Economics

The Medium-Sized Book That Started This Big War (Against the New New Deal)

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David Weigel at the Washington Independent profiles the book, The Forgotten Man: A New History of the Great Depression, and its author, Amity Shlaes, which he credits with energizing the intellectual and political opposition to the new age of bailout and stimulus.

Excerpt:

There are 200,000 copies of the The Forgotten Man in print, a dramatic success for a work of economic history. Shlaes has written a gripping revisionist history of the New Deal, told through the interweaving lives of New Dealers and prominent Americans of the era…..

According to Shlaes, who builds on decades of New Deal criticism and research into the lives and work of FDR's brain trust, the programs actually lengthened and aggravated the Depression because of regulation that ate away at American entrepreneurship and profit motive, and because of haphazard implementation that drove businesses and banks to uncertainty and panic. The "forgotten man" of the title is the American whose income and effort were taken, against his will, to pay for the experiments and entitlement programs of the New Deal. The New Dealers, in this telling, were well-meaning and smart people who did a lot of damage and little good, and understanding that is key to understanding why government intervention in the economy and big-spending stimulus packages are doomed to fail.

Shlaes did not invent these arguments. She's more a journalist reporting on a decades-old controversy than a pathbreaking economist or historian. Still, as Hayek knew, such popularizers of big ideas do the most to directly influence public opinion and policy. Nor is she even the only recent author making such anti-New Deal arguments; but she has certainly been the most influential one. Weigel gives examples of her shaping the thoughts of politicians from Gingrich to Giuliani.

Shlaes is hard-edged about the political lessons she thinks should be gleaned from her work:

Shlaes wants to wave Republicans off from making the kind of rhetorical or ideological compromise with the New Deal that Republicans made, for example, during the 2005 Social Security fight. "This is a time for choosing," she said on Monday, "and I'm not the first person to say that or to use that term in saying so. Reagan could afford to like FDR because, at the time, it seemed possible to keep our entitlements if we reformed them. It turns out that we can't afford entitlements. We have to choose between Reagan and Roosevelt. You can't just say you like both Reagan and Roosevelt."

Reason magazine interviewed Shlaes about her influential book in its January 2008 issue.

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  1. God save us from well-meaning and smart politicians. At least when Bush was in the White House everyone knew an idiot was in charge.

  2. …he credits with energizing the intellectual and political opposition to the new age of bailout and stimulus.

    What the fuck are you talking about? Where is all this “opposition”. All is see are a bunch of impotent Republicans crying about Democrats doing exactly what they did when they were in power.

  3. Weigel gives examples of her shaping the thoughts of politicians from Gingrich to Giuliani.

    What a wide scope of opinion!

    Not that I disagree, but I can’t remember the last time a politician had actual small-government cred. The only reason Republicans are whining about big government is because the other team is in power.

  4. All is see are a bunch of impotent Republicans crying about Democrats doing exactly what they did when they were in power.

    All I see are a bunch of low foreheads who think they can change the world with dreams and talk. It’s too late for that! If you’re not ready to act, give me a break and shut up.

  5. Nor is she even the only recent author making such anti-New Deal arguments; but she has certainly been the most influential one.

    Again I ask, what influence are you talking about?

    Weigel gives examples of her shaping the thoughts of politicians from Gingrich to Giuliani.

    Oh them, Republicans with withered testicles in addition to their limp and shriveled dicks.

  6. How can I change the world with dreams and talk if I have to shut up?

  7. Paul Krugman says Amity Schlaes doesn’t know what she’s talking about. And he should know.
    He’s got a Knobble Prize.

  8. David Weigel at the Washington Independent

    I wondered what happened to him.

  9. How can I change the world with dreams and talk if I have to shut up?

    CN, try this. It’s audio, just to let you know in case you are at work. Totally work safe.

  10. If “little good” meant reducing the unemployment rate from 25% in 1933 to 13% in 1937, I’m all for it. Please stop this mendacious bullshit!

  11. What’s sad is that there are a good number of Republican rank and file who lean, by and large, more towards limited government and free market principles than not. Unfortunately, they’re willing to ignore the fact that their leadership generally doesn’t give a crap about such ideals to (1) avoid the Democratic bogeyman, (2) support whatever war we’re in, (3) “protect”, in some cases, their religious cause du jour.

    Dumbing down debate to one-liners about a few issues has had no small effect on eliminating tougher issues–like why we should limit government power–from public discourse. I mean, how many Republicans and Democrats vote for president based solely on their position on abortion? That’s insane, since it’s obvious that nothing substantial will change, regardless of who is in power and since the president should be elected on things he’s supposed to be involved with, like defense and foreign relations. And that’s just one such issue.

  12. How dare Republicans learn anything from the last eight years and start thinking about limited government. How dare they. No one ever said that sad sack group of fundie losers could be for limited government. Only the vangaurd elite untainted by the stain of the last 8 years can be libertarian. The rest of them need to shut up and vote with the Democrats. We will take our 10,000 votes rage against the dying of the light in the new socialist Utopia.

  13. Pro,

    Most movement Libertarians are transnationalists. Most rank and file Americans are nationalists. Most movement Libertarians are athiests. Most Americans are religous in some form or another. Until Libertarians figure out a way to to talk to people with nationalist and religous leanings, they will always be on the sidelines. Ultimately, I think many movement Libertarians become so more to make a statement than to actually win elections, so I am not holding my breath for that to happen. But unless and until it does, there will not be a coalition for small government. The rank and file small government types will be stuck with the choice of business as usual beltway Republicans intent on looting the treasury like everyone else and Libertarians intent on lecturing them on how their patriotism and religion are for the ignorant. Since most people vote based on culture and don’t like to be insulted, they will swallow their distain and vote R and leave the country much worse off for doing so.

  14. I don’t think religion is really the issue, even with the rhetoric. I’ve remained registered as a Republican to be able to vote in the primaries (I tend to vote LP in national and statewide elections) and have been a member of the Republican Liberty Caucus for a while. The RLC is about as successful in the GOP as the LP is in national politics, but a good number of the RLC folks seem to be all over the place, religion-wise. Not as atheistic as the LP tends to be, but not fruitcakes, either.

    What tends to frustrate me about the RLC from a philosophical position is all the in-fighting about whether they are libertarians or Republicans first. In my mind, that’s not debatable, though, of course, most of the party loyalists want to be party guys first out of utilitarian motives. I think you’re stated goals and actions need to agree, and the only way the GOP can really do any good as a minority party is for elements like the RLC to strike during this realignment phase and change the tenor of the party. Very unlikely to happen, but perhaps less unlikely than the LP ever winning anything.

    All that said, I agree that the Republicans have earned libertarian wrath. And now the Democrats will as well. Maybe that’s all to the good, though I think the slide towards less freedom and more government is bad, whatever flavor it is.

  15. Amity Shlaes gets the biggest economic story of 2008 completely and utterly wrong and we are supposed to believe this tool? Shlaes in July of 2008: “Gramm was right about the recession and stood by his recession comments on Thursday. A recession is two consecutive quarters in which the economy shrinks, and last quarter it grew. But no matter. Voters feel they are in a recession, and so they are, at least according to Campaign Econ.” She even got the definition of a recession wrong according to the NEBR. And this is whom Reason uses to inform us about economic matters? Find someone with a clue. You really have to stop just saying Krugman’s wrong. That doesn’t make Shlaes correct. She cherry picks data and focuses on one year of the depression (1937). That year’s poor showing was the result of FDR reducing taxes and the flow of money. What she does is find evidence that Krugman is right, FDR was right, and the left is correct about how to solve our economic troubles and then trot it out as the opposite. It’s pathetic. Please find people who actually have some knowledge of economics and economic history.

  16. The linky failed, Epi. I’m very disappointed.
    Guess I’ll just have to keep dreamin’ and talkin’.

  17. Pro,

    I think Libertarians need to prioritize. What is the biggest threat to freedom today? The federal government. The states are limited in their ability to take our freedom and money if for no other reason that people can easily move away from states that don’t respect freedom. You can’t as easily move out of the country. I think the compromise between religious conservatives and libertarians lies in Federalism. Religious conservatives are making a deal with the devil if they think that expansive federal power is the way to enlightenment. Government power is the most dangerous threat to religious freedom. The more power the Federal government has, the more in danger religious freedom, like all freedom is in. Ultimately, Libertarians need to learn to live with the fact that some states and some communities are not going to be Libertarian. Issues like abortion, drugs, vice laws ought to be left to the states. It may not be libertopia, but I would take a country where the states determined their own policies on those kinds of things and the Feds stayed out of it. If Utah wants to ban fire water and abortion and all forms of fun, I just won’t live there. It is not perfect, but it better than what we have now and it is a compromise I think a lot of people could live with.

  18. If “little good” meant reducing the unemployment rate from 25% in 1933 to 13% in 1937, I’m all for it. Please stop this mendacious bullshit!

    And yet national unemployment remained under (and sometimes well under) 7.5% for over 20 years starting in 1984, all this without FDR in office, with a preponderance of women in the labor force, and without stimulus spending. I’m all for that.

  19. If you don’t like it you should move to another country!

    Social contract!!!!!!

  20. So, John. You one a them Freestaters?

  21. The linky failed, Epi. I’m very disappointed.
    Guess I’ll just have to keep dreamin’ and talkin’.

    It was a quote from The Running Man, CN. Arnold talking to Dweezil Zappa and Mick Fleetwood.

  22. “So, John. You one a them Freestaters?”

    A bit yes. There has to be some limits however. No state can go back to slavery or Jim Crow. But I don’t think any state would if it could anyway. Real federalism would give us places like Alaska and a few other places out west where you could do anything you wanted and then a few places like Utah that were pretty driery and a lot in between. That doesn’t sound like a bad deal to me.

  23. Sorry, Epi. I wiffed on that one.

  24. I’m not sure federalism alone is the answer. I like the idea of a strong thread of federalism remaining in our system, but my interest in that is more in providing an additional check on state power than on allowing the states to wield too much power. Florida could oppress me as much as the federal government could, in theory.

    On the other hand, the idea of letting the states control the gray area between the lines makes a lot of sense. I’m also partial to the 50- laboratories argument, which allows for variations among the states in how they handle regulation and the like.

  25. And this is whom Reason uses to inform us about economic matters? Find someone with a clue.

    No one with a clue will tell them what they want to hear.

    Journalist? Laughable record of making economic predictions? Sign her up!

    Obviously, the 3/4 of economists who think stimulus spending is a good idea right now are in the tank with the climate scientists.

  26. I wondered what happened to him.

    I write two stories a week there, plus blog posts, in addition to writing at the Economist’s Democracy in America in blog. All caught up!

  27. So all those who were making fun of people saying there was a recession in the summer of ’08 are now predicting a years long depression?

    Color me shocked, SHOCKED I say!

    In 2011 they’ll be telling us how growth will last forever.

  28. Obviously, the 3/4 of economists who think stimulus spending is a good idea right now are in the tank with the climate scientists.

    What is your source for the 3/4 figure?

    Regardless, there may be libertarians who exclusively go down the rabbit trail of whether this is a good idea or not economically, but that is only part of the argument against it. The libertarian objection to the stimulus package can rest on the simple point that these actions are grossly outside the powers given to the Federal government in the Constitution.

  29. Obviously, the 3/4 of economists who think stimulus spending is a good idea right now are in the tank with the climate scientists.

    >cough< bullshit >cough

  30. They can, of course, mistakenly think stimulus spending will work in theory, but this current crop of bills are anything but stimulus spending.

    Stimulus spending would just be cash vouchers or checks that you have to spend on something. Sounds pretty simple, but somehow all of these politically-connected groups keep getting the money.

  31. Anybody who might be willing to consider some theoretical benefit of “economic stimulus” would be by definition in favor of Obama’s plan.

    It’s important to accept this.

  32. if AGW and keynesian economics go down together that would be fucking sweet!

  33. So the repudiated Keynesian position on spending is unrepudiated? I heard no fewer than four different economics professors tell me that Keynes was mostly wrong. And only one of those was a hardcore supply-side guy.

    Nah, I doubt economists have changed their views that radically. It’s like asking whether kids should chew Dentyne or landmines. Four out of five dentists agree!

  34. joe,

    Fine. If 3/4 of economists do think that then they would be fine cutting the current “stimulus package” by roughly 90%, since roughly 90% of that package goes for spending which not take place until four years from now. Even based on the Keynesian notion of a so-called savings paradox the majority of the spending in this package makes little sense.

  35. John, have you been to Alaska?

    Really, I wish that people who haven’t lived there would quit holding it up as some libertarian paradise.

    30 years ago or so, you could pretty much do what you wanted..now, not so much. I used to grow a pot plant in my living room front window, legally. Not any more. Not to mention the subsistence issues…

    Not to mention that they are able to be so “free” because they don’t pay any state income tax and suck off the federal tit to an enormous extent.

    I did enjoy that when I lived there..that and the PDF check every year, but I wasn’t under any illusion that Alaska citizens were, for the most part, the rugged individuals they like to think they were. Especially as most of them lived in the Anchorage metro area with all the amenities. Note: I lived, and still work off and on, out west…

    Sorry, this is a pet peeve of mine.

  36. Come on capelza, you have libertarian hero Sarah Palin as your governor!

  37. Pro Libertate,

    Survey research has shown though that economists by wide margins generally favor free trade, that they think that price gouging laws are counter-productive (which they are), and that they do not favor things like a minimum wage or rent control.

  38. Hello, I’m a little tear in a beer. Joe Boyle has no argument to justify his shaky position. Instead, he squirted me outta his eye.

  39. If “little good” meant reducing the unemployment rate from 25% in 1933 to 13% in 1937, I’m all for it. Please stop this mendacious bullshit!

    I got a cold, and demanded my doctor give me anti-biotics, even though he said they wouldn’t help. Wouldn’t help! That cold was gone in a little over a week! Don’t tell me we don’t need to do somethin’!

  40. Fidus Achates,

    Fuck NEBR. They are wrong. See my long argument with joe previously, Im not repeating it here.

    Yes, we were in a recession in July of 2008, but we didnt know that for sure until last week. πŸ™‚

    (Just as a quick thing – my problem with NEBR isnt that they define a recession differently than the 2 quarters “standard”, its that they dont actually define it. They are very unscientific and dont have a repeatable methodology that can be used by anyone else to verify their results. They use a frickin committee.)

  41. BakedPenguin,

    Throughout the 1960s and 1970s using government spending to “prime the pump” was a common feature of economic development plans. None of the dynamic economies of the last twenty or so years (e.g., China, etc.) used such an approach. Low taxes, funding for education, etc. were what were important.

  42. I heard two economists trashing the “stimulus” package on NPR last night (or maybe the night before). The issue, of course, is that the various programs being foisted upon us in the name of stimulus don’t do what a stimulus is supposed to do–put cash in the economy right now.

    I think some serious tax cuts would be a good idea, but the only way that can happen responsibly is to cut spending. Like a household or company would do, you know, in a recession. Naturally, no such thing will happen.

  43. BakedPenguin,

    More to the point, any claims made about FDR’s policies reducing unemployment would have to demonstrate that his policies enhanced the natural recovery of the economy. And those claims cannot be based on Keynesian principles, because as I mentioned yesterday, “The General Theory…” was not published until 1936.

    I think it is safe to say that at least some of FDR’s policies clearly hindered economic recovery; that’s what wage and price controls do. They thought rather stupidly that they could mimic the practices the government undertook in WWI to guide war production activities. They were wrong.

  44. Pro Libertate,

    The prevailing idea amongst some folks seems to be (and this crosses party lines) that government debt isn’t important. I’m rather skeptical of such a notion.

  45. Funny, I didn’t write a word about “Obama’s plan,” but about “stimulus spending.”

    swillfredo’s point about non-economic points, and TAO’s about the plan working it’s way through Congress are logical, but really irrelevant to the issue at hand, which is Shale’s argument about stimulus spending as a strategy.

    Why are so many of you so uncomfortable with talking about ideas that you need to drag political parties and individual personalities into every discussion? It comes across as (probably well-supported) insecurity about your ability to discuss economic concepts.

  46. Seward,

    The CBO released a report last week which found that 3/4 of the spending in the stimulus bill would be spent within 18 months.

    Also, a poll of economists done in 2006, and widely reported on the blogosphere, found that something like 70% supported keeping or raising the minimum wage.

    And finally, Keynes was promoting his ideas about counter-cyclical spending as pump-priming in papers and speeches for years before his “General Theory” was published.

  47. joe,

    What does it say about your insecurities that you notice this in every thread while others dont notice it?

    I seriously didnt notice it. I believe you, Im sure if I scrolled up it would be there. I guess the fact I dont give a damn about parties (even, usually, the one Im in) makes it easy to gloss over.

    But, when I do notice it, I dont bring it up.

  48. robc,

    What makes you think that the people who write comments about Barack Obama and Democrats don’t realize that they’re writing comments about Barack Obama and Democrats?

    That doesn’t even make sense. I know it’s a lot of fun to try to put a counterargument in the same terms as the original argument, but if you write something that illogical, it loses all its punch.

  49. joe,

    What makes you think that the people who write comments about Barack Obama and Democrats don’t realize that they’re writing comments about Barack Obama and Democrats?

    Huh, WTF? I never said that. Try rereading my post.

    I, in fact, made no comment about them at all. I only commented about you.

  50. I think some serious tax cuts would be a good idea, but the only way that can happen responsibly is to cut spending.

    But if you match the two in order to avoid deficits, you’re just giving with one hand and taking away with the other, in terms of stimulating demand.

    Your point about debt is a good one, but it’s also a long-term concern.

    The prevailing idea amongst some folks seems to be (and this crosses party lines) that government debt isn’t important. I don’t think that’s true; I think supporters of a stimulus package are very concerned about debt, over the long term. We just have more immediate concerns right now.

    And keep in mind, a depression would be terrible for the national debt, since tax receipts would plummet.

  51. Just piss off, robc. Not interested in your cheap shots. There are actual ideas being discussed.

  52. Your point about debt is a good one, but it’s also a long-term concern.

    And as seems to be commonly pointed out in threads discussing corporate decisions (on other forums with more liberals), they (or governments) should be focusing on the long term, not next quarter’s numbers.

    Which I agree with. Make the best decision for the long term. Fuck the short term. We will survive.

  53. WTF…the whole reason why we are talking about stimulus spending is due to the new administration and congress trying to push stimulus legislation! Talking about an idea and the parties pushing that idea politically go hand-in-hand.

  54. joe,

    Not in your 11:56 post.

  55. the issue at hand…is Shlae’s argument about stimulus spending as a strategy.

    I have not RTFB but I know the basic arguments she aggregates, which is why I would like to see a cite for the poll in which 3/4 of economists surveyed support the stimulus spending. My guess is that after evaluating the way the question is framed and throwing out the obviously politically motivated among them the remaining economists are those who support the tax cut component of the stimulus plans waaaaay more than they do the spending components. I seriously doubt there are any credible economists who support the entire stimulus plans as proposed.

  56. And keep in mind, a depression would be terrible for the national debt, since tax receipts would plummet.

    But only in the short term. A depression might clean out enough chafe to lead to more tax receipts in the long term. Which when discussing debt, is what is important (we aint paying off the national debt in the next 5 years).

  57. And keep in mind, a depression would be terrible for the national debt, since tax receipts would plummet.

    Also, this isnt true if spending is cut MORE than tax receipts plummet. The key to debt reduction is to ALWAYS spend less than you bring in. Good times and bad.

  58. According to Shlaes, who builds on decades of New Deal criticism and research into the lives and work of FDR’s brain trust, the programs actually lengthened and aggravated the Depression because of regulation that ate away at American entrepreneurship and profit motive, and because of haphazard implementation that drove businesses and banks to uncertainty and panic. The “forgotten man” of the title is the American whose income and effort were taken, against his will, to pay for the experiments and entitlement programs of the New Deal.

    A bad idea, wrapped in good intentions, is still a bad idea.

    What makes you think your comments about “3/4 of economists” supporting stimulus won’t be interpreted as you claiming that they support the Democratic stimulus plan currently wending its way through the sausage-grinder?

  59. And as seems to be commonly pointed out in threads discussing corporate decisions (on other forums with more liberals), they (or governments) should be focusing on the long term, not next quarter’s numbers.

    They need to focus on both. Criticism of short-sighted corporate decision-making is based on the idea that they’re putting too much emphasis on the short-term, not that it should be neglected entirely.

    Particularly in a crisis, the short-term needs to be a priority. Worrying about water damage when your house is on fire is foolish – you need to put out the fire ASAP!

    BTW, wouldn’t a long-term concern about the national debt advise against tax cuts as a stimulatory measure? I don’t see the newly-minted deficit hawks suggesting we can’t afford those. Quite the opposite, I see them arguing they should be larger.

    Get your own handle,

    Talking about an idea and the parties pushing that idea politically go hand-in-hand. How are you supposed to figure out if the items in the bill are smart ideas or not if you don’t first understand what is, and what is not, smart? Pinning down stimulus in theory needs to come first; otherwise, you have no grounds to criticize or evaluate specific practices.

  60. I think the government should, for the most part, ignore short-term economic effects, including recessions. I’m not keen on long-term manipulation of the economy, either, but I think it’s a safer process in general.

    Leaving aside that view for the moment, a tax-cut/spending reduction stimulus means that the government, realizing that the tax burden is more keenly felt now, simply eases that burden by providing temporary tax relief. With more money, we’re more likely to spend it in commerce (not in black hole programs) and to help limit the contraction of the economy. Even putting money in savings has an effect, because banks get more money to lend.

  61. swillfredo,

    Please note, I didn’t claim that 3/4 of economists support THE stimulus spending, but that 3/4 of economists support the idea of counter-cyclical, pump-priming stimulus spending.

  62. What we need is priority based budgeting (like some states and cities use – and many households):

    You can vote to spend as much as you want, but a priority is attached to each spending item. As revenue comes in, the items are funded from highest priority to lowest. When the money runs out, the spending stops. At whatever point you are at.

    Would be interesting to see what priorities congress set on things.

  63. robc,

    But only in the short term. A depression might clean out enough chafe to lead to more tax receipts in the long term.

    I think this would be a fine point if we were talking about an ordinary recession, but a deflationary depression is a different beast altogether. Past a certain point, an economic slowdown ceases to function as a culling-of-the-weak, and becomes more like a plague, killing of the fit as well as the unfit.

    If this was 1990 or 2001, I wouldn’t be arguing for a big, pump-priming stimulus package.

  64. wouldn’t a long-term concern about the national debt advise against tax cuts as a stimulatory measure?

    Yes and no. As a stimulatory measure, Yes. As a means of raising tax revenue because we are on the wrong side of the Laffer Curve peak, no.

    I don’t see the newly-minted deficit hawks suggesting we can’t afford those. Quite the opposite, I see them arguing they should be larger.

    Well, Im an old-minted deficit hawk, so I cant speak to what they say, but I favor tax cuts as a means of increasing long term revenue. But, it is well behind spending cuts on my priority list.

    They need to focus on both. Criticism of short-sighted corporate decision-making is based on the idea that they’re putting too much emphasis on the short-term, not that it should be neglected entirely.

    Oh, I agree. But we arent in an emergency situation, just a recession.

  65. Also, this isnt true if spending is cut MORE than tax receipts plummet. Layoffs on a large scale make recessions worse.

    The key to debt reduction is to ALWAYS spend less than you bring in. Good times and bad. Roosevelt tried big spending cuts in 1937. The economy fell off a cliff, and didn’t come back until he revved up the military buildup in 1940.

  66. Please note, I didn’t claim that 3/4 of economists support THE stimulus spending, but that 3/4 of economists support the idea of counter-cyclical, pump-priming stimulus spending.

    I’m sure they do, but I challenge the idea that any government spending will be counter-cyclical. “Counter-cyclical” means that, when the business cycle turns up, the government spending goes down. Never happens.

    “Temporary”/”Emergency” increases in government spending have a way of becoming the new permanent baseline.

  67. are there economists in libertopia? Does a completely free-market, sound money economy have any need for economists? i don’t see how always repeating “let the market work” would be called a science.

  68. “No plan is perfect, and we should work to make it stronger,” he said. “Let’s not make the perfect the enemy of the essential. Let’s show people all over our country who are looking for leadership in this difficult time that we are equal to the task.”

    * * *

    “A failure to act, and act now, will turn crisis into a catastrophe and guarantee a longer recession, a less robust recovery, and a more uncertain future,” he said in his prepared remarks. “That’s why I feel such a sense of urgency about the Economic Recovery and Reinvestment Plan.”

  69. P Brooks,

    What makes you think your comments about “3/4 of economists” supporting stimulus won’t be interpreted as you claiming that they support the Democratic stimulus plan currently wending its way through the sausage-grinder?

    I don’t think that. I’ve come to expect that mostof commenters – and some in particular – are going to be incapable of responding to anything I write except to argue about partisan bullshit, eschew any discussion on the level of the level of ideas, and think only in terms of contemporary political controversies.

  70. I think this would be a fine point if we were talking about an ordinary recession

    ITS DIFFERENT THIS TIME!!!!!

    As I said yesterday, bullshit. Its just another recession, maybe even just another depression (worst case). Same old, same old. Time will heal it. Ride it out.

    BTW, if counter-cyclic spending is such a good thing, how come there arent suggestions of $900B emergency anti-stimulus cutting packages during high growth years?

    If the goal is to kill the cycle, killing it on both ends would seem to be optimal. Dont claim the goal is just to end the negative part of the cycle. That is impossible.

  71. What we need is priority based budgeting (like some states and cities use – and many households):

    What a preposterous notion.

  72. In order for a stimulus to be successful it has to create a floor of economic activity that is higher than the natural floor. A stimulus package that doesn’t stimulate economic activity enough to compensate for the pork, much of which has already been proven not to do much of anything for economic activity, in the bill will not create a higher floor than we would otherwise have, nor will it create enough economic activity to compensate.

  73. This is ridiculous, robc:

    Oh, I agree. But we arent in an emergency situation, just a recession.

    GDP declined 3.8% in the last quarter – not “declined at a 3.8% annual rate for a quarter,” actually declined 3.8% in a three months. That’s over a 14% annual rate of decline! The estimates are for a 5% decline in Q1 08. We lost over 500,000 jobs in EACH of the last two months. This is vastly worse than a recession.

    Hell, you don’t even think we went into a recession at all until late in 2008. I think your definitions are a little off.

  74. I think some serious tax cuts would be a good idea, but the only way that can happen responsibly is to cut spending.

    But if you match the two in order to avoid deficits, you’re just giving with one hand and taking away with the other, in terms of stimulating demand.

    A cut in spending would put more money in the hands of the private sector to do as needed as the money spent on day to day operations crowds out the monies that would otherwise be used by the private sector.

    For it to be otherwise you would have to assume that the monies being spent in the public sector are being done so more efficiently than the private. Indeed, that is the heart of the current argument, that the drop in bank lending practices during this recession gives us a situation where that is the case.

    However, this ignores that if the money was returned to the private sector, the majority of that money would go into banks who would then have more flexible choices to expand lending practices.

    True, that most of the money would be returned to the private sector through contracting for projects under a stimulus plan, but this is at the cost of overhead of the government being an instrument of this transferal at a time when market efficiency is most needed (not unique to government, all tertiary forms of payment have overhead costs).

    Cut spending, cut taxes, deregulate the economy, that is a recipe for growth that will get us out of the current logjam.

  75. I’ve come to expect that mostof commenters – and some in particular – are going to be incapable of responding to anything I write except to argue about partisan bullshit, eschew any discussion on the level of the level of ideas, and think only in terms of contemporary political controversies.

    How did this tragic state of affairs come to be, do you suppose?

    Don’t bother to “explain” it to me. The sun is blazing; time to ski.

    So long, Commander Quibble. Have fun skoolin the libertoonianz

  76. R C Dean,

    It is not inevitable that temporary spending become permanent, you know. Which brings me to another point: it sure would be nice if the people who spent 1980-2008 declaring that “Reagan proved that deficits don’t matter,” but who have suddenly seen the light on the problems with a large national debt, could remember their recent insight the next time the economy recovers and we’re running a surplus, and support a debt paydown instead of reverting back to their old habits.

    That’s the kind of thing that could change the political calculus in Congress. So, let’s all keep this concern in mind past 2010. OK?

  77. Please note, I didn’t claim that 3/4 of economists support THE stimulus spending, but that 3/4 of economists support the idea of counter-cyclical, pump-priming stimulus spending.

    Okay…I still would like to see some more information on this. The economic analyses I have read show broad support of counter-cyclical tax cuts for pump priming; I would like to see some contemporary polls of economists supporting significant deficit spending during troughs in the business cycle. Preferably 75% of them.

  78. ITS DIFFERENT THIS TIME!!!!!

    Wow, between the ALL CAPS and the exclamation points, I almost didn’t notice that you’ve offered nothing but your feelings to back up your assumption.

    It can’t be different this time, despite the hard numbers on jobs and GDP, because it would be politically inconvenient if it were.

    That’s about it, isn’t it?

  79. BTW, if counter-cyclic spending is such a good thing, how come there arent suggestions of $900B emergency anti-stimulus cutting packages during high growth years?

    See my comments about what to do the next time we run a surplus.

    But as far as your question goes, surely you’ve noticed that we’ve been using Fed monetary policy to slow growth during boom times for the past several decades.

    I’m all for doing away with that next time, and using debt-paydowns, during the good times in the 2010s and 2020s. (BTW, does anyone remember the Bush campaign arguing in 2000 that paying down the nation debt instead of cutting income tax rates would be “a giveaway to the bankers,” and fretting that “we might pay down the national debt too fast?” It’s like gallows humor now.)

    If the goal is to kill the cycle… It’s not, at least, that’s not my goal. I think that during ordinary recessions, we should run small deficits, just to maintain service levels and give people a life preserver during hard times.

  80. joe,

    On the CBO.

    According to that article, CBO projects only 40% is to be spent within the first 18 months. The entire article is worth reading.

    Also, a poll of economists done in 2006, and widely reported on the blogosphere, found that something like 70% supported keeping or raising the minimum wage.

    Is this the poll?

    A similar survey in 2006 by Robert Whaples polled PhD members of the American Economic Association. Whaples found that 37.7% of respondents supported an increase in the minimum wage, 14.3% wanted it kept at the current level, 1.3% wanted it decreased, and 46.8% wanted it completely eliminated.[60]

    …Keynes was promoting his ideas about counter-cyclical spending as pump-priming in papers and speeches for years before his “General Theory” was published.

    I’m sorry, but there is no evidence that FDR’s policies in his first administration were influenced by anything Keynes had written, said, etc.

  81. joe,

    An emergency is Pearl Harbor being bombed or aliens invading. Zimbabwe’s economy is an emergency situation. A recession (even a bad one) is just a recession. The best way for it not to become an emergency is for people to not treat it as an emergency.

    I think my definitions are fine.

  82. joe,

    I have to ask a question: remember all that money that we poured into Iraq? We are here faced with a similar situation domestically. How exactly are government agencies domestically better prepared to spend money than they were overseas?

  83. A stimulus package that doesn’t stimulate economic activity enough to compensate for the pork, much of which has already been proven not to do much of anything for economic activity..

    This is a ridiculous statement. Any government spending is going to have a short-term stimulatory effect.

    A better argument would be that some of the proposed spending would be a net long-term loss, because we wouldn’t gain as much long-term benefit as the eventual cost of paying for it, but to claim that putting money into the economy isn’t stimulatory is flat-out wrong.

    This is also a ridiculous statement: A cut in spending would put more money in the hands of the private sector to do as needed as the money spent on day to day operations crowds out the monies that would otherwise be used by the private sector. As if there is no idled capacity during a recession or depression. As if there isn’t a skyrocketing unemployment rate. As if the people and equipment who’d be put to work are currently bombarded with offers for work.

    For it to be otherwise you would have to assume that the monies being spent in the public sector are being done so more efficiently than the private. No, you’d just need to be aware that the money isn’t being spent by the private sector, that unemployment is high, and that there is a great deal of idled economic capacity.

    Cut spending, cut taxes, deregulate the economy, that is a recipe for growth that will get us out of the current logjam. It’s generally best to ignore people who think every question has the same answer, whose policies don’t change in response to vastly different circumstances.

  84. How did this tragic state of affairs come to be, do you suppose?

    Excessive time spent in a partisan bubble by the majority of libertarians, leading them to consider any argument they don’t already agree with to be a bad-faith Trojan horse.

    kthxbai. Don’t hurry back on my account.

  85. Wow, between the ALL CAPS and the exclamation points, I almost didn’t notice that you’ve offered nothing but your feelings to back up your assumption.

    It can’t be different this time, despite the hard numbers on jobs and GDP, because it would be politically inconvenient if it were.

    That’s about it, isn’t it?

    You have any evidence that this time is exponentially worse than any of the other recessions or depressions of the last 200+ years? And I used exponentially for a reason, if its just marginally worse, then think of it as a local minima, but still not an emergency.

    If we are heading for Wiemar or Zimbabwe, then I think we have an emergency that we need to fix. Then again, I think huge deficit-based spending packages are the first step towards Wiemar or Zimbabwe.

  86. I have to say, they always say it’s different this time. It’s a valid criticism of our overlords. Didn’t Bush say that about the WoT? Ditto the S&L crisis, ditto the various booms (to throw in a non-crisis moment), etc. I still don’t see this as being as bad as the late 70s/early 80s. That was a horrific time, with no end in sight. Given that lending last year was still high, the credit crunch, which is supposedly the biggest problem, is largely mythological. It’s more about people not wanting to take on more debt than it is about banks sitting on their money.

    Nah, we should just sit put. If the government wants to reform itself in the meantime, that’s okay with me, but trying to guess which way to jump? Well, they’ll fail like they usually do.

    Here’s a question: With so much of the economy intact up to the Bush/Paulson panic attack, how much of the GDP shrinkage was due to the government publicly freaking out (Obama threw out the word catastrophe in relation to the non-passage of the stimulus bill–great leadership, that) versus the actual economic downturn? No rational person can say that the government panic didn’t have any effect on commercial and consumer confidence. Right at the time most companies are doing their 2009 budgeting, too. How smart that was!

  87. Hence the word “compensate,” joe.

  88. joe,

    to claim that putting money into the economy isn’t stimulatory is flat-out wrong.

    Depends entirely on the multiplier. If government spending has a multiplier

  89. damn it, stupid less than sign.

  90. joe,

    The best argument would be that any short term stimulus is not significant enough to justify the air drop of money by the government.

    As for unemployment, idle capacity, etc. the government cannot solve that problem since it is but a poor substitute for private investment in the areas of the economy where economic growth and death occurs. Indeed, a capitalist economy requires economic death to occur; without this it becomes the corporatist, carterlized mess that Schumpeter predicted it would be.

  91. anyone remember the Bush campaign arguing

    At least joe wont bring partisanship into this. πŸ™‚

  92. Errm, cartelized. πŸ™‚

  93. to put it more simply

    Outputs need to be greater than inputs. If many economists can agree that we need a stimulatory effect in the down times and admit to a net-positive gain from stimulatory spending – the positive effect can be easily completely wiped out by wasteful spending on pork projects that never actually recoup the amount of their cost in economic benefit.

  94. Joe is using the D word fairly often now. i always thought depressions were impossible with the FED watching over. hopefully joe is just nervous and not correct.

  95. Seward,

    You are linking to an outdated CBO report that looked at only a portion of an older version of the stimulus bill.

    Here’s a link to how they scored that actual bill submitted in the House.

    http://yglesias.thinkprogress.org/archives/2009/01/actual_cbo_report.php

    2/3 within 18 months.

  96. adrian,

    joe did successfully call the recession about 12 months in advance. Of course, he said we were already in it. πŸ™‚

  97. And you’re right, I misremembered the results of the poll of economists – it was about 53-46 in favor of maintaining or raising the minimum wage.

  98. 18 months? I thought this was supposed to be a short term fix?

    18 days is the proper time frame. πŸ™‚

  99. I have to ask a question: remember all that money that we poured into Iraq? We are here faced with a similar situation domestically. How exactly are government agencies domestically better prepared to spend money than they were overseas?

    There is much greater oversight of domestic spending than spending in a war zone, and the intended use of the money is much more targeted.

    When they flew palettes of currency into Iraq to hand out, that was the plan – to hand out stacks of money to people whose support would be useful to the military mission. Obviously, that’s not how most government spending works.

  100. joe,

    Obviously, that’s not how most government spending works.

    Heh. I beg to differ. Handing out stacks of money to people whose support would be useful seems SOP.

  101. You have any evidence that this time is exponentially worse than any of the other recessions or depressions of the last 200+ years?

    Yes, and I just provided it. Over a million jobs lost in two months.

    If many economists can agree that we need a stimulatory effect in the down times and admit to a net-positive gain from stimulatory spending – the positive effect can be easily completely wiped out by wasteful spending on pork projects that never actually recoup the amount of their cost in economic benefit.

    It’s certainly possible that the short-term increase in economic activity could be smaller than the long-term reduction (from paying back the cost years later) from any one item, but consider a couple of points:

    First, we typically ramp up interest rates during economic booms. If our fiscal policy – paying down debt – during the next boom does this and we keep interest rates lower, we’re not talking about any real reduction in economic activity.

    Second, there is a benefit just to time-shifting. If unemployment during a downturn is lowered from 8% to 6%, and the cost is that the boom times feature a job market is characterized as “strong” rather than as “serious labor shortages,” because the nominal unemployment rate is 3% instead of 1%, we are clearly better off overall.

  102. joe,

    You are linking to an outdated CBO report that looked at only a portion of an older version of the stimulus bill.

    Actually, I’m linking to an article which discusses some of the metrics of how the CBO does business.

    There is much greater oversight of domestic spending than spending in a war zone…

    I’m sorry, but how much money does the government simply lose every year domestically? Vast swaths of the federal government’s spending simply cannot be accounted for; something which is the subject of an embarrassing expose from time to time. And that’s just under regular, normal circumstances. That is the reality of government spending, whether it is done domestically or overseas.

    52.2% to 48.8% actually. Far below 70%.

  103. i always thought depressions were impossible with the FED watching over.

    A deregulated financial sector that allows 1800s (or 1929)-style cascades of failures will put you in a depression no matter what the Fed does with interest rates.

    Anyway, I’m not much of a monetarist. I’ve made actual arguments, you know, if you’d care to address those, as opposed to the ones National Review told you the joe in your head just gotta be making.

  104. joe did successfully call the recession about 12 months in advance. Of course, he said we were already in it. πŸ™‚

    Heh. I wish. I didn’t “call it” until half a year into the recession.

    But your quip raises a good point; how many of the people running around like Kevin Bacon at the end of Animal House (“All is well! All is well!”) and insisting that this is just an ordinary recession were arguing that there was no recession during Q4 2007, and Qs 1, 2, and 3 2008?

  105. Yes, and I just provided it. Over a million jobs lost in two months.

    So is that the worse job loss rate in the last 200 years? Because we are no where near 70s unemployment or 30s unemployment numbers yet.

    I dont see the emergency. 1M jobs is about .3% of the population (larger chunk of the working population obviously). About 1% of the number of households.

    Huge, but not emergency huge.

  106. Heh. I wish. I didn’t “call it” until half a year into the recession.

    You called it at least 6 months early. Im ignoring NEBR bullshit definition of course. Last January, I know for sure you had called it but I dont think that was your first call.

  107. arguing that there was no recession during Q4 2007, and Qs 1, 2, and 3 2008?

    They would be right for 75% of those quarters. πŸ™‚

  108. joe,

    First, we typically ramp up interest rates during economic booms.

    Apparently you’ve never heard of inflation targeting. That’s not what we typically do any more, and for good reason.

    As for time-shifting, can you provide us with some econometric data, analysis, etc. which actually illustrates this? Because to that sounds like the sort of “fine tuning” which the macroeconomic consensus of the early 1970s was unable to accomplish.

  109. Im ignoring NEBR bullshit definition of course.

    Of course you are. We must accept the government’s unemployment numbers, despite knowing they’ve changed their methodology dramatically since the 70s, but you, rob, get to decide when we’re in a recession. And in an astounding coincidence, each of those methods happens to help make your point! Wow!

    I don’t think I stated definitively that we were in a recession until the summer of 08, though I might be remembering wrong.

  110. Seward,

    Because to that sounds like the sort of “fine tuning” which the macroeconomic consensus of the early 1970s was unable to accomplish.

    It also sounds like the cycle killing that joe denies. There are some people that really think that we can “manage” our way to consistent 2% growth now and forever, instead of boom-bust cycles. They are wrong.

  111. Seward,

    That’s not what we typically do any more, and for good reason.

    Really? The Fed didn’t raise interest rates during the mid-to-late 1990s? You sure about that?

    Cuz I’m going to go link to a chart of interest rates now and prove you wrong.

    As for time-shifting, can you provide us with some econometric data, analysis, etc. which actually illustrates this? Illustrates what? How can econometric data illustrate a conceptual point?

  112. robc,

    Well, more to the point, the argument over whether we or were not in a recession (I never called it either way) illustrates why fiscal policy is so useless, particularly as some sort of fine tuning instrument.

  113. Seward,

    Fed rates since 2000:

    http://www.moneycafe.com/library/fedfunds.htm

    Note the correlation with the performance of the economy.

  114. We must accept the government’s unemployment numbers

    Ive never accepted the government’s bullshit unemployment numbers either. Or their debt numbers. I use both at times as best available, but I dont trust them at all.

    And in an astounding coincidence, each of those methods happens to help make your point!

    Wrong. See above.

    Also, NBER isnt government, they are just some random-ass think tank.

  115. Longer term:

    http://en.wikipedia.org/wiki/Federal_funds_rate

    I think making arguments based on the assumption that I don’t know what I’m talking about is an awesome idea, and doesn’t ever turn out badly.

  116. joe,

    I don’t think I stated definitively that we were in a recession until the summer of 08, though I might be remembering wrong.

    You are. Early last year I offered you a bet about whether or not we would actually be in a recession by end of 2008 (standard 2 negative quarters definition). Loser couldnt post in Venezuela threads in 2009. You didnt take me up on it, but I offered it based on your claim we were already there.

  117. joe,

    Really? The Fed didn’t raise interest rates during the mid-to-late 1990s? You sure about that?

    The Fed doesn’t “ramp up” interest rates; no central bank does business like that any more. Look up inflation targeting. You might learn something.

    How can econometric data illustrate a conceptual point?

    By putting some skin on the concept? Logically the concept doesn’t make much sense because it seems unlikely that the government can really anything like except by mistake, but perhaps there is some empirical data in favor of it.

  118. joe,

    I never claimed that they didn’t increase interest rates. Indeed, by using the term inflation targeting I readily admit that they do so. Have you never even heard this term before? Because the argument you are making, well, makes it sound like that is the case.

  119. Well, more to the point, the argument over whether we or were not in a recession (I never called it either way) illustrates why fiscal policy is so useless

    I don’t think it does. I don’t think there’s a serious case to be made.

    All through 2008, we had the unemployment-filing numbers, we had the housing starts, we had all sorts of economic measures that pointed to a recession.

  120. robc,

    There are some people that really think that we can “manage” our way to consistent 2% growth now and forever, instead of boom-bust cycles.

    That’s largely because they have a 19th century physics model of the economy. They look at the economy as if it were made up of relatively static billiards balls smacking into one another.

  121. You are. Early last year I offered you a bet about whether or not we would actually be in a recession by end of 2008 (standard 2 negative quarters definition). Loser couldnt post in Venezuela threads in 2009. You didnt take me up on it, but I offered it based on your claim we were already there.

    I remember that now. You’re right, I did call the recession just about at the time it began.

    There goes my excessive humility again, getting the better of me. Seriously, my humility is, like, superhuman. I need to stop doing that, and just acknowledge that I am, indeed, teh awesome.

  122. It’s generally best to ignore people who think every question has the same answer, whose policies don’t change in response to vastly different circumstances.

    and you see what a polite response to joe gets you? I do that as an experiment every now and then to test his sincerity when he complains about how he is treated. Just another failure on his part. So is his attempt at a counter argument that punched not a single hole in the solid, logical foundation I laid out for all those who are serious and non partisan in their desire to end the current crises. You can safely ignore joe and not doubt you are doing so at your intellectual peril.

  123. I know what inflation targeting is, Seward. I just didn’t get that you were objecting to my use of “ramping up” to mean “raise.”

    OK, “the Fed raises interest rates during economic booms.” Better?

    There are some people that really think that we can “manage” our way to consistent 2% growth now and forever, instead of boom-bust cycles.

    BTW, I’d just like to repeat that I am not one of these people, and only support getting all Keynesian on the economy’s ass because we are facing a depression. As I said, I think that we should run deficits during ordinary recessions (like 1991 and 2001) only large enough to avoid service cuts, and to help people who are really suffering – welfare state, not cycle-busting.

    You people (YOU PEOPLE!!!) always accuse me of never changing my mind, but I’ve actually come to see a lot of wisdom in the anti-monetarist argument that the Fed should have less discretion with interest rates, and keep them a lot steadier than they have been.

  124. robc,

    I’m sort of a melding of Hayekian and Schumpeterian thought myself; I don’t really take issue with true efforts of the government to relieve poverty, but when it starts mucking around in the real economy, trying to pick winners and losers, that can basically be a killing stroke for a capitalist economy.

    Then again, we can always take comfort from Macauley:

    It has often been found that profuse expenditure, heavy taxation, absurd commercial restriction, corrupt tribunals, disastrous wars, seditions, persecutions, conflagrations, inundations, have not been able to destroy capital so fast as the exertions of private citizens have been able to create it.

  125. You people (YOU PEOPLE!!!) always accuse me of never changing my mind, but I’ve actually come to see a lot of wisdom in the anti-monetarist argument that the Fed should have less discretion with interest rates, and keep them a lot steadier than they have been.

    Now if we can get you to take the next step that the Fed shouldnt even exist.

    One of your party’s heroes was absolutely right about national banks. Lets go all Andy Jackson on the Feds again!

  126. corrrectablelunchables,

    Shall I call the Waaaaaaaaaaambulance now?

    BTW, I guess you missed the two longest paragraphs in my response – you know the substantive replies I made to your Austrian arguments? Here, I’ll post them again for you.

    This is also a ridiculous statement: A cut in spending would put more money in the hands of the private sector to do as needed as the money spent on day to day operations crowds out the monies that would otherwise be used by the private sector. As if there is no idled capacity during a recession or depression. As if there isn’t a skyrocketing unemployment rate. As if the people and equipment who’d be put to work are currently bombarded with offers for work.

    For it to be otherwise you would have to assume that the monies being spent in the public sector are being done so more efficiently than the private. No, you’d just need to be aware that the money isn’t being spent by the private sector, that unemployment is high, and that there is a great deal of idled economic capacity.

    So, just to keep score, it is YOU, not I, who responded to substantive points with a personal attack.

    You should really knock that off. Plenty of other people have managed to both acknowledge and respond to my substantive arguments; why can’t you?

  127. joe, if the FED’s job as bank regulator is to avoid depressions (flatten cycle) and we enter a depression, is this not a failure of the FED? You say it was deregulation, but the FED is still there as the regulator. I don’t remember the FED speaking up about deregulation under its watch while it was happening.

  128. Now if we can get you to take the next step that the Fed shouldnt even exist.

    Perhaps the libertarian movement would be larger if you didn’t dispose of your offspring every time you emptied the tub.

    πŸ˜‰

  129. joe,

    Because the Fed doesn’t simply ramp up the interest rate to “cool down” (my term) the economy. That’s what it used to do, and it was very problematic. When you use terms like “ramp up” it sounds like ideas that died a good death thirty years ago.

  130. No, you’d just need to be aware that the money isn’t being spent by the private sector

    Not true. The money the government is borrowing to spend would be spent anyway. Using a very loose term of spending here to include investment. The Chinese and Saudis arent sticking in under their mattress if we dont borrow it.

  131. Perhaps the libertarian movement

    As I pointed out, getting rid of the Fed is an old school democratic party idea. If the Dems would become the Party of Jefferson/Jackson again (getting rid of the worst of both obviously) I would join.

  132. Perhaps the libertarian movement would be larger if you didn’t dispose of your offspring every time you emptied the tub.

    Also, the Fed isnt my offspring.

  133. joe, if the FED’s job as bank regulator is to avoid depressions (flatten cycle) and we enter a depression, is this not a failure of the FED? No, because the Fed (not all caps. It’s not an acronym) is neither all-powerful nor in possession of a monopoly on regulation.

    I certainly blame the Federal Reserve for its overly-aggressive monetarist policies after the stock market collapse in 2001, and for its stubbornness in refusing to regulate, and for Greenspan talking up tax cuts instead of debt repayment, and for Greenspan talking up ARMs, and…hey, you know what, fuck the Fed.

    Where was I? Oh, yeah, but the primary culprits for the deregulation of the financial sector were the executive and legislative branches, particularly the White House, the SEC, and Congress. This was a purposeful policy decision they made, to assume that the Market Will Regulate Itself, and the Fed was far from the leading actor on that front.

  134. Market Will Regulate Itself

    It did. Now people are whining about that.

  135. As if there is no idled capacity during a recession or depression. As if there isn’t a skyrocketing unemployment rate. As if the people and equipment who’d be put to work are currently bombarded with offers for work.

    You argument rest on the proposition that the burden of government doesn’t way into the decision making processes of employers, that is false.

    So, just to keep score, it is YOU, not I, who responded to substantive points with a personal attack.

    Hardly. You could use a conscience if you are not able to see what you did, and I quoted to point out to you.

  136. robc,

    The money the government is borrowing to spend would be spent anyway. Using a very loose term of spending here to include investment.

    This “very loose term” includes “spending” that doesn’t actually put our idled capacity to work; that’s the point.

    PS – it was a baby/bathwater joke. But I’m not going to insult your sense of humor, because that would be bitchy.

  137. corrrectablelunchables,

    If you wish to apologize for your misrepresentation of my response to you, I’ll consider responding.

    (I’d really rather you didn’t, though).

  138. If you wish to apologize for your misrepresentation of my response to you, I’ll consider responding.

    (I’d really rather you didn’t, though).

    I really need to get back to work, but I have to say, the chutzpah of your rhetorical bag of tricks, is to quote Joey Strummer, ‘simply unbelievable.’

  139. joe, if the FED (i use caps so people know its The Fed) has failed as you point out in so many ways, why would you think we would be in the same position (or worse) without it? If you adjust your position slightly and accept that the FED is actually very powerful and possibly mostly responsible, would this not bring other solutions to the table? I really don’t see it as being that far of a stretch from the position you currently hold.

    Is maybe 5-10% of your brain is thinking that the FED fucked 10 things up, couldn’t it be possible that it actually fucked 20 things up (and we won’t know till the future) and that it really isn’t doing the job it was created to do and we should rethink it?

  140. replies I made to your Austrian arguments?

    BTW, the recipe I propose doesn’t follow from an Austrian model. They would have some objections to cutting taxes without getting rid of the debt burden.

  141. Here are my rhetorical tricks. They’re vicious but effective in crushing your opposition.

  142. adrian,

    joe, if the FED (i use caps so people know its The Fed) has failed as you point out in so many ways, why would you think we would be in the same position (or worse) without it? Because it did a pretty good job for the fifty or so years before that. It was the Volcker Fed that beat inflation, for instance.

    Now, please everyone, let’s all stop talking about economic policy. Someone who won’t post under a recognizable handle wishes to hold forth on how terrible I am. I’m afraid that these back-and-forths we’ve been having about different ideas will have to go on the back burner, because it’s ever so important for us to talk about how I refuse to have honest back-and-forths about ideas.

  143. it was a baby/bathwater joke

    I got it. I was just pointing out that Im okay with throwing out someone else’s baby.

  144. This “very loose term” includes “spending” that doesn’t actually put our idled capacity to work; that’s the point.

    Sure it does. Now, the idle may have to move to Hong Kong or Riyadh, but that spending will put it to work.

  145. Now, please everyone, let’s all stop talking about economic policy. Someone who won’t post under a recognizable handle wishes to hold forth on how terrible I am. I’m afraid that these back-and-forths we’ve been having about different ideas will have to go on the back burner, because it’s ever so important for us to talk about how I refuse to have honest back-and-forths about ideas.

    If you find that you are being beaten, you can create a diversion-that is, you can suddenly begin to talk of something else, as though it had a bearing on the matter in dispute. This may be done without presumption that the diversion has some general bearing on the matter.

  146. Because it did a pretty good job for the fifty or so years before that. It was the Volcker Fed that beat inflation, for instance.

    So I think now our disagreement is just one of measurement. Its perfectly logical to not want to change something that you think is doing a pretty good job, as well as it is perfectly logical for me to want to change something that i think is not doing a good job.

    now the question is, how can we set up measurements to determine good vs bad. Is it inflation, buying power, # of recessions, # of depressions? Is there a goal that the FED is actually shooting for (besides price stability and unemployment)?

  147. that last one was me to joe.

  148. I like #28:

    28. When the audience consists of individuals (or a person) who are not experts on a subject, you make an invalid objection to your opponent who seems to be defeated in the eyes of the audience. This strategy is particularly effective if your objection makes your opponent look ridiculous or if the audience laughs. If your opponent must make a long, winded and complicated explanation to correct you, the audience will not be disposed to listen to him.

    We see this around here, but it’s also very, very common in political debates.

  149. Oh, look, now they guy who won’t respond to what I wrote is crowing about winning something. Yawn.

    Anyway, it’s pretty funny that he 1) changed the subject from economic policy to me, then 2) posted something about people changing the subject when they’re losing.

    What could that mean?

  150. Now, the idle may have to move to Hong Kong or Riyadh, but that spending will put it to work.

    So in other words, robc, it doesn’t put our idled capacity to work. That is, it doesn’t stimulate our economy.

    And what does “the idle may have moved to Hong Kong” mean? We still have the unemployed workers, the close factories, and all of the other unused inputs, sitting around, not producing things of value.

  151. I stopped posting after i was told to get my own handle. Isn’t this my own handle?

  152. Robc – have you ever taken anything beyond econ 101?

  153. As I pointed out, getting rid of the Fed is an old school democratic party idea. If the Dems would become the Party of Jefferson/Jackson again

    ???

    What is it that’s appealing about Jackson? Is it the genocide, or the willful violation of the Constitution?

  154. joe @ 1:04
    And you’re right, I misremembered the results of the poll of economists – it was about 53-46 in favor of maintaining or raising the minimum wage.

    joe @ 1:20
    I remember that now. You’re right, I did call the recession just about at the time it began.

    joe @ 1:29
    I think making arguments based on the assumption that I don’t know what I’m talking about is an awesome idea, and doesn’t ever turn out badly.

  155. Robc – have you ever taken anything beyond econ 101?

    Oh, come on. He’s making perfectly good, informed arguments. He just has a certain point of view.

    It’s not like he’s Gil Martin here.

  156. This just in: joe’s memory not perfect.

  157. I can’t remember shit. I blame the Internet, because I used to have a great memory.

  158. joe,

    So in other words, robc, it doesn’t put our idled capacity to work. That is, it doesn’t stimulate our economy.

    Im not a xenophobe. Hong Kong and Riyadh are part of MY economy. Mass isnt. But fuck those assholes. πŸ™‚

    I mean really, are you going to go all USA! USA! on me here? When the jobs are here, Mexicans move here. When the jobs are in Hong Kong, we move there.

    And what does “the idle may have moved to Hong Kong” mean? We still have the unemployed workers, the close factories, and all of the other unused inputs, sitting around, not producing things of value.

    It means the idle people, materials, assets etc, get shipped to HK if that is where the money is being spent. They will be producing things of value, just there instead of, for example, Detroit.

  159. have you ever taken anything beyond econ 101?

    I went to a real school, we used 4 digit class numbers.

  160. What is it that’s appealing about Jackson?

    Killing the Bank.
    Paying off the debt.
    and
    Ummm….yeah, i guess that is about it.

  161. Im not a xenophobe.

    Me neither. I was responding to a specific point about idled capacity in the United States. It’s all well and good that the Chinese and Saudis can find other places to invest their money than US bonds, but it really has nothing to do with what we were talking about.

    It means the idle people, materials, assets etc, get shipped to HK if that is where the money is being spent.

    You don’t actually believe this do you? That unemployed American workers all move to Hong Kong?

    Further, you don’t actually believe it would be a GOOD thing for every downturn to result in a massive exodus of labor and equipment that will no longer be available when the economy turns around, do you?

  162. joe,

    You don’t actually believe this do you? That unemployed American workers all move to Hong Kong?

    I once worked in Switzerland. It was my best offer straight out of college. All? no. If it makes sense financially and etc? Why not? Mexicans cross borders for jobs all the time. Why shouldnt Americans?

    Further, you don’t actually believe it would be a GOOD thing for every downturn to result in a massive exodus of labor and equipment that will no longer be available when the economy turns around, do you?

    Every? Massive? No. But if it drags on you gotta do what you gotta do. I do think that people are far too unwilling to move for better jobs. Im stunned when people in Michigan-type areas (Detroit, eastern KY, etc) whine about lack of jobs in their area when other areas are hurting for employees (that isnt the case right now, but a few years ago).

    For most recessions, I think you just ride it out. For deep ones and/or depressions, moving seems like a pretty good option. How many of our ancestors came to America because this is where the jobs were?

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