Tea Party

"Epistemic Closure" at The New Yorker?

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How much do you want to bet that their median reader (let alone writer) is richer than ours?

Many people are excited about Ryan Lizza's New Yorker profile of Michele Bachmann, but while procrastinating before diving into the 9,000-word monster, I came across something of note in the same issue of the magazine (yes, that's the cover on the right). Namely, a startling (and startlingly familiar) unanimity of opinion when it comes to economic policy. To wit:

John Cassidy, in the lead comment:

A political system that responded rationally to the country's problems would be concentrating on creating jobs. Washington is moving in the opposite direction: toward austerity and job cuts. […]

[T]he downgrade should not be allowed to distract attention from the unemployment crisis. What is needed, and what the system appears unable to deliver, is short-term action on jobs and credible long-term deficit reduction. About the best that can be said of the debt-ceiling agreement is that it doesn't entail major spending cuts for this year or next. […]

A substantive jobs bill is what's called for, and the White House should send one to Congress as soon as possible after it returns from the summer recess.

Good morning, grumpy pants!

What sort of policies might make a real dent in unemployment? Providing subsidies to businesses that hire new workers is one. Extending extra tax cuts to firms that build new factories and offices is another. More radical ideas include investing in infrastructure projects, importing a version of the job-sharing scheme that Germany has used, and launching a national community-service program. Most of these things would involve the federal government's borrowing and spending more money, but that, of course, is what governments are supposed to do in an economic downturn. […]

The real barrier to a meaningful jobs program is not the markets or the ratings agencies but the G.O.P.

Crowds not looking too wise, eh J-Sur?

James Surowiecki, in his "Financial Page" column:

Even though the spending cuts are backloaded, so that the major ones are still more than a year away, they will likely hit precisely the kind of public spending—on infrastructure, basic research, and defense—from which corporate America reaps great, if often unacknowledged, benefits. More important, the debt-ceiling fight made clear that, even as the economy struggles to avoid recession, no help can be expected from Washington. President Obama may be talking about the need to create jobs, but, with the advocates of austerity in charge, it's hard to see where support for any new government initiatives is going to come from. Indeed, it's possible that Republicans will block the extension of unemployment-insurance benefits and of the current payroll-tax cut. That would deliver a significant hit to the economy next year. And the austerity advocates will also be emboldened in their attacks on the Federal Reserve, which they argue has been overly loose in its monetary policy (when in fact it's been too tight). The economy needs strong doses of both fiscal and monetary policy. The debt deal makes it more likely that we'll get neither.

Move ahead!

Ed "Slut" Schultz, MSNBC host, in a lunch-counter/regular-guy advertisement between the above two pieces:

We don't have a tax problem, we have a revenue problem. We've told American workers they're not valuable anymore, that it's better to do it overseas than it is right here. That's wrong. We need to reinvest in people, reinvest in manufacturing. That's how we're going to turn our economy around.

I put that last bit in for a laff, though the glove does fit.

I don't open up The New Yorker to agree with its economics, and I'm sure the feeling would be mutual. But what's striking here is the absence of any engagement with the critique that we've already been dosing the economy with fiscal and monetary stimulus, we've already been pushing a "jobs, jobs, jobs, and jobs" agenda from Washington, and after three full years of this approach (which itself came after an eight-year federal spending binge whose multiplier effect can be scientifically calculated as bupkus), we have…the lowest labor-force participation since 1983.

I understand the counter-arguments, on those occasions when people stir themselves to make them–bailout economics saved us from an unimaginable financial meltdown, the stimulus needed to be several times larger, the Great Credit Unwind is greater and unwindier than we thought. That's why it's important to, you know, engage those counter-arguments.

But what we've largely seen on both the left and the great do-something center these past several days is not a willingness to persuade a skeptical nation, nor to grapple with the many inconvenient real-world after-effects of bailouts and stimuli, but rather a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms. To do this in one breath, then in the next condemn the Tea Party tendency as "ideological," strikes me at minimum as being a little lacking on the self-awareness side.

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  1. Fitting the most famous thing about the The New Yorker are the cartoons…

    1. and they all suck.

      1. This cartoon has to be on top of the list for “Most Racist New Yorkers Cartoon Ever.”

        Only white guys in the lifeboat. All the people on the sinking ship are made to look black.

        And a question: Shouldn’t they have put a jug-eared mulatto visibly in the pilothouse of the sinking liner for some sense of accuracy in their parallel to the US economy? And an oompa-loompa in a crows-nest with a KY button on?

        I wish I could draw.

        1. That’s racist.

        2. The ironic thing about that cartoon is that, during the early stages of the Titanic disaster, anyone who wanted to get on a lifeboat could have gotten on one. So the cartoon seems to be saying that rich fatcats are the only ones paying attention to the fact that the friggin ship is sinking.

          1. So the cartoon seems to be saying that rich fatcats are the only ones paying attention to the fact that the friggin ship is sinking.

            There is a reason they’re rich, after all.

        3. Surely, at least two of them are disguised Jewish bankers. Even more racist.

      2. IT used to be a lot better. They were always sort of pretentious and directed at rich people who think they are really smart. Then (I think when Tina Brown took over) the covers started to be all lefty political.

        1. My family has been New Yorker subscribers since before I was born, so I’ve had decades of experience with it, and your take is pretty much correct. It was always left-wing, but mostly fairly nonpolitical, until about the Tina Brown era. Then when GWB took office, they really went off the rails; for a while, you were pretty well guaranteed that the first paragraph of “real text” (that is, not the letters or movie listings and such) would mention GWB.

          The strange thing to me is that the “Financial Page” they’ve been running for a while is actually pretty well-written and sensible, at least until the last paragraph when it usually goes off the rails and asserts that whatever reasonable thing it may have just stated, liberal orthodoxy is correct. It’s kind of like “A is true, therefore B; also C is true, therefore D; B and D are true, therefore E; therefore we conclude PURPLE MONKEY TABLECLOTH ASTRINGENT QUADRANGLE FWHAAAAARGHptththbbbb.” Really, the whole thing now largely exists to reassure its readership of how right they are.

          1. PURPLE MONKEY

            Racist.

    2. Especially when they plagiarize Tom Wilson.

    3. The pig should say, “My wife is a slut”.

      1. Now that’s a complaint.

        1. Matt Welch has Ziggy bed sheets.

  2. Let’s see.
    If we use the government to put money into the economy, after first removing that money from the economy and skimming some off the top, it will have a multiplier effect.
    Yeah, that’s it!

    1. You fool. The multiplier comes from the investment in infrastructure like dams, bridges, roads, and dykes.

      1. You left out the part about all the brand new choo-choo trains, zooming in and out of all those long, dark tunnels across the nation, Rachel!

        Trains! TUNNELS!

        1. AIIIIIIIIIEEEEEEEEEEEEEEEEE — !!!

          1. So…that’s what a Maddow orgasm sounds like…I’m going to puke now.

            1. No one knows what a Maddow orgasm sounds like, not even Rachel.

      2. Dog Parks.

        1. Cowboy poetry.

          1. Pink, supple young congressional pages.

            1. They are ending the page system after 200 years.

        2. Turtle tunnels.

          1. I LIKE TURTLES

            1. And they like you, too!

      3. and dykes

        OK, but enough about you.

      4. Rachel Maddow’s “Lean Forward” MSNBC ad in The Atlantic:

        “WE DIDN’T PUT A MAN ON THE MOON BECAUSE SOME COMPANY THOUGHT THEY MIGHT BE ABLE TO MAKE A PROFIT DOING IT. It takes vision to involve the common good of the American people without regard for profit. If you’re charting a course for this country and your big idea is, “NO WE CAN’T”, then I don’t want you leading the country.”

        It’s a pretty sad commentary on the effectiveness of the US government that Mr. Maddow had to go back 40 years to find a significant positive accomplishment. What’s really sad is that Mr. Maddow cannot understand the difference between the argument “No we can’t” and “No, we should not” engage in any particular unprofitable endeavor. Sensible conservatives and libertarians make the former argument only when it involves first principles of nature and economics. E.g., no, Congress can’t repeal the laws of thermodynamics, and no, government can’t raise taxes (aka, “confiscate property” or, euphemistically, “raise revenues”) without adverse consequences.

        But, I’ll give this MSNBC ad campaign this: it doesn’t make any pretense of MSNBC’s being “fair and balanced”.

        1. Countless times I have heard liberals going on and on about how we shouldn’t be spending money on space exploration when we have problems to fix here at home. But now it’s an example of how great the government is?

          1. What party was in the White House when space exploration was a waste of money?
            What party was in the White House when there were war protests?
            What party was in the White House when liberals decried deficit spending?

            1. Blow up the Moon? We’re earthlings, let’s blow up earth things!

        2. “…accomplishment. What’s really sad is that Mr. Maddow cannot understand….”
          LOL! But really, Mr. Maddow should modernize his haircut – he looks like one of Herman’s Hermits.

          I would dispute that going to the moon was positive, as no subterranium civilization of buxom blondes who adore fat, ugly, middle aged bureacrats was discovered…

          1. What do you have against Herman’s Hermits?

        3. The moon landing was 98% math and engineering. It wasn’t some pruuf that government works better than the market, it was merely throwing billions at an engineering problem. Yes there was a lot of innovation, but that innovation was done by individuals working at various companies under contract, NOT BY POLITICIANS.

        4. “WE DIDN’T PUT A MAN ON THE MOON BECAUSE SOME COMPANY THOUGHT THEY MIGHT BE ABLE TO MAKE A PROFIT DOING IT”
          No, we put a manon the moon becuase we wanted to scare the living sh*t out of anyone who might, even for a brief moment, think of posing us any threat. It was our way of telling the worldthat our missles can hit you anywhere anytime.

        5. “WE DIDN’T PUT A MAN ON THE MOON BECAUSE SOME COMPANY THOUGHT THEY MIGHT BE ABLE TO MAKE A PROFIT DOING IT.

          Umm, does Maddow actually think all that space equipment and research was developed at cost?

        6. Maddow has to cite the Apollo program? Hah, that’s funny. Because cool as it was (going to Moon via riding a burning skyscraper is just fucking cool at childish level…it just fucking is) the Moon program was a giant ‘My American dick is waaay bigger than your tiny Commie prick.’

          Yup. Strategic pissing contest. If she it buys into all that rhetorical Kennedy shine about why we did it, look how much peeps gave a shit after we had indeed, proved how massive the American phallus truly was.

          No wonder Maddow doesn’t get it, few are so alien to a cock as this Maddow creature.

      5. Seems to me, based on results, the multiplier is less than 1, i.e., government stimulus spending results in less economic activity and fewer jobs.

        I can see Maddow’s vision now, a dyke does “performance art” on the Hoover dam bridge, where she inserts an Obanana into one of her orifices, and funded by the government. That may be stimulating to some I suppose.

      6. I can’t believe I have to explain the simple concept of the multiplier effect effect. See the government proposes an infra structure project like a dam. The the engineers (jobs) draw up plans, that require that lawyers (jobs) take people’s land by eminent domain. Then scientists (jobs) do an environmental study that finds that dozens if not thousands of very rare swamp amoeba will die. Where upon PETA (people for the Ethical Treatment of Amoeba) enters the picture and hires more lawyers (jobs) who file an injunction so the landowners can’t even use their land and then they go on unemployment. And we all know that unemployment compensation creates JOBS. SO even before the infrastructure project starts, and we have to begin consuming natural resources (which are not limitless you know), loads money is spent and circulating. Right?

      7. Dykes!!!! That’s the first I’ve ever heard about dykes curing “depresion” Where can I get one? NO! I WANT TWO!!! That way they can keep each other amused when I’m at work. Not that Madow pig though…..she’s gross. Seriously though, do you think I can get Obama to help me pay for this. Talk about STIMULUS!

      8. Also, some multiplier comes from fags.
        You know we sometimes need a smoke.

    2. By jove, I think you’ve got it!

  3. a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms.

    “PRESENT!”

    1. Can we add No Spoofs to the no troll Thursday rules?

  4. How much do you want to bet that their median reader (let alone writer) is richer than ours?

    According to one of his recent columns, a Jaguar XJ6 is Cassidy’s “current heap”. I’m still on the fence about whether the man is an actual writer for the New Yorker or one of the most cleverly conceived parodies I’ve ever seen.

    http://www.newyorker.com/onlin…..humer.html

    1. I’m sure he’s all for saving union jobs, too. Its like that around here in Santa Monica…everyone applauds Obama’s bailout of say, GM. Then gets in their 5-Series and drives away, giving dirty looks to the poor Mexican gardener arriving in his Crown Vic.

  5. Few things are more psychotically irrational than the meme that government has any substantive ability to “create jobs.”

    1. Beyond paper pushing that is. The State can produce a lot of those.

    2. People know what they see.
      They see government spending money, so obviously that should result in economic activity which will create jobs.
      What they don’t see is the dollars invested into bonds not being invested into businesses that create jobs or deposited into banks that loan money to business that create jobs.
      They do not see the portion of those dollars invested in bonds burned to pay government workers to do work that creates nothing of value.

      It is rational to base your beliefs on what you see and ignore what is unseen.

      1. It is rational to base your beliefs on what you see and ignore what is unseen.

        We prefer the term “reality-based”, Monsieur Bastiat.

        1. It is rational to base your beliefs on what you see and ignore what is unseen.

          This is why I live in PowerPoint. While riding my Gulfstream V, bitches.

  6. not a willingness to persuade a skeptical nation

    Very good point Matt.

    I’ve spent a bit of energy here trying to get libertarians to understand that during a recession there is no such thing as “job killing government spending” (the phrase is pure idiocy from a macro perspective). When unemployment is high and aggregate demand is low, deficits must be made larger to ward off collapse. The best way to do that is tax cuts – these plans the Democrats you quoted above are putting forward (targeted tax breaks to those companies who do X, Y or Z) are completely retarded, but perfectly predictable.

    Once Americans understand that every dollar added to deficit is a dollar of net financial assets injected into the private sector (and every dollar in surplus a dollar removed), they’ll be less hostile to growing deficits in times of recession or high-unemployment. Of course, libertarians and conservatives sort of understand this when they say that we shouldn’t raise taxes in a a bad economy – they just don’t fully understand why.

    1. during a recession there is no such thing as “job killing government spending”

      Draco, I see what you’re saying, but the issue I have with this is the reality that we (the US) NEVER DON’T GROW THE DEFICIT (basically during my lifetime).

      Therefore, spending in a “recession” – to me – is no different than spending “any other time” – it’s all deficit spending, and therefore “job killing” due to the ultimate impact on markets, etc. etc. etc. without getting into it too deeply.

      So I get what you’re saying, but I consider it “job” killing when I look at how my bidness (and many, many, many…) others are responding to it – by not doing hiring we’d otherwise do. True story….therefore, “job killing”…

      1. Exactly. I completely agree with you. You have to act counter-cyclically, including once the boom begins. But when the rebound comes, we refuse to do that. I concede that. We need to do better.

        1. Given that “we” never, EVER “do better”, do you not think that this undermines your premise?

          1. “Damn it, we forgot to insert the cooling rods in the reactor again. Another melt down. Let’s just chuck this whole nuclear energy idea, and go back to burning coal. It’ll never run out.”

            We’ll do better when people understand how our system really works. Hint: Ron Paul doesn’t understand it (or doesn’t want it to be true, possibly, even if he does understand it).

            1. It’s not the “every bit of government spending” that’s the big issue here. What is, is the amount of money the government takes away from it’s citizens, spends 20% in administration (a conservative estimate), and recycles into rigid programs that are considerably less adaptable to individual needs than programs run by the private sector are.

              Case in point, ask a local paving contractor how much less he has to bid on a private paving job vs a public works one. Then ask him how big a difference exists in compliance costs for the two projects.

              Virtually all government projects that could be carried out in a private fashion are suck holes that drain the economy and stifle economic growth. To dispute this is akin to disputing that the sun rises in the east.

              1. But, but … if we just elect the right people and cut out the waste, fraud, and abuse, it will all get better. That why we elected Obama, and if it weren’t for George Bush and the evil Republicans thwarting his every move, we could make progress. That’s why we’re called progressives.

              2. @sloopyinca

                In almost every comment here I’ve stated that government shouldn’t be taking money away from its citizens. I completely agree with you there.

                Government is wasteful and inefficient compared with private industry. No argument there. But with 20% unemployment, a “pave the roads” program is better than nothing.

                Cut taxes. Cut regulation. Increase deficit in the short run. Jobs. Recovery.

                BTW, it’s so much nicer to respond to someone who disagrees politely. As opposed to hurling insults.

                1. Once Americans understand that every dollar added to deficit is a dollar of net financial assets injected into the private sector

                  If you take it in terms of a tax cut, then sure, that dollar now floats in private sector.

                  But you’ve got to compute the interest on the deficit dollar, because now there’s not one dollar but two. One of which is a loan.

                  A deficit is like any other loan, you don’t know the result until the transaction is closed, and what net result you get ‘injected’ into the private sector, subtracted over time from costs of Uncle Mao’s favor come due.

              3. To dispute this is akin to disputing that the sun rises in the east.

                Well, I wouldn’t dare dispute that! You win!

            2. “Damn it, we forgot to insert the cooling rods in the reactor again. Another melt down. Let’s just chuck this whole nuclear energy idea, and go back to burning coal. It’ll never run out.”

              More like “Damn it, we left the foxes in charge of the henhouse and they ate all the chickens again. Another fiasco. We need more foxes.”

              At some point, you have to acknowledge that the failures aren’t due to insufficient knowledge, they are due to fundamentally flawed premises. People who derive their power from their ability to distribute spoils don’t want to lessen the pool from which they draw. To them, increased spending at all times is a feature, not a bug.

              1. @Night Elf Mohawk

                I hear you Mohawk. It may be that the combination of representative democracy and central bank issuing fiat money is just doomed to fail. But neither of those two things is likely to change anytime soon in this country – so we have to be educated in order to make the right decisions. And then we have to make the right decisions.

                1. It may be that the combination of representative democracy and central bank issuing fiat money is just doomed to fail. But neither of those two things is likely to change anytime soon in this country

                  If we have to give up one or the other, it’s an easy decision. At least for me.

            3. We’ll do better when people understand how our system really works.

              When people understand how our system “really works”, they will reject it. Which is exactly what we are seeing.

              1. Some people have seen how our system works and they are robbing us blind.

        2. We need to do better.

          We won’t.

          Now what?

    2. You continue to be an idiot. How completely not charming. But please, continue to spew your nonsense for our amusement.

      1. I’ll refer to your post as “Shorter Almanian”, if that’s OK with you…

        1. Fine with me, Al.

          1. Is this Judge Elihu Smails quote intentional or not?

            I can only read it in his voice now.

            1. Here, keep it fair.

              *hands wad of cash to referee*

              Oh no, I couldn’t.

      2. I’m an idiot for opposing Obama and the Democrats raising taxes in a recession?

        Please, expand on your claim. I’m intrigued to hear how I’m wrong about that.

        1. I don’t think anybody disagrees with that part. It’s the defecit spending part we question.

          1. The idiot wants me to explain his idiocy. How…cute?

            1. No need. T just did it perfectly.

          2. If you decrease taxes (and therefore revenues), and do nothing else, you increase the deficit. So, I guess you are for increasing the deficit. That’s my point. Increasing the deficit puts more money into peoples’ hands. That’s also my point. You can’t have it both ways (“I hate deficits, I love tax cuts.”)

            1. If you decrease taxes (and therefore revenues)…

              When you say “decrease taxes” do you mean “decrease marginal rates?”

              You can’t have it both ways (“I hate deficits, I love tax cuts.”)

              Why not? Can’t I love lower marginal rates with a broader base and fewer market-distorting tax incentives so as to lessen the distorting, lessen the dead-weight loss of compliance, and generate the same or more revenue through economic growth and hate deficits?

              1. Clearly I was referring to “changes to the tax code that result in reduced revenues.” In that sense, being for “tax cuts” (i.e. revenue cuts) makes you in favor of deficit increases, all other things held constant.

                I concur with you about the dead weight loss inherent in our multiple tax systems.

                1. all other things held constant.

                  Don’t be a jerk.

              2. You can’t have it both ways (“I hate deficits, I love tax cuts.”)

                Sure you can. Two words “Spending” and “Cuts”.

            2. “Increasing the deficit puts more money into peoples’ hands. ”

              And whose hands did that borrowed money come out of?

            3. Draco|8.11.11 @ 12:15PM|#
              If you decrease taxes (and therefore revenues),
              —————————–
              So revenues have never increased after marginal rate tax cuts? We’ve always had lower revenues after marginal rate tax cuts? You sure?

    3. “I’ve spent a bit of energy here trying to get libertarians to understand that during a recession there is no such thing as “job killing government spending””

      You certainly have.
      How about a dose of “up” really equals “down”; that should get the same results.

      1. “I’ve spent a bit of energy here trying to get libertarians to understand that during a recession there is no such thing as “job killing government spending””

        What I understand is that government creates nothing – not jobs, not wealth, not anything.

        All it does is redistibute wealth that has already been created by somebody else. Everything it does is nothing more than forced transfer payments. And it is physicaly impossible that any benefit to the tranferees could ever outweigh the detriment to the transferors.

        1. What I understand is that government creates nothing – not jobs, not wealth, not anything.

          All it does is redistibute wealth that has already been created by somebody else. Everything it does is nothing more than forced transfer payments. And it is physicaly impossible that any benefit to the tranferees could ever outweigh the detriment to the transferors.

          Unsupported positive assertions.
          You need to do some work to prove those.

          1. “You need to do some work to prove those.”

            Not on your say so.

            1. Thank you.
              That was the response I was looking for – ya lazy fool.

              1. You’re quite welcome you worthless piece of shit.

          2. here you go

            http://www.economics.harvard.e…..e_Debt.pdf

            1. V. Concluding Remarks
              The sharp run-up in public sector debt will likely prove one of the most enduring legacies
              of the 2007-2009 financial crises in the United States and elsewhere. We examine the
              experience of forty four countries spanning up to two centuries of data on central government
              debt, inflation and growth. Our main finding is that across both advanced countries and
              emerging markets, high debt/GDP levels (90 percent and above) are associated with notably
              lower growth outcomes. In addition, for emerging markets, there appears to be a more stringent
              23
              threshold for total external debt/GDP (60 percent), that is also associated with adverse outcomes
              for growth. Seldom do countries simply “grow” their way out of deep debt burdens.
              Why are there thresholds in debt, and why 90 percent? This is an important question that
              merits further research, but we would speculate that the phenomenon is closely linked to logic
              underlying our earlier analysis of “debt intolerance” in Reinhart, Rogoff, and Savastano (2003).
              As we argued in that paper, debt thresholds are importantly country-specific and as such the four
              broad debt groupings presented here merit further sensitivity analysis. A general result of our
              “debt intolerance” analysis, however, highlights that as debt levels rise towards historical limits,
              risk premia begin to rise sharply, facing highly indebted governments with difficult tradeoffs.
              Even countries that are committed to fully repaying their debts are forced to dramatically tighten
              fiscal policy in order to appear credible to investors and thereby reduce risk premia. The link
              between indebtedness and the level and volatility of sovereign risk premia is an obvious topic
              ripe for revisiting in light of the more comprehensive cross-country data on government debt.
              Of course, there are other vulnerabilities associated with debt buildups that depend on the
              composition of the debt itself. As Reinhart and Rogoff (2009b, ch. 4) emphasize and numerous
              models suggest, countries that choose to rely excessively on short term borrowing to fund
              growing debt levels are particularly vulnerable to crises in confidence that can provoke very
              sudden and “unexpected” financial crises. Similar statements could be made about foreign
              versus domestic debt, as discussed. At the very minimum, this would suggest that traditional debt
              management issues should be at the forefront of public policy concerns.
              Finally, we note that even aside from high and rising levels of public debt, many
              advanced countries, particularly in Europe, are presently saddled with extraordinarily high levels
              24
              of total external debt, debt issued abroad by both the government and private entities. In the case
              Europe, the advanced country average exceeds 200 percent external debt to GDP. Although we
              do not have the long-dated time series needed to calculate advanced country external debt
              thresholds as we do for emerging markets, current high external debt burdens would also seem to
              be an important vulnerability to monitor.

    4. You don’t have any children, do you?

      1. Completely irrelevant, but I actually do have children.

        What, you’re going to hit me with “how can you leave this debt to your children?” nonsense? I’ve already debunked that here at least once.

    5. Deficits aren’t stimulative when the monetary authority acts last, and acts to counteract them.

    6. I’ve spent a bit of energy here trying to get libertarians to understand

      You brave, wonderful little soldier, you.

    7. Once Americans understand that every dollar added to deficit is a dollar of net financial assets injected into the private sector

      Every dollar added to the deficit is a dollar invested in bonds that could have been invested in something that produces value.

      Before that dollar is put back into the economy, a portion of it is burned to pay the government workers who produce nothing of value.

      The end result is a net loss as a reduced amount of money is returned to the economy based upon political considerations instead of potential to produce value.

      1. THIS

        To put it in highfalutin’ econommix terms that Draco might understand, there is an opportunity cost to taking money out of the private sector by selling bonds.

        Every dollar added to the deficit is taken out of the private sector before it is injected back into the private sector. It’s like drinking de-caf coffee & taking a NO-DOZ.

        1. It’s more like drinking coffee and then pissing into the pot.

        2. Joshua, treasury bonds issuance is a tool with two main purposes: managing interest rates, and managing aggregate demand. You dampen aggregate demand by removing cash from the economy. Levying taxes destroys cash, dampening aggregate demand. With bonds it’s more complex, since you are removing a large sum of cash initially (in exchange for the bond), but then returning interest back into the private sector. No one said this was simple.

          1. It is up to the millions of actors in the economy to reallocate resources based upon price signals, and then the economy will get humming again until the next bubble bursts.
            Government interference in this process by trying to prop up overvalued home prices, create incentives to allocate resources to politically correct industries, and control interest rates, will only slow if not completely disrupt the market from healing itself.

            You are correct in saying it is not simple.
            It is so incredibly complex that it cannot be managed from the outside.
            The best way to let the market heal is to leave it alone.

          2. Joshua, treasury bonds issuance is a tool with two main purposes: managing interest rates, and managing aggregate demand.

            While those may (or may not) be side-effects, the purpose of issuing treasury bonds is to raise money for the government to spend without going to the bother of taxing people.

    8. Its true that when I’m doing well, earning money and enjoying a healthy standard of living, my goal should be to squirrel away as much money as possible so that when I stop earning money (or are severely reduced) I can continue to survive through deficit spending my stockpiled cash and carry a manageable debt load. I should also try and reduce my cost of living temporarily if I am unsure how long I will have to rside in such a fashion.

      But, if I spent like a drunken sailor, incurred massive amounts of debt during the good times, spending more money when I lose employee is just rediculous.

      If the US had a manageable amount of debt (say 10% of the GDP), what you’re saying might make sense, but we’re rapidly approaching Japan levels of debt (200% of GDP) with no end in sight. The time for stimulous is over and if we’re going to survive, the only way to do that is accept that job creation (which is inefficient anyway and merely bandaids a cut to the bone) is an impossible task for our current government.

      The only thing the US government should be worried about now is preserving what little respect the world has for our sensibility and bringing about changes to balance the budget and staunch the hemorraging debt.

      1. The key to the argument I’m making is the difference between what an individual citizen or firm can do, and what a sovereign issuer of fiat currency with a central bank can do.

        It’s just a bad analogy in this case – but the problem with the Tea Party is that they’ve largely accepted the analogy. “We’ve maxed out our credit card. Now you are asking us to spend more???” False analogy.

        1. The government can pay all its bills with worthless inflated money.

          Innovation!

        2. listen, you may believe that the government is like a star trek replicator that can create energy/products/etc out of thin air, but its not, so something has to give. either the government prints money and redistributes wealth by devaluing the money some people have so others can have it (basically a tax on stagnant money) or it can pretend its money is still good by issuing bonds and going into further debt. But it can only do this until a certain point, at which the illusion is broken and people stop buying its bonds. That’s where we’re at and why the government can’t keep creating debt.

        3. A sovereign issur of fiat currency cannot create actual wealth out of thin air any more than an individual can.

          All it can do by printing more money is devalue the currency as a store of value of whatever amount of real wealth does exist.

    9. Even if you were right (you’re not cause at some point the government has to take money from “the economy” to pay for the money it borrowed, thus completely defeating the purpose), DC has proven over the last 80 fucking years that they have no intention of cutting that spending during the good times.

    10. Except that its well established that said deficits do not have the habit of occurring at just precisely the time that their unknown and variable lags in boosting activity will be needed. Maybe you are the one person who has a super-finely-tuned crystal ball that tells you exactly when the spending needs to be passed, enacted and reversed (oh, and a special hypnotism coin that will make everyone in the government agree to your every call on countercyclical policy). Somehow, though, I doubt it.

    11. I’ll also add that even the experts you seem enamored of have acknowledged that there is, in fact, a point where the marginal dollar of borrowing to finance the marginal dollar of government deficit spending has a greater combined effect from crowding-out and diminished confidence. So, the very same experts note that there is in fact such a thing as job killing government spending.

    12. Spending is taxing.

      The money comes from somewhere
      1.taxes
      2.inflation (a tax on money)
      3.borrowing (a tax on raising capital)

      Lowering a tax to deficit spend is just tax shifting.

  7. Inauthentic. No monocles.

    1. that was my first thought.

  8. Matt, this is today’s “Cop Shoots Dog” story, right?

    PS Thanks for taking one for the team and reading the Ode to Michele. I can’t be bothered – don’t care, tl;dr, etc. etc.

  9. I didn’t realize Surowiecki was such a Keynesian statist idiot. I thought The Wisdom of Crowds was pretty interesting but he’s been seriously downgraded, more roadz and defenze will create jobzzz!!!

    1. You’re smart, of course, and Surowiecki is the idiot. You’re educated in economics, and he’s not. Sorry to pick on you, particularly, PS, but this kind of know-nothingism goes on all the time here.

      There’s a reason huge numbers of economists agree with Surowiecki and not with you.

      You are wrong even in your example (roads and defense): the government absolutely can create government jobs building roads and policing the world. It’s easy: create the job, hire someone, pay them with the money that the government itself creates. Is that the best way to have jobs created? No. Is it better than massive unemployment and collapse in economic growth? Hell yes.

      But again, letting the private sector create the jobs is far better – tax cuts are the way forward.

      1. Oh, just keep going. Dig that moron hole. Please.

        1. Hey epi, doesnt this fall under the thursday rule?

          1. You make a very good point, thought I don’t think he’s a troll, just an idiot. But thanks for reminding me.

          2. I’ve been here intermittently. What is this “Thursday Rule” of which you speak?

            1. No feeding of trolls on thursdays.

      2. You are wrong even in your example (roads and defense): the government absolutely can create government jobs building roads and policing the world. It’s easy: create the job, hire someone, pay them with the money that the government itself creates.

        But only if you ignore the actions of the Federal Reserve. In the real world, the Fed sucks out money from the economy equal to what the fiscal stimulus creates, leaving us worse off than if we’d do nothing.

        Fiscal stimulus is pointless if the Fed is determined to counteract it. Then it’s just redirecting money to less efficient uses.

        1. How is the Fed sucking money out of the economy (right now, or any time recently)? It’s not. The monetary spigots are on, full blast. But now the fiscal policy spigots are dried up.

          1. No, the monetary spigots are not on, full blast. That claim doesn’t even make any sense, and is not an argument, because the monetary authority always could do more. There are more tools than the fed funds rate.

            At the very least, you must concede that paying interest on excess reserves is contractionary in a monetary sense. Therefore, the Fed could stop doing that.

            Similarly, you cannot claim that the fiscal policy spigots are dried up when we continue to run a deficit over $1T; that is, by definition, stimulative.

            Of course, there’s no real sense in which the “spigots” can be “on full blast.” You can always do more, or less; there is practically no conceivable bound. The important thing is to find the right level.

            Judging by inflation and other nominal measures, the money spigots are not on full blast at all. The money supply contracted significantly during the crisis (and expectations of money supply contracted before that), and the monetary response helped but was insufficient.

            People keep worrying about inflation that has not shown up yet. If you go by the GDP deflator, we’re practically at deflation.

            1. I’m talking about within the self-imposed bounds. Read the financial press, and everywhere everyone is saying “there are no more arrows in the quiver” or “the Fed is out of tools.”

              They could always find another spigot, it’s true (drop suitcases full of money here and there). But they won’t.

              I completely agree with you about the lack of inflation, and the threat of deflation.

          2. The only way logically you can claim that the “fiscal policy spigots are dried up” is by looking at the rate of change in the deficit instead of the deficit itself. But by that metric, the monetary policy spigots are dried up as well, since the Fed was doing QE and then stopped.

          3. How is the Fed sucking money out of the economy (right now, or any time recently)?

            Money invested in bonds (that’s how the government borrows, by selling bonds, right?) is not invested in something productive.
            Sure nobody forces investors to buy bonds, but once they do that money will not be invested in something else.
            It has effectively been sucked out of the economy.

            1. See above. Imagine if they raised interest rates on bonds – would you be more likely to want to buy a bond then? Hell yes. So right now, they are discouraging savings bonds, and encouraging spending. How close to zero does the bond rate need to drop before you pansies stop buying them, and move back into stocks?

              1. Imagine if the market determined interest rates instead of the central planners.

                1. It’s easy if you try.

              2. How close to zero does the bond rate need to drop before you pansies stop buying them, and move back into stocks?

                So glad that I have the geniuses in DC trying to micromanage my investment incentives and decisions. What could possibly go wrong?

      3. So you think “the multiplier” is > 1?

        1. It’s magical!

      4. I’m Facebook friends with somebody that you happened to remind me of. He’s basically a yuppie twat suffering from the most intractable lack of self-awareness I’ve ever seen and the only reason I pretend to enjoy his company is because he’s a longtime friend of someone close to me. His incessant wall posts are right on par with the crap you’re spewing, and the justification for his smarmy Keynesian evangelism is that he’s a Smart Person with a Degree in Smart People Stuff and therefore qualified to upbraid the teabagger ignoramuses for somehow roadblocking the mythical stimulus path to recovery. The most infuriating thing about him is that he also happens to be employed at a major financial institution which I won’t name (hint: four lower case letters beginning with “c”) and constantly drones on about how the bailout was such a fantastic deal for the taxpayers. I’m not sure where I’m going with this anecdote but I hope it helps you understand why it’s almost impossible to take people like you seriously.

        1. I love this whole paragraph. I think we all know people like that and now thanks to Facebook, we get to read their inane HuffPo links on a daily basis.

          Also, the most intractable lack of self-awareness is an excellent phrase.

      5. You’re smart, of course, and Surowiecki is the idiot. You’re educated in economics, and he’s not. Sorry to pick on you, particularly, PS, but this kind of know-nothingism goes on all the time here.

        But again, letting the private sector create the jobs is far better – tax cuts are the way forward.

        Interesting. You say that these educated people know better because they’re better educated. We’ll put aside for the moment that the principles they were educated in could be wrong. What about you? You disagree with most experts when it comes to tax cuts vs. taxes revenue enhancements. So does that make you a know-nothing, too? Welcome to the club, brother!

      6. Damn, Draco, three logical fallacies in one post? Appeal to authority (“Surowiecki is an economist, so he’s right”), appeal to numbers (“lots of people agree with him” – yeah, but lots of people disagree too), and false dichtomy (“we either have government jobs projects, or massive unemployment and collapse”). I do believe you’re arguing sincerely, Draco, I just don’t think you’re doing a great job of it.

  10. We need to reinvest in people, reinvest in manufacturing. That’s how we’re going to turn our economy around.

    WE?

    Fuck you, Ed, you Stalinist scumbag.

    1. Ah the manufacturing canard. How unsurprising that the Sean Hannity of TEAM BLUE–or, more clearly, the trained hairless ape of TEAM BLUE–would use it.

      1. Yeah, those manufacturing jobs – being replaced by a fucking xerox machine.
        http://www.youtube.com/watch?v=ZboxMsSz5Aw

        1. Fucking ATM’s. How do they work?

          1. Let me be clear: ATMs TUK ER JAWBS.

    2. The saddest part about Schultzie’s comment is that while increasing the nation’s industrial base would be positive for the economy (contrary to popular belief, an economy cannot be sustained by a nation of paper-pushers), there’s little incentive for major corporations to rebuild and invest here unless they can get some serious tax breaks and regulation waivers.

      Manufacturers figured out back in the 1970s that they could move operations overseas or simply shut down altogether, and there wouldn’t be a damn thing the government or the unions could do about it.

      What possible incentive would they have now to rebuild the manufacturing belt in the northeast, for example, or the aerospace industry in California? Jingoistic appeals to “patriotism” won’t do the trick.

      1. I will say that as the dollar contnues to go in the shitter, my company’s bringing more work back to the midwest that we might have done in Mexico or China before. Like, a LOT more – several thousand jobs in the last couple years.

        Now, how long that lasts? Let’s put it this way – we’re filling ALL those jobs through people made available by increased productivity….:) ZERO new hires. And if the dollar gets stronger again, well – what’s done can be undone.

        1. EEEEYYY TUKKK RRR JERRRBSSZZ!

          1. DAAAAAAAA TOOOOGGGGGGG EEEEERRRR JEEEEERRRRRRRRRRBBBZZZZZZZ

      2. So what you are saying is, that the NLRB needs to start suing companies that build new plants overseas too, not just ones that try to build new plants in icky southern states?

        Whatever happened to the NLRB/South Carolina/Boeing-plant thingamajig anyways?

        1. So what you are saying is, that the NLRB needs to start suing companies that build new plants overseas too, not just ones that try to build new plants in icky southern states?

          No, this is what I’m saying: “there’s little incentive for major corporations to rebuild and invest here unless they can get some serious tax breaks and regulation waivers.”

          It was in my original post, after all.

      3. “contrary to popular belief, an economy cannot be sustained by a nation of paper-pushers”

        sure it can.

        1. The current economy says otherwise.

  11. Matt,

    The New Yorker does not exist to engage in debate or to persuade. It exists to reassure its readers that they are correct and that everyone else is wrong.

    Of course, the real irony is the wealthy readership of the New Yorker avidly purchasing a magazine that blames wealthy people like them for the sinking of the economy, and not seeing the contradiction.

    1. I’ve spent my whole life around rich liberal hypocrites who are tone-deaf to their rich liberal hypocrisy. Welcome to my reality.

    2. “The New Yorker does not exist to engage in debate or to persuade. It exists to reassure its readers that they are correct and that everyone else is wrong.”

      The irony, it’s thick. This is true of every niche print mag in the world, including Reason, and especially Hit & Run.

      1. Thank you for agreeing that the New Yorker is a niche print mag. They pretend otherwise.

  12. Shouldn’t those guys in the lifeboat have disguised themselves as women and children?

    1. We don’t need no stinkin’ pretext – damned right the Rich White Men are in the boat. Fuck the women and drown the children – everyone for HIMself, eh wot!

      /Libertarian Cartoon

    2. Hey, we don’t need no facts disrupting the narrative.

      A quick look at the Wikipedia shows:

      Children, 2nd class – 100% saved
      Women, 2nd class – 86% saved
      Women, 3rd class – 46% saved
      Children, 3rd class – 34% saved
      Men, 1st class – 33% saved

      1. Yeah, they seem to be blissfully unaware that wealthy men such as John Jacob Astor IV went down with the ship.

        1. Eh, they probably spin it as “Back then, people had Progressive ideals! Not at all like the win-at-all-costs capitalism of today!”

          1. So, progressivism progresses backwards through time. Now it’s making sense.

            1. Yes, apparently progressivism is regressive.

      2. still a disturbing fact that only 34% of children in 3rd class were saved and that 33% of 1st class men were saved.

        1. They were lazy irish children, to drunk to hike ten flights of stairs to the ledo deck.

        2. Well, if they wanted to be saved they should have paid for 1st class!

          Seriously, though, by the time they got to the upper decks, many of the mostly empty lifeboats had already been launched.

  13. So what you’re saying is that while we are focusing on austerity and/or doing nothing, you won’t bitch about the unemployment rate or weak growth and blame it all on the do-somethingers?

    1. “So what you’re saying is that while we are focusing on austerity and/or doing nothing, you won’t bitch about the unemployment rate or weak growth and blame it all on the do-somethingers?”

      So what you’re saying is you won’t bitch about political assassinations, starvation and and mass murder by the do-somethingers?
      See how easy that is?

      1. Psssst…it’s Thursday.

    2. Plenty of people on here have acknowledged that the party’s over and that will mean significant pain, Tony.

      What’s worth bitching about is when politicians make promises about unemployment and growth rates that they can’t deliver and don’t square with basic math.

    3. are you going to repeal all the job-killing regulation and legislation? if not, accept the blame that rightfully belongs to you and yours.

  14. what the system appears unable to deliver

    !!!!!!!!!!!!!!

    Exactly.

    Stop pretending it can.

  15. The real epistemic closure is much broader than the usual lefty precincts when it comes to economic policy and JOBZ!!!

    What’s squatting on this economy like Jabba the Hut isn’t just horrible policy, its a bloated, capricious, unaccountable regulatory state.

    The reason that most businesses are reluctant to hire is driven to some degree by the enormous deadweight and risk imposed by the myriads of regulators, and the certain knowledge that it will only get worse.

    1. Well said, and clearly related to my (not very articulate) response to Draco above. Cleary what we’re doing in my bidness – we need people like a motherfucker, have for over a year, and have hired ZERO, solely due to lack of clarity on future costs due to gov’t actions/regulations/Obamacare/etc.

      Solely. Due. To. Gov’t.

      “Job Killing”

    2. What regulations, specifically, are you referring to?

      You do know this is GOP messaging, meant to translate explicitly to “Democrat in white house = uncertainty,” don’t you?

      Employment like everything else in the market is a function of supply and demand. People aren’t spending money or don’t have money to spend. Without consumer demand there is nowhere for businesses to grow and thus no ability to employ more people.

      What’s interesting about your perspective is that it seems you’d rather have millions of people sitting idle collecting government cash than doing productive work paid for by government.

      1. You do know this is GOP messaging, meant to translate explicitly to “Democrat in white house = uncertainty,” don’t you?

        So Obama wasn’t begging businesses earlier this year to begin hiring people again?

        1. If private businesses started hiring they could start a virtuous cycle of growth on their own. But as rational market agents, nobody wants to go first.

          Whatever the excuses the private sector is giving for not hiring, the fact is they’re not, so what else besides government is going to attend to the millions of people out of work?

          1. Hey genius – why don’t YOU start a company and go employ them all? You seem to have a magic wand you can wave – prove it.

            Oh, yeah…you’re just talk…

          2. We’re hiring like mad. We’d hire even more, but I work in subsea oil field equipment. No new projects in the Gulf, thanks to the .gov. We’re working on projects approved 2 and 3 years back.

            1. And Fucking Mate

          3. Whatever the excuses the private sector is giving for not hiring, the fact is they’re not, so what else besides government is going to attend to the millions of people out of work?

            Hey genius, Obama tried that and failed miserably. And the fact remains that you can’t run an economy where your debt outpaces the growth for very long. The math takes over and renders your efforts pointless, and the math doesn’t give a shit how much you or any other welfare case from the Free Shit Army cries about it.

            We’re spending 12% of GDP in debt to get 1-2% in growth. Are you really stupid enough to think that can be sustained until the economy “rebounds”? And what specific economic engines are going to pull the employment to population ratio back up to the troughs of the Dubya recession, much less the dotcom bubble?

            Face it, chump, your heroes in the government and the Fed have no more bazookas to fire.

      2. “You do know this is GOP messaging, meant to translate explicitly to “Democrat in white house = uncertainty,” don’t you?”

        You do know you’re pitching the Dem messaging translating explicitly to “We love political assassination, starvation and mass murder”
        See how easy that is, shithead?

      3. Obamacare mandates (parts in effect beginning this year), OSHA regs, new EPA regs (directly responsible for plant closure for us), CAFE (new regs), NLRA/NLRB (new interpretations unfavorable to bidness), FLSA (ditto), ERISA…that’s just off the top of my head, just in HR-related areas, and that’s just the NEW regulations in the last couple years – forget the ridiculous burden that was already there. We didn’t get into the construction mandates, state-level/local bullshit that just compounds all this…

        So, go fuck yourself, Tony. As usual, you don’t know what you’re talking about, so don’t bother…

        1. Oh yeah, that new cross-state rule from the EPA is complete bullshit. Texas is included because the EPA said it affected one monitoring point…in OHIO.

          Magically Delaware isn’t included.

          1. Texas included because their economy is doing well and making The One look bad.

      4. What regulations, specifically, are you referring to?

        Oh, there are plenty, many of long standing. The Jones Act, the Fly America Act, the Davis-Bacon Act, the trucking regulations, the FDA insistence on efficacy instead of safety (and recent banning of foods mentioning science on their labels), the National Environmental Policy Act regulations that mean that every federal construction project has multiyear Environmental Impact Statements that never actually stop or even affect the project (gov’t does what it wants) but do add time and inefficiency to the project.

        Yes, most of the worst things predate Obama, and it’s still possible to have growth in good years even with them (there is a lot of ruin in a nation.)

        But they are low-hanging fruit, along with tax reform, for actually improving the economy.

        1. Yeah it’s possible that letting industries socialize the cost of polluting or letting businesses have less liability for their workers getting cancer might loosen up the job market, but ending the EPA and such are things Republicans and the business interests who back them always call for, no matter the circumstances.

          Not surprisingly, their solution to any problem under any circumstance is the same wishlist they’ve had for decades. The underlying problem is something deeper than regulations or taxes, like weak overall demand.

          1. “Yeah it’s possible that letting industries socialize the cost of polluting or letting businesses have less liability for their workers getting cancer might loosen up the job market,”

            Why do you love mass murders and starvation, shithead?

            1. I don’t love mass murders and starvation. I just don’t think people can be trusted to run their own lives, and there is simply no reason for them to do so when there are others who know better.

              1. I just don’t think people can be trusted to run their own lives, and there is simply no reason for them to do so when there are others who know better.

                The mind reels.

          2. Fuck, I will give you the EPA on a silver platter, IF you (being as pragmatic as you are at times) can admit that there are regulations out there that stifle growth and deter businesses from hiring.

            I’m on the design end of the construction business, there is actually quite a lot of demand for design and construction services, but when people find out how much red tape and bureaucratic bullshit you have to go through to get a permit (thus increasing my fees and their costs) they balk.

            1. Sure there can be regulations (good and bad) that discourage hiring. But we very much have a buyer’s market for labor–if we reduce costs for employers won’t they just pocket the money and keep their workforce where it is? Regulations exist for reasons that are separate from economic policy (like saving lives). They should be judged on their merits, and we can deal with unemployment in the ways that are known to work rather than hoping we’ll reduce costs for employers enough to make it profitable for them to significantly increase hiring even when overall demand is still weak.

      5. “doing productive work paid for by government.”

        Do you favor forced work programs for the unemployed? At what wage level?

        Couldn’t lowering the minimum wage accomplish this at a much lower cost?

        1. No I don’t favor forced work. If you reduce wages for the sake of employing more people, wouldn’t that just come out as a wash, consumer spending-wise?

          1. “If you reduce wages for the sake of employing more people, wouldn’t that just come out as a wash, consumer spending-wise?”

            The market is not a zero-sum game, shithead.

    3. You are correct R C Dean – except it’s not the only thing holding us back. Aggregate demand is too low. (Go talk to businessmen – they aren’t hiring because they have too few customers and demand for their goods).

      The bloated regulatory state, the real “vampire squid on the face of humanity” needs to be dismantled.

      1. BZZZZZZZZZZZTTTT!!!

        We’re selling WAY above what we forecasted last year…but we’re getting ALL our productivity through OT and running people till their tongues hang out. Have had hiring reqs for over a year that we haven’t filled.

        ZERO hires, demand WAY up…it’s not lack of demand, it’s lack of clarity around where the gov’t is headed. Period.

        Yeah, that’s us – but I know we’re not the only company. All our suppliers are in the same boat – they can’t keep us supplied, we’re exceeding all their contract volumes, but they won’t hire…

        1. According to the Wall Street Journal, your company/industry is very much the exception to the rule.

          I am very happy for you. It’s just not widespread. I wish it were.

      2. Which businesses are you talking about ?

        Ever considered that businesses that have a lack of customers now should not had that many customers in the first place. Distorting the markets with easy money is not a good way of determining whether the business is viable.

      3. (Go talk to businessmen – they aren’t hiring because they have too few customers and demand for their goods

        Wrong, dude. I work in an industry that is doing great right now, saleswise. Owners and managers are still going lean and mean as much as possible. They don’t know what’s coming next, so that’s the best approach. They’re being careful not to get too close to that magical number of employees that turns them into a vassal of the state.

  16. Economics and Progressiveness don’t got together. One operates on solely feeling and emotion and the other on data (as much as possible). So when Progressives try to use economics to bolster their arguments it’s usually a disaster.

    EXTERNALITIES!!!!
    MULTIPLIER!!!!

    I WIN!!!

    1. Well, it’s not like they’re EXPERTS or anything….

    2. go, got… I won’t charge for the extra “t”

      1. Give the customer more than they ask for, hmm.

        1. You’re just in the pocket of Big “T”.

  17. “but rather a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms. To do this in one breath, then in the next condemn the Tea Party tendency as “ideological,” strikes me at minimum as being a little lacking on the self-awareness side”

    If you are on the academic or intellectual left, this position is NOT lacking in self-awareness. My academic friends consider conservatives and libertarians to be ideological. They (academics) are not ideological (in their view), they are simply correct.

  18. “How much do you want to bet that their median reader (let alone writer) is richer than ours?”

    There seems to be a different attitude about wealth among those who inherited most of their money and those who earned most of their money. Call it “lottery winner’s guilt” or whatever you want. Those who received their money from some process other than earning it often lack the understanding of wealth’s origin.

    1. Actually, if you think really wealthy people read The New Yorker, you’re mistaken. It’s for upper middle class–usually the upper upper middle class-who want to pretend that they’re the next step up. They can peruse the real estate section, can pretend that they can actually afford the more expensive properties in there (they can’t), and can read the bien pensant stories that make them feel good.

      1. SWPL. NE liberal, Ivy-league-Ed, English majors, upper-middle classers, classic Manhattan progs.

        They keep the Mother Jones mags out to impress their prole friends.

        1. Don’t get caught up in the “NE liberal Ivy League” shit. It’s actually all kinds; liberals from Texas who moved to NYC to “escape”; leftists from Montana who wanted to move somewhere “more cultured”.

          One of the hallmarks of TEAM BLUE pseudo-elitism is an abandonment of a TEAM RED family and upbringing. Never forget that their lifestyle is 99% about them and their past, and nothing else.

          1. Progressivism for many seems to be a style, not a rational belief system. Kind of like buying an Apple computer.

          2. Holy shit – this describes my mother-in-law to a ‘T’. Originally from Indiana, moved to NYC area to pursue a career in art, professor at a state university, and the only member of her entire family who is a liberal. The first time I went to Indiana with my wife to visit her family, I was shocked at how conservative they all were in contrast.

          3. This is just human nature to some degree.

            I, for one, love being a middle class nobody. I live in a shitty New England city well past its prime, and though there are some downsides of course, one of the nice things is that it, and its residents, no what it is and what they are and are comfortable with that.

            And jesus this blog eats a lot of comments. What gives? I have about a 20% success rate in posting successfully.

          4. One of the hallmarks of TEAM BLUE pseudo-elitism is an abandonment of a TEAM RED family and upbringing.

            Progressivism has largely been a “FUCK YOU DAD!” philosophy for the last 40-50 years.

    2. I have a similar theory about actors and musicians etc.

      Though its not guilt from their success so much as self-serving logic. People never assume their success was random. Rather they think their success occurred because they personally are special and superior to everyone else. And they worry about the inferior “little people” who are not blessed with such gifts so who’s only hope is wealth redistribution. Whereas someone who really had to work to succeed knows damn well anyone can do it.

      1. I would argue that actors just can’t have any sense of reality, since they get paid millions for dressing up and playing make-believe.

        1. “I would argue that actors just can’t have any sense of reality, since they get paid millions for dressing up and playing make-believe.”

          Ahh … THAT’s what is wrong with Al Gore!

          1. Take care of THIS!

  19. “A political system that responded rationally to the country’s problems would be concentrating on creating jobs. Washington is moving in the opposite direction: toward austerity…”

    It’s remarkable that the markets have continued to batter every European country, from Italy to France, and the only reprieve they get is when that country announces austerity measures…

    From Italy promising to adopt a balanced budget amendment, at one point, to France, yesterday, promising austerity measures, the one thing that assuages the markets right now is austerity…

    Do these people imagine that the economic turmoil we’re seeing happen in Europe is due to anything other than a lack of budget austerity?!

    Why did Italy’s cost of borrowing spike so high that it could no longer cover the interest rate markets were charging them to borrow to cover their deficit?

    The answer is because Italy pursued the very policies this crew is advocating!

    1. If you want to play that game, note that the markets also get reprieves when QE is announced, and fall when it’s not forthcoming.

      Of course, you can argue that the short-term reaction of the market is wrong, but it applies to the austerity measures as well.

      1. “If you want to play that game, note that the markets also get reprieves when QE is announced, and fall when it’s not forthcoming.”

        I’m not talking about any one rally at any particular point in time; I’m talking about a general rule in all the fits and starts–in every country in Europe that’s run into problems…

        I’m talking about the general trend all moving in the same direction.

        The market turmoil we’ve seen in whatever country we’re talking about? Has been about a lack of austerity. And the only countries that get a reprieve are the countries that announce austerity plans.

        The countries in Europe that have been largely unscathed by the market turmoil? Already had austerity plans in place–from Sweden to the U.K.

        To completely miss this important fact and advocate the very policies France, Italy and Spain used to drive themselves into the ditch?

        Is freakin’ noteworthy!

        P.S. Expectations of a watered down Euro is what’s driving investors to dump Euro denominated debt and buy U.S. Dollar denominated debt and Swiss Franc denominated debt…

        That may be because of what the ECB and the German government, et. al. are being forced to do–but that isn’t making any markets rally. That’s the very storm they’re trying to survive.

        1. I think it’s a difficult claim to prove, especially because countries that have to announce austerity plans are in bad situations. I dislike reasoning from this kind of uncertainty.

          The debt ceiling plan was “austerity” compared to what happened before, and it was followed by a market decline– that probably had other causes.

          Reasoning from stock market moves has to be done very carefully because of confirmation bias. I can easily compile a list of market moves that would provide at least as strong evidence that monetary loosening (including QE) is positive.

          But, I agree that fiscal stimulus is worse than useless.

          1. “I think it’s a difficult claim to prove, especially because countries that have to announce austerity plans are in bad situations.”

            I think this chart is very illuminating…

            http://www.bloomberg.com/apps/…..TPGR10:IND

            See where the Italian rate peaks at about 6.2% and then drops steeply off a cliff?

            That’s the day Berlusconi promised he would seek a balanced budget amendment to the Italian constitution–reversing course from talking about stimulus before that!

            Speaking at a hastily called news conference Friday evening in Rome, Mr. Berlusconi said the country would introduce a balanced-budget amendment in its constitution and would aim to balance its budget by 2013, instead of 2014 as announced just a couple of weeks ago.

            In an address to Parliament only two days earlier, Mr. Berlusconi had blamed market tensions on global factors and promised to spend more on public works to stir Italy’s slowing economy.

            http://online.wsj.com/article/…..84296.html

            Notice that the market–professional money managers mostly–think stimulus is a jackass! …and that austerity is the solution. When the government promises stimulus–the market mercilessly hammers them! …and when they promise austerity?

            The markets reward them!

            There is no debate in the markets about whether stimulus is necessary.

            None. Just among pundits (like at the New Yorker) and academics–people who should probably be ignored on such matters for anything but entertainment purposes anyway.

        2. “Expectations of a watered down Euro is what’s driving investors to dump Euro denominated debt and buy U.S. Dollar denominated debt and Swiss Franc denominated debt…

          That may be because of what the ECB and the German government, et. al. are being forced to do–but that isn’t making any markets rally. That’s the very storm they’re trying to survive.”

          Collateral degradation is STILL at the heart of what we’re talking about–especially with the European banks taking such big hits over the last few days…

          In 2008, we were talking about banks with mortgage backed securities on their books, which had dropped in value so badly, that all of a sudden the banks’ balance sheets looked so bad, many of them couldn’t justify the GOOD loans they already had outstanding…

          So…what happens to banks holding Euro denominated bonds on their balance sheets right now? …as the world flees Euros and flies to the U.S. Dollar?

          How many Euro denominated bonds will the ECB have to buy before France, Italy and Spain can sell bonds at rates low enough–that they can cover their outstanding debt and cover their deficits?

          The answer is that there may not be enough money in the world–if they don’t slash their deficits. Ultimately, the solution to Italy overspending–is not Italy over-borrowing to the point that the markets just won’t lend to them at reasonable interest rates anymore!

          There’s no amount of Italian bond buying the ECB can do to keep Italy’s interest rates down–if Italy doesn’t adopt budget austerity to slash its deficit to the point that buyers of Italian bonds will give them a decent rate again!

          In other words, the cause of the problems we’re seeing is a lack of budget austerity. And everybody from the ECB, which insisted on austerity from Italy before it would agree to buy Italian bonds, to Berlusconi, who promised to seek a balanced budget amendment to the Italian constitution, to the market, which refuses to lend Italy any more money at reasonable interest rates, to the freaking ratings agencies!

          …everybody agrees on two things: 1) the problem is a lack of budget austerity on the part of Spain, Italy, et. al. and 2) The solution is budget austerity on the part of Spain, Italy, et. al.!

          The only people who disagree on those two points? Are idiot pundits at the New Yorker and elsewhere!

          1. Serious question here: I’ve been reading a few editorials in Barron’s of late. Obviously a publication geared toward capitalism. Their editorial pages, and a cover story about a month back, have been very consistent – and vociferous – in arguing against the Greek austerity package. They’ve argued, instead, for a “haircut” on Greek bonds.

            I would have thought austerity would be the way to go too. Any thoughts on why a market-oriented pub would be opposing austerity as something that “doesn’t work”?

            As I noted above, not a sarcastic enquiry; I’m having trouble understanding their point.

            1. “I would have thought austerity would be the way to go too. Any thoughts on why a market-oriented pub would be opposing austerity as something that “doesn’t work”?

              I usually read those myself, but I missed that one, and I’d have to read it to be sure…so I’d have to speculate.

              Greek bond holders did end up taking a haircut by the way…

              I suspect they may have thought the damage to Greece’s credit rating was already done, and that the money would be better spent on maintaining basic services in Greece.

              …but it may have been more about limiting further bailouts to Greece also. Why throw good money after bad? If Greece has already slashed its budget as much as it can be slashed–beyond what the Greek people will stand for–then why push them even farther down in the hole, when their credit rating is already as low as can be anyway?

              Especially if that money is being directed away from productive use elsewhere in the Euro zone.

              1. OK, this makes some sense to my economics-challenged brain.

                Links:

                http://online.barrons.com/arti…..36842.html

                and this was the cover story

                http://online.barrons.com/arti…..94116.html

                there are more but can only post two here.

    2. …”France, yesterday, promising austerity measures,”…

      In the interest of honesty, could we please call these “reality measures”?
      The only “austerity” is folks losing part of their ability to steal from others.
      BTW, someone else on the board mentioned this first.

      1. FWIW, I think they need to cut deeper now that they don’t have a choice? Than they would have if they’d made reasonable cuts back when they had a choice.

  20. Somewhat related – I gotta find the post from Workforce mag:

    What’s the job with the LOWEST unempl rate? CEO’s (duh). What’s #2 LOWEST – HR Managers. HAHAHAHAHAHAHA! I posted it on FB and watched my leftard friends have coronaries.

    It made my heart all warm to watch the reaction…(best was “pure evil in a three-piece suit”…REALLY??? REALLY! AWESOME…)

    1. That is A+ trolling.

      1. Found it…this is priceless…the responses were SO heartwarming!

        http://www.workforce.com/secti…..ent-in.php

  21. That’s why it’s important to, you know, engage those counter-arguments.

    Thanks, but I already cut on myself for similar levels of amusement.

  22. I’m just wondering how loose fiscal & monetary policy would have to be before these people thought it was enough. I’m guessing that no matter where policies are, since they have only one pedal to press on, their solution is to press on it harder.

    1. Monetary policy isn’t loose. Right now we have the worst of both words; loose fiscal policy, and tight monetary policy that prevents the fiscal policy from having any benefits and makes it a large net negative.

  23. The bit with the cigar’s reflection becoming the stock market graph is clever enough, but why don’t any of the FAT CATZ have monocles?

  24. the government absolutely can create government jobs building roads and policing the world. It’s easy: create the job, hire someone, pay them with the money that the government itself creates.

    Magic will save us!

    YAY!

    1. pay them with the money that the government itself creates.

      IT COMES RIGHT OUT OF MY ASS! WITH SPRINKLES!!!

      1. I keep telling people that — !

        1. Sprinkles AND the soothing scent of fresh-baked cinnamon rolls!

          1. Mind if I, errr, take a closer look? [::Leans Forward::]

            1. There! Right there, goddammit! Something just ran straight UP me!

      2. I’ll make you a deal: the Fed can fill two suitcases full of $100 bills, give one to you, and one to me. Then you give me your suitcase, okay? After all, it’s just magical pixie dust, right?

        1. This is such a transparent misdirection by monetarists. Yes, giving you and I money made out of thin air will still increase our wealth as individuals, but adding money into circulation without increasing the amount of real goods and services that people are willing to trade simply reduces the buying power of each individual dollar. That makes everyone other than the 2 of us poorer, because as time moves forward, prices will reflect the increased supply of money. First principles libertarians, like myself, dissagree with this at a base level because it’s tad amount to theft. Austrians dissagree with it because when done on a large scale it causes an intitial boom, followed by a bust, and finally, should their be no more tampering, an equallibrium. Though that never actually happenes a everytime there is a bust, pols wash, rinse and repeat this process, increasing their power, reducing everyones liberty, and repeatedly bursting bubbles.

          1. Not when there’s excess capacity and high unemployment. First that excess capacity will get sopped up… only then we deal with inflation. Then we take measures to dampen aggregate demand (spending cuts, tax hikes).

            But the “austerity” folks around here would rather people suffer instead of getting back to work and having the economy get back to producing at full capacity.

            So, right concern, wrong time.

            1. “But the “austerity” folks around here would rather people suffer instead of getting back to work and having the economy get back to producing at full capacity.”

              Ooh, I fucking love this game! My turn! And evil, cold-hearted Keynesians like you would rather have our currency collapse and create social upheaval then have our economy restructure itself. You sick fuck.

            2. Not when there’s excess capacity and high unemployment.

              I would highly recommend that you stop giving your opinion on a subject which you clearly have very little command over or risk losing what little credibility you have with this community.

              There is a fixed amount of purchasing power in a community at any given time. You will simply shuffle unemployment by moving purchasing power from one sector of the economy to the other. This is why despite all of Roosevelt’s fiscal and monetary efforts unemployment lingered at 20% and didn’t fall to zero until the United States became a command economy during WWII.

              Like most Keynesians you also ignore the fact that an increase in the demand for money will only cause unemployment insofar as it causes deflation which is unexpected by entrepreneurs (the reverse of the money illusion), as it is real demand that dictates what is employed where as Rothbard pointed out five decades ago in Man, Economy, and State. If the proportion between consumption and investment remains the same there is also no reason for interest rates to shift.

              I will turn a blind eye to the fallacy of excess capacity for the moment to avoid needlessly lengthening this post. If you are referring to excess capacity in monopolistic competition microeconomic models (technically every firm is “monopolistic” and “competitive”) then suffice it to say that it can only be a short-run phenomena as the firm can adjust its capital to operate at a point where minimum average total costs are tangent with demand in the long run. This too was demonstrated in Man, Economy, and State and I will be happy to provide links if asked.

              Then we take measures to dampen aggregate demand (spending cuts, tax hikes).

              Tony is a better Keynesian than you. In the Keynesian framework raising taxes cannot lower inflation (i.e. lower national income to more closely equal national expenditure) because this taxed money will simply be spent by the federal government.

              But the “austerity” folks around here would rather people suffer instead of getting back to work and having the economy get back to producing at full capacity.

              The difference between libertarians and you is that we tend to care about production for the sake of consumption while you yearn for production qua production.

        2. http://research.stlouisfed.org/fred2/series/MULT

          To me, this chart demonstrates the end of the “credit is the lifeblood” meme. I would agree that expanding credit and money printing used to work and worked for decades.

          But like a lot of things, doing something a little and doing something a lot gives you two different outcomes (eating sufficiently and eating gluttonously).
          I can remember in my life when the average person – hell, any person, did not have a credit card. The availability of credit was good. But that always presumed that the credit was paid back.
          There is plenty of demand – there is not enough income. Because of modernaty, balancing the income and outcome can take years…but it will happen.

  25. Someone actually pays $6 for this crap?

    1. Nah. They subscribe and get it for 53% off the cover price.

  26. Everything else was laughable horseshit but that claim about LulzSec sinking the Titanic right there on the cover intrigues me.

  27. What regulations, specifically, are you referring to?

    This is apparently the new programmed response.

    How about the “Consumer Safety” lead rules, stupid?

    1. BUT TEH CHILDRUNZZ!!!11!

    2. And don’t forget the idiocy of raising minimum wage right into the teeth of a depression (and collapse in the money supply). Gee, I wonder why teenage unemployment in particular is so high?

      1. Teenage unemployment wouldn’t be high if we expanded Americorps… or better yet, made it mandatory.

  28. If the government wants more jobs, it needs to massively deregulate, including the elimination of many unfunded mandates, it needs to cut spending and constitutionally prohibit continued deficit spending, and it needs to reduce the tax burden. Do all of that, and we’ll have jobs and a boom economy in no time. Don’t do it, and this crappy economy may continue. Remember the Japan!

  29. Speaking of Manhattan and environs, did anyone else see Nightmare in the City that Never Sleeps, about NYC’s debt crisis in the early 70s? I saw it on CNBC a few days ago but it was made by BBC in 2007, according to Wikipedia. It was a very interesting program: city administrations had caved to the unions, gave them whatever they wanted, all while keeping up expensive New Deal style programs. The tax base of the city shrank, so the city had to sell more and more bonds to pay for everything, until finally one day no banks showed up to buy.

    Thank God it’s completely unthinkable that some day Washington will have a bond sale and no will show up to buy.

  30. The Tea Party is arrogant, ideological and dogmatic.

    Liberals are simply always right.

    1. …especially when we don’t legalize drugs and perpetuate wars we claim to abhore!

      1. We are right on those things too, yes.

        Like i said: liberals are simply always right. That’s a statement of fact, not ideological rigidity like with the Tea Party.

  31. Epi, for someone who was complaining about no one getting Devo refs around here, maybe you should let your mouse hover over the third picture.

    1. You know, you really should have worked something in about telling him to “try to detect” the Devo reference. But perhaps it’s not too late.

      1. Well done, John. Even though “Whip It” references are passe.

        BP, I stopped hovering over the third picture. But I like you, which is why I’m going to kill you last. It’s my freedom of choice.

        1. That’s what you want. Freedom from choice is what you got.

          John – something was going wrong…

  32. Nice response, Draco.

    Now go study up on “marginal return”.
    Paying one hundred dollars for fifty dollars’ worth of value is NOT how you lay the foundation for real organic growth in the economy.

  33. diving into the 9,000-word monster

    I don’t know… it’s that… it’s that sprawling New Yorker shit!

  34. I thought the fat guys partying down in the lifeboat were congressman….

  35. Which one of those three characters on the New Yorker cover is Obama?

  36. What sort of policies might make a real dent in unemployment? Providing subsidies to businesses that hire new workers is one.

    You know, I predicted this shit back in the 80s. I was having a discussion with someone about raising the minimum wage and the general increased cost of doing business by government fiat and the question of how far this could go came up.

    I remember the person I was talking to suggesting that at some point it would simply kill all small business, and I responded that no, as small business starts to die off, the government will start giving subsidies to small business to help cover the wages that it imposed.

    Essentially, the government drops regulatory bombs on its citizens, then flies in doctors and medics to give them bandaids.

    It never occurs to them to stop dropping the bombs.

    1. “Essentially, the government drops regulatory bombs on its citizens, then flies in doctors and medics to give them bandaids.”

      BANNED CHEMICAL LEVELS HIGH IN PREGNANT WOMEN:
      “UCSF researchers say the results, […] are probably attributed to California’s flammability standards, which led to the introduction of many new chemicals to meet the standards.”
      http://www.sfgate.com/cgi-bin/…..1KKRR6.DTL

      Predict new (feel-good) regs will lead to next level, rinse and repeat.

  37. We don’t have a tax problem, we have a revenue problem. We’ve told American workers they’re not valuable anymore, that it’s better to do it overseas than it is right here. That’s wrong. We need to reinvest in people, reinvest in manufacturing. That’s how we’re going to turn our economy around.

    Why don’t these idjuts run for president? They’ve got all the catchy soundbite policy prescriptions.

    Winning the Future! Invest in People!

  38. but rather a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms.

    This is why you’re one of my Reason favs, Matt. Keep it up.

    1. It was a thorough smackdown, yet civil (at least compared to what most of the commentariat would write.)

  39. Here’s a question for you:

    What is the likelihood of substantive tax reform, when our “leaders” keep coming up with stuff like special targeted tax credits for hiring veterans?

    1. What is the likelihood of substantive tax reform

      Somewhere in the neighborhood of drug legalization.

  40. I thought Chuck Schumer already provided the counternarrative on this: those greedy kulak wreckersRepublicans that only care about profit are intentionally sabotaging the economy and their own pocketbooks for political gain.

    http://www.huffingtonpost.com/…..87648.html

    http://tpmdc.talkingpointsmemo…..er-yes.php

  41. I used to be mildly shocked that College-educated people still had basically zero understanding of economics, I mean even the most basic and simple concepts like price theory, supply/demand curves, the time value of money, etc. I blamed high-school for failing to provide any background. I only managed to learn the stuff because the business I decided to work in required it. I figured most other people would be the same, and that all it took would be maybe 5 years in the business world to dispel the general ignorance.

    15 years later, I’m even more shocked that people i graduated college with in the mid-late 90s are *still* as bone-fucking ignorant as they were back then, and have learned absolutely zilch in the intervening years. And this is after at least 2 major market crashes/asset bubbles, and various public-issues surrounding fiscal crises, either at home or abroad.

    I mean, at this point, you really can’t blame high school anymore.

    You might blame Ryan Lizza, who knows nothing except how to be a high-level political gossip-columnist, and who was educated at Berkeley… Why should anyone expect him to make any @#*$& sense about economic issues? What he’s proposing makes perfect sense from the POV of *a politician* who needs to send a ‘message’ that they’re, you know, Doing Something… but even the politicians (maybe) know that the ‘message’ is just a ‘message’, and won’t actually do shit, and will in fact make things worse…

    This is my point = people are so fucking deluded that they believe their own bullshit. When you point out to them that they don’t have the first grip on economic reasoning, and what they’re saying *doesn’t even make sense on its own terms*… well, then they accuse YOU of being purely-political *for resorting to economic reasoning*. HOW DARE YOU START USING NUMBERS!!

    Yes, if you bring economic facts to the table… you’re simply not being fair. Its a sign of ‘Right Wing-ness’ to discuss actual facts. You’re demanding that other people consider the things from an objective point of view, which is unreasonable in a world where no one has any economic training, and everything *has* to be either the fault of Democrats or Republicans. We all know economists “got it wrong” on the past! = ergo, Economics Is Bullshit, and our collective ignorance is in fact nothing but a purifying virtue….

    God I could go on for a week.

    All I need to do is mention “unfunded liabilities” and everyone in the room rolls their eyes and looks at each other, nodding, like, “yeah, he’s *sorta republican!*”…. LIKE THAT EVEN FUCKING MATTERS!!

    As I said to one dude, “Republican, Democrat = Who Fucking Cares!? Do you understand we’re all fucked – everyone – if we don’t turn the boat around?!”

    They sigh knowingly…. poor soul… he must watch Fox news… He has been confused by his decade of economic research, and should have simply read the new yorker… then he would feel smug, and know who the Blame For Everything….

    I’m almost jealous. There is ignorant bliss in their cartoon universe.

    1. Quit watching Fox you christfag.

      Something something Rush Limbaugh.

    2. Reality is a harsh mistress. For the people you’re discussing, she’s a dominatrix.

    3. Long rant, no facts or numbers.

      1. “Long rant, no facts or numbers.”

        Short post, all mis-direction.

      2. Ah yes, numbers…

        functionally negative interest rates, roughly ~100% debt/GDP ratio for current FY2011-2012, debt payment requirements increasing *faster* than historical GDP rates, what used to be a growing workforce declining as boomers are starting to retire, real inflation increasing about 4-6% a year, purchasing power being destroyed, and 200million too many fucking idiots like you in the country who need things spoon fed to them, and then will still spit it out like the fucking retarded baby you are.

        Other than that, I’m sure more Government Spending will make shit better…

        1. Math is smug.

  42. I would have thought austerity would be the way to go too. Any thoughts on why a market-oriented pub would be opposing austerity as something that “doesn’t work”?

  43. This sounds awfully like the “debate” about climate change.

    1. This sounds like the climate debate to you? Your not thinking at all.

  44. Goddammit.

    I haven’t read a copy of Barron’s in quite a while, but hopefully what they are advocating is “punishing” investors dumb enough to buy Greek bonds without demanding an adequate risk premium.

    Much like we should not have bailed out banks who threw money at people with no realistic means of repaying it.

    1. Much like we should not have bailed out banks who threw money at people with no realistic means of repaying it.

      The means of repaying turned out to be very realistic. Obama insured that by getting elected.

  45. To all the so called Keynesians here, Keynes said government spending should decrease during good time. Since not a single one of you would ever support spending cuts under any conditions, you are violating the laws of Keynes.

    1. This has been pointed out thousands of times. A little research will show that the statists never, ever declare a time to be ‘good’. Research your local paper’s archives for articles during what everyone agrees were the ‘good years’ and you’ll find article after article about ‘budget crisis’ and ‘worst budget ever’ or ’emergency funding’.

      This is why we have the debt we have. We were never not deficit spending.

      1. Yeah Republicans do the opposite of Keynes in good times and bad. Doesn’t make him wrong. Just because Republicans don’t know how to manage an economy is no reason to punish normal people looking for work.

        1. When did Republicans do the “opposite of Keynes”? Let’s start with George W Bush, spender extraordinaire and work our way back.

          1. Keynes doesn’t mean = always deficit spend as NotSure explained above. In good times you pay down debts, either by cutting spending or raising taxes or both, in order to prepare for a downturn. When the Republicans were starting wars and passing expensive changes to entitlement programs, they should have been raising taxes to pay for them or not doing them in the first place.

            1. Yes, I’m well aware of what Keynes wrote about how to reduce deficits. And yes, Republicans failed to increase taxes to reduce deficits, but they also refused to reduce spending, which puts me right back to where we started. When haven’t we been deficit spending?

        2. “Just because Republicans don’t know how to manage an economy is no reason to punish normal people looking for work.”

          Why do you love starvation and mass murder, shithead?

        3. There is no country in the world that slashed spending when times were supposedly good, including USA. They do it when they have no other choice other than to cut back.

          1. The US did it under Clinton (he also raised taxes).

            1. Pure bullshit, there was no time where less was spending than the year before under Clinton. And no, raising taxes does not somehow magically equate to cutting spending no matter how many daft excuses you try.

              1. I’m talking about balancing the budget. How big government should be (i.e., what it should do) is a question of politics. But we have engaged in countercyclical behavior before, most notably when we ended the great depression by ignoring deficits and spending hugely.

                1. Everyone is talking about politics here. Without politics, balancing the budget could be done in seconds.

                  I know you think that paying people for doing nothing is not a political action, but some kind of clever investment, but most of your believers state it very clearly: “people before profits”. At least those people admit they do not care about economics, your belief is worse, paying losers and selling that as if it will create a prosperous society.

                  1. I prefer to keep moral finger-pointing out of discussions of fiscal and economic policy.

                    You guys are such moral busybodies you’d rather the economy stay in a rut than give a poor person something he may not have worked for. (Like in all religions, the moral requirements seem not to apply to the rich.)

                    1. Moral finger pointing, and then immediately use the “poor man” moral argument. Like I said, you think paying losers is not a moral thing, but the path to prosperity. You truly are thick.

                    2. Define losers.

                      Adam Smith warned about the fallacy of equating wealth with virtue and poverty with vice.

                    3. Adam Smith warned about the fallacy of equating wealth with virtue and poverty with vice.

                      Source, please. Adam Smith was a Calvinist and thus idolized hard work, so he would’ve viewed those who do nothing but consume and produce nothing in return (i.e. those on the dole) with contempt.

                    4. “I prefer to keep moral finger-pointing out of discussions of fiscal and economic policy.”

                      Why do you love hypocrisy, shithead?

                2. Ummmm…wasn’t that huge spending because we got into a war?

                  1. Ummmm…wasn’t that huge spending because we got into a war?

                    Yes, what’s your point?

            2. “The US did it under Clinton (he also raised taxes).”
              W

              Why do you love lying, shithead?

        4. Yeah Republicans do the opposite of Keynes in good times and bad.

          As we all know, only the Republicans have been in charge of the government since 1957.

    2. ^This. During good times, they say “expand government! we can afford it! look at all this money we’ve got!” During bad times, they say “expand government! we can’t afford not to! deficits don’t matter!”

      Heck, I always figured that’s way “progressive” means: the government gets progressively bigger no matter what.

  46. Holy freaking reality-denial batman…

    And the austerity advocates will also be emboldened in their attacks on the Federal Reserve, which they argue has been overly loose in its monetary policy (when in fact it’s been too tight)

    Did the @#($*@ not get the message from the Fed the other day?? Functionally negative interest rates until 2013?

    Even the editors are so retarded they can say ‘policy is too tight’ when in fact we’ve done nothing except POUR MONEY DOWN THE MONEY HOLE SINCE 2008, creating trillions in debt, with zero @(#*$ results..>!!!

    I mean, how much more @*#&$& “loose” can we get?

    http://www.moneycafe.com/libra…..istory.htm

    And did no one mention to him that the last 2 major asset bubble crashes we had were entirely DUE to loose monetary policy?

    Oh, I bet his column got 200 glowing comments about how the GOP is somehow stymieing the Right Thinking policy which would *totally work* if we just wished hard enough.

    1. Like the article already mentioned. People like Tony’s fall back defense is that things would have been even worse if there had been no bailout.

      1. What is spurious about that claim? Nobody is saying the stimulus policies were enough to return the country to pre-recession growth. That’s obviously the case.

        Say your dinghy is sinking. You use a bucket to remove half the water. Do you claim that removing the water is wrongheaded policy because removing half of it failed to stop the boat sinking?

        Austerity policy is what hasn’t even started to work, and we have plenty of examples right now.

        1. A stupid analogy, because the economy is not a boat and the assumption that the bailout was needed in the first place is not a fact, just the usual fear mongering from doom prophets like you.

          Here is a real fact, the biggest bailout ever in history has occurred all over the world. It failed by the as defined by those that did the bailout. A $ 50 trillion bailout would still not be enough for you.

          1. Here is a real fact, the biggest bailout ever in history has occurred all over the world. It failed by the as defined by those that did the bailout.

            This can’t be emphasized enough, even though Tony will ignore it because college students don’t like facts that intrude on their sense of self-regard.

            It wasn’t just US banks that were bailed out, it happened all over Europe. The stock market’s activity all through the spring of 2010 hinged almost solely on whether or not Greece was going to get bailed out.

            All these banks got bailed out, instead of eating it and suffering for their stupidity, and what’s the result been? A huge shit sandwich that’s devolved into riots and protests because the math quickly took over.

        2. “Say your dinghy is sinking. You use a bucket to fill it half way with water. Do you claim that adding the water is wrongheaded policy because you haven’t filled it entirely?”

          FIFY, shithead.

        3. Your analogy might hold water (pun) if you acknowledged there was a big fucking hole in the boat and was getting wider while you insist that the problem could be solved by a bigger bucket.

          We’re in deeper water than when you started bailing, yet you wont change your tune. “it’d be deeper if we weren’t bailing! We just need to bail harder!” …. uh, what about the hole? “Forget the hole, the hole is not important!”

          What’s the definition of insanity again? Oh yeah, “doing the same thing over and over again and expecting different results.”

  47. The “bupkus” link doesn’t link to anything related to a spending multiplier (despite claiming otherwise). Too bad, I was really looking forward to that.

    The main reason we don’t see a lot of links to those is because government multipliers are almost always greater than one–which really isn’t what people want to hear.

    Of course, the problem is that if private industry did those things, it would be even greater (and if nothing else, it would be voluntary–unlike tax spending).

    1. If government multipliers are almost always greater than one then what the hell happened in the Soviet Union and the other communist countries of yesteryear?

      1. Uh, they just sort of missed the sign on the multiplier.
        Hey, it happens.

      2. They were so successful that they disappeared into an economic singularity.

        1. Infinite money singularity!

          1. They took my advice about borrowing an infinite amount of money. When will the U.S. listen?

  48. Breaking news: Nancy Pelosi just appointed Rep. James “I’m the REAL Magic Negro” Clyburn to the super-duper-extra-special-nuclear-powered Congressional Committee for totally fake deficit reduction. This is America, 2011.

    1. How dare she appoint a black man to that panel? It’s not like diversity leads to better choice-making or anything.

      1. “It’s not like diversity leads to better choice-making or anything.”

        Why do you love lying, shithead?

        1. Why do you hate African-Americans?

          1. “Why do you hate African-Americans?”

            Why do you love lying and mass-murder, shithead?

          2. Prove the hate, Tony.

  49. It’s not like diversity leads to better choice-making or anything.

    To a guy who believes “all government spending is equally beneficial” this makes perfect sense.

  50. But what we’ve largely seen on both the left and the great do-something center these past several days is not a willingness to persuade a skeptical nation, nor to grapple with the many inconvenient real-world after-effects of bailouts and stimuli, but rather a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms.

    I happen to be the emperor of what you are describing.

    Excuse me, I need to go polish my Nobel Prize.

  51. There is no Tony, only Zuul.

  52. It’s not like diversity leads to better choice-making or anything.\

    Racial diversity as such doesn’t lead to better choices. Competence does. If you substitute racial identity for competence, guess what results you will get?

    1. The status quo with more racial diversity?

  53. Tony,
    Clyburn is a government worshiping idiot who happens to be of the race-baiting, race-centric, blacks are incapable of wrong variety. There are plenty of fine black citizens in this country – he is not one of them.

    1. You’re talking to a spoofer.

      And for the record, stuff it. Every single somewhat influential black Democrat has a right-wing narrative about him or her. However useful he is or isn’t as a legislator, he’s most useful as a scary black liberal punching bag for Republicans.

      1. And for the record, stuff it. Every single somewhat influential black Democrat has a right-wing narrative about him or her.

        So do the white ones.

      2. “And for the record, stuff it. Every single somewhat influential black Democrat has a right-wing narrative about him or her.”

        And for the record, eat shit. Every one of your posts is a mis-direction, a srawman, or a flat-out lie.

      3. You’re talking to a spoofer, but I believe everything the spoofer said, so fuck it.

      4. OTOH, the left has been so respectful to me. They never bring up race when criticizing me.

      5. That’s because almost every influential Democrat is a piece of shit. Black, white, yellow, or orange and black striped tiger (Wu’s that?).

    1. Nor is the US government subject to market forces driving up interest rates on US Treasury bills.

      EVEN AFTER BEING DOWNGRADED US TREASURY BILL RATES REMAIN NEAR 0%

      Why, because, any nation that issues its own currency also sets it’s own interest rates.

      True, they can set the rates to whatever number they want; but unfortunately, they can’t force investors to buy T-bills at those rates. Right now they can get away with low rates because other govts’ securities look even more risky. If we start seriously considering monetization of the debt that’s going to change.

      the deficit hawks must CHANGE THEIR REASONS FOR DEFICIT REDUCTION
      or shut up!

      they must FLIP FLOP
      or shut up!

      Yes, there is a new reason they can flip flop to.

      Inflation.

      They can start claiming the current path of deficit spending will lead to inflation.

      Fine.

      Bring it on!

      First, they need to do the research, as they haven’t even thought about this yet.

      Ever heard of Ron Paul?

      But ONLY because some day,
      if we don’t do something when the time comes
      and even though we don’t have an inflation problem now,
      and haven’t had one in a very long time,
      SOME DAY far in the future,
      inflation might go from x% to y%.

      We don’t have an inflation problem now because we haven’t monetized the debt, dunce. Just because I’ve never had a problem with my brain being splattered on the sidewalk doesn’t mean it’s a good idea for me to jump off the top of the Sears Tower.

      1. So far, so good!

  54. Since neo-Keynesians are the economic school of methodological positivism (intellectually far beyond the silly Austrians with their little axioms), and since it seems all of you are swarming Reason today, maybe you can help piece this together for me.

    1. The Obama stimulus package was in real dollars bigger than every New Deal program combined and is the greatest fiscal stimulus venture ever embarked upon in the history of the United States and perhaps the world.

    2. Federal Reserve monetary policy is the loosest it has been since the 1920’s (when the money supply doubled which prompted both an overbuild up in capital and rampant speculation in the housing and stock market) with historically low nominal interest rates and, with inflation, effectively negative real interests rates.

    Based on points one and two, we can therefore conclude that Obama has presided over the most ardently Keynesian government since at least Clement Attlee. Now let’s look at a few more points.

    3. Unemployment today is nowhere near as high as it was during even the best times of the Great Depression.

    4. Total output is higher now than it was during the Great Depression.

    So if we were for a moment to accept the highly flawed aggregate demand/aggregate supply model then we could say that the aggregate demand curve was much further to the left during the 30’s and 40’s than it is today. Since both fiscal and monetary stimulus far exceeded what supposedly dragged us out of the worst economic downturn in American history then in Keynesian terms we should’ve long ago surpassed the point where national income equals national expenditures (i.e. full resource utilization and zero involuntary unemployment) and should now be experiencing high inflation. And yet this has not happened.

    Perhaps fiscal and monetary stimulus is a zero-sum game where existing purchasing power is shuffled around in favor of the politically well-connected. Perhaps the bastard son of economics and mathematics, econometrics, cannot tell us as much about human interaction as college textbooks have led us to believe. Perhaps methodological positivism has a place in other sciences but not in economics. Perhaps after a boom prices and interest rates must align according to consumer preferences in order for meaningful production to begin. Perhaps Keynes should be swept into the dustbin of history with Marx and Malthus.

    But what do I know? I don’t have a doctorate or a Noble Prize.

    1. Complex question, but you’re comparing current stimulus spending with the New Deal, which proved inadequate–the real spending (where debt as a percentage of GDP got to around 120%) that ended the GD was WWII. In a Keynesian universe the only logical answer is that we haven’t spent nearly enough. The depressing thing is that humans are so ape-minded that we only may be able to if we’re blowing up some countries.

      1. The economy didn’t start booming until several years after the war was over, when govt spending crashed.

        1. Correct, Tulpa. Hoover cut the government’s budget by 70% and the economy expanded; Keynesians predicted a second Great Depression.

          By the way, as a physics PhD (my apologies if I’m incorrect on this account) how does it feel to know that people like Tony are aping your field’s methodology and horribly misapplying it?

          1. I’m a math PhD, but your point still does apply. Luckily I’ve developed a chewy outer crust that shields me from caring about what partisans do to my field, group, ring, or other algebraic structures.

            I think you mean Truman, not Hoover though.

            1. I think you mean Truman, not Hoover though.

              I’m no math PhD, but that one didn’t add up. Thanks for pointing that out.

            2. You’re correct, it was Truman and not Hoover who cut the federal budget so dramatically. My mistake.

    2. Perhaps fiscal and monetary stimulus is a zero-sum game where existing purchasing power is shuffled around in favor of the politically well-connected.

      This is what it all comes down to– and you had a nice post, albeit complicated. But not in a bad way.

      You’re shuffling dollars from productive sectors of the economy and moving them to unproductive sectors of the economy.

      The Obama administration (and his economic team) has implicitly admitted this. They just use flowery rhetoric to obfuscate that fact.

      When a government stimulus program is sold to its people by essentially declaring that it’s taking money from those who can “afford it” and giving it to those sectors which are underperforming (American auto manufacturing for one example) they are doing exactly that.

      Those who can “afford” a “little extra taxation” can afford it because they are part of a productive area of the economy. They’re either generating jobs through entrepeneurial activity, or employed in an area which is performing well enough to generate excess capital, ie “profit”.

      Without profit, there is no source of tax revenue, period. The only place you can extract more tax revenue is from the already profitable (ie, productive) areas of the economy.

    3. Minor addendum, but as Tulpa and Paul have pointed out, it was Truman that imposed sweeping cuts on the federal budget following WWII, not Hoover. I’m not sure how I managed to mess that one up.

  55. “What sort of policies might make a real dent in unemployment? Providing subsidies to businesses that hire new workers is one. Extending extra tax cuts to firms that build new factories and offices is another.”

    How many Lefty readers of the New Yorker nodding their heads to these suggestions realize that the author is advocating corporate welfare?

    1. Democrats are the party of corporate welfare. That debate has been officially put to bed.

      It’s not to suggest that Republican hands aren’t dirty in this respect, but it always seemed a sort of sordid back room affair when Republicans do it.

      When Democrats do it, they do it up front, in your face, and crow about ‘working families’ while wiring billions to CEOs.

  56. Taylor Conant at Economic Policy Journal has done a good job refuting Draco’s talking points.

    http://conant.economicpolicyjo…..bel/Mosler Economics

    1. I’ll try that again.

      http://goo.gl/U3HxE

      1. Thanks for the link. As the comparatively well informed commentators at the site you link make clear, however, Taylor Conant has no more refuted Mosler than he has refuted Einstein.

        But the give and take in the articles and comments will be educational to those libertarians here who are cocksure they are right about money. Of course, the give and take on Mosler’s own site is also edifying.

        Feeling revulsion towards the fiat money system, the Federal Reserve, Income Tax, etc. is not the same as saying these things don’t exist and behave in certain ways.

        My exposition of some of these ideas here is not meant to express a normative judgment on the underlying system. I’m attempting to describe reality, not approve of it.

  57. That was an entertaining piece. I’ve never spent much time here but I intend to in the future.

  58. “a series of petulant declarations of allegedly settled economic facts, accompanied by some general stomping around and a crossing of the arms. ”

    That pretty much sums up all that we hear from liberal/progressives – not just in the New Yorker. The New Yorker just has the distinction of being the spokesman for the elite smarmy, stuffy, limousine liberals who represent maybe 1% of the population. They sneer down their noses at “fly-over” country and the inbred rednecks who cling to their guns and bibles (that would be the rest of us to you don’t get the not-so-subtle put-downs). This is the province of the OBamas, Kerrys, Gores and Kennedys – the elite ruling class angry that their wisdom is not appreciated. It is, after all, “fact” is it not?

    No, it is not “fact” – it is hogwash and the time is coming to wash the hogs in anticipation of their electoral slaughter.

  59. Definition of insanity is trying the same failed policies over again and again expecting different results. Classic example of liberal insanity was proven by the first few suggestions in this article……give businesses a subsidy to hire…build infrastructure. What an absolute joke. Why on earth would any business in this environment where Barry is piling on the regulations through BarryCare, EPA and Dodd-Frank want to hire. The liberals in DC are absolutely clueless and the sooner we can get rid of them in 2012 the better this country will be…..Everything Pelosi, Reid and Barry have done needs to be repealed as soon a Perry, Boehner and Mcconnell are in charge.

  60. What would interest rates be if the Government monopoly (Federal, State, and Local) wasn’t sucking $2 Trillion a year from the pool of available job creating investment capital? 1%? T-Bills have a negative interest rate!
    There’s a reason it’s called Capitalism, it’s because Capital is what fuels the Economy.
    What would the economy look like now if the $6 Trillion that the Government monopoly has sucked from that pool of capital since the Democrats took congress in 2007 had remained in the economy?
    All Government Monopoly spending is a cost to the Economy, both as taxes and higher interest rates from Government crowding at the borrowing trough.
    Government spending can never create jobs. Capital for the economy creates jobs.

  61. The first rule of Liberalism (or Progesssivism) is that whatever the problem more government is always the solution. Of course, communism is the most government possible (to solve all the problems) but it results in the most poverty. Their arguments for more government just don’t convince anyone but those who refuse to see reality.

  62. Wasn;t a 1 trillion stimulus a jobs program? How did that work out? Unemployment is higher than it was when the stimulus was passed. Had more than 9% gone for infrastructure instead as a union payoff it might have worked. But the Dems are out of ideas.

  63. Get out of the way of business- tax/regs/NLRB. That is a jobs bill.

  64. Obama and the left have borrowed, created, and spent more money than in the history of the world. Their extreme left wing policies have failed totally and completely. So now they want more. More borrowing, more funny money, more spending, more debt. They really think that driving the nations credit rating to junk bond status will create jobs? More of the same wasted corrupt spending? The left can’t admit that their policies have failed, and they and Obama are willing to destroy the nation in a desperate attempt to show otherwise. The problem with jobs now is that nobody in their right mind will risk expanding and hiring while the most extreme left wing business hostile President is in the White House. To see real job growth we need to get rid of Obama. 2012 can’t get here soon enough!

  65. Generally I’m one with the leftists on the ECONOMICS of it all but I’m with the collumnist on the POLITICS which is to say the PEOPLE’S CONCERNS which I think left right and center are that things are changing and to an unusual extent in ways which challenge most folk’s sense of personal security. And it’s not clear that ANY faction’s do-more-of-our-approach answers would help at all.

    Perhaps less security and more inequality are inevitable but it’s not what Americans want for a future. CREDIBLE proposals to address either or preferably both of these concerns would be most welcome, regardless of the source.

  66. John Cassidy: “A political system that responded rationally to the country’s problems would be concentrating on creating jobs. Washington is moving in the opposite direction: toward austerity and job cuts.”

    Sir, at the risk of injecting some common sense into your comments, would you consider that austerity in government and taxes just might actually be what the private sector is looking forward to before starting up new job projects? Or are you locked into the idea that only government jobs are all that important?

  67. The humanoid known as “Ed Schultz” appears regressive. Is it possible that a few essential bits are missing from his chromosome strand?

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