And if Government Had Just Hired 14 Million People, There Wouldn't Be Any Unemployment at All!

New York Times biz/econ columnist David Leonhardt drops some science on "the cost of austerity":

In round numbers, state and local governments have cut about a half million jobs over the last two years. If they had continued to hire at their previous pace — expanding as the population expanded — they would have added about a half million jobs.

In other words, the state and local austerity of the last two years has cost the economy about one million jobs.

By this logic, the U.S. economy after World War II would have lost many millions of jobs, resulting in economic catastrophe. Instead, the David Leonhardts of the time were not decisive in policy decisions. Here's Arnold Kling, writing about this for Reason last November:

[T]he Keynesians who were gaining prominence in the economics profession warned that a rapid decline in government spending and the size of the public work force would produce, in the late economist Paul Samuelson's words, "the greatest period of unemployment and dislocation which any economy has ever faced."

Thankfully, Truman ignored the Keynesians. Government spending plummeted by nearly two-thirds between 1945 and 1947, from $93 billion to $36.3 billion in nominal terms. If we used the "multiplier" of 1.5 for government spending that is favored by Obama administration economists, that $63.7 billion plunge should have caused GDP to fall by $95 billion, a 40 percent economic decline. In reality, GDP increased almost 10 percent during that period, from $223 billion in 1945 to $244.1 billion in 1947. This is a rare precedent of a large drop in government spending, so its economic consequences are important to understand.

The end of World War II thrust more than 10 million demobilized servicemen back into the labor market, but without the catastrophic consequences Keynesians feared. Close to 1 million took advantage of the GI bill to attend college. In addition, some of the increase in the male work force was offset by a decline in female labor force participation from World War II levels. But if Rosie the Riveter became a housewife, many of her friends continued to work outside the home. Over all, from 1945 to 1947 the civilian labor force increased by 7 million, or 12 percent. The vast majority found work, as civilian employment rose by 5 million, an increase of 9 percent.

More (including similar examples in Canada and New Zealand) here.

Leonhardt link via the Twitter feed of The Nation's Chris Hayes. Take it away, Reason.tv!

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  • Tony||

    Close to 1 million took advantage of the GI bill to attend college.

    See, we don't need government, we just need a massive government program to educate hordes of government employees in order to remake the economy by direct government action into one that can sustain full employment.

    Sounds like the stimulus (known as fighting WWII) worked to create the virtuous cycle leading to job demand it is intended to in that instance. Maybe it can work again if we ramp up government debt to 120% of GDP like it was back then. Curious that there was no massive debt crises even with that huge number.

  • PR||

    or we could cut govt. 60% and get 9% GDP growth.

  • Tony||

    How?

  • db||

    If you have to ask, you'll never know. Seriously, are you that much of a blind believer in the need for micromanagement of the economy that you can't see how allowing businesses and individuals to keep more of their product will result in more prosperity? Your very question of "how" implies the need for a managed plan. People will figure out how to leverage their own assets to their own benefit. Some will fail, but many will succeed.

  • Tony||

    It's just that there's already plenty of capital out there, trillions of dollars worth, and it's not going to job creation. Dogmatism, to me, is dedicated belief despite the evidence.

  • db||

    That's just more of the same from you. Your assertion that "there's plenty of capital out there" just shows that you really believe your own story--that more planning and mangement, rather than freedom of action and ownership of one's product, is all that's needed.

  • Tony||

    I'm waiting for your assertion that freedom and wealth concentration at the top (which is what you mean by freedom) will create jobs. If it doesn't, then your assumptions are wrong, at which point I assume you'll move the goalpost and claim that job creation doesn't matter because freedom is the only thing that does.

  • sarcasmic||

    Dogmatism, to me, is dedicated belief despite the evidence.

    Like the dedicated belief that more government is the answer when the evidence shows that everything government touches turns to shit?

    Is that what you mean by dogmatism?

  • ||

    It's just that there's already plenty of capital out there, trillions of dollars worth, and it's not going to job creation.

    How can it go anywhere when the government is paying the owners of that capital not to use it.

    And why when anyone use that capital on real estate (a very large segment of the economy) is being propped with policies and government expensive that have no possibility of being sustainable.

    Why build a factory or a buy a house or make a brick and mortor buissiness when you know the government is going to have to end its

  • ||

    The above was a miss submit. Ignore it.

    It's just that there's already plenty of capital out there, trillions of dollars worth, and it's not going to job creation.

    How can it go anywhere when the government is paying the owners of that capital not to use it.

    And why would anyone use that capital on real estate (a very large segment of the economy) which is being propped with policies and government expensive that have no possibility of being sustainable.

    Why build a factory or a buy a house or make a brick and mortar businesses when you know the government is going to have to end its market props and the value will drop like a stone?

  • Mr. FIFY||

    So... should government use the threat of gunpoint, to force businesses to hire people?

    I'd say "fuck, no".

  • sarcasmic||

    Directive 10-289 will fix it.

  • Herbert Hoover||

    It worked for me!

  • Reinstate the draft....||

    ....send them all, including women, to fight and die in the Obomber's Afrikan and Asian wars...cheap boots on the deck..instant cure for unemployment and a perfect excuse to raise taxes on the rich....

  • ||

    Tony|7.8.11 @ 1:10PM|#

    How?

    During WW2 massive deregulation occurred in labor markets, lower taxation, and in manufacturing, farming, trade and transportation.

    When the war ended the business climate due to these massive overhauls and deregulation was very different then what it was during the depression and allowed those returning GIs to enter the work force and allowed businesses to grow.

    The economy was ripe for an infusion of labor and growth.

    In other words the constant experimentation of FDR did the exact opposite of what it intended to do. Instead of ending the great depression it extended it. Once that experimentation stopped and much of its more damaging parts were eliminated the economy did what it would have done years ago; It recovered.

  • Jason||

    In other words the constant experimentation of first Herbert Hoover and then FDR did the exact opposite of what it intended to do.

    Corrected for historical accuracy.

  • Juice||

    Sounds like the stimulus (known as fighting WWII) worked to create the virtuous cycle leading to job demand it is intended to in that instance.

    WWII was a jobs program?

  • Tony||

    Yes, unfortunately it seems it's much more politically palatable to stimulate the economy via building expensive ships and dumping them in the ocean and getting millions of people killed than it is to simply direct the money at useful things, but that's human nature for you.

  • sarcasmic||

  • Juice||

    So let me get this straight.

    You used the word "intended," as in "WWII was intended as a jobs program."

  • Tony||

    Ya that was phrased awkwardly.

  • ||

    See, we don't need government, we just need a massive government program to educate hordes of government employees in order to remake the economy by direct government action into one that can sustain full employment.

    I hate to break it to you tony but the economy after WW2 grew by leaps and bounds before any of those poeple ever graduated.

  • Tony||

    It wasn't my argument, it was the anti-stimulus guy's. My argument is that WWII represented massive countercyclical government spending that was sufficient to create enough demand in the economy to promote a virtuous cycle of growth.

  • Red Rocks Rockin||

    Relying on a worldwide conflict that results in the death of tens of millions on an industrial scale is probably not the best long-term economic strategy.

  • Lyrical||

    Wow. One data point and you’re jumping for joy.
    The last time I checked wars only destroy.
    There was no multiplier. Consumption just shrank
    as we used scarce resources for every new tank.
    Pretty perverse to call that prosperity.
    Ration meat. Ration butter. A life of austerity.
    When that war spending ended, your friends cried disaster.
    Yet, the economy thrived and grew faster.

  • Dick Fitzwell||

    Demand for what? Couldn't have been demand for all of those things that were rationed, right?

    After the war, after the "countercyclical government spending" was over people were finally able to buy steel, rubber, sugar, cheese and gasoline.

    In what areas was the war spending creating demand?

  • EDG reppin' LBC||

    I think you meant "Kinectic Countercyclical Government Spending".

  • EDG reppin' LBC||

    Hey Tony, I think the American "success story" following WWII had more to do with blasting our industrial competitors into the stone age.

  • sarcasmic||

    That eventually came around and bit us in the ass as our industrial competitors built brand spanking new factories while we're still using century old textile mills. Thanks to regulation it is prohibitively expensive to build anything new in this country, so our manufacturing is going way.
    But don't worry, more government will fill the void. It creates something from nothing because laws are magic.

  • cynical||

    No, you're thinking of friendship.

  • wayne||

    Tony, the massive government spending during WWII almost completely supplanted the private sector. That led to massive pent-up demand in the private sector, which led to the boom following WWII. Following WWII the government nearly completely disbanded the military.

    IMO the GI bill was, and is, a terrific use of funds. I see it as delayed compensation for the vets who used it.

  • ||

    Curious that there was no massive debt crises even with that huge number.

    __________________

    Maybe because the gobs of money it took to make and drop bombs on Europe and Japan were not structural spending problems, a la Medicare and Social Security? There was no unfunded $37 trillion liability in WWII. Now, we have that.

  • Tony||

    No it was just an existential threat from world military powers on the eve of the nuclear age. No big deal.

    Poor people getting help with medical care and not starving... now that is a crisis.

  • Doktor Kapitalism||

    Government programs keeping people dependent, and regulation preventing economic growth in areas that would allieviate that poverty, is the real crisis.

  • ||

    You are missing the point. The war debt wasn't a crisis because we won the war and the debts were sure to decrease, as they did. If had to keep fighting in perpetuity, the debt would have been a very big deal. Medicare and social security are like wars that will never end. We don't have the money to pay those future promises.

  • Red Rocks Rockin||

    Yeah, it's typically left out of analyses like Leonhardt's that we actually paid down the national debt off and on for a few years after WW2 ended. We haven't done that since 1957, and now we're overleveraged.

  • Sudden||

    More than that, government at that time was simply using the surpluses from SS (not medicare yet since that was 1966, but those surpluses were always used throughout the period following it to pay for misc other spending) to fund the war effort. They replaced the money with IOUs, just like dumb and dumber.

  • NeonCat||

    Maybe we can hire people to beat up homeless people, then build them a house and make them live in it. It's a win-win-win!

  • anomdebus||

    Film the first part for pay-per-view and its win-win-win-win.

  • Old Mexican||

    Re: Tony,

    See, we don't need government, we just need a massive government program to educate hordes of government employees in order to remake the economy by direct government action into one that can sustain full employment.


    You missed the point entirely.

    Sounds like the stimulus (known as fighting WWII) worked to create the virtuous cycle leading to job demand it is intended to in that instance.


    This is tipical of the economics illiterate. WWII did not stimulate anything besides the manufacture of weapons and supplies, but people were actually living poorer during those years than during the Great Depression, as factories churned out tanks and planes instead of cars and refrigerators, plus the nagging fact that food and energy were heavily rationed. You have NO idea, NO clue or graps of what you're talking about, NONE.

    Maybe it can work again if we ramp up government debt to 120% of GDP like it was back then. Curious that there was no massive debt crises even with that huge number.


    Only becase the government made massive cuts in spending immediately after the war.

  • Max||

    Without government programs like the GI bill and other sudbisdies to education, cults like the business- worshiping libertarianism featured here could dupe even more dimwits into sending donations.

  • Shorter Max||

    I can't make a legitimate point.

  • Mr. FIFY||

    State-worshiping being better, you mean?

  • wayne||

    The GI bill is not like other subsidies to education. To lump them together is foolish.

  • Maxie is dizzied....||

    ...by images or REoan Pualz Koch....

  • Flex Nasty B.I.G.||

    This is so full of stoopid it makes my head hurt.

    FWIW, I have had some luck in lefty circles by pointing out that "It's not fair to look only at the benefits of a government program and not consider the opportunity cost. That is, where would the money have gone, if left in the hands of those who earned it? What did each of us give up in order to finance this [program | position | agency]?

  • Juice||

    That's easy to answer. You gave up luxury yachts and vacation homes in Fiji.

  • Jeffersonian||

    But just think of the boon to the monocle and top-hat industries.

  • ||

    I've answered that question several times.

    "None of your fucking business, fuck-off commie."

  • ||

    I prefer the formulation "Fuck off, slaver" myself.

  • robc||

    9 cents.

    Dammit, I knew I should have sung it.

    I like to ask people (often in righty circles) what the opportunity cost of NASA was.

    I claim we would have had the DVR and multi-angle porn 20 years sooner.

  • ||

    What's the opportunity cost of social programs?

    Screw the sick, lame, and lazy - I could be commenting from Mars right now.

  • robc||

    What's the opportunity cost of social programs?

    DVR's and multi-angle porn. Cash is generally pretty fungible.

  • ||

    In the YouTube screencap, that chick in uniform must be wearing the new military issue miniskirt.

    And Desmond Tutu doesn't even seem to notice.

  • Nipplemancer||

    that would be the uniform for the new MOS, 0969 - Pleasure Officer

  • ||

    After they repeal DADT completely, will they change the MOS designation to 0699 so it will equally apply to gay, lesbian, bisexual and transgendered persons?

  • ||

    It's hard to read such stupidity without screaming. Every government job destroys several private sector jobs (before their bureaucratic mischief even starts).

    http://www.thefreemanonline.or.....troy-jobs/

    The comparisons with WWII are meaningless also – unless we are going to bomb our economic rivals into rubble.

  • Tony||

    So, since we are currently losing loads of government jobs, the private sector should pick up soon, right?

    You know what happened after we bombed our "economic rivals" into rubble? We spend massive amounts of money rebuilding them, followed by unprecedented worldwide economic growth.

  • Nipplemancer||

    What makes you think that people who were previously employed by the government are employable in the real world?

  • Tony||

    Well they tend to be more highly credentialed and qualified than the average private sector worker, so there's that. I happen to believe that a job is a job, though.

  • ||

    That's because nobody in the private sector gives a fuck about credentials or merit badges or any of the bullshit.

    We just care about getting work done and making a profit.

  • doctors, lawyers, engineers||

    what about credentials?

  • Mr. FIFY||

    Notice Obama today only mentioned "firemen, teachers" and other public-sector employees... in ObamaWorld, the private sector is a dirty, evil thing.

  • Tony||

    Yes I'm so sure he feels that way.

  • Mr. FIFY||

    He did refer to it as "behind enemy lines", just as he admitted in front of Charlie Gibson the only reason Obama wants to raise taxes is "to make things fair".

    He's no Marxist, because Marx would've lost patience with him three years ago.

  • ||

    And businesses don't pay for employees' worthless degrees with taxpayer funds - so their employees can pad their resumes and move up to their next worthless cushy do-nothing government job.

  • JoJo Zeke||

    Well they tend to be more highly credentialed and qualified than the average private sector worker

    1.) Hard citation in support of bald assertion needed here.

    2.) "More highly credentialed and qualified" than private sector employees in which premium workplace skills, specifically? Engineering? Medicine? Retail management and development? Bitch, please.

  • ||

    He's talking about Certified Social Workers, Public Employee Certification, Certified Public Managers and similar bullshit that wouldn't get you a receptionist job in the real world.

  • ||

    We spent massive amounts of money "rebuilding" our economy in 2008 and 2009. It hasn't worked because the problems are different. Your side seems to think we can cure a problem of massive overleveraging by leveraging up even more. It's insanity.

  • Tony||

    It doesn't matter what caused the economic downturn does it? The solution is the same--and it's the only one anyone has offered. Nobody here has a jobs program from what I can tell.

  • ||

    I happen to think there is no solution. We had a debt-fueled spending binge for years. Now it's over. We have to live through the hangover. Attempting to keep the party going by levering up at the government level is only making things much, much worse long term.

  • Mike M.||

    Nail right on the head. Like a burned-out junkie, the west needs to go through a long and painful detoxification program before it can get well again.

  • ||

    I read this morning that the personal debt to income ratio is now 115%. That's down from about 130% during the real estate bubble, but still about twice what it was in the 1970s and it was about 90% in the 1980's. Point being, we still have a long way to go to get the ratio back to a sane level. To get there, people have top spend less and save more. This will cause dislocation in the short term, but is a grreat thing long-term. Too bad the government is trying its best to keep it from happening.

    It is impossible to get us back to the the "boom" of 2004 through 2007 because that "boom" was a mirage, all fueled by borrowed money. People have now spent all the money they could borrow and have none left. All of the debt-fueled "growth" is now gone and can't come back, no matter how many "shovel ready" projects Obama sends down the pike. Until personal balance sheets get repaired, we are going to limp along economically. And that is an at-best scenario. Repairing those balance sheets will take years and some tough medicine. Our economic "culture," if you will, is set to view wealth not as real money, but consumption. Reversing that is hard but necessary.

  • Red Rocks Rockin||

    That's what burns me about the arguments coming from the left on this--they always assume that "something" should be able to allow us to keep the current economy humming. They never even consider, for one minute, the possibility that perhaps there is nothing that can be done, and that we're going to have to endure considerable pain before we can begin a substantive recovery. The junkie analogy by Mike M. is the perfect encapsulation of what is going through their heads--"Please, Obama, just one more hit and we'll be good!"

  • Juice||

    Yes. It matters what caused it.

    The solution is not the same to every economic downturn.

    Right now (in the current situation) the way to get companies hiring again is regime certainty. The regime should promise no new regulations or schemes for the rest of the term. Keep the regulatory regime stable so that companies know what to expect 5 years from now.

    Right now we've got all kinds of new government regulatory agencies being set up, but they haven't been rolled out yet.

    Companies aren't quite sure just yet how the Consumer Financial Protection Bureau or the Obamacare Insurance Exchanges will work or what fiat regulations will come out of them. They don't quite know how Dodd-Frank will affect lending and borrowing, etc.

    To make an analogy, I don't know what job I'll have a year from now, so I sit on every bit of cash I can. It just sits there in a bank account. I won't invest it or buy anything until I have job security.

  • sarcasmic||

    Economic downturns are caused by misallocated resources.

    The solution to this is to use the power of government to slow or even stop the reallocation of those resources to more productive uses.

    This way the politically connected can be insulated from their mistakes and shielded from any loss that would be incurred if the market was allowed to function as it should.

    It also allows for increased government power in the name of preventing future economic downturns, hamstringing the economy and solidifying the power of cronies.

    Yay!

  • Doktor Kapitalism||

    We literally flattened cities in WW2. Very different rebuilding houses and factories, than bailing out banks.

  • ||

    How many goverment jobs have we really lost - what is the net? The Feds are hiring like crazy and closing in on 2 million civil servants. More like 2.6 million if you count Amtrak and the Post Office - neither of which would survive a month without Uncle Sam.

  • Sinic||

    Why does anyone still take Keynes seriously when his bullshit is consistantly proven wrong?

  • Mike M.||

    Normal Americans don't, only worthless losers like Krugman, Obama and Geithner do.

  • NeonCat||

    Tony and Max, evidently, as well as a bunch of other people who would pity us poor, deluded libertarians if they didn't realize the only proper response is to hate us because we're so influential - unless they're mocking us for not being influential. Depends on the phase of the moon or Obama's poll numbers or something.

  • ||

    ^This

  • Tony||

    It's an interesting place you're in. You're absolutist utopians, so you shouldn't in theory have a lot of influence. Yet one of the major political parties has borrowed all of your lunatic ideas to support its plutocratic looting, and people still vote for them! It's that last bit that I can't figure out.

  • Mr. FIFY||

    The Green Party let Team Blue steal a few ideas, Tony.

  • O-bomb-a's.....||

    ....military expansionism has given hem a great excuse to plunder the treasury in the name of National Security. He is becoming a bigger, more out-of-control lunatic than Bush -- Something I used to think was impossible. The amazing thing is, Barack still has his little army of attack dog apologists running around....snarl, bark, snap, bite.

  • Tony||

    Yeah, we Democrats borrowed some of that absolutist utopian Karl Marx's nuttiest ideas to support looting all you rubes, and some of you still vote for us! Ha ha, you nutsacks!

  • sarcasmic||

    Because the alternative is to "do nothing".

    Nevermind that "do nothing" means allowing millions of ideas to compete in the marketplace. No, that doesn't count.

    We need to "do something" which means forcefully imposing a handful of ideas upon people.

    It only counts as doing something when it is backed up with violence.

    Violence is the only answer.

  • ||

    This is the Statist Fallacy:

    Nothing outside the State, nothing against the State, everything for the State.

  • sarcasmic||

    Government spending plummeted by nearly two-thirds between 1945 and 1947 ... GDP increased almost 10 percent during that period

    But... but... but... more government stimulates the economy, therefor less government must have the opposite effect.
    How can this be?
    Is it possible that not taking resources away from productive people and handing them out based upon political considerations does not stimulate the economy?
    Could it be possible that allowing people to keep their own money and spend it as they choose stimulates the economy?
    Rubbish! Government is God! Those statistics are a lie!

  • Tony||

    Keynesians don't support government stimulus at all times in all conditions.

  • Chupacabra||

    Only Democrats and Republicans do.

  • NotSure||

    Back in the real world, politicians like to spend all the time in all conditions.

    Find one politician (anywhere in the entire world) who supports Keynesian spending who actually cuts spending during good times, you will find zero.

  • Doktor Kapitalism||

    The ones who don't get elected?

  • Mr. FIFY||

    Fuck Keynesians.

  • sarcasmic||

    Keynes did suggest that government should stop stimulating and start saving once the economy recovers.
    In practice once the economy recovers the politicians use the extra revenue not to save for a rainy day, but to create more government which never goes away.

    The reality is that that "stimulus" comes from somewhere. It has to be taxed or borrowed. Those funds would have been used not by people who spend other peoples money on things they don't use, but by people who spend their own money on thing that they use.

    Who spends more responsibly? The guy spending money that is not theirs on stuff he won't use (government), or the guy spending his own money on stuff that he will use (individuals).

    If you answered government then you are a complete idiot.

    But I already knew that.

  • T||

    Worth reviewing the 4 kinds of spending:

    A)You spend your money on things you want.
    B)You spend your money on things for someone else.
    C)You spend someone else's money on yourself.
    D)You spend someone else's money on someone else.

    Government spending is all category D. The problem with the category is there's no real incentive to be fiscally responsible, and several perverse incentives not to do so.

  • db||

    Government spending is an especially odious special case of D: spending someone else's money on someone else, who has the power to determine whether you keep your job at the next review.

  • uh||

    Looking at the post-WW2 example though, the Keynesians argued that since it wasn't boom time yet, spending should continue. The boom only started after the spending ended. I'm not implying direct causation like others here, but it does point to a flaw in the counter-cyclical Keynesian model - how do we judge when the "bust" is over? When FDR rolled back New Deal programs in the later 30s, unemployment skyrocketed again; revealing that the previous years' bounce-back was more of a bubble caused by government payroll expansion. How can we tell when the virtuous cycle takes hold if government spending is still inflating payrolls and employment numbers?

    Furthermore, during the war, life in the US wasn't exactly peachy - ration programs and all that. GDP rose because people were using less and committing more of their personal resources to the war effort - a large portion of which ended up at the bottom of the pacific or on beaches in Normandy (or mountains in Italy, deserts in North Africa, etc etc...) In short, economic "growth" during WW2 was a result of the government demanding that everyone drastically reduce their own consumption.

  • uh||

    One more thing - during the early 1970s, there were social programs (SS and Medicare), welfare programs, as well as still-strong unions, and a top-marginal rate upwards of 60%. On top of this, was government war spending on Vietnam. Yet despite this, stagflation and worst recession post-war recession (at the time) still occurred.

    One final, minor quibble that has nothing to do with the current comment thread: That NYT op-ed author takes for granted that all states are experiencing population growth. There is a northern, mitten-shaped state that has declining numbers, and yet the public sector still refuses to be trimmed to appropriate levels.

  • THERE ARE NO ABSOLUTES.||

  • Doktor Kapitalism||

    Another thing worth mentioning is that everything was rationed during the War. And companies that had supplied war goods had gotten a lot of greenbacks, so they had a fair amount of capital to work with despite a small postwar recession. Interestingly, the postwar boom was the only one I can think of that didn't end with a big bust...

  • creech||

    At lunch time I caught a Univ. of Georgia economics prof on CNN saying that "corporations are sitting on a pile of cash worth a trillion."
    Just "sitting." Does this maroon think the CEOs have it piled on their desks, or in some Scrooge McDuck vaults? I would guess not; what he means is it isn't invested the way he would invest their money if he could only get his hands on it without getting his hands dirty.

  • Tony||

    It's a direct refutation of supply-side economics, so there's that.

  • ||

    The Great Depression, Japan's Lost Decade, and our current mess is a direct refutation of Kensyian economic policies.

  • sarcasmic||

    No, it's proof that government didn't do enough.

    Just look at all those times the world came to an end when government didn't step in to stop the downward cycle of people losing their jobs and not having money to spend, causing others to lose their jobs and not have money to spend.... kaboom!

    1920 is a prime example. Government didn't step in and the economy recovered in less than two years, while it's been much more than two years of government intervention and the economy still sucks.

    See?

  • ||

    I forgot. Those assholes Harding and Coolidge caused the Roaring Twenties which was bad because ... uh, there was a recession at the end and Hoover and FDR had to do something about it and then there was the Depression....

    Or something like that.

  • Tony||

    Only if it's opposite day.

  • Red Rocks Rockin||

    Is that where you pretend you can do basic math?

  • ||

    Yes, corporations are sitting on a lot of cash. But much is held overseas and can't be repatriated without paying the 35% corporate income tax. If we want it brought home, a corporate tax holiday would make sense, but the liberals will have none of that.

  • Brandon||

    Because it's not really about improving the economy, it's about punishing those who have more than whoever is talking.

  • sarcasmic||

    The rich don't pay their fair share.
    We know this because they are rich.
    If they paid their fair share then they wouldn't be rich.
    That is why taxes need to be raised on the rich.
    Once all the rich have been bled dry will we know they have paid their fair share.
    Then we will all be happy because there will be nobody to envy.
    Sure we'll all be poor, but we'll be equal and that's what matters.

  • ||

    Thanks, I've always wondered how the idea that the rich don't pay their fair share could be justified. Now I know.

  • Apogee||

    Bullshit. It's a scam, and nothing more. There's plenty of rich people - almost every single Democrat in office is a millionaire. And some, like Pelosi, are worth tens of millions.

    That money's not going anywhere near the government - case in point Buffett and Gates both refuse to leave their wealth to the state.

    This entire retard act about the 'poor' and 'downtrodden' is just bullshit to enable a few politically connected people to wield power over a far larger group.

    Don't buy the 'equality' shit for even a second. They want anything but equality - they want to control society, and to have the power to pick who wins and who loses.

  • sarcasmic||

    Equality is for the masses. It doesn't apply to the political class and their friends.

    They need those resources because they administer the government. They are not evil capitalists to be envied and hated, they are benevolent caretakers of society.
    Profit is theft. It is immoral.
    Acquiring wealth through political favor is the only moral way to get rich. It's about who you know, not what you do.
    Doing stuff is hard, but anyone can shed their principles and kiss ass.

  • Tony||

    It is so sad how you have this pent-up grievance against "elites" but like a good Republican goosestepper you aim it in completely the wrong direction.

  • sarcasmic||

    Yes I do have a grievance against people who attain great wealth not by producing anything of value, but by using political power.

    They are parasites on society and do not deserve to live.

  • Tony||

    It is so sad how I have this pent-up grievance against "the rich" but like a good Democrat nutsucker I aim it in completely the wrong direction.

  • ||

    When government keeps changing the rules, tightening regulation, and threatening more overhead expenses through taxes (including getting rid of tax breaks), businesses sit on money. There's no mystery there.

  • Red Rocks Rockin||

    At lunch time I caught a Univ. of Georgia economics prof on CNN saying that "corporations are sitting on a pile of cash worth a trillion."

    Another example of how worthless academia has become.

    Where the hell is this guy's evidence? Is the "pile of cash" actual liquid FRNs, or is it tied into the what their businesses are supposedly worth?

    Yeah, that's right professor--they've got the bucks, and you don't, because they're actually running businesses while your failed ass is sitting in a university complaining that no one's giving you the paycheck you think you deserve.

  • robc||

    I dont often get to do this outside the sporting realm:

    To Hell With Georgia!!!

  • ||

    Correct - In good times, coporations sit on a pile of investments (internal and external). In bad times, they can't find anything worth investing in - that's the problem.

    We don't open new factories, stores, whatever, because sales are down. We don't hire people because that cost more than they add to the company (thank you Obamacare).

  • ||

    With union and civil-service rules like they are today, there really isn't much of an opportunity for "offset" government hiring anymore. The WPA was a relic of an extremely different labor market.

    The closest thing we have to a government jobs program today is the EITC -- basically subsidizing craptastic jobs at WalMart and McDonalds, paying companies to hire people who are, in the contemporary labor market, barely worth their weight in cheeze-doodles.

    Here's the bottom line: just because the current system isn't working doesn't mean that a different system will work. We could go "Full Galt" and roll this society back to the wonderful economic paradise of Carnagie Steel and the Haymarket Riots, and it won't save this rotted-out sham we are living.

    Nobody has a plan for getting us into a strong national position where we can tell the Saudi oil companies and Red Chinese financiers to kiss our American ass. We have already be mortgaged to Peking and Mecca five times over. It's way past done. The thermometer had already popped out of this turkey ten years ago.

  • Fire Tiger||

    Ponzi!!!!!!!!!!!!!!!!!!!!

  • Achtung Coma Baby||

    One thing and one thing only ended the Great Depression...Kirk and Spock's cold-blooded resolve to watch as Edith Keeler was squished by that truck.

  • Otto||

    Bones could have saved her, too.

  • Achtung Coma Baby||

    Bones attempted to save her, but Kirk and Spock stopped him.

  • Achtung Coma Baby||

    But negligent homicide in the cause of sweet, sweet job creation is no vice!

  • Drax the Destroyer||

    Sorry Guys...we all know her true cause of death was a lack of health insurance.

  • mofo||

    He knows, Otto, he knows.

  • ||

    Only one thing ended the Depression:

    FDR finally croaked (while vacatining with a lady not his wife). Once he was dead, the post WWII New Deal was cancelled and businesses could actually make plans again.

  • ||

    It's a direct refutation of supply-side economics, so there's that.

    Fucking marginal return- how does it work?

  • ||

    If we want it brought home, a corporate tax holiday would make sense

    Krugabe hates you.

  • ||

    Perhaps it might help the Tonys and Leonhardts and Krugnuts of the world to think about where the money for government jobs comes from.

    Leaving aside issues of multipliers, funding that government job required that the funding for an equivalent private sector job be shifted out of the private sector to the job market.

    Net affect on the number of jobs? Zero.

    But, you say, RC, you are assuming a balanced budget, so that the increase in spending for the new pubsec job is matched by an increase in tax revenues taken from the private sector. By borrowing the money, we can create that new pubsec job without burdening the private sector.

    No, the burden on the private sector just takes a different form. Government borrowing either shifts finite investment capital out of the private sector, or it increases the burden on the private sector later, when interest and principle have to be paid. TANSTAAFL.

  • sarcasmic||

    Dude! You're talking about results. Results don't matter. Intentions are what matter. It is not the intention to put people out of work when resources are taken from the private sector to create government jobs, so it doesn't matter.

    Shhhhh! We don't talk about results. Only intentions.

    Besides, even if what you say is true, that taxes and borrowing has a negative effect, I'm sure some well intentioned bureaucrat or politician can come up with a government solution.

  • ||

    Net effect on jobs = zero, unless you take into account the cost of gathering that money, deciding how to spend it, doing the paperwork to get it spent, etc.. The actual amount that a $50k government job costs tax payers has to be much, much higher.

  • ||

    I was trying to be nice.

  • Tony||

    funding that government job required that the funding for an equivalent private sector job be shifted out of the private sector to the job market.

    What if the private sector is stubbornly refusing to create that job? The government can just do it.

    There is plenty of money sloshing around in our economy. The problem is it's all going to the same place (the top), where it doesn't in fact get spend on jobs if there isn't economic demand for jobs.

  • ||

    From the Dept. of Missing the Fucking Point, I give you . . . . Tony!

  • Mr. FIFY||

    Why the fuck should we increase employment in the public sector?

  • Tony||

    Because the public sector is for employing people who care about you. Unlike those greedy capitalist exploiters in the private sector. When's the last time a private sector employee ever told you how much he cares about you?

  • ||

    What the hell is an "economic demand for jobs"?

    What consumers demand is *products*. The jobs come about as a result of producing something consumers are willing to pay for.

    And if they are willing to pay for it, what need is there for the government to intervene?

    If you're willing to concede that prosperity is about producing things that people actually want and need, rather than just employing people in some arbitrary function, then we can have a discussion about what sort of mechanisms are better at allocating capital to productive uses.

  • EDG reppin' LBC||

    Thank you, once again Hazel, for getting to the kernel of the argument.

  • Tony||

    I'll never concede, you hear me? Never! People deserve to be employed just for existing!

  • J_L_B||

    What if the private sector is stubbornly refusing to create that job?

    There are reason that might be the case:

    Too many resources have been allocated to one sector (automobile, housing), and must shift to another productive sector. In this case, government bailouts only work to inhibit job production by preventing resources from being reallocated away from unproductive sectors.

    Also, a sector could presently have a level of capital and labor that is adequate to meet demand. Additional input of labor is unnecessary.

    Just as employment isn't needlessly created, it also isn't needlessly prevented.

  • ||

    Too many resources have been allocated to one sector (automobile, housing),

    Resources, why are they finite?

  • Old Mexican||

    Re: Tony,

    What if the private sector is stubbornly refusing to create that job? The government can just do it.


    Jobs are not the end of economic activity, you economics-illiterate fool. A job is a cost, the same than raw materials and energy; if an employer is "stubbornly" refusing to hire, is because the productivity he can expect from a further unit of labor is not at least equal the cost of the unit of labor (i.e. it's marginal utility.) If labor is made artificially more costly than the productive output it can deliver, the result will NOT be a hiring spree.

    There is plenty of money sloshing around in our economy.


    So was in Weimar Germany. Phony money does not translate into investment, only higher prices for capital goods - and labor. Welcome to Hell...

  • Tony||

    Thank you for the lesson, but you aren't getting the whole picture. The point is to temporarily subsidize employment so that those employed people with their paychecks can increase demand in the economy, meaning their employers' products sell more. We are not obligated to follow the requirements of current market conditions if they are causing widespread misery. It is a tool, not a god. Human well-being (which tends to entail employment) is more important than anything else.

    Phony money..blahblah
  • Tony||

    Have I mentioned I'm retarded?

  • Xenocles||

    "And though we had plenty of money, there was nothing our money could buy;
    The Gods of the Copybook Headings said "If you don't work, you die."

  • Zeb||

    The purpose of government is not to give people nice jobs, it is to govern (or something).
    Even if you believe that government should be providing schools, medicare, etc, the point of public schools isn't to give teachers nice jobs, it is to educate the students. How many jobs are lost or created by any particular policy should not be given any consideration. Figure out what government should be doing (if anything) and do it in the most efficient way possible. That is all that should be considered, no matter what you think the proper scope of government is.

  • Scruffy Nerfherder||

    Government is equivalent to business overhead. Some of it is necessary, it produces no returns, and it never wants to be cut.

  • ||

    But, but, MULTIPLIER EFFECT! DERP!

  • Sean Healy||

    Can we just go back to killing the Nazis? That worked!

  • J_L_B||

    The left justifies high taxes by proclaiming them the only way to save the middle class. The implication being that, absent subsidies from the wealthy, the middle class is not and never was capable of maintaining a decent standard of living. It is a perfect fit with the snobbish leftist belief of the unwashed masses starving if not for their betters, but it also requires the left to concede that the only ones capable of ensuring our continued prosperity are those evil rich. What a dilemma for them.

  • Tony||

    Not quite. The only reason anyone is talking about tax hikes is because the Republicans are insisting on austerity policy. Austerity policy means cut spending and hike taxes and always has.

    Instead they want something completely insane: make the people least able to afford the burden take care of the entire problem, and leave rich people and corporations with all their historically low taxes and giveaways. This is not sanity.

    Though yes it would be nice if our economy rewarded actual productive work (like the middle class does) instead of what it does reward: already having lots of money.

  • Mr. FIFY||

    Why isn't 34% high enough?

  • Tony||

    Why isn't no cuts to medicare benefits good enough?

  • Mr. FIFY||

    I forgot, I'm dealing with a rich man who wants to cut his own throat.

  • Old Mexican||

    Re: Tony,

    Austerity policy means cut spending and hike taxes and always has.


    Not in the 20s, one of the periods of greatest growth in US history. Taxes AND spending were lowered in those years, the debt actually shrinking.

    You have NO clue, NO idea, NO grasp of the subject you're talking about.

    Instead they want something completely insane: make the people least able to afford the burden take care of the entire problem[...]


    The burden of what? How? Because if you mean cutting entitlements, that's no burden.

    Though yes it would be nice if our economy rewarded actual productive work (like the middle class does) instead of what it does reward: already having lots of money.


    Ho-hum, Up is down.

    Having more money IS the reward for hard work. The money is the result of previous productive efforts and the act of saving.

  • sarcasmic||

    You have NO clue, NO idea, NO grasp of the subject you're talking about.

    There is an inverse relationship between one's knowledge of basic economics and the likelihood of them being a liberal.

    WAR IS PEACE
    FREEDOM IS SLAVERY
    IGNORANCE IS STRENGTH

  • Tony||

    Having more money IS the reward for hard work. The money is the result of previous productive efforts and the act of saving.

    Oh, so our economy isn't completely distorted by evil big government, but is actually a fair thing that works like it's supposed to. Get your stories straight. It's a little too convenient for you to have two.

  • EDG reppin' LBC||

    No Tony. First, the economy and the government are two different things. The ECONOMY (a freeish market system) rewards hard work, with money. Then, EVIL BIG GOV'T actually does try to take away money from the productive and savers. Second, no one on this website has two different stories. If you haven't noticed we all want free markets, and no governmental interference. I think we would all agree that the "free" markets we have in the USA are in fact distorted by evil big government. It is this distortion that prevents the most productive in society to earn at their optimal rate. What do you think the distortions (caused by evil big government) do to the earning capabilities of the less productive in our society?
    I think you see the schism between wealthy and poor, and somehow blame the wealthy, without considering the distortions caused by evil big government. With less interference, the more productive would in fact be more wealthy, but the current less productive would have more opportunity to earn at their optimal rate. This is where schemes like the DC Taxi medallions come into play. Government distorts (reduces) the market for taxi cab drivers by mandating a medallion. The cost for the medallion prohibits poorer/ less productive drivers from being able to produce at their optimal level. The richest drivers (large cab companies with government ties) will get the medallions, and retain their wealth now that there is a government imposed monopoly on the cab driver market. No one here at H&R would argue that this is a free market. This is a cruelly distorted market, created by the very force that you offer as the solution: BIG GOV'T. Free markets are inherently equitable. Government influence on markets have two outcomes; redistribution from the wealthy to the poor, or monopolies that deny access of the poor to the market. I know I'm ranting here, but Jesus man, can you see that the government may be the cause of what you perceive to be wrong?
    Also, I don't get the "two stories" argument you made above. Wee need freer markets. How do we get freer markets? Less government.

  • Tony||

    Obviously, with government as big and taxation as high as you say it is, this economy must be going gangbusters according to my theories. If we had even more government and more taxation, it would be even better! See? My stories are consistent!

  • J_L_B||

    Though yes it would be nice if our economy rewarded actual productive work (like the middle class does) instead of what it does reward: already having lots of money.

    In essense, our economy rewards those who produce what people want. You may disagree with their choices, but attempts to alter those choices will only result in the production of goods and services that you and few else deem useful; the demand for those goods and services will reflect that.

  • Tony||

    You can't say our economy is completely distorted by government and then try to tell me that the outcomes of that economy are all in line with market purity at the same time. You're just making excuses not to raise taxes.

  • Mr. FIFY||

    You're just looking for excuses TO raise taxes.

    Fuck, we could be ten trillion in the black, and Team Blue would still grouse about tax cuts for the blah blah.

  • J_L_B||

    It's not all one giant homogenous sector. There are areas where the flow of resources is generally uninhibited (internet, travel and leisure), and areas where it is (housing, automobile). The problem is that you may oppose both where resources are allocated and where they are not (or from where they are being allocated). Any attempt to distort that process leads to extended periods of economic stagnation. The bailouts only help to extend the period of stagnation.

  • ||

    What if the private sector is stubbornly refusing to create that job? The government can just do it.

    Fucking marginal return- how does it work?

  • Mr. FIFY||

    If I owned a private-sector company, I wouldn't just create jobs for the fuck of it. There would have to be a NEED for the job... otherwise, I'm just paying someone to stand around and scratch his nethers.

  • ||

    What do you mean hire them? They should just pay them unemployment benefits. According to the world's smartest economists the multiplier effect is the same.

  • sarcasmic||

    Spending is what matters. Not production.
    It doesn't matter that things need to be produced before they can be purchased. No, that doesn't matter.
    That is because "demand" is magic. You see, "demand" causes good to magically come into being. They don't have to be produced. Only demanded.
    Pump money into the economy to create demand, and goods will magically follow.
    Production is a myth.

  • ||

    But, people have been demanding immortality for thousands of years. How come a cure for aging hasn't happened yet?

  • sarcasmic||

    Nobody passed a law. If they passed a law making death illegal then everyone would become immortal.

    Duh!

  • Xenocles||

    It's called death. When you die, you stop aging.

  • Tony||

    It's like you guys didn't even make it to middle school econ. Our economy suffers from overcapacity. If people were spending money, employers could sell their goods and services and utilize their factories. I am not the one pretending one side of the equation doesn't exist. This isn't the first time either.

  • Mr. FIFY||

    I've got it!

    FORCE people to spend money, forcing employers to hire more people!

    Call the National Guard, Barry!

  • Tony||

    Mind, I make it a point of pride never to have learned anything about the economy. I'm a government-worshiping parasite. We brilliant elitists don't have to learn anything about the "supply" side of supply-and-demand, unlike you serfs.

  • ||

    What the hell is an "economic demand for jobs"?

    This is what you say when you think "employers" exist solely for the purpose of handing out paychecks on Friday afternoon.

  • Tony||

    Why is a society that promotes the mindless accumulation of wealth better than one that promotes employment?

  • Tony||

    Obviously, a society that punishes production and rewards parasitism is far superior to one that rewards people for making anything anyone actually wants to buy and punishes them for making crap nobody wants.

  • EDG reppin' LBC||

    Sockpuppet?

  • EDG reppin' LBC||

    Is this a "real Tony"? I seriously can't tell if this is parody... Anyhow, why is the accumulation of wealth, in your words "mindless"? Why is wanting to provide for self, family, and whatever philanthropic endeavors mindless? Frankly, it seems kind of mindfull. Otherwise, this is a sockpuppet.

  • Xenocles||

    When I was a child I wondered why the government didn't just hire everyone below the poverty line. Congratulations to all those economists who think at the same level as a ten-year-old.

  • Tony||

    Wouldn't that be better than cash handouts? Something could get accomplished.

  • Xenocles||

    Like what? Are we to assume that poor peole can perform any task you assign them? Can they learn anything we need them to? People aren't fungible. A country only needs so many ditches and ugly propaganda drawings.

    I won't even get into the opportunity cost of spending resources on make-work.

  • Tony||

    Would be nice if we educated them too. Even more of a pay-off with that. But I suppose protecting the wealth of the already wealthy is more morally correct.

  • Xenocles||

    Because education took so well in them the first time through... but if only we spend more we can teach everyone anything!

    Seriously, how many years of wasted education spending are enough for one person? For many poor we're talking about repeating several years of high school just to start. After that you seem to be assuming both that the person is fit for college and that it will even be of value to anyone.

  • Mr. FIFY||

    We're spending HOW much on education, again, compared to all years previous to the one we are in now?

  • Tony||

    Public school is awesome! It teaches ten-year-olds they should have lots of sex because everyone their age is, and then instructs them in how to steal money from their parents and circumvent state laws in order to abort the babies that result; you know, the stuff that's important to learn.

  • cynical||

    "Would be nice if we educated them too. Even more of a pay-off with that."

    Give a man a fish, and you feed him for a day. Teach a man that a woman needs a man like a fish needs a bicycle, and you feed him for a day*.


    *only if you also gave him a fish.

  • Tony||

    Give a man a fish, and you feed him for a day. Create a government job for him of gathering manure, and he'll have to eat buffalo chips the rest of his days, as will we all; but there'll always be lots of buffalo chips to eat and the fish population will be safe from greedy capitalist exploitation.

  • Tony Fixed||

    Would be nice if we brainwashed them too. Even more of a pay-off for our communist Messiah's re-election campaign with that. But I suppose protecting the wealth of the already wealthy who don't support socialist brainwashing the way we far-left parasites do is more morally correct.

  • Tony in a nutshell||

    Rich people should all be taxed to death!

    Except for Michael Moore; he's entitled to all that money he made bashing rich people.

    Oh, and George Soros; he's entitled to all of his money for helping destroy capitalism with all of its evils.

    Actually, all left-wingers who have money deserve a free pass on this one. The only people who deserve to be taxed to death are rich people from the right because they insist on keeping and spending their money their own way instead of letting the government take it to spend it on various left-wing causes the way it ought to be spent.

    Only the left knows how to spend money the right way, and only the left ever will. Therefore, all you right-wing redneck peckerwoods need to have your money confiscated for the greater common good. We, your masters know what's good for you crackers. Now get your cotton-pickin' hands off that money and get back on the plantation, you racists!

  • Tony Aesop||

    Remember, you little ants can do all the work you want producing and storing your supplies for the winter, but that's not going to do jack squat for you when the mighty grasshopper swarm goes to town on you greedy hoarders!

  • scarpe Nike Store||

    is good

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