Krugman: U.S. Needs Death Panels, Sales Taxes.

[stripes]

geezass christ, you doofuses still arguing about that shyster krugman, well good luck, everyones got an opinion & pretty sure they'll remain the same by the time you guys tire of your little charts & graphs...

[RiotGrip]

the government throws a trillion dollars into the economy and you brag about the gdp going up and then use it as proof it helped the economy. bfd, since government spending is part of gdp, it better go up.

Ok so if I'm reading this correctly you've just stated that it is obvious that government spending should stimulate economic growth.

[Goo For You]

geezass christ, you doofuses still arguing about that shyster krugman, well good luck, everyones got an opinion & pretty sure they'll remain the same by the time you guys tire of your little charts & graphs...

Tell us something we don't know.

[Goo For You]

the government throws a trillion dollars into the economy and you brag about the gdp going up and then use it as proof it helped the economy. bfd, since government spending is part of gdp, it better go up.

So now it's GDP that's bothering you? Are there any type of metrics you consider reliable?

It's hard trying to convince you when you won't give us a single hint on how it can be done.



EDIT: And give me that estimate of your reasonableness. It shall be my prize for all this trouble.

EDIT2: Also, give us a little feedback. On a scale from 0-10, how would you rate our responses so far?

[I invented that]

government stimulus programs increase GDP: Government spending is counted in GDP, so the real challenge is not merely to increase it. The essence of a recession is a decline in business investment, as economists have argued for over 100 years. The challenge of a recovery is to get the private sector investing again. However, even that isn’t quite right because not just any old private-sector spending will do the trick: The spending has to create a sustainable pattern of resource use. Because politicians lack market information and incentives, government policies favoring one type of private-sector investment over another will simply create new patterns of malinvestment that will lead to another bust down the road. The singular focus on GDP diverts our attention from the real problem, which is not the size of the economy but how well the pieces of the economic jigsaw puzzle fit together. An unfortunate legacy of the economics of the interwar years is that measurement became the hallmark of allegedly “real” social science and Keynesianism took what could be measured and built models to match. But what’s convenient to measure is not necessarily what matters. To the degree the stimulus debate is couched in terms of boosting GDP, it allows largely meaningless aggregates to paper over the microeconomic coordination on which economic growth depends.
The advocates of stimulus also conveniently ignore the degree to which recessions before the Great Depression corrected themselves without a stimulus. Yes, those recessions could be fairly deep, though none even half as deep as the Great Depression, but they were remarkably short. Recovery came briskly and completely. That history, along with the ways intervention turned a recession into the Great Depression, gives us reason to believe that the current lagging recovery is simply the result of bad policy.

[Goo For You]

If you're going to argue by copy-pasting stuff, be sure to include a link so that I know where you're coming from. The odds are I've read whichever Austrian economist you're plagiarizing right now, and I'd like to know who it is so I know how to respond.



EDIT: Also, include a mention whether you have actually read a complete book by the author, or whether you are just copy-pasting random stuff you found by googling "gdp is incorrect". Do you have some favorite authors whose opinions you respect? If so could you name them?

[I invented that]

If you're going to argue by copy-pasting stuff, be sure to include a link so that I know where you're coming from. The odds are I've read whichever Austrian economist you're plagiarizing right now, and I'd like to know who it is so I know how to respond.



EDIT: Also, include a mention whether you have actually read a complete book by the author, or whether you are just copy-pasting random stuff you found by googling "gdp is incorrect". Do you have some favorite authors whose opinions you respect? If so could you name them?

it's from rush limbaugh's website

[RiotGrip]

government stimulus programs increase GDP: Government spending is counted in GDP, so the real challenge is not merely to increase it. The essence of a recession is a decline in business investment, as economists have argued for over 100 years. The challenge of a recovery is to get the private sector investing again. However, even that isn’t quite right because not just any old private-sector spending will do the trick: The spending has to create a sustainable pattern of resource use. Because politicians lack market information and incentives, government policies favoring one type of private-sector investment over another will simply create new patterns of malinvestment that will lead to another bust down the road. The singular focus on GDP diverts our attention from the real problem, which is not the size of the economy but how well the pieces of the economic jigsaw puzzle fit together. An unfortunate legacy of the economics of the interwar years is that measurement became the hallmark of allegedly “real” social science and Keynesianism took what could be measured and built models to match. But what’s convenient to measure is not necessarily what matters. To the degree the stimulus debate is couched in terms of boosting GDP, it allows largely meaningless aggregates to paper over the microeconomic coordination on which economic growth depends.
The advocates of stimulus also conveniently ignore the degree to which recessions before the Great Depression corrected themselves without a stimulus. Yes, those recessions could be fairly deep, though none even half as deep as the Great Depression, but they were remarkably short. Recovery came briskly and completely. That history, along with the ways intervention turned a recession into the Great Depression, gives us reason to believe that the current lagging recovery is simply the result of bad policy.

http://www.fee.org/the_freeman/detai...#axzz2KXp66zXS

You should credit Mr. Horowitz for his opinions.

[I invented that]

http://www.fee.org/the_freeman/detai...#axzz2KXp66zXS

You should credit Mr. Horowitz for his opinions.

and that makes what difference.

[I invented that]

here's another good one.

http://www.fee.org/the_freeman/detai...#axzz2KX5tG6Ee

[RiotGrip]

Although I'm not an economist, the biggest flaw I see in Mr. Horowitz's article is the fact that he makes no mention of the housing market. The great recession is basically the only time since the great depression that the housing market took such a deep and nationwide hit. Housing is where most of the middle class has their wealth--cut that and everything else goes to hell. The stimulus did almost nothing to really revive the housing market or bail out underwater home owners and it is just starting to come back. However despite complete criticism from the right, the stock market is near its all time high again.

[RiotGrip]

and that makes what difference.

Well the first line was either paraphrased or an actual though of yours, so you intentionally tried to make seem like you knew something. The rest was verbatim because I searched the last paragraph.

[I invented that]

despite complete criticism from the right, the stock market is near its all time high again.

maybe that's because the government is forcing interest rates to an artificially low level which severely limits investment options.

[RiotGrip]

maybe that's because the government is forcing interest rates to an artificially low level which severely limits investment options.

keeping interest rates artificially low was a big reason the housing bubble formed in the first place. They are keeping rates low now to encourage borrowing and spending in business and the private sector. How do low rates limit investment options on anything other than bonds?

[HeinousMark]

Tar Baby

Tar Baby comes from an "Uncle Remus" story, in which a fox (Br'er Fox) makes a baby made of tar in a plan to trap Br'er Rabbit. Br'er Rabbit duly comes along and says "Hi" to the Tar Baby, and then is annoyed when it refuses to be polite. In an effort to teach it manners Br'er Rabbit takes a poke at it and gets first stuck and then completely ensnared.

The phrase is now used as a colorful(!) way of saying that a discussion is pointless, although an alternative lesson is that when someone is rude, or ignores you, perhaps, after making due effort, you should ignore them.

[I invented that]

keeping interest rates artificially low was a big reason the housing bubble formed in the first place. They are keeping rates low now to encourage borrowing and spending in business and the private sector. How do low rates limit investment options on anything other than bonds?

i don't think it was the low interest rates as much as the no money down and the relaxed qualifications for borrowing that caused the bubble. low interest rates rule out savings accounts and cd's, real estate is not appreciating. what's left, stocks. if you had a ton of debt and you had the option to control the interest rate on that debt you wouldn't opt for a rate as close to 0 as possible?

[RiotGrip]

i don't think it was the low interest rates as much as the no money down and the relaxed qualifications for borrowing that caused the bubble. low interest rates rule out savings accounts and cd's, real estate is not appreciating. what's left, stocks. if you had a ton of debt and you had the option to control the interest rate on that debt you wouldn't opt for a rate as close to 0 as possible?

Well relaxed and predatory lending practices were certainly the other side of the housing bubble, but if rates were higher prices wouldn't have skyrocketed as much and low end buyers would have been less likely to try to buy a home. But CDs and moneymarkets have had shit rates since around 2001-2002. A lot of investors are going towards precious metals, commodities and futures, instead of the stock markets so there are other options. The low rates argument for propping up the stock market is based on nothing other than a right wing talking point (damn you love them)

[Avery]

The low rates argument for propping up the stock market is based on nothing other than a right wing talking point (damn you love them)

Straight from the horse's mouth:

Federal Reserve Bank of Chicago President Charles Evans: “The investment climate seems to be one where people are increasingly understanding that very low interest rates on super safe assets are going to be around for a while. And if they’re worried by that they need to take on more risk - and taking on that more risk will help get the economy growing.”

Take on more risk=stocks.

[Goo For You]

http://www.fee.org/the_freeman/detai...#axzz2KXp66zXS

You should credit Mr. Horowitz for his opinions.

Ah, now I see where you're coming from. Steven Horwitz writes on two blogs that I read...

Fuck it, why don't I just debunk the whole damn piece?

"First, let’s admit the problem: We cannot conduct experiments in economics. The argument over the stimulus is a battle of counterfactuals. Obama’s supporters argue that without the stimulus things would have been much worse, while the critics will respond that the stimulus made things worse than they would have been without it. Because in both cases the comparison is to something that did not happen, there’s no way to settle that debate based on “the facts.”"

Firstly, economics is all about conducting experiments. In macroeconomics creating laboratory conditions is extremely difficult, but in some cases it is possible (like when comparing Jamaica and Barbados), and in others we settle for the next best thing: comparing and analyzing all types of empirical evidence.

Secondly, macroeconomic debates are settled based on facts: the models and ways of thinking that give us useful information and useful predictions are kept, and those that do not are discarded. This is of course a long and dirty process, and those who want to nitpick about some element of it can readily do so.

Thirdly, the Austrian business cycle model -- the one Steven bases most of his writings on -- was discarded for this very reason somewhere around the 1920s. Today, only a very small group of people (mostly outside of academia) continue to be interested in talking about it.

Here is a link to a thread from last year where I went through several ways in which uneducated people who follow these people tend to be misguided.

"The closest thing we have, and it’s far from ideal but important nonetheless, is the famous chart that accompanied the administration’s case for the stimulus in late 2008. The chart shows the Obama team’s predictions of, first, the unemployment rate over several years if the stimulus passed and, second, of the notably higher rate if it did not pass. The updated chart superimposes the actual unemployment rate over that period–a rate quite a bit higher than the administration’s prediction of what would have happened without the stimulus. Again, that chart is helpful but not definitive."

Yes, the crisis was worse than everyone expected. Let's not pretend that if the prediction in that graph had held up, it would've changed Steven's worldview. Why? Because his worldview (or at least one formulation of it, which he pulls out whenever it's convenient) is explicit about rejecting the use of empirical evidence altogether (in other words it conveniently shuns every attempt to reject it based on empirical evidence, even though 99.9999% of educated people consider this type of falsifiability an important criterion for a theory to be considered scientific).

"Shrinking GDP

Another point that defenders of the stimulus raise is that since GDP in the fall of 2008 was shrinking 9 percent on an annual basis–which is Great Depression territory–the stimulus should be credited with at least stopping that decline: GDP recovered shortly after the spending started. The problems here are multiple."

After this paragraph he starts making wild assertions about the effects of various events and policies during the Great Depression, based on the aforementioned theory that was discarded in the 1920s.

Considering the level of understanding I invented that has demonstrated throughout our discussion, I don't think he will benefit much from a technical point-to-point rebuttal. Therefore, I'll just cut to the chase:

The crux of Horwitz's argument is this thing called "malinvestment".

Firstly, while this concept is central to everything he talks about, he refuses to define it in any way that would allow us to measure it, or to make predictions about how much of it might occur under different types of policy regimes.

(This is of course problematic for all kinds of reasons, which you can surely imagine.)

Secondly, behind a veil of fancy-sounding technobabble, he is making a very simple assertion: Fed and government action produce these "malinvestments", and that's the end of the story.

(Nothing we can do about it, except get rid of the Fed and the government.)

Here's an example from his article:

"Declining Investment

Second, of course government stimulus programs increase GDP: Government spending is counted in GDP, so the real challenge is not merely to increase it. The essence of a recession is a decline in business investment, as economists have argued for over 100 years. The challenge of a recovery is to get the private sector investing again. However, even that isn’t quite right because not just any old private-sector spending will do the trick: The spending has to create a sustainable pattern of resource use. Because politicians lack market information and incentives, government policies favoring one type of private-sector investment over another will simply create new patterns of malinvestment that will lead to another bust down the road."

As you can see, he's just asserting this stuff. No proof, no evidence. Just the implications of a few simplistic theories from a hundred years ago.

And all this happens inevitably. Unquantifiably, but inevitably.

What does a malinvestment look like? No one really knows.

But easy money supposedly creates it...

This of course raises a myriad of questions -- none of which Horwitz can answer properly.

Would Amazon (a company created under easy money) have been considered a malinvestment if tight money had caused its investors to pull out before it became profitable? Presumably.

But wait a minute -- that means 1) tight money would have been the culprit, and 2) there was a way for Amazon to avoid becoming a malinvestment. In other words, it was not inevitable!

Maybe the economy's a bit too complex for us to be basing our analyses on the simplistic and fatalistic assumption that "malinvestments just happen"? Especially when we are not allowed to measure their scale or scope.

[I invented that]

A lot of investors are going towards precious metals, commodities and futures, instead of the stock markets so there are other options.

they're not investors, they're gamblers.