financial journalists who interview Krugman and the rest of the Keynsenian disciples on TV would call those guy's bluff and ask them to provide some actual proof that such a thing as "multiplier effect" for government spending exists.

Taktix®|1.26.09 @ 12:35PM|#

I'm not going to read the Krugman article, mainly because I want to maintain control of my lunch, but doesn't this underscore the uselessness of the Nobel Prize?

I mean, Al Gore? Paul Krugman? Who's next, Michael Bay for literature?

If I were Alfred Nobel or any of the previous, legitamate winners, I'd be mighty steamed as of late...

|1.26.09 @ 12:36PM|#

I saw a Dean Baker post yesterday which ran along similar lines. It boiled down to, "Those guys are wrong because their assumptions are wrong. My assumptions, on the other hand, are correct!"

Shorter "multiplier effect":
The more you spend, the more you save!

sage|1.26.09 @ 12:40PM|#

I was going to ask why you guys even quote Krugman. Then I read the post. Please keep doing it. We need more slapping down of Kruganomics over here.

Some Guy|1.26.09 @ 12:40PM|#

1) Nobel Prize-winning economist

2) Krugman (without bothering to explain why)

3) See #1

Taktix®|1.26.09 @ 12:43PM|#

The more you spend, the more you save!

The more you spend, the better you feel,
So eat your tripe at every meal!

|1.26.09 @ 12:45PM|#

I don't think that tax payers should be "creating" jobs to begin with, but if we are I would guess a job might be worth 50 bucks tops.

Alfred Nobel|1.26.09 @ 12:48PM|#

I want my bling back.

|1.26.09 @ 12:49PM|#

In fact, says Krugman (without bothering to explain why his supposedly more accurate figure is so damn great)

As a matter of fact, he does explain it: because the $275,000 figure is produced by taking the total cost of a multi-year plan and dividing it by the jobs created in one year.

It says so, right there in the column.

|1.26.09 @ 12:51PM|#

The more you spend, the more you save!

Hmm. Accounting for our coming doomsday-like inflation, this may actually be a more honest sentiment than we'd like to admit...

|1.26.09 @ 12:52PM|#

Joe,
Could you please explain that air traffic control example to me? Because it makes absolutely no sense at all to me right now.

|1.26.09 @ 12:55PM|#

I'm not going to read the Krugman article, mainly because I want to maintain control of my lunch, but doesn't this underscore the uselessness of the Nobel Prize?

The prize is given for legitimate work, usually in a highly specialized subsection of the field. It should not be interpreted as an endorsement of everything the recipient thinks about the field, any more than a coach who wins the Super Bowl must be considered right about everything related to football. The problem is that the "Nobel Prize-winning" is used as a credential when it shouldn't be.

Of course, the Peace Prize is a politicized basketcase, but that's been true from the beginning (Teddy Roosevelt got it back in the early days, for chrissakes!)

Jerry|1.26.09 @ 12:59PM|#

Why should someone pay for air traffic control when you don't use planes for your travels?

robc|1.26.09 @ 1:00PM|#

joe,

Sounds like you are saying it is a unit problem, which could be the case, but why doesnt Krugman just say that.

If I understand you correctly, it is 100k per jobyear. But Krugman didnt say that. That makes a lot of sense though.

So, 275k per job would be accurate, but a possibly stupid measure. Instead of trying to argue that it is a unit problem, it sticks with the bad units but calculates the math proberly.

And he got a Nobel prize how?

Some Guy|1.26.09 @ 1:01PM|#

The prize is given for legitimate work

Just like the Oscar©™®.
Get one of those and you're immune for life.

robc|1.26.09 @ 1:01PM|#

"he" sticks with the bad units.

|1.26.09 @ 1:01PM|#

"Any time you hear someone reciting one of these arguments" against various stimulus proposals coming out of the Obama admin, writes Krugman, "write him or her off as a dishonest flack."

I'd written off Krugman as a dishonest flack long ago, so I'm trapped in one of those "This statement is false" evaluation loops.

Jerry|1.26.09 @ 1:02PM|#

Oh right, I get it, Krugman probably thinks these people are free riders because air traffic control causes planes to stay in the air, instead of dropping down onto free riders' homes.

Naga Sadow|1.26.09 @ 1:03PM|#

Aaaarggggghhhhhh! Damn you Krugman!!!

*shakes fist in air*

It's ALWAYS a deadweight loss! Always!

"The beauracracy is expanding to meet the needs of the expanding beauracracy."

|1.26.09 @ 1:05PM|#

But there is such thing as a free lunch if The Smart People (tm) are in charge, which is why borrowing is bad under Republicans, but the key to economic success under Democrats, because the GOP borrows to build bombs to be dropped overseas, which is a waste, but the Dems borrow to have one guy dig holes and another fill them up, which creates jobs.

Elemenope|1.26.09 @ 1:06PM|#

(Teddy Roosevelt got it back in the early days, for chrissakes!)

He got it for negotiating the conclusion of the Russo-Japanese War. So...absolutely meets the criteria.

Other Matt|1.26.09 @ 1:08PM|#

Oh right, I get it, Krugman probably thinks these people are free riders because air traffic control causes planes to stay in the air, instead of dropping down onto free riders' homes.

No, he just ignores that private industry would create something presumably better, because of his biases.

TallDave|1.26.09 @ 1:08PM|#

Write off anyone who says it's always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money. Here's how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets-and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats.

This is so unserious an argument I don't see how Krugman can even be called an economist anymore. Obviously ATC is a vitally important external good, like national defense. Obviously, the free market is better at allocating non-externals than gov't. We had a little thing called the Cold War that pretty much proved it beyond any doubt.

DADIODADDY|1.26.09 @ 1:09PM|#

Don't you just love the way the word fucktard rolls off the tongue as in "Paul Krugman fucktard", it's just like music.

|1.26.09 @ 1:12PM|#

What Krugman is saying is we should hire lots more air traffic controllers. This just makes sense -- they will have jobs and they will spend money.

If after we hire them, it turns out there are more air traffic controllers than we need, they can be put to work digging holes. Another federal agency can then be formed to fill in the holes, which will create more jobs, more income, and more prosperity.

It's really pretty simple when you think about it.

Gilbert Martin|1.26.09 @ 1:13PM|#

"As a matter of fact, he does explain it: because the $275,000 figure is produced by taking the total cost of a multi-year plan and dividing it by the jobs created in one year."

Except, of course, that he can't prove that there will be any jobs created on a net basis by yanking money out of the private sector and putting it in the public sector.

Other Matt|1.26.09 @ 1:16PM|#

but the Dems borrow to have one guy dig holes and another fill them up, which creates jobs.

Only if they're dug and filled by non whites, unless they're females. If straight white males are involved, it might as well be republican regardless of how many jobs are created.

It's really pretty simple when you think about it.

See, I knew joe could explain it.

|1.26.09 @ 1:16PM|#

Except, of course, that he can't prove that there will be any jobs created on a net basis by yanking money out of the private sector and putting it in the public sector.

No, he explains that right here:

"It's clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts...because a large fraction of any tax cut will simply be saved."

Taxpayers are stupid, they try to save their money. What we need to do is get as much of their money as possible before they waste it on paying back loans.

|1.26.09 @ 1:18PM|#

Here's how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets-and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats.

Ignoring the fact that this makes no sense, wouldn't Krugman's idea be analogous to the air traffic controller telling you--mid-flight--that you don't really want to go to New York and instead taking you to New Orleans because they're in greater need of your tourism dollars?

Regardless, Krugman has nothing on Blagojevich when it comes to analogies.

Heh, I slapped down the troll so hard on the Afghan thread he's spoofing me on other threads.

Cry, little girl, cry.

|1.26.09 @ 1:19PM|#

Krugman is pro-Money Hole, it's true. But you know what? So is everyone else.

Neu Mejican|1.26.09 @ 1:19PM|#

Write off anyone who says it's always better to ~~cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.~~ [put your pet peeve here].

Krugman is making a legitimate point about black and white thinking in a world of grey.

Over-reaction to his point may occur among those who tend to think it's always better to cut taxes than to increase spending is expected, of course.

|1.26.09 @ 1:20PM|#

Thanks other Matt.

What people don't understand is that by digging holes, we can create "demand" for someone to fill them in, which are then filled with "supply." And at $275,000 per job, those are going to be expensive holes that a lot of people will pay big bucks to fill in.

Naga Sadow|1.26.09 @ 1:20PM|#

joe,

I tried thinking about it. I blacked out and woke with a nose bleed.

Gilbert Martin|1.26.09 @ 1:23PM|#

"It's clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts...because a large fraction of any tax cut will simply be saved."

Yes I understand now - how brilliant.

Because everyone knows that the only way people save money is to bury it in old coffee cans in the back yard. It is totally out of the economy.

No one ever puts it into money market funds or bank accounts where the money is loaned out to businesses to do stuff.

|1.26.09 @ 1:23PM|#

I think about it this way: What if the government simply ordered all of us to spend 30% of our income in the next month? On a list of projects that the government provided us? Would that be a good thing?

|1.26.09 @ 1:24PM|#

I tried thinking about it. I blacked out and woke with a nose bleed.

That's called "learnding." Get used to it, bub, cause Obama won.

|1.26.09 @ 1:25PM|#

robc,

Krugman does say that. Right in the story. I don't know why Gillespie said he doesn't. Was there maybe an earlier version that didn't include the explanation?

Adam,

The point of the air traffic controller argument is that individuals can't spend the $3.50 they each have in their pocket to by 1/220th part of an air traffic controller. Some things are public goods, which can only be provided (or can only be efficiently provided) collectively. There's a difference between a single, comprehensive air traffic control system and 300 million dress shirts. Everybody can pick out the best dress shirt to buy all by themselves. The difference between such goods and public goods, btw, has nothing to do with the intelligence of individuals, as much as some people get a rush out of that assertion, but with the nature of the goods.

|1.26.09 @ 1:26PM|#

Little girl troll,

Your tears are so yummy and sweet!

As a matter of fact, he does explain it: because the $275,000 figure is produced by taking the total cost of a multi-year plan and dividing it by the jobs created in one year.

If I need $100K from the govt to hire someone this year, wouldn't I need another $100K next year to keep him hired? If I can't afford him now, why can I afford him next year? Does The Krugster expect things to become so wonderful next year that this isn't an issue (then why the multi-year program), or does he just think I'm too stupid to see I need this new person so the subsidy is necessary and I will drop to my knees to thank him for His Wisdom after hiring the guy?

|1.26.09 @ 1:27PM|#

What if the government simply ordered all of us to spend 30% of our income in the next month? On a list of projects that the government provided us? Would that be a good thing?

That would depend on whether you hired minorities. Of course, Americans are pretty racist so most of the money would be wasted on white people.

So you would need some laws to prevent that. Other than that it sounds like a great idea.

Naga Sadow|1.26.09 @ 1:28PM|#

joe,

Ah. Doublethink. Well why didn't you say so?

sage|1.26.09 @ 1:28PM|#

Geez. So when is this "troll-fix" going to come on line, Matt? This is old.

|1.26.09 @ 1:28PM|#

Please ignore my troll. I am trying to make a valuable contribution here.

I apologize for his distracting behavior.

|1.26.09 @ 1:29PM|#

The point of the air traffic controller argument is that individuals can't spend the $3.50 they each have in their pocket to by 1/220th part of an air traffic controller.

The same way we can't individually spend the $3.50 they have in their pockets to buy 1/XXXth part of the plane they'd be flying in, thus making airlines economically impossible, thus negating any need for air traffic controllers in the first place, so The Krugster's argument is wrong because his example is of people who clearly can't exist.

Neu Mejican|1.26.09 @ 1:29PM|#

Pro Libertate | January 26, 2009, 1:23pm | #
I think about it this way: What if the government simply ordered all of us to spend 30% of our income in the next month? On a list of projects that the government provided us? Would that be a good thing?

Cute. (Really).

The good/bad thing would, of course, depend entirely on the goodness and badness of the things on the list...that's what debates about government spending are all about...determining the goodness and badness of list items.

Pooled resources for the common benefit in a democratic society are a potentially powerful tool for good. But that requires honest debate and engagement by the populace.

sage|1.26.09 @ 1:29PM|#

Can't you guys figure out who it is from their IP address?

robc|1.26.09 @ 1:30PM|#

joe,

While every traveler cant buy ATC, the dozen airlines can.

I dont know about the rest of the article but this quote

"The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000"

says job, not jobyear.

Being persnickety about units was drilled into me at engineering school.

Alan Vanneman|1.26.09 @ 1:31PM|#

The Krugman does tend to foam at the mouth a bit when contradicted, doesn't he? I guess liberals have egos too, particularly when they've got a Nobel glued to the dashboard of their Prius.

The quotations from Robert Barro were interesting, especially the one about "the U.S. economy was already growing rapidly after 1933," which as I remember it was about the same time Franklin Roosevelt became President.

Saying that the multiplier effect in peacetime wouldn't be much different from that in wartime strikes me as bit odd, because wartime spending is largely devoting to building big, expensive items like ships, airplanes, and tanks and then letting other people destroy them. Of course, now we simply build big, expensive items that we don't need and sail/fly them around in circles for twenty years, an exercise I find even more dubious than high-speed rail.

|1.26.09 @ 1:31PM|#

So there's a fake joe, now? I need a chart to keep up with who is--and isn't--who.

Kolohe|1.26.09 @ 1:31PM|#

I think the argument that taxpayers are better at spending their money implies that people are not complete fucktards,

You gotta admit, Krugman is somewhat at a disadvatage, because he's not allowed to (awesomely) use 'fucktards' in the New York Times.

What Krugman is saying is we should hire lots more air traffic controllers. This just makes sense -- they will have jobs and they will spend money.

Absolutely right, Joe. But I say --- take it a step further. The government needs to give every citizen with less than a million dollars a million dollars to put in his or her bank account. This way, we have way more millionaires to tax; with all of this taxable money, we should just about be able to pay for the stimulus. What we can't pay for by taxing the money we give away (from a pool of money we garnered by way of heavy taxation) we can just borrow from China. Or, hell; we'll just print it. Paper's cheap!

joe, I tried thinking about it. I blacked out and woke with a nose bleed.

Ha!

Can't you guys figure out who it is from their IP address?

I hope so. I hate that someone else is stealing my witty threadwinning name.

Sean W. Malone|1.26.09 @ 1:33PM|#

Sorry Joe, you lost me there... was that meant to be a joke?

Can anyone explain how this all works to me? I'm at a loss.....

Government takes money from general population, mostly the middle class & corporations (i.e. people who spend money and the organizations which produce wealth)
->
Government pays bureaucrats, middlemen & system managers
->
Government hands remaining money to either themselves or some other corporation - thereby "producing jobs"?

And yet Krugman expects me to believe that there's some magic in his silk cap that makes the hands of government A. more efficient and better suited to meeting public demand than the people who had the money originally, and B. Adds value, and then isn't actually a loss of money at all?

And that guy's on CNN all the time too... Man, makes me tired of living sometimes.

Salvius|1.26.09 @ 1:33PM|#

Here's how to think about this argument: it implies that we should shut down the air traffic control system.

I suspect that the air traffic control analogy is based on the same assumption that silently lurks under virtually every defense of any government spending program: That if the government did not provide [X], then [X] would not exist at all.

|1.26.09 @ 1:34PM|#

Humans aren't hamsters that just need a hamster wheel to keep them occupied. A real economy is about creating value.

You could pave over the same road 10 times but how much real value does that actually produce for those using it past the first or second time? To go further let's say it costs $10,000 to do it each time. That means your out ~$80,000 dollars you didn't have to spend. Sure the construction company may have some more money but every one else loses out as tehy are paying almost 10x what they normally would have for a road.

The best answer would be to allow people to allocate their money according to what they thmeselves value. That will insure value is actually being created for the most people.

Naga Sadow|1.26.09 @ 1:35PM|#

Just relax Pro Lib. Your fear of one day being told everyone is a fake may be at hand.

Will The Real Joe Please Stand|1.26.09 @ 1:35PM|#

How can we tell the real joe from the impostor making fun of him? Most people in the thread apparently can't, which should tell us something.

As with Lefiti, self-parody set in long ago.

|1.26.09 @ 1:35PM|#

What if the government simply ordered all of us to spend 30% of our income in the next month? On a list of projects that the government provided us? Would that be a good thing?

Wait- don't they do that already? What's that thing I write in April?

Salvius|1.26.09 @ 1:35PM|#

So there's a fake joe, now? I need a chart to keep up with who is--and isn't--who.

It really isn't difficult to tell which one is the fake...

|1.26.09 @ 1:36PM|#

While every traveler cant buy ATC, the dozen airlines can.

You mean "the market" can get ATCs hired the exact same way it would get the pilots hired? Who wudda think it?

|1.26.09 @ 1:37PM|#

The government needs to give every citizen with less than a million dollars a million dollars to put in his or her bank account.

Well, hold on there buddy. That's a good start but don't minorities deserve a little extra?

Xmas|1.26.09 @ 1:37PM|#

Do y'all think a privately run Air Traffic Control system would allow airports to charge landing rates based on the time of day instead of the size of the aircraft? You know, pricing so that small aircraft that take up landing slots during peak travel hours would pay the same for the amount of air-traffic-control time they use.

If we simply must waste our money on busy work, how about blowing it on something potentially useful? Like cheap access to space or fusion power or something like that? Instead of rewarding favored businesses, industries, various governments, and individuals in political favor.

Gilbert Martin|1.26.09 @ 1:37PM|#

"Some things are public goods, which can only be provided (or can only be efficiently provided) collectively. There's a difference between a single, comprehensive air traffic control system and 300 million dress shirts. Everybody can pick out the best dress shirt to buy all by themselves. The difference between such goods and public goods, btw, has nothing to do with the intelligence of individuals, as much as some people get a rush out of that assertion, but with the nature of the goods."

Are you claiming the Air Traffic control function is impossible to privatize?

Also, the determining factor on spending more on a "public good" whatever it may be, is whether there is any real need for a capacitly increase, upgrade, repair, etc for that particular function - not a generic desire to "create jobs".

The government could hire 5 million more air traffic controllers but if there is no actual need for them based on the air traffic volume, it is not creating anything of value.

Kolohe|1.26.09 @ 1:38PM|#

To be fair to the Nobel Prize*, Krugman got it for basically showing how free trade between nations utilitizing their comparative advantages yields emergent benefits that help all involved.

That columnist Krugman seems to be such at odds with economist Krugman is one of the great mysteries of our time.

*and technically, it's not quite the same as the 'real' Nobel Prizes, but to differentiate it from the others is a sign of a *really* pedantic asshole.

|1.26.09 @ 1:39PM|#

because a large fraction of any tax cut will simply be saved

Isn't Krugman (and the left in general) who is always bitching that Americans do not save enough.

It really isn't difficult to tell which one is the fake...

You're being sarcastic, right? With the exception of the "threadwinning name" bit, I honestly can't tell who is who. And even that one I wouldn't have caught had I not known there was a troll...

sage|1.26.09 @ 1:39PM|#

It really isn't difficult to tell which one is the fake...

It was for me on one comment. Not to insult the real joe but the troll nailed it well that time. It's been pretty obvious since. And he really should just stop.

Naga Sadow|1.26.09 @ 1:40PM|#

Salvius,

Speak for yourself brother! Joe used to be much more shrill. Lately, he's been funny and witty. So no, I can't really tell if it's joe using sarcasm, or an imposter joe.

Neu Mejican|1.26.09 @ 1:40PM|#

jsh,

You realize that in a very real sense a coop of corporations and a coop of citizens deciding to pool resources to provide ATC is a difference of degree not of kind.

The incentives of the two coops are, of course, slightly different.

Gilbert Martin|1.26.09 @ 1:41PM|#

"It really isn't difficult to tell which one is the fake...
"

How do you know that the supposedly "real" one hasn't been a fake all along?

adrian|1.26.09 @ 1:41PM|#

ahh yes, public goods. Take Amtrak, for instance, how else would people get around in this country without it?

rand spits in your face joe.

Lefiti|1.26.09 @ 1:41PM|#

Krugman is absolutely right.

Barack Obama was elected to spend our money. If he didn't know better than you, he wouldn't be President.

|1.26.09 @ 1:41PM|#

Well, hold on there buddy. That's a good start but don't minorities deserve a little extra?

Oh, no. I don't think we should get carried away. What if we only give minorities the million a piece in the first place?

Naga Sadow|1.26.09 @ 1:41PM|#

Pro Lib,

Are you on about rocket cars again?

|1.26.09 @ 1:42PM|#

rand spits in your face joe.

That's a typical angry right-winger response with no value or contribution.

Obama won, deal with it.

robc|1.26.09 @ 1:42PM|#

Kolohe,

to differentiate it from the others is a sign of a *really* pedantic asshole.

You mean like you just did?

robc|1.26.09 @ 1:43PM|#

maybe the other joe isnt a spoof troll but an idiot with a common first name.

Lefiti|1.26.09 @ 1:43PM|#

What if we only give minorities the million a piece in the first place?

Now you're on the trolley!

|1.26.09 @ 1:45PM|#

Pain,

You could pave over the same road 10 times but how much real value does that actually produce for those using it past the first or second time?

Sure, but nobody is proposing to pave over roads ten times.

Do you really think that there isn't $300-$400 billion worth of economically worthwhile infrastructure work to do in this country?

Especially after the past 25 years?

That's a typical angry right-winger response with no value or contribution. Obama won, deal with it.

And there's the typical left-wing response. I would just add this one bit:

Obama won, deal with it. This is the age of bipartisanship, now.

|1.26.09 @ 1:47PM|#

Obama won, deal with it. This is the age of bipartisanship, now.

Finally, someone gets it.

I wish someone would explain that to my troll.

Neu Mejican|1.26.09 @ 1:47PM|#

Also, the determining factor on spending more on a "public good" whatever it may be, is whether there is any real need for a capacitly increase, upgrade, repair, etc for that particular function - not a generic desire to "create jobs".

Hence Obama's emphasis on avoiding "pork" and concentrating on needed repairs, upgrades, increases in capacity and the like. Devil's in the details, of course, but it is possible to advocate stimulus AND to understand this point.

Obama: "Creating and saving 2.5 million jobs, jobs rebuilding our infrastructure, our roads, bridges, modernizing our schools and creating the clean energy infrastructure of the 21st century .... ''

If you don't think we need these things, then you may disagree with particular items, but Obama is proposing that we stimulate by spending on real needs.

Taktix®|1.26.09 @ 1:48PM|#

Yeah, stuff like that is funny, like, once, but now it's just annoying.

Sounds like Welch is bringing the ban hammmer pretty soon, though...

|1.26.09 @ 1:48PM|#

Gil Martin asks:

Are you claiming the Air Traffic control function is impossible to privatize?

No, I'm not.

But the air traffic control system is not being privatized. Take that as a given.

Now, assuming that, what is a more efficient way to upgrad the air traffic control system with $10 million: to put $10 million towards new computers and whatnot for air traffic controllers, or a $10 million tax cut spread across the economy?

Kolohe|1.26.09 @ 1:50PM|#

robc @ 1:42

Reinmoose|1.26.09 @ 1:51PM|#

I leave you all alone for one week - ONE WEEK - and you get all troll crazy.

I'm never taking off again.

robc|1.26.09 @ 1:52PM|#

joe,

Now, assuming that, what is a more efficient way to upgrad the air traffic control system with $10 million: to put $10 million towards new computers and whatnot for air traffic controllers, or a $10 million tax cut spread across the economy?

If you word it that way, the answer is obvious, but if you reword the question to:

What is the more efficient way to upgrade the economy in general?

then I am going with the tax cut.

Maybe we should put privatizing ATC on the table.

|1.26.09 @ 1:52PM|#

Has anybody from the GAO been over the "infrastructure" wish list?

That seems like a minimum requirement.

adrian|1.26.09 @ 1:52PM|#

question, what % of the population is NASA good for?

Naga Sadow|1.26.09 @ 1:52PM|#

reinmoose,

Weren't you playing the part of a troll as a Finnish newspaper editor a week or two ago?

Reinmoose|1.26.09 @ 1:53PM|#

I think the air traffic control example is terrible for more reasons than just that it doesn't make sense. The biggest problem I have with it right now is that it has nothing to do with the stimulus. The stimulus is not creating something like an air traffic control system to make sure planes don't crash in to each other, nor is it doing anything remotely similar.

|1.26.09 @ 1:53PM|#

Obviously the federal government is too small, or we wouldn't be having a recession.

It's ridiculous for people to claim we don't need more government spending when valuable projects like the Bridge to Nowhere are being cancelled right and left.

Reinmoose|1.26.09 @ 1:54PM|#

Naga -
No, why? Was it being suggested that I was? That sounds like it deserves points for creativity.

|1.26.09 @ 1:54PM|#

And- as long as we're talking about air traffic controllers:

Three cheers for President Reagan!

Huzzah!

Huzzah!

Huzzah!

|1.26.09 @ 1:56PM|#

I expect we'll see a lot more of this troll behavior, if Matt Welch doesn't make some kind of effort to head it off.

Trolling like that is classic acting-out by people frustrated by their own insignificance, little different than teenagers who walk really slowly across the street against the light. Hey, look at me, I made that guy slow down! I'm not totally without influence in this world!

With the political right sinking into political irrelevance, this is what they're left with.

Ha ha.

Q: What did John Boehner, Mitch McConnel, and Dick Cheney say to Tom Delay?

A: Who cares?

adrian|1.26.09 @ 1:56PM|#

Just imagine guys, every state can now have their own Big Dig!

After months of tedious negotiations, Massachusetts highway officials finally got a qualified approval from the federal government for their Big Dig finance plan.

The Federal Highway Administration's approval -- given after six previous plans were rejected and more than six months after it was originally due -- is good news for state officials. It clears the way for the state to receive millions of dollars in federal funds through September, the close of federal fiscal year 1996.

"We're delighted with the outcome," Transportation Secretary James J. Kerasiotes said last night. "We have prepared for every scenario imaginable."

Naga Sadow|1.26.09 @ 1:56PM|#

Dammnit! Joe are you being sarcastic or are you a spoofer? I can't remember if joe has a hotmail account or reason account!

P Brooks,

Yeah, huzzah for the guy who gave America AIDS and bankrupted the country with an arms race that nearly got us all killed.

Obama is the President now, quit living in the past.

Now, assuming that, what is a more efficient way to upgrad the air traffic control system with $10 million: to put $10 million towards new computers and whatnot for air traffic controllers, or a $10 million tax cut spread across the economy?

Spending money on ATCs may help air traffic control more than spending it on something else (or may not, but for the sake of argument...), but that doesn't make "the govt" smarter than me.

You take it as a given that this will be a govt program and not be privatized, and therefore to spend more on it will require more govt spending, but that doesn't prove govt is "better" at providing air traffic control than the market would be.

|1.26.09 @ 1:58PM|#

Naga,

No it's really joe. These trolls are just angry rightwingers who can't accept that Obama won (like P Brooks).

Hopefully we'll get a troll filter soon. Once there is a rating system for posts it will be clear who is the real "threadwinner joe" as I am known at Reason.com.

Naga, I find your lack of faith in joe... disturbing.

|1.26.09 @ 1:59PM|#

Do you really think that there isn't $300-$400 billion worth of economically worthwhile infrastructure work to do in this country?

That seems to be the wrong question...

The correct question, to me, is:

Do you really think that the government is going to spend 300-400 billion on worthwhile infrastructure projects or is it going to instead reward their political backers with the public monies while not actually accomplishing much worthwhile.

I personally think the latter will happen, but we shall see.

Gilbert Martin|1.26.09 @ 1:59PM|#

"Hence Obama's emphasis on avoiding "pork" and concentrating on needed repairs, upgrades, increases in capacity and the like. Devil's in the details, of course, but it is possible to advocate stimulus AND to understand this point."

Promoting "stimulus" is not pursuant to any ennumerated power delegated to government in the Constitution.

Whatever "legitiamte" backlog of infrastructure repairs exists does so because of prior government misallocation of massive amounts of government funds that have been and continue to be spent on pork and or transfer payments are not in any way a "public good".
In fact one of the first thing Obama and Dems have done is waste another huge chunk of money on expanding the SCHIP entitlement program.

The government collects far more than enough money already to take of roads and bridges. I don't hear Obama advocating cutting farm price supports to pay for any of it - or cutting any entitlement program to pay for any of it.

|1.26.09 @ 2:00PM|#

the guy who gave America AIDS

Now that is funny. Like he mailed out AIDS in tax rebates checks, or personally spread it with his wizened cock.

Now, assuming that, what is a more efficient way to upgrad the air traffic control system

"I'll do the thin'in' around here!"

Naga Sadow|1.26.09 @ 2:01PM|#

reinmoose,

I can't recall the article exactly. Something about a bailout for newspapers.

Salvius|1.26.09 @ 2:01PM|#

*shrug* Maybe I just have unusually mad skillz at identifying people's online voices, though I generally try to assume that there's nothing special about me. If I can tell immediately which ones are the real Joe, I assume everyone else can, too.

Of course, I read my very first online discussions 25 years ago or so, back when the internets were just tin cans tied together with string, so it might just be my old, grey-haired experience coming into play...

Rev. Wright|1.26.09 @ 2:01PM|#

Like he mailed out AIDS in tax rebates checks,

My son! You have SEEN the LIGHT!

|1.26.09 @ 2:02PM|#

Hence Obama's emphasis on avoiding "pork" and concentrating on needed repairs, upgrades, increases in capacity and the like. Devil's in the details, of course, but it is possible to advocate stimulus AND to understand this point.

Except that Obama (or any President) doesn't actually get to write the stimulus bill -- he just gets to sign/veto what Congress sends him. Senators and Congresspeople have an incentive to pork up the bill, and bring home as much bacon as possible to their state and their political benefactors.

Or are we to believe that Obama would veto a bill that contained too much or the wrong kind of pork?

|1.26.09 @ 2:03PM|#

Trolling like that is classic acting-out by people frustrated by their own insignificance, little different than teenagers who walk really slowly across the street against the light. Hey, look at me, I made that guy slow down! I'm not totally without influence in this world!

Did anyone else just get a fantastic visual of teenager after teenager, over the course of several years, walking slowly in front of Joe's car while he shifted uncomfortably in his seat and locked his doors?

Kolohe|1.26.09 @ 2:03PM|#

The comparison of the 'stimulus' to the ATC system is silly because the analogy is fundementally flawed. ATC like highways, is paid from a 'user fee' by taxing a specific related product and using the dedicated revenue stream. (that these streams get cross with general funds is inevitable, but a side issue). The stimulus OTOH, is using general tax revenue - actually debt - to fund and/or create new infrastructure ex nihilo. Now, this may work - and I am generally in favor of doing just this, but specifically *not* as a stimulus, because to paraphrase miracle max, you rush infrastructure you get lousy infrastructure.

The Angry Optimist|1.26.09 @ 2:04PM|#

The spoofing of joe is low class and particularly unfunny. Someone should be ashamed of himself.

Naga Sadow|1.26.09 @ 2:04PM|#

SugarFree,

Oh? Disturbing huh? How do I know I'm not talking to a "fake" SugarFree? In league with the joe imposter? Confess!

|1.26.09 @ 2:04PM|#

jsh,

Spending money on ATCs may help air traffic control more than spending it on something else (or may not, but for the sake of argument...), but that doesn't make "the govt" smarter than me.

No, it doesn't prove that the government is smarter than you. As I said, the observation that the government does a better job providing public goods than the market would provide has nothing to do with the government being smarter, but with the nature of the goods provided, and the mismatch between incentives on the individual vs. societal level.

Look at is this way: a private developer than got it into his head to upgrade an intersection could probably do so more efficiently, using his own money, than the government could.

But why would he? On an individual level, no one person, no ten people, no hundred people, are going to get as much out of an upgraded intersection as it would cost them to upgrade it.

When you get to the scale where the individual cost can make sense - say, 30,000 people - the free rider problem becomes so overwhelming that it again becomes impossible that it will be done.

And the important part here is that every person who chooses not to pay for the upgrade is not being stupid, but is in fact being smart, even if it is very much in their interest to have the intersection upgraded, and worth their share of the total cost to them.

|1.26.09 @ 2:05PM|#

The stimulus OTOH, is using general tax revenue - actually debt - to fund and/or create new infrastructure ex nihilo.

Are you really claiming we don't need more infrastructure?

Really?

[chokes Naga]

|1.26.09 @ 2:06PM|#

Shorter Joe/ATC argument. Govt spending is good because govt spending will improve ATC more than private spending, because ATC spending is govt spending and not private spending. Therefore, because ATC spending IS govt spending, it therefore SHOULD be govt spending.

Did anyone else just get a fantastic visual of teenager after teenager, over the course of several years, walking slowly in front of Joe's car while he shifted uncomfortably in his seat and locked his doors?

They're on my grill.

Threadwinner Joe doesn't slow down for anybody.

|1.26.09 @ 2:07PM|#

Confirmed:

'jsh' is an attempt to spell out the sound of an idea whooshing over one's head.

"Obviously the federal government is too small, or we wouldn't be having a recession."

How would having a bigger federal government keep us from having a recession?

|1.26.09 @ 2:08PM|#

As I said, the observation that the government does a better job providing public goods than the market would

Assumption Joe, not observation. Assumption.

|1.26.09 @ 2:09PM|#

huzzah for the guy who gave America AIDS

Yes, don't we all remember Reagan's regularly promotion of anal sex and needle-sharing? That bastard!

Or maybe I'm responding to a fake joe....

Kolohe|1.26.09 @ 2:09PM|#

Are you really claiming we don't need more infrastructure?

Are you really responding to a post before you read the entire thing? Really?

Naga Sadow|1.26.09 @ 2:09PM|#

*comes to hours later*

Wha . . . what happened? Did I drop acid or somethin'? Where are my pants?

|1.26.09 @ 2:11PM|#

As I said, the observation that the government does a better job providing public goods than the market would

Assumption Joe, not observation. Assumption.

Tomato, tomahto.

Obviously this proves the government should spend as much money as possible. By definition, there's no such thing as too much public goods.

The Angry Optimist|1.26.09 @ 2:11PM|#

folks, come now, the fake joes and real joe are easily distinguished.

Eyes up. Engage brain.

Sure, but nobody is proposing to pave over roads ten times.

Do you really think that there isn't $300-$400 billion worth of economically worthwhile infrastructure work to do in this country?

Especially after the past 25 years?

Worthwhile to who? If you don't use roads for most things (much of my company workforce telecommutes for instance) how will that add value for them? They will be paying for things they barely use and are being denied the ability to invest in things that add value for themselves.

Take the telecommuting example again. The best use for them would be investing in better telecom functions and not roads. So you might suggest the government invest in them as well. But how do you determine how much is needed and at what cost? What improvements should be funded and which ones shouldn't? The telecommuters will of course ask for as much as they can get since they are not directly paying for it. Just as the those asking for funding for other infrastructure projects. In the end the money will go to whoever has the better lobby and not what creates the better value.

Also it's not like we haven't been spending boatloads on infrastructure for the last 25 years. So I'm not certain what you are referring to there.

|1.26.09 @ 2:13PM|#

As usual, I win the thread.

My girlish little trolls can suck on that.

Gilbert Martin|1.26.09 @ 2:13PM|#

"Now, assuming that, what is a more efficient way to upgrad the air traffic control system with $10 million: to put $10 million towards new computers and whatnot for air traffic controllers, or a $10 million tax cut spread across the economy?"

Not quite clever enough. You are attempting to conflate a question of whether upgrading the ATC system is actually necessary based on the specifics of that situation and a question of whether public vs private spending is better for the economy (i.e the alleged multiplier effect).

If $10 M is actually needed for the ATC, then the best way accomplish that is to switch the money from some useless government spending like farm price supports or welfare to pay for it.

jsh,

You need to look up the definition of "public good."

It is not an assumption to say that the government can do a better job of providing public good than the market. It is inherent to the concept of a publc good. If such goods could be better provided by the private sector, that wouldn't be public goods..

Seriously, it's painfully obvious you don't know what the term means.

|1.26.09 @ 2:14PM|#

Pain,

Worthwhile to who?

Economically efficient on the macro level.

adrian|1.26.09 @ 2:15PM|#

Joe: do you really think that if an intersection was private and inefficient and causing business around the intersection to lose business that the businesses would fix it to make more money? Or toll the intersection so that less people travel through it? Can you really see no way to do things this simple in the private space? We have companies shooting rockets into space hoping in the future to make money off of it, but redoing an intersection would NEVER be done privately?

are you kidding?

*Wouldn't fix it...

|1.26.09 @ 2:15PM|#

Also it's not like we haven't been spending boatloads on infrastructure for the last 25 years. So I'm not certain what you are referring to there

We spend it on big flashy things that we can name after Congressmen and look good on TV, instead of boring maintenance work. Big Stimulus money will be spent more intelligently, of course, because The Smart People (tm) are now in charge, and not because the incentives involved in govt spending lead to stupidity.

folks, come now, the fake joes and real joe are easily distinguished.

Now that you're looking for them, yes. But initially, no, I don't think they were easily distinguishable. At least, one or two of them blended right in (and still sort of do).

In any case, it doesn't matter. Obama's in office, and just yesterday he promised this nation a road to troll-independence within the next few years. Eventually, this government's going to take care of it. We just need to give them a little more money.

|1.26.09 @ 2:16PM|#

How would having a bigger federal government keep us from having a recession?

By providing more public goods, of course. Since the private sector can't produce them, the public sector must be as large as possible.

You go sit with jsf in the dunce corner.

Solana,

Corn-based trolls will just drive up food prices.

|1.26.09 @ 2:18PM|#

It is inherent to the concept of a public good.

Shorter Joe: "Govt spending is good because I've defined it that way. These things can only be provided by govt because I say so. Give me some money."

adrian,

adrian | January 26, 2009, 2:15pm | #

Joe: do you really think that if an intersection was private...

See, there's your problem.

As we try to formulate policy during this recession/depression, noodling away at thinking about what libertopia would be like gets us exactly nowhere.

Gilbert Martin|1.26.09 @ 2:18PM|#

One other thing - a lot of this supposedly huge backlog of infrastructure spending is actually supposed to be state and local responsibilites - not a federal one.

There is no reason that taxpayers in states that have been more responsible in their spending should get their pockets picked to bail out states that foolishly spent their money elsewhere.

|1.26.09 @ 2:19PM|#

"there's no such thing as too much public goods."

There is when it crowds out too much private investment.

The Angry Optimist|1.26.09 @ 2:19PM|#

OK, that last one is hard to tell. Still, whatever douchebag is doing it needs to stop.

|1.26.09 @ 2:20PM|#

Seriously, jsh, the concept of a public good is not some joe-based conspiracy, nor a word game I made up to help my arguments on comment threads.

You're just embarassing yourself now.

|1.26.09 @ 2:21PM|#

Joe: do you really think that if an intersection was private and inefficient and causing business around the intersection to lose business that the businesses would fix it to make more money? Or toll the intersection so that less people travel through it?

No, because the government would make that illegal.

Also, the joe troll should shut up, he's just looking desperate and childish and stupid.

I mean the other joe troll, not the regular one (me).

Yawn.

|1.26.09 @ 2:24PM|#

There is when it crowds out too much private investment.

That's just a libertopian fantasy. Welcome to the real world. Oh, and guess what, Obama is President here.

|1.26.09 @ 2:25PM|#

Stretch.

"How would having a bigger federal government keep us from having a recession?"

"By providing more public goods, of course. Since the private sector can't produce them, the public sector must be as large as possible."

But, as I said before, if it's too large, it will drive out private investments. If you drive out private investments, where are you going to get the money to pay for the public goods?

Seriously, jsh, the concept of a public good is not some joe-based conspiracy, nor a word game I made up to help my arguments on comment threads.

You assert ATCs are a "public good" the market cannot provide (or cannot provide efficiently), w/o offering any justification for that assertion. Your use of it is basically an empty phrase used to cover your lack of an argument in the specific case given in this thread.

"It's clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts...because a large fraction of any tax cut will simply be saved."

The flaw here is the assumption that "savings" means stuffed into a mattress.

Rewrite that sentence so it says a large fraction of any tax cut will be invested (which it will), and the fallacy becomes clear.

|1.26.09 @ 2:26PM|#

Economically efficient on the macro level.

Which given the scale of the world economy (which is what you have to actually factor in) is impossible with any degree of real accuracy. So you end up flushing a huge amount of money down the toilet because you cannot predict what people will find valuable.

In other news: Blagojevich is my favorite. Can we get some snarky response to this "media blitz" of his?

|1.26.09 @ 2:28PM|#

"There is when it crowds out too much private investment."

"That's just a libertopian fantasy."

So joe, you don't think the government can ever crowd out private investments by taxing the economy too much?

Info that belongs in every Krugman thread:

http://article.nationalreview.com/?q=NmZmMzlmZjU4NDVlMmFlZWRlZDM4YjZiYmRmYjc4NDQ=

In 1999 Paul Krugman was paid $50,000 by Enron as a consultant on its "advisory board," and that same year he wrote a glowing article about Enron for Fortune magazine. But he would change his tune. After Enron collapsed in 2001, Krugman wrote several columns excoriating the company. (One featured what may be the most absurd howler in the history of op-ed journalism: "I predict that in the years ahead Enron, not Sept. 11, will come to be seen as the greater turning point in U.S. society.") In most of these columns Krugman worked hard to link Enron to the Bush administration, and in one he actually blamed Enron's consultants for the company's collapse - while neglecting to mention that he, too, had been an Enron consultant.

|1.26.09 @ 2:29PM|#

You assert ATCs are a "public good" the market cannot provide (or cannot provide efficiently), w/o offering any justification for that assertion.

Hey, don't tell me how to debate. Do YOU have a jacket with "THREADWINNER" spelled out in rhinestones? Didn't think so.

My rule is, you bring a fact to this fight and I bring a knife. Guess who wins?

Charles|1.26.09 @ 2:29PM|#

Since we're going to get a stimulus, I just hope some useful stuff at least tangibly related to the government's actual function manages to slip in. My own hope (from professional experience) would be the digitization of the national, state archives, and public universities archives.

Salvius|1.26.09 @ 2:30PM|#

Now, Joe, I think that just to confuse things, you need to start writing a few posts in the voice of your own troll, spoofing your own posts.

On topic, air traffic control is a bad example of a public good because it isn't one: It is possible to exclude free riders (for example, by offering ATC to airlines as a subscription service, and refusing to respond to non-subscribers), and it could potentially be open to competing providers (a monopoly might be preferable for various reasons, but natural monopolies can happen in free markets).

More generally, Joe: Just because you haven't read any of the free-market thinkers who have already dealt with problems of public goods, does not mean those problems have not been considered as part of any free-market theories. The work exists - you just haven't studied it.

|1.26.09 @ 2:30PM|#

Too bad Enron isn't around any more to be bailed out in the stimulus, which would be a better use of my money than letting me keep it. Krugman says so.

|1.26.09 @ 2:31PM|#

"you end up flushing a huge amount of money down the toilet because you cannot predict what people will find valuable."

Exactly! But liberals in their arrogance think they know more about what we need and want than us.

|1.26.09 @ 2:32PM|#

So joe, you don't think the government can ever crowd out private investments by taxing the economy too much?

Sigh. You obviously didn't read the article.

With a multiplier of 1.5, that means the more the government spends, the bigger the economy gets. Logically, therefore, we should spend as much as possible. The more we tax the private sector, the bigger it will get too.

This is probably confusing to you, because you don't have lots of prizes like Paul Krugman. Did I use small enough words to explain it to you?

|1.26.09 @ 2:33PM|#

With a multiplier of 1.5, that means the more the government spends, the bigger the economy gets. Logically, therefore, we should spend as much as possible. The more we tax the private sector, the bigger it will get too.

So we should only get recessions when govt spending goes down, which means no recessions ever, which means we're not in a recession, which means no crisis, which means no need of a stimulus.

Naga Sadow|1.26.09 @ 2:34PM|#

bookworm,

Obviously we can just print money to solve our problems. I does technically grow on trees after all. Or is it cloth? I can't recall.

|1.26.09 @ 2:35PM|#

The work exists - you just haven't studied it.

I don't need to. Maybe you didn't hear, but Obama won.

|1.26.09 @ 2:36PM|#

jsh,

Close. But under Bush's disastrous policies, we didn't expand government enough.

That's why Clinton never had a recession, btw.

|1.26.09 @ 2:37PM|#

One assumption I see above is that any spending on something called a "public good" is necessarily good for the public.

So I guess it logically follows that if nice roads are a public good, then if Obama hires workers to fill potholes and pays each of them $200,000/year, that would be good for the public.

|1.26.09 @ 2:43PM|#

bookworm,

You're arguing with the troll.

jsh,

You assert ATCs are a "public good" the market cannot provide Actually, I didn't. When asked explicitly if I was saying the private sector could not provide air traffic controllers, I said I was not.

Krugman picked the metaphor, not me. The fact is, air traffic control IS being provided as a public good right now. I even went so far as to say we should treat it as an assumption that it would provided this way.

So, no, I'm not. I'm not discussing whether this is the best way to provide air traffic control, I'm just using the metaphor in play.

Your use of it is basically an empty phrase used to cover your lack of an argument in the specific case given in this thread.

You still don't know what a public good is, do you?

LOOK IT UP. Any economics web page will do. Srsly.

Naga Sadow|1.26.09 @ 2:43PM|#

joe,

LMAO! "Threadwinner Joe"!

|1.26.09 @ 2:45PM|#

I'm sorry, I can't find the comment again:

Who was asking me if public spending could ever crowd out private spending?

|1.26.09 @ 2:47PM|#

jsh,

You're arguing with the troll.

Come on, do you really think he doesn't understand that public goods could be privatized? He's just acting stupid to make me look bad.

Not. Gonna. Work.

The Angry Optimist|1.26.09 @ 2:48PM|#

The fact is, air traffic control IS being provided as a public good right now.

Uh, joe, now I feel like you are using "public good" incorrectly. The government cannot provide excludable or rivalrous goods as "public goods", by definition.

Xeones|1.26.09 @ 2:51PM|#

I'm late to the thread, but fuck Paul Krugman. Seriously.

|1.26.09 @ 2:52PM|#

Uh, joe, now I feel like you are using "public good" incorrectly. The government cannot provide excludable or rivalrous goods as "public goods", by definition.

I'm not going to say it again: BUY A DICTIONARY.

And buy a newspaper too, and see who's President now. All the trolls in the world can't change that.

|1.26.09 @ 2:53PM|#

TAO,

You're right, bad phrasing on my part.

Try that as "ATC is being provided as if it were a public good right now."

*Nelson Muntz voice* Ha ha!

Reinmoose the troll who\'s try|1.26.09 @ 2:55PM|#

*ahem*

if u dont no what a public good is u need to go back and take econ 101!! LOLOLo!lo1

|1.26.09 @ 2:56PM|#

The fact is, air traffic control IS being provided as a public good right now.

You equate a govt program w/ a public good, thus proving you have no idea what the term means. No definition of the term I've ever seen claims that if the govt is footing the bill, something becomes a public good by that very act. The argument is supposed to go the other way - the govt has to pay for it because it is a "public good", not that something is a public good because the govt pays for it.

That would justify any and all govt spending, because anything the govt spent money on would magically become a public good.

The Angry Optimist|1.26.09 @ 2:57PM|#

So I guess it logically follows that if nice roads are a public good, then if Obama hires workers to fill potholes and pays each of them $200,000/year, that would be good for the public.

Or that we should pour more money into national defense, because it is a public good :D

Try that as "ATC is being provided as if it were a public good right now."

My fault...I should have known what you meant.

The Angry Optimist|1.26.09 @ 2:58PM|#

jsh - it's been clarified now. Start again.

Paul|1.26.09 @ 2:59PM|#

Why have any private spending? I take it that private spending is just a necessary evil that we have to begrudgingly allow because we're, you know, 'free' and all?

I heard Krugman's argument on NPR. Tax cuts will be 'saved'? By what metric does he estimate that? I thought that the #1 problem with Americans is that we don't save anything and have racked up massive, unsustainable debt.

|1.26.09 @ 3:02PM|#

Obviously ATC is a vitally important external good, like national defense.

Obviously how? ATC is a service provided to the people flying on the plane. They are the prime beneficiaries, not the general public, because they are at a incredibly higher risk of dying if the ATC system goes offline than a random member of the general public.

National defense, OTOH, provides a service for which the alleged benefit is spread out more evenly over the general population, though arguably people in the center of the country derive a lesser benefit than people on the borders.

I say alleged benefit, since a lot of so-called national defense spending isn't about defense at all.

And a strong case can be made that national defense could be privatized, while it has already been demonstrated that ATC can be privatized.

Tyler|1.26.09 @ 3:07PM|#

Reminds me of something interesting I read recently regarding centrally planned economies:

A group agreeing that central planning is necessary but not on the actual plan is much like agreeing to go on a journey without deciding on the destination. Once you start the journey, it will be apparent that certain members of the group had different destinations in mind. A leader must be given the authority to make the decision, and in a democratic society this will result in arbitrary power which was not originally intended by that free society.

Applying this analysis to the stimulus, we basically have decided to take the journey but Democrats and Republicans have different destinations in mind. The compromise will be that Obama's administration will be granted the authority to make decisions about the stimulus as long as Republicans get some tax cuts. This destination we have chosen, perhaps mistakenly, is Keynesland with a dash of arbitrary power.

Hopefully the utter failure of this stimulus will stand as a testament to the folly of central planning. But it seems more likely that some free society (if it exists) some number of years down the road will once again decide to embark on such a journey, where the only sure destination is a compromise of liberty, liberalism, and the Rule of Law.

|1.26.09 @ 3:07PM|#

Is freedom a public good? If so, how about we buy some of that?

You equate a govt program w/ a public good, thus proving you have no idea what the term means. No definition of the term I've ever seen claims that if the govt is footing the bill, something becomes a public good by that very act.

Which is probably why I corrected my phrasing when TAO pointed that out.

Which, unlike anything you've written, demonstrates a working understanding of the term.

|1.26.09 @ 3:08PM|#

My fault...I should have known what you meant.

Not at all, I should have made myself clear.

|1.26.09 @ 3:23PM|#

Shorter Joe: "JSH, you are an idiot for responding to what I actually wrote, despite my entire argument depending on that meaning to have anything to it whatsoever. You should have known that due to my being one of The Smart People (tm), I couldn't have said anything stupid."

Given that ATC isn't a public good, WTF does it have to do with the wonderfulness that is the Obama stimulus, as Kruggie asserted?

Neu Mejican|1.26.09 @ 3:26PM|#

Applying this analysis to the stimulus, we basically have decided to take the journey but Democrats and Republicans have different destinations in mind.

I think the "journey" analogy is not quite right here... you "consume" a journey in a certain sense, but the idea behind the stimulus package is not so much to "consume" as it is to "make stuff." It seems the government is the decision making process of the group regarding which things to make. If the individuals in the group agree that there are a number of things that need to be made, but disagree on which are most important, the choice between each individual trying to meet those needs alone and pooling resources to get things done will determine in large part what kinds of things are possible to get done, as well as which ones are likely to get done.

For some of the needs, the pooled resources, controlled by the shared decision process will provide the best outcomes, for others, smaller aggregates, or individuals may be able to meet the needs more efficiently. A robust decision making process will use trail and error and correction to identify missteps and successes along these dimensions.

Any argument that assumes that all needs will be met best by either the pooled resources, or by the individuals is disingenuous in just the way Krugman implies above with his "always" statement.

Yadda yadda

Neu Mejican|1.26.09 @ 3:31PM|#

Shorter:

If you think the argument is between a FREE MARKET and a PLANNED ECONOMY, then you are not engaged in a serious discussion.

Somewhere between these extremes is the path that results in the best results. Krugman seems a too far towards one pole, while Barro is, hurm, pole-sitting on the other, perhaps.

Neu Mejican|1.26.09 @ 3:35PM|#

I think I'll revise my estimate of Barro's location on the continuum...I missed this key phrase.

Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.

So you have two individuals, each within site of their own pole trying to sway the middle to move in their direction.

adrian|1.26.09 @ 3:36PM|#

Somewhere between these extremes is the path that results in the best results.

PROOF?

Neu Mejican|1.26.09 @ 3:37PM|#

The real question given Barro's analysis is whether he thinks any public works program passes cost-benefit muster given his assumption that there will be a multiplier below 1.0 for all government programs.

adrian|1.26.09 @ 3:38PM|#

and since you can't give proof, howabout a # from 1-10, 1 being free market, 10 being planned economy. Are you really a 5?

|1.26.09 @ 3:39PM|#

Whether there are two ends to a single continuum is another issue, but, accepting that premise, my issue is with us having to be in the middle. If free market is zero on the scale, and total regulation is ten, I vote for setting the economy to one. We've been trying wholesale regulation and tampering for a long time now, so why not try something more free marketish?

adrian,

Damn your quick little fingers!

"JSH, you are an idiot for responding to what I actually wrote, despite my entire argument depending on that meaning to have anything to it whatsoever. You should have known that due to my being one of The Smart People (tm), I couldn't have said anything stupid."

Actually, you demonstrated your muddled and ill-informed misunderstanding of the term in several comments BEFORE the poorly-phrased statement you're now hiding behind.

Neu Mejican|1.26.09 @ 3:39PM|#

adrian | January 26, 2009, 3:36pm | #
Somewhere between these extremes is the path that results in the best results.

PROOF?

So, you are sitting on one of the poles, I assume.

How's the view?

|1.26.09 @ 3:42PM|#

We've been trying wholesale regulation and tampering for a long time now...

Oh, come now.

Why is American always the closest thing to a free market, and a powerful demonstration of the superiority of unplanned economies, when a particular measure makes us look good, and "wholesale regulation and tampering" when that's convenient?

Neu Mejican|1.26.09 @ 3:42PM|#

and since you can't give proof, howabout a # from 1-10, 1 being free market, 10 being planned economy. Are you really a 5?

The number will vary depending upon the problem, of course.

But if you want to use some sort of aggregate trend, using very rough numbers, if the WORLD economy is set at 5, the US is around, maybe 4. This seems to have worked pretty well historically.

adrian|1.26.09 @ 3:46PM|#

Ok, how about this. Which would you think would be more successful, 1 or 10?

I do indeed fall very near one of the ends, but am always willing to listen to reason and logic.

T|1.26.09 @ 3:46PM|#

Is freedom a public good? If so, how about we buy some of that?

Apparently not much of a market for it right now, Pro L.

Gilbert Martin|1.26.09 @ 3:48PM|#

Whether government should X amount of dollars fixing X number of bridges depends on the facts of the physical condition of the bridges.

And the only thing that that the physical condition of the bridges can prove is whether they need to be fixed or not.

What cannot be proven is that spending X amount of dollars on those bridges (needed or not) creates any "multiplier effect" in the economy relative to the same amount of money being spent or saved elsewhere in the private sector absent the government extracting it to spend on the bridges.

Neu Mejican|1.26.09 @ 3:48PM|#

adrian,

Given the comparison you set up, it seems that 10 is ON one pole and 1 is one step away from the other.

Do you mean me to compare 1 and 9?

I'll assume so...both are too close to their respective pole to have a good chance at optimal results, it seems.

|1.26.09 @ 3:49PM|#

joe,

It's all relative, of course. But I think your team has gotten its way long enough. We've seen in other cultures what too much government interference can do, and we're seeing it here, too, though to a lesser extent. I'd rather turn the dial down now, than wait and see how much we can mess things up.

"I heard Krugman's argument on NPR. Tax cuts will be 'saved'?"

Some of it will and what's wrong with that? Savings build capital formation which we need for upgrading machinery and building new machinery.

Paul|1.26.09 @ 3:49PM|#

The idea is you "plan" an economy just enough to get votes, but not too much until it breaks.

adrian|1.26.09 @ 3:51PM|#

ok fair enough i guess. save it for a different thread.

back to the joe trolling.

Neu Mejican|1.26.09 @ 3:51PM|#

Of course, adrian, the point is that policy decisions are not about these aggregates, they are about specific decisions.

Sometimes a 0-ish solutions are appropriate.

Sometimes a 10ish solutions are appropriate.

Context matters.

Paul|1.26.09 @ 3:52PM|#

Some of it will and what's wrong with that? Savings build capital formation which we need for upgrading machinery and building new machinery.

Nothing's "wrong" with that, at all. That's not my point. My point is, I want proof...PROOF from Krugman that tax cuts will get saved. Did he just say that or does he have some evidence that when the tax burden lowers, that those monies go into savings accounts?

NM copyeditor|1.26.09 @ 3:56PM|#

remove "a" as appropriate for grammatical agreement.

|1.26.09 @ 3:59PM|#

The big problem for me, NM, is that the government and supporters of substantial government intervention today don't seem to view many areas as falling near "0." Despite the fact that our system is supposed to be based on the concept of limited government. In fact, I'm hard put to determine what limits really exist anymore when it comes to the economy.

robc|1.26.09 @ 4:00PM|#

As we try to formulate policy during this recession/depression, noodling away at thinking about what libertopia would be like gets us exactly nowhere.

Why should during a recession being any different than during growth?

Im not trying to formulate policy. Fuck policy. The policy should be do nothing.

adrian|1.26.09 @ 4:01PM|#

NM: I would argue that context doesn't matter in almost all matters. I don't believe much in the grey.

Neu Mejican|1.26.09 @ 4:02PM|#

Whether government should [spend] X amount of dollars fixing X number of bridges depends on the facts of the physical condition of the bridges.

And the only thing that that the physical condition of the bridges can prove is whether they need to be fixed or not.

Assume, for now, that they do.

What cannot be proven is that spending X amount of dollars on those bridges (needed or not) creates any "multiplier effect" in the economy relative to the same amount of money being spent or saved elsewhere in the private sector absent the government extracting it to spend on the bridges.

Assume also, the current conditions, whereby private resource spending is low. Doesn't this matter in terms of the concept of a multiplier? If the government has resources that will be used when private resources would not be used, then it seems more likely the mulitiplier on these projects would be above 1.0.

I think the factor of time is important here, and doesn't seem to be forward enough in the discussion.

Seward|1.26.09 @ 4:03PM|#

robc|1.26.09 @ 4:03PM|#

I even went so far as to say we should treat it as an assumption that it would provided this way.

Bad assumption.

Neu Mejican|1.26.09 @ 4:04PM|#

adrian | January 26, 2009, 4:01pm | #
NM: I would argue that context doesn't matter in almost all matters. I don't believe much in the grey.

Grey exists.
Embrace the grey and it will set you free.

Seward|1.26.09 @ 4:06PM|#

Neu Mejican,

Say we take the multiplier for granted, that it works as described, etc. (I personally think it is hogwash, I must add). A lot of the theory appears to assume that once a recovery happens the government will stop spending lots of money. That doesn't happen however, and for obvious reasons given what public choice economics has discovered.

robc|1.26.09 @ 4:08PM|#

If you think the argument is between a FREE MARKET and a PLANNED ECONOMY, then you are not engaged in a serious discussion.

Bullshit. That is the exact argument.

Somewhere between these extremes is the path that results in the best results.

Bullshit until proven. Prove it.

robc|1.26.09 @ 4:12PM|#

I see adrian beat me to asking for proof of that statement.

BTW, asking for proof doesnt imply sitting on a pole, it is asking for proof. If you can prove it, I will agree with it. That is what a proof is after all - proof.

Neu Mejican|1.26.09 @ 4:13PM|#

Seward,

Conceptually, I don't see that there isn't a multiplier, but like Barro argues, it won't always be more than 1.0. The trick for an economic stimulus package, it seems, is recognizing the cases where it would be greater than 1.0 as well as the case where it would be less than 1.0.

Conceptually it is just a way to express costs/benefits.

You are correct, of course, that spending during a situation where the multiplier is 1.0 should eventually change the context to the point where the multiplier is below 1.0. At that point, the government benefit becomes a cost. Recognizing these break points is not something large bureaucracies do well very often.

Pole-sitters like the folks around here are an important part of the process to help feed that information back into the decision making process and increase the chances the shift has occurred.

Gilbert Martin|1.26.09 @ 4:13PM|#

"Assume also, the current conditions, whereby private resource spending is low. Doesn't this matter in terms of the concept of a multiplier? If the government has resources that will be used when private resources would not be used, then it seems more likely the mulitiplier on these projects would be above 1.0."

If the government has resources?

Where are these resources the government has?

Government has nothing to do anything with except that which it has first taken away from someone else in one way or another.

There are only three basic ways for government to obtain wealth to do something with. It can tax it away from somebody, it can borrow it from somebody. Or, it can print money, debase the currency and create inflation - which is essentially nothing more than a backdoor tax on everybody. All three of those ways extracts wealth that is already being used to generate other economic activities. Unless you're talking about cash buried in a coffee can in the backyear, all that money is already in the economy one way or another. There is no proof that moving from the area's it's already in to some other area that government decides creates any magic "multiplier".

BDB|1.26.09 @ 4:13PM|#

Sweet Christ, whatever jackass is spoofing joe is making this thread completely unreadable.

robc|1.26.09 @ 4:14PM|#

If the government has resources that will be used when private resources would not be used

All government resources are private resources. They dont have any other source of resources. Also, barring the mattress storage technique, private resources dont go unused. Sticking them in the bank or a 401k or whatever uses them.

robc|1.26.09 @ 4:15PM|#

Damn you GM, you beat me by a minute and were wordier.

Neu Mejican|1.26.09 @ 4:15PM|#

robc | January 26, 2009, 4:08pm | #
If you think the argument is between a FREE MARKET and a PLANNED ECONOMY, then you are not engaged in a serious discussion.

Bullshit. That is the exact argument.

Chocolate is always better than vanilla.
Everyone knows that no blending of flavors can improve our dessert outcomes.

;^)

I guess you are one of the ones that doesn't want to be taken seriously.

Seriously.

Seward|1.26.09 @ 4:16PM|#

robc,

Well, more to the point, just because a position lies between two opposing points does not by itself make the middle point correct.

Neu Mejican|1.26.09 @ 4:20PM|#

All government resources are private resources.

Really.

Expand on this concept for me.

Be sure to explain how pooling resources (no matter the mechanism) can never result in the creation of wealth.

Remember, any pooling of resources is just a redistribution of wealth within the economy, so no wealth can be created in the economy...because that would require some magical multiplier.

|1.26.09 @ 4:20PM|#

Tyler, is that Hayek?

Neu Mejican|1.26.09 @ 4:22PM|#

Seward | January 26, 2009, 4:16pm | #
robc,

Well, more to the point, just because a position lies between two opposing points does not by itself make the middle point correct.

True enough.

But we are talking about solutions in the real world falling between two poles that do not manifest in reality.

Seward|1.26.09 @ 4:23PM|#

Neu Mejican,

The trick for an economic stimulus package, it seems, is recognizing the cases where it would be greater than 1.0 as well as the case where it would be less than 1.0.

Sorry, that is an impossible task. It runs headlong into the Hayekian knowledge problem and cannot overcome it. Any time it would over come such would be merely accident. And what happens when the "accident" goes the opposite way? Well, you get a more than decade long recession as was the case in Japan.

BTW, there are no clear examples of the multiplier working as a happy accident. The data does not exist to show such examples.

Pole-sitters like the folks around here are an important part of the process to help feed that information back into the decision making process and increase the chances the shift has occurred.

That information never gets there. Why? Again, public choice economics explains that fairly well. Which is why the government has not contracted in any significant way since the time of FDR. What we have had is minor dips and largely periods of small growth punctuated by periods of rapid growth. Government programs, agencies, etc. are like organisms which rarely if ever die.

|1.26.09 @ 4:24PM|#

You know, as has been pointed out by many people, modern liberals get the whole "taxes means you get less of stuff or an activity" when it comes to cigarette taxes. Many of them often forget that however when the taxes are applied salaries, corporate earnings, etc.

Even tho cigs are THE MOST ADDICTIVE ITEMS EVER DEVISED BY MAN!!!!!!!!! EEEEKKKK!!!!!

Expand on this concept for me.

Govt gets its money from taxes on the private sector. It creates no wealth of its own.

Seward|1.26.09 @ 4:24PM|#

Neu Mejican,

I pretty much think anyone defending a few trillion dollars in government "spending" (er, borrowing) isn't living in the real world.

|1.26.09 @ 4:28PM|#

RealJoe,

amoungst all the BS I couldn't figure out what your actual position on public goods was - I think you might have said ATC was a decent example.

I'm all for providing public goods - in fact the consititution provided for the feds to provide pretty much all the ones I can think of - ie. a currency, national defense, courts.

I'm less sure a lot of what the government provides passes muster as truely public goods. like education.

Oh and Krugman is an dangerous assclown. with a Fauxbel Prize.

robc|1.26.09 @ 4:29PM|#

NM,

Be sure to explain how pooling resources (no matter the mechanism) can never result in the creation of wealth.

That isnt what I said. I said that government resources are private resources. I didnt say pooling them doesnt make them better, just not any less private.

Government doesnt have access to any resources (except by law) that private individuals/groups dont also have access to.

If pooling makes sense, then private forces can pool it for efficiency purposes. In other words, spend it privately.

|1.26.09 @ 4:30PM|#

What is it that communists like Krugman and the Chinese govt have against saving? Is it that a lack of savings makes people open to dependence on govt?

http://www.prospect.org/csnc/blogs/ezraklein_archive?month=01&year=2009&base_name=will_china_have_universal_heal

China just decided to spend $123 billion by 2011 to build a universal health care system for its $1.3 billion people. So they'll likely have universal health care before we will. This American exceptionalism thing is getting out of hand.

But it's worth zooming in on why the Chinese are making this a priority right now: Chinese economists see universal health care as a way to induce consumption and economic dynamism. The Chinese have a high savings rate -- indeed, an absurdly high savings rate, between 30 percent and 40 percent of income -- and one of the reasons is fear of medical expenses....

Neu Mejican|1.26.09 @ 4:30PM|#

Government programs, agencies, etc. are like organisms which rarely if ever die.

Ok...but when they do it is because they did not evolve to fill a meaningful nitch in their environment.

I think the example of wild versus domesticated species has again become salient.

Government programs are domesticated species, sole proprietors are wild species, corporations are, perhaps hybrids (wolf-dog crosses, say).

Can we develop breeding programs that make our domesticated species more productive at lower costs?

robc|1.26.09 @ 4:31PM|#

But we are talking about solutions in the real world falling between two poles that do not manifest in reality.

The only point that manifests in reality is the point we are at.

Neu Mejican|1.26.09 @ 4:33PM|#

robc,

I didnt say pooling them doesnt make them better, just not any less private.

Fair enough. I thought, based on your comments, that you were supporting the content of GM's comment.

Seward|1.26.09 @ 4:33PM|#

Neu Mejican,

But we are talking about solutions in the real world falling between two poles that do not manifest in reality.

More to the point, if you do not like the way I describe the world, and I describe it well IMHO, you are free to look elsewhere.

However, it is no surprise to me that how libertarians describe the world is largely how it functions, because all of our discussions of cartelization and agency capture associated with regulation, the dangers of laws which attempt to regulate consumption choices of people, etc. have born the fruit we said that they would.

The world we live in is the world that often good intentioned government intervention created! Yet somehow the libertarian idea is the incorrect one; the one which does not fit "reality." I guess in a way it doesn't of course. The irony associated with such would be comical if it were not so terribly sad!

robc|1.26.09 @ 4:34PM|#

Can we develop breeding programs that make our domesticated species more productive at lower costs?

Why would we want to do that when it appears the "wild species" are the most productive species. Shoudnt we be figuring out how to de-domesticate species and get them back into the wild?

|1.26.09 @ 4:35PM|#

Savings is a dangerous and useless use form of wealth. In quantity it can be repudiated via bank failures, inflation, and government fiat. Yet it thrives in societies that are fearful of exactly that. So the fruits of excess production lie fallow, or are lent via banks to state supported industries to be frittered away when the system inevitably crashes. At least we get to enjoy the hookers and blow in the meanwhile.

Seward|1.26.09 @ 4:36PM|#

Neu Mejican,

Ok...but when they do it is because they did not evolve to fill a meaningful nitch in their environment.

If you mean they did not hook up with a concentrated interest, that is right.

Government programs are domesticated species...

Historically speaking that has often not been the case. Governments can be quite, well, "wild."

Neu Mejican|1.26.09 @ 4:37PM|#

The world we live in is the world that often good intentioned government intervention created! Yet somehow the libertarian idea is the incorrect one; the one which does not fit "reality." I guess in a way it doesn't of course. The irony associated with such would be comical if it were not so terribly sad!

As far as I can tell, libertarianism does not sit on the FREE MARKET pole...that would be anarcho-capitalism, no?

As for the "how libertarians describe the world is largely how it functions" is really only true if you squint just right and don't demand much precision.

To say regulations have costs, is true enough.
To say there will be unintended consequences is true enough.

To say, therefore, this specific policy will have X outcomes is, however, a whole nuther matter.

Been nice.
Gotta go use some pooled government resources to create some wealth.

Later.

robc|1.26.09 @ 4:37PM|#

I thought, based on your comments, that you were supporting the content of GM's comment.

I think I do, unless I missed one of his. He made the same points I did - Government doesnt have access to special resources.

I never saw him saying pooling of resources couldnt be more efficient. That would be silly, economy of scale and corporations and cartels clearly prove that it can be.

Seward|1.26.09 @ 4:38PM|#

More exactly, the world of government intervention we live in is the world that government intervention created.

|1.26.09 @ 4:38PM|#

Be sure to explain how pooling resources (no matter the mechanism) can never result in the creation of wealth.

Ah, but the mechanism matters.

When the pooling is done by people who have a direct vested interest in whether or not the resulting pool of capital will, indeed, produce wealth for them, you betcha it does.

But when the pooling is done involuntarily, by people who have no such vested interest, then any subsequent creation of wealth, while not impossible, will be accidental at best.

And do recall that opportunity costs matter. If your investment of your own dollar would have created $1.25, but my taking of your dollar results in the creation of only $1.10, then $0.15 has been destroyed, rather than $0.10 created.

|1.26.09 @ 4:40PM|#

RC Dean re opportunity costs - blindingly great argument. bravo.

robc|1.26.09 @ 4:41PM|#

As far as I can tell, libertarianism does not sit on the FREE MARKET pole...that would be anarcho-capitalism, no?

In case you come back - no.

Free market isnt anarchy, it, in fact, requires government. Required items for a free market include rule of law and property rights. Without them, you dont really have a free market, imo.

You have something very similar that quickly breaks down.

The Angry Optimist|1.26.09 @ 4:41PM|#

The only point that manifests in reality is the point we are at.

Oh geez, somebody's been reading his Leibniz. robc, are you going to expound on modanology next? :D

er, *monadology.

robc|1.26.09 @ 4:43PM|#

RC Dean and domo,

Yeah, the thing you never see is the private sector spending multiplier. Does anyone really claim that it is less than the government multiplier, even if the govmult is > 1?

robc|1.26.09 @ 4:44PM|#

TAO,

I can, but Leibnitz was wrong about that. Maybe he should have been an economist instead. :)

BTW, have any modern physicists tried to bring back the monad concept?

|1.26.09 @ 4:45PM|#

One problem I have with government spending in general is this concept that we have anything resembling well-considered decision making at the federal, state, or local levels of government. We don't. Not even close. In fact, the evidence seems to show that decisions are usually made to reward certain favored constituencies, often at the expense of the majority. That's not efficient at all, and only rewards those who can manipulate political figures, not those who create wealth.

In the end, the inefficiencies and unfairness inherent in the free market seem far less pronounced and destructive to the economy as a whole than those inherent in government regulation and spending. If benign, god-like decision makers come down to Earth, then maybe this will change. But there's no sign of that today, that's for damned sure.

Gilbert Martin|1.26.09 @ 4:45PM|#

"If pooling makes sense, then private forces can pool it for efficiency purposes. In other words, spend it privately."

Private pooling, (i.e corporate stock issuance) isn't a "redistribution of wealth" anyway - it is an aggregation of wealth. Each stockholder retains an individual ownership percentage relative to the amount of wealth he contributed. And he individually owns that same percentage of any return on investment that occurs as a result of that welath aggregation.

That's not the same thing at all as government wealth redistribution that occurs through taxing and spending.

|1.26.09 @ 4:52PM|#

I support tax rebates precisely because it will probably result in saving/debt reduction. FWIW, this is exactly what the TARP has done for the banking system - recapitalized it. It's good enough for banks, and it ought to be good enough for individuals. BTW, it fits in perfectly with the other thread about national debt - eventually we will become less of a debtor nation. By some combination of inflating/depreciating away our debt and repaying our debts through production.

Seward|1.26.09 @ 4:53PM|#

Pro Libertate,

Well, more to the point, Hayek won the economic calculation problem, yet I think an underlying principle of a stimulus package is the notion you can plan your way via government to an economy which is expanding the PPC at an fair good clip.

|1.26.09 @ 4:54PM|#

Neu...

I think the example of wild versus domesticated species has again become salient.

Government programs are domesticated species, sole proprietors are wild species, corporations are, perhaps hybrids (wolf-dog crosses, say).

Can we develop breeding programs that make our domesticated species more productive at lower costs?

This is some kind of joke, right?

Can we please keep the discussion to REALITY and/or making fun of Joe (in moderation)? Please?

And anyone that thinks the US shouldn't repudiate it's debt like some thirdworld bananna republic - remember that our ability and willingness to consume coupled with the vision that someday they could be like us is what lifted the chinese from poverty - it sure as hell wasn't communism.

|1.26.09 @ 4:57PM|#

You guys really need to stop posting on economics. You're just embarrassing yourselves.

|1.26.09 @ 5:00PM|#

Randall Flagg - shouldn't you be in Las Vegas?

|1.26.09 @ 5:13PM|#

what the eff - post like mad until 5pm - is it miller time?

Gilbert Martin|1.26.09 @ 5:36PM|#

They must all be in the eastern time zone.

Time to quit goofing off at work and go goof off somewhere else.

Neu Mejican|1.26.09 @ 6:15PM|#

They must all be in the eastern time zone.

Time to quit goofing off at work and go goof off somewhere else.

Does this say something about the efficiency of private versus public labor resources?

Is h&r dominated by lazy public employees who get nothing done, or by super-efficient private employees who multi-task?

;^)

|1.26.09 @ 6:23PM|#

Everything ends hereabouts at 5:00 p.m. ET. As a hyper-efficient-to-the-point-of-being-able-to-take- the-sandtrout-as-my-skin private sector employee, I'm still at work. My hyper-efficiency only means working more hours. Otherwise, more people would be needed, and we can't have that in These Trying Times.®

Neu Mejican|1.26.09 @ 6:26PM|#

domoarrigato | January 26, 2009, 4:40pm | #
RC Dean re opportunity costs - blindingly great argument. bravo.

Really?

Seems pretty blindingly obvious.
Of course, the polarity on the example can be positive or negative, so it doesn't really get us far in figuring out how to recognize which situation we are in.

Well, more to the point, Hayek won the economic calculation problem

Won, or described?

Information is a tricky thing to measure/pin down. You may have too much at one-level for one kind of decision, and just enough at another for another kind of decision, and too little for another kind of decision...all with the same set of "facts on the ground."

Processes for aggregating knowledge are certainly part of all large systems. And it is clear from natural systems that it is possible for there to be a central "agency" that has more information than the sum total of all the parts that are feeding the data to the system.

An integration of sensory inputs into perception, of sorts.

We, of course, don't want to stretch that analogy too far and start talking about the government as the "consciousness of the people."

Neu Mejican|1.26.09 @ 6:54PM|#

If benign, god-like decision makers come down to Earth, then maybe this will change. But there's no sign of that today, that's for damned sure.

Pay Attention!

http://4.bp.blogspot.com/_L6pDyjqqsvY/SEXvO1hZP6I/AAAAAAAAOFw/Atkw39N9jaM/s400/obama%2Bmessiah%2Blincoln.JPG

*sorry, tinyurl wouldn't help me with this one for some reason.

Neu Mejican|1.26.09 @ 7:14PM|#

Regarding the economic calculation problem.

By the full version of the Church-Turing thesis, if a problem can be solved by a distributed collection of human computers, then it can be solved by a Universal Computer. If it is tractable for humans interacting via a market it is also algorithmically tractable when calculated by the computers of a socialist planning agency. The very factors which make the price system relatively stable and useful are the factors which make socialist economic calculation tractable. We contend that economic planning does not have to solve the impossible problem of neoclassical equilibrium, but merely has to apply the classical "law of value" more efficiently.

http://www.macs.hw.ac.uk/~greg/publications/ccm.IJUC07.pdf

Hmmm....

Neu Mejican|1.26.09 @ 7:19PM|#

In any system, what is needed is some mechanism for exploring options "in the neighbourhood of" the current input-output matrix that are rendered feasible by scientific advances (or, in some cases, just by leaps of the imagination). This inevitably involves experimentation, trial and error, and so on. This task is beyond the scope of the Lange/Dickinson mechanism, just as it is beyond the scope of the textbook process of market equilibration (migration of capital from low-profit fields to high-profit fields). Creating an effective mechanism for this job is non-trivial. [8] discuss this, suggesting that one would need some kind of agreed annual innovation budget, and that it might be a good idea to have more than one agency in the business of disbursing resources for innovation experiments. The parlaying of scientific advances into new products that people want, or new processes that are more efficient than the old ones, is not an issue that invites a simple "capitalism vs socialism" split. Capitalist economies have differed quite widely in their effectiveness in this regard (for example, Britain versus the USA), and socialist economies might be expected to differ too.

Hmmm...

[8] Allin Cottrell and Paul Cockshott. (1992). Towards a New Socialism, volume Nottingham.
Bertrand Russell Press.

Neu Mejican|1.26.09 @ 7:25PM|#

Above post should not be construed as evidence that I am convinced of their validity...just that they provide some grist for the debate.

|1.26.09 @ 9:29PM|#

NM,

blindingly great in several senses.

1) I was about to make the same point myself - therefore...
2) more seriously, while perhaps obvious, it's the best "judo" type rebuttal to Krugman type arguments in that it uses the logic of his own arguments against him. Also, it can be couched in a framework that mainstream (non-Austrian) economists would accept. It's also testable.

|1.26.09 @ 9:31PM|#

if tinyurl wont work, maybe an [a] tag would :0

|1.26.09 @ 10:11PM|#

can I also point out that nothing in the world will provoke a 250+ post H&R thread like the mention of Paul Krugman... like money in the bank. The FDIC insured kind.

Neu Mejican|1.26.09 @ 11:49PM|#

that mainstream (non-Austrian) economists would accept

As opposed to punk economists (Austrian)?

Anarchy Oi!

Neu Mejican|1.26.09 @ 11:55PM|#

maybe an [a] tag would :0

How's that help?

http://4.bp.blogspot.com/_L6pDyjqqsvY/SEXvO1hZP6I/AAAAAAAAOFw/Atkw39N9jaM/s400/obama%2Bmessiah%2Blincoln.JPG

I teh suck at the atch tee em ell

|1.31.09 @ 10:52AM|#

Nick, the main problem about people saving tax cuts therefore making credit available for mortgagesand businesses as a possible part of the stimulus is a fucking liquidity trap!!! Why do you think they're using fiscal stimulus? Bcuz credit can't reach consumers due to liquidity trap!!!So it would be useless to put more credit into banks.[Bangs head on table]

|2.2.09 @ 5:50AM|#

that criticism on Krugman's conclusion doesn't make sense at all:

Tax cuts don't stimulate the economy, precisely because people don't spend it and let them sit in banks. Consumers don't buy things, sellers and manufacturers go out of business. That simple.

Bush's spending was on policies that didn't work, and a big chunk of it went to the war. His 'political capital' ran out, quick.

Jeff|2.3.09 @ 8:43PM|#

Great, the peanut gallery trying to one up a world class economist.

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