On January 28 2012 20:35 BobTheBuilder1377 wrote: + Show Spoiler +
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
I was actually defending Ron Paul here, and in response you criticize liberals like me who "attack" and "fear" Ron Paul. You also said I was blinded by the left-right paradigm, when clearly it was YOU who were blinded by the name I choose to post with. Please slow down and apply some better reading comprehension, and if you want to support Ron Paul, please don't do it with inaccurate, biased images and youtube clips. It only makes his supporters look ignorant.
On January 29 2012 01:06 Hider wrote: On official statistics (GDP, unemployment), everything now looks fine, and one could argue that the crises has been solved. The haircut industry still keep firing people, but instead of firing 10 people each week they only fire 5 people/week because people are now spending more money again (as the government borrowed money to finance the bridge.). The machine-production secot has on the other hand began hiring people again, and is currently hiring 5 people/week.
In addition, your example is wrong. If people are being fired at a slower rate in the haircut industry because of increased demand, then we have a new equilibrium, which contradicts the assumption that the original equilibrium doesn't change.
I kinda throught this was you would think. Why should the optimal economy relationship between ppl employed in the industries change? There has been no technological changes, and people still value haircutting just as much as machine-production as they always has done. And we knew that the economy was healthy preboom. Let me elaborate on what that means: If we assume that we can either do 2 things with money: 1) Spend 2) Save.
Money saved will eventually go into investments. Some of those money will go to investment in new techonlogy, but lets assume this doesn't happen in our economy.Investments will only be made if old machines are no longer working. So the only impact of investments is to make sure that the wealth of our economy isn't decreasing (or increasing). Everything else is being spend.
However nobody borrows money to spend. Money will only be borrowed to invest in production facilltiies that replaces other production facilities. This means that the average debt/GDP ratio is (lets say) 20%. This is the ratio that is sustainable forever (giving the assumptions i prev. made).
So this sustainable debt/GDP ratio will result in the 500-500 equlibrium. However if the government used fiscal policy the eqilibrium ratio would change, but that obv. wouldn't be sustainable.
The only sustainable ratio is the 500-500. And since consumer preferences doesn't change over time, this ratio is supposed to stay the same (well almost). So its not sustainable if 900 people is working in the haircutting indsutry and 100 in the machine-production. The market it self will go towards the 500-500 ratio, and the proces (as shown in my example) will be prolonged if government gets involved.
They do not value haircutting as much as they always have. They value it more, because their demand for haircuts has increased. Is it invalid for shops to hire more staff in Christmas because demand has suddenly increased with no underlying change?
Your example bears no resemblance to a real macroeconomy, where there is no magic target of having 500 persons employed in one industry and another 500 persons in another, and then all is well. It's simply about whether people are employed or not. And without government spending more people will be unemployed.
On January 28 2012 23:51 Hider wrote: I will focus on the last part as that is where we seem to disagree.
Your example is not of a macroeconomy. If people didn't want that many haircuts, then it would be futile for government to boost demand, unless they could endlessly inject stimulus to keep demand at the level that corresponded to a $30 price.
But how this differs from the real macroeconomy is a lack of feedback loops. In a real macroeconomy a sudden collapse in value makes people less willing or less able to spend which reduces demand, which puts people out of work which reduces demand further. Then people are unemployed, standing around doing nothing, contributing nothing, and that is a waste of human capital.
This argument doesn't hold in your example, a sudden collapse in the haircutting market doesn't make people less willing to spend on other things, like buying TVs or food. Of course, if this were some alien species where all they do is haircuts, i.e. the haircut market is the entire macroeconomy, then for the reason above, government stimulus is a good idea.
I think you're mixing up microeconomics and macroeconomics.
Your hypothetical example seems to fall into the realm of micro. There is a reason why micro and macro are usually taught in separate courses at universities. There are key differences: in macro feedback loops are very important.
The failure to recognize the difference between macroeconomics and microeconomics is also the root of the completely wrong analogy whereby an indebted government is compared to a person who borrowed so much money he can't pay it back anymore. Last edit: 2012-01-28 22:38:34
I am not talking about microeconomics or macroeconomics specific. Demand/suply still affects prices in the real world. Not just in microeconomics.
I am talking about a hyphotetical situation, and I give you the chance to explain the situation using your own logic.
So from how I understand your post you feel like the difference between my example and the "real world" is the fact, that the increasing unemployment affects demand in all other sectors (not just the haircut sector). But of coruse it does that as well in the haircut sector. Its only logical that if (assuming no fiscal policy) demand is below suply, then unemployment rises and prices decrease, and demand in the rest of the world decreases.
So you can assume that prices in all industries are falling (though not as much as the haircut industry), and unemployment is rising. But remember as well that during the "haircut" boom prices in every sector rose as well above its "natural level" (though not as much as the haircut sector). Do you still think given the above scenario that fiscal policy is a good solution. Or do you disagree with the realism of the scenario (I suspect you don't think natural prices of all sectors are above its natural level during a boom).
Demand falling in the haircut market and unemployment rising in the haircut market does not cause a feedback loop whereby demand is falling in the the entire economy because of a financial crisis and unemployment is rising in entire economy, causing demand to fall further.
You cannot use the example of a haircut market and make inferences for the entire economy just by substitution. That's why there's microeconomics and macroeconomics and why they are treated differently and separately.
As I've already said, fiscal policy should not be used to boost the haircut market when the haircut market crashes, only when the entire economy crashes. The difference is in the feedback loops, which in the haircut market example is so small it is virtually nonexistent. When the economy blows up, you can't just move into a different economy, like you can when the haircut market blows up.
Because the feedback loop is virtually nonexistent in the haircut market, government must permanently increase spending to bring demand in haircuts to the pre-crash level. However, the feedback loop is highly important in the case of the entire economy, so that only a temporary increase in government spending is required to restore aggregate demand. This is the notion of a fiscal multiplier. Fiscal multipliers are not applicable in microeconomics.
Well if the haircut market actually was really big. A lot of investors had put their money into haircut saloons during the boom (just like real estate, or if thats is too insane, prob like the dot-com prices. Instead of ppl buying dot-com stocks they would buy shares in haircut saloons). So the entire economy will be affected by the crash in the haircut market.
Would you then advice fiscal spending?
Yes.
Good now we can move on .
Assume that before the boom of the haircut industry all people acted rational, and there were no investors which speculated in overvalued industries. This meant that everything was valued somewhat closely to its Net present value of future income.
Assumptions Lets assume that that there actually were only 2 industries in this country (this is just to make the example more simple. There are no trade imbalances and the economy is absolutely fine). The other industry besides haircutting is machine-production. There are 1000 people in the country and everybody is employed (preboom). Preboom 500 worked in the haircut industry and 500 in the machine-produciton industry. Assume as well that there are no technological and personal preferences over time (only exceptions is that alot of investors mistakelny throught the haircut sector would growth).
Effect of the boom and the bust During the boom the haircutting industry became more attractive for the employeed, and hence 700 people (just before the bust) worked in that sector and only 300 in the machine-production sector.
I guess you will agre with me that this isn't a healthy economy. Too many people are working in the haircut industry. We know that the amount is too many as the economy was somewhat close to equilibrium preboom (and preferences and technology hasn't changed since then).
The market realizes this mistakes, and hence people get fired from the haircut industry. Lets say each week 10 people get fired, and its somewhat hard for them to find a job in the machine-production sector, as the machine-production indsutry currently doesn't have the production facilities to hire more people.
Fiscal policy After 5 weeks the government decides to build a bridge, and to build that bridge they need 25 workers (they didn't need any specific qualifications). What could happen is that the government pays too high wages, and people in the machine-production instead of the unemployed took the job. This is obv. really bad, but lets assume that the government gets really lucky and hires only the unemployed.
On official statistics (GDP, unemployment), everything now looks fine, and one could argue that the crises has been solved. The haircut industry still keep firing people, but instead of firing 10 people each week they only fire 5 people/week because people are now spending more money again (as the government borrowed money to finance the bridge.). The machine-production secot has on the other hand began hiring people again, and is currently hiring 5 people/week.
However after 4 weeks the bridge has been built. Now 630 people are now employed in the haircut industry. 320 people are working in the macine-production sector. 50 people are currently unemployed but hoping that the government will borrow new money and decide to build a new bridge.
The effect of the fiscal policy can be split into 2 parts: 1) The direct effecet - 25 people employed building a bridge. 2) They spend more money, this slowed down the amount of people being fired from the haircut industry by 5.
What have we learned? Hence one could conclude that the fiscal policy was succesful. But I would argue thats its not. Its actually the problem that people aren't getting fired faster from the haircut industry. Becacuse as we know from the preboom phase the optimal economy has a 500-500 split. The longer it takes for the economy to go back to this 500-500, the longer the economy will require constant fiscal injections to have a low unemployment.
Your analysis is a complete non-sequitar, and says nothing about the real economy.
Here's a better example: 1000 people are employed. There is a financial crisis and 300 people get fired, leaving 700 people employed. If the government does nothing, aggregate demand falls and another 100 people will be fired, leaving 600 people employed. If the government implements stimulus, 150 people would be put to work, increasing aggregate demand which puts another 50 people to work, leaving 800 people employed.
Is 600 people employed better than 800 people employed.
THats the problem. you think in terms of aggreagte numbers. But I just made the argument that you can't use these kind of numbers. They are misleading, as you need to think in terms of terms of whether the market actually needs these kind of jobs. You could change the numbers in my example, and make the effect of fiscal spending even more dramastic, but that doesn't change the point.
If you agree with me that the industry needed that 500-500 mix (yes/no?). Then it doesn't matter if the fiscal policy makes jobs. The economy won't be healthy till we go back to that 500-500 mix (agree?).
What you don't understand is macroeconomics. And that macroeconomics is different from microeconomics.
In microeconomics, we deal with supply and demand. In macroeconomics, we deal with aggregate supply and aggregate demand.
Applying microeconomics to the macroeconomy is wrong because it doesn't take into account feedback loops.
There isn't some magic distribution of x number of jobs here, and y number of jobs there that the market needs to hit in order to be healthy. People need to be employed or else demand falls, further reducing employment, and so on. You don't see people talking about how many jobs we need in this industry and that industry, only people talking about the dismal 8.5% unemployment rate.
The alternative is sustained high unemployment, which is a waste of human potential and human capital.
Well I've been taught macroecnomics like everyone else, but that is why I am trying to proove that a lot of people doesn't udnerstand economics. You dont really to learn to understand economics through college (as I prev. got banned for saying), because you will constantly think about aggregate terms which makes as I have tried to point about, isn't relevant.
I could advice you to read some of Bob Murphy. He likes to point out the mistakes that Paul Krugman often makes.
On January 28 2012 23:51 Hider wrote: I will focus on the last part as that is where we seem to disagree.
Your example is not of a macroeconomy. If people didn't want that many haircuts, then it would be futile for government to boost demand, unless they could endlessly inject stimulus to keep demand at the level that corresponded to a $30 price.
But how this differs from the real macroeconomy is a lack of feedback loops. In a real macroeconomy a sudden collapse in value makes people less willing or less able to spend which reduces demand, which puts people out of work which reduces demand further. Then people are unemployed, standing around doing nothing, contributing nothing, and that is a waste of human capital.
This argument doesn't hold in your example, a sudden collapse in the haircutting market doesn't make people less willing to spend on other things, like buying TVs or food. Of course, if this were some alien species where all they do is haircuts, i.e. the haircut market is the entire macroeconomy, then for the reason above, government stimulus is a good idea.
I think you're mixing up microeconomics and macroeconomics.
Your hypothetical example seems to fall into the realm of micro. There is a reason why micro and macro are usually taught in separate courses at universities. There are key differences: in macro feedback loops are very important.
The failure to recognize the difference between macroeconomics and microeconomics is also the root of the completely wrong analogy whereby an indebted government is compared to a person who borrowed so much money he can't pay it back anymore. Last edit: 2012-01-28 22:38:34
I am not talking about microeconomics or macroeconomics specific. Demand/suply still affects prices in the real world. Not just in microeconomics.
I am talking about a hyphotetical situation, and I give you the chance to explain the situation using your own logic.
So from how I understand your post you feel like the difference between my example and the "real world" is the fact, that the increasing unemployment affects demand in all other sectors (not just the haircut sector). But of coruse it does that as well in the haircut sector. Its only logical that if (assuming no fiscal policy) demand is below suply, then unemployment rises and prices decrease, and demand in the rest of the world decreases.
So you can assume that prices in all industries are falling (though not as much as the haircut industry), and unemployment is rising. But remember as well that during the "haircut" boom prices in every sector rose as well above its "natural level" (though not as much as the haircut sector). Do you still think given the above scenario that fiscal policy is a good solution. Or do you disagree with the realism of the scenario (I suspect you don't think natural prices of all sectors are above its natural level during a boom).
Demand falling in the haircut market and unemployment rising in the haircut market does not cause a feedback loop whereby demand is falling in the the entire economy because of a financial crisis and unemployment is rising in entire economy, causing demand to fall further.
You cannot use the example of a haircut market and make inferences for the entire economy just by substitution. That's why there's microeconomics and macroeconomics and why they are treated differently and separately.
As I've already said, fiscal policy should not be used to boost the haircut market when the haircut market crashes, only when the entire economy crashes. The difference is in the feedback loops, which in the haircut market example is so small it is virtually nonexistent. When the economy blows up, you can't just move into a different economy, like you can when the haircut market blows up.
Because the feedback loop is virtually nonexistent in the haircut market, government must permanently increase spending to bring demand in haircuts to the pre-crash level. However, the feedback loop is highly important in the case of the entire economy, so that only a temporary increase in government spending is required to restore aggregate demand. This is the notion of a fiscal multiplier. Fiscal multipliers are not applicable in microeconomics.
Well if the haircut market actually was really big. A lot of investors had put their money into haircut saloons during the boom (just like real estate, or if thats is too insane, prob like the dot-com prices. Instead of ppl buying dot-com stocks they would buy shares in haircut saloons). So the entire economy will be affected by the crash in the haircut market.
Would you then advice fiscal spending?
Yes.
Good now we can move on .
Assume that before the boom of the haircut industry all people acted rational, and there were no investors which speculated in overvalued industries. This meant that everything was valued somewhat closely to its Net present value of future income.
Assumptions Lets assume that that there actually were only 2 industries in this country (this is just to make the example more simple. There are no trade imbalances and the economy is absolutely fine). The other industry besides haircutting is machine-production. There are 1000 people in the country and everybody is employed (preboom). Preboom 500 worked in the haircut industry and 500 in the machine-produciton industry. Assume as well that there are no technological and personal preferences over time (only exceptions is that alot of investors mistakelny throught the haircut sector would growth).
Effect of the boom and the bust During the boom the haircutting industry became more attractive for the employeed, and hence 700 people (just before the bust) worked in that sector and only 300 in the machine-production sector.
I guess you will agre with me that this isn't a healthy economy. Too many people are working in the haircut industry. We know that the amount is too many as the economy was somewhat close to equilibrium preboom (and preferences and technology hasn't changed since then).
The market realizes this mistakes, and hence people get fired from the haircut industry. Lets say each week 10 people get fired, and its somewhat hard for them to find a job in the machine-production sector, as the machine-production indsutry currently doesn't have the production facilities to hire more people.
Fiscal policy After 5 weeks the government decides to build a bridge, and to build that bridge they need 25 workers (they didn't need any specific qualifications). What could happen is that the government pays too high wages, and people in the machine-production instead of the unemployed took the job. This is obv. really bad, but lets assume that the government gets really lucky and hires only the unemployed.
On official statistics (GDP, unemployment), everything now looks fine, and one could argue that the crises has been solved. The haircut industry still keep firing people, but instead of firing 10 people each week they only fire 5 people/week because people are now spending more money again (as the government borrowed money to finance the bridge.). The machine-production secot has on the other hand began hiring people again, and is currently hiring 5 people/week.
However after 4 weeks the bridge has been built. Now 630 people are now employed in the haircut industry. 320 people are working in the macine-production sector. 50 people are currently unemployed but hoping that the government will borrow new money and decide to build a new bridge.
The effect of the fiscal policy can be split into 2 parts: 1) The direct effecet - 25 people employed building a bridge. 2) They spend more money, this slowed down the amount of people being fired from the haircut industry by 5.
What have we learned? Hence one could conclude that the fiscal policy was succesful. But I would argue thats its not. Its actually the problem that people aren't getting fired faster from the haircut industry. Becacuse as we know from the preboom phase the optimal economy has a 500-500 split. The longer it takes for the economy to go back to this 500-500, the longer the economy will require constant fiscal injections to have a low unemployment.
Your analysis is a complete non-sequitar, and says nothing about the real economy.
Here's a better example: 1000 people are employed. There is a financial crisis and 300 people get fired, leaving 700 people employed. If the government does nothing, aggregate demand falls and another 100 people will be fired, leaving 600 people employed. If the government implements stimulus, 150 people would be put to work, increasing aggregate demand which puts another 50 people to work, leaving 800 people employed.
Is 600 people employed better than 800 people employed.
THats the problem. you think in terms of aggreagte numbers. But I just made the argument that you can't use these kind of numbers. They are misleading, as you need to think in terms of terms of whether the market actually needs these kind of jobs. You could change the numbers in my example, and make the effect of fiscal spending even more dramastic, but that doesn't change the point.
If you agree with me that the industry needed that 500-500 mix (yes/no?). Then it doesn't matter if the fiscal policy makes jobs. The economy won't be healthy till we go back to that 500-500 mix (agree?).
What you don't understand is macroeconomics. And that macroeconomics is different from microeconomics.
In microeconomics, we deal with supply and demand. In macroeconomics, we deal with aggregate supply and aggregate demand.
Applying microeconomics to the macroeconomy is wrong because it doesn't take into account feedback loops.
There isn't some magic distribution of x number of jobs here, and y number of jobs there that the market needs to hit in order to be healthy. People need to be employed or else demand falls, further reducing employment, and so on. You don't see people talking about how many jobs we need in this industry and that industry, only people talking about the dismal 8.5% unemployment rate.
The alternative is sustained high unemployment, which is a waste of human potential and human capital.
Well I've been taught macroecnomics like everyone else, but that is why I am trying to proove that a lot of people doesn't udnerstand economics. You dont really to learn to understand economics through college (as I prev. got banned for saying), because you will constantly think about aggregate terms which makes as I have tried to point about, isn't relevant.
I could advice you to read some of Bob Murphy. He likes to point out the mistakes that Paul Krugman often makes.
Nice.
You trash mainstream academia as worthless by saying you don't need an university education in economics to understand economics.
And then you point me to some weirdo on the fringe of economic thought.
parallel is talking about what "looks healthy" short-term. hider is talking about what "is healthy" long-term.
Neither of you is technically wrong, but your desires, or economic perspectives if you will, result in two different outcomes:
parallel sees a quicker reduction in the "bad stats", but the effect is going to linger for a longer period. hider sees a very tumultuous period, but it recedes quickly and a healthy equilibrium is reached sooner.
The US government has followed parallel, and that is why our current recession is lingering. They opted to not upset the apple cart, but in turn are paying with it by having a very slow recovery.
On January 29 2012 01:06 Hider wrote: On official statistics (GDP, unemployment), everything now looks fine, and one could argue that the crises has been solved. The haircut industry still keep firing people, but instead of firing 10 people each week they only fire 5 people/week because people are now spending more money again (as the government borrowed money to finance the bridge.). The machine-production secot has on the other hand began hiring people again, and is currently hiring 5 people/week.
In addition, your example is wrong. If people are being fired at a slower rate in the haircut industry because of increased demand, then we have a new equilibrium, which contradicts the assumption that the original equilibrium doesn't change.
I kinda throught this was you would think. Why should the optimal economy relationship between ppl employed in the industries change? There has been no technological changes, and people still value haircutting just as much as machine-production as they always has done. And we knew that the economy was healthy preboom. Let me elaborate on what that means: If we assume that we can either do 2 things with money: 1) Spend 2) Save.
Money saved will eventually go into investments. Some of those money will go to investment in new techonlogy, but lets assume this doesn't happen in our economy.Investments will only be made if old machines are no longer working. So the only impact of investments is to make sure that the wealth of our economy isn't decreasing (or increasing). Everything else is being spend.
However nobody borrows money to spend. Money will only be borrowed to invest in production facilltiies that replaces other production facilities. This means that the average debt/GDP ratio is (lets say) 20%. This is the ratio that is sustainable forever (giving the assumptions i prev. made).
So this sustainable debt/GDP ratio will result in the 500-500 equlibrium. However if the government used fiscal policy the eqilibrium ratio would change, but that obv. wouldn't be sustainable.
The only sustainable ratio is the 500-500. And since consumer preferences doesn't change over time, this ratio is supposed to stay the same (well almost). So its not sustainable if 900 people is working in the haircutting indsutry and 100 in the machine-production. The market it self will go towards the 500-500 ratio, and the proces (as shown in my example) will be prolonged if government gets involved.
They do not value haircutting as much as they always have. They value it more, because their demand for haircuts has increased. Is it invalid for shops to hire more staff in Christmas because demand has suddenly increased with no underlying change?
Your example bears no resemblance to a real macroeconomy, where there is no magic target of having 500 persons employed in one industry and another 500 persons in another, and then all is well. It's simply about whether people are employed or not. And without government spending more people will be unemployed.
Your violating the assumptions. The assumption was that people (the investors primarily) acted irrational and hence overvalued the future growth of the haircutting industry. But the sustainable ratio is still 500-500 because people still think the same way as they do precrises. The investors just made a mistake during the boom, and from now on we assume they wont do the same mistake. ANd hence postboom(post collapse w/e), people will value goods the same way they always have done.
Even if you don't think the above assumption is realistic, but could you assume that this is the case, and then answer if you think the 900/100 ratio is sustainable?
If you can answer the above, then we can go on to discuss whether my assumptions are actually correct (my assumptions implies that the boom-period is actually what is causing the economic collapse).
On January 29 2012 02:41 BluePanther wrote: I think you two are arguing semantics.
parallel is talking about what "looks healthy" short-term. hider is talking about what "is healthy" long-term.
Neither of you is technically wrong, but your desires, or economic perspectives if you will, result in two different outcomes:
parallel sees a quicker reduction in the "bad stats", but the effect is going to linger for a longer period. hider sees a very tumultuous period, but it recedes quickly and a healthy equilibrium is reached sooner.
The US government has followed parallel, and that is why our current recession is lingering. They opted to not upset the apple cart, but in turn are paying with it by having a very slow recovery.
I think we are both talking at the same thing. I think Paralle belivesl that the boom is healthy (the bust = bad), and that there is no need for a shift in the industries. Most likely he believes that through fiscal policy we can increase employment, which creates a healthy economy.
The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. Ugh...
I don't know about that. Sure interest rates are low, but taxes are also incredibly low as well. It makes companies prefer to keep their money and cut employment rather than invest in the country.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. Ugh...
I don't know about that. Sure interest rates are low, but taxes are also incredibly low as well. It makes companies prefer to keep their money and cut employment rather than invest in the country.
What? We have one of the highest corporate tax rates in the world.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
Well to be fair to the keynesians, I think most of them are aware (or at least i hope so), that the value of the jobs they are creating doesn't have the same value as the jobs created by the market. Their throught proces is most likely that government that governmen through its fiscal policies programs can increase aggregate demand which increases employment. But the main problem with this way of thinking is that it doesn't make sense to have think in terms of aggregate sizes, since some industries need to fire employed and others need to hire, and some even need to die. Fiscal policies only prolonged (while indebting) the crises.
Keynesians also dont think the same way of the boom/bust cycles as the austrians does, as they actually think the boom's are healthy (which it isn't as you point out). But the boom is just a proces of malinvestments (haircut industry), which is due to the mismatch between savings and investments, which again is due to the Fractionel-reserve, interest rate policies as you point out.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. Ugh...
I don't know about that. Sure interest rates are low, but taxes are also incredibly low as well. It makes companies prefer to keep their money and cut employment rather than invest in the country.
It doesn't make any sense that you can deduct interest rates in taxes, even if the corporate tax rate is like 20-30%.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. Ugh...
I don't know about that. Sure interest rates are low, but taxes are also incredibly low as well. It makes companies prefer to keep their money and cut employment rather than invest in the country.
What? We have one of the highest corporate tax rates in the world.
Liberal is 100% correct. Period.
Used to be much higher, and companies actually invested in the country instead of firing their employees. Now they just sit on their billions.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
Well to be fair to the keynesians,
If one wants to be fair to keynesians, the key thought is to be counter-cyclical which most nations simply don't do - and without that, it obviously doesn't work. According to Keynesians, raising taxes and cutting spending is what you should be doing when the economy is doing well. Now look back to before 2007 and check if that was done ... or if the opposite was done, which according to Keynesians would lead to a bigger crisis ...
So if the Keynesians were right, the Bush policy would lead to a big bubble and then a crisis afterwards ...
What would have been right would be increasing taxes and cut spending then, and cut taxes and raise spending now ...
See how the opposite is done and how well that works out?
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
Well to be fair to the keynesians,
If one wants to be fair to keynesians, the key thought is to be counter-cyclical which most nations simply don't do - and without that, it obviously doesn't work. According to Keynesians, raising taxes and cutting spending is what you should be doing when the economy is doing well. Now look back to before 2007 and check if that was done ... or if the opposite was done, which according to Keynesians would lead to a bigger crisis ...
So if the Keynesians were right, the Bush policy would lead to a big bubble and then a crisis afterwards ...
What would have been right would be increasing taxes and cut spending then, and cut taxes and raise spending now ...
See how the opposite is done and how well that works out?
Well but keynesians doesn't interpret the boom the same way as the austrians does. For the austrians you can have a boom even without high fiscal spending. Its the monetary policy that is creating the artifical boom.
But what happened during the boom doesn't seem to be relevant in the decision making of today (giving you keynesian). Fact is for them that unemployment is rising, GDP shrinking --> We gotta increase spending.
But you definitely has a point that it isn't a keynesian politic to have large fiscal spending in good times.
I dont think though that any keynesians based on the "high spendings of the bush"-era would predict that that would cause a crises (especially since it wasn't actually what caused it). Keynesians genereally seem to see the problem in terms of demand shrinking. But if you could refer to some keynesians who predicted this crises I would like to hear/read their analysis.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. Ugh...
I don't know about that. Sure interest rates are low, but taxes are also incredibly low as well. It makes companies prefer to keep their money and cut employment rather than invest in the country.
What? We have one of the highest corporate tax rates in the world.
Liberal is 100% correct. Period.
Used to be much higher, and companies actually invested in the country instead of firing their employees. Now they just sit on their billions.
Eh, this really isn't the point of what he is trying to write. The problem is that the tax system favors debt instead of equity.
On January 29 2012 06:38 Hider wrote: But what happened during the boom doesn't seem to be relevant in the decision making of today (giving you keynesian). Fact is for them that unemployment is rising, GDP shrinking --> We gotta increase spending.
But you definitely has a point that it isn't a keynesian politic to have large fiscal spending in good times.
I dont think though that any keynesians based on the "high spendings of the bush"-era would predict that that would cause a crises (especially since it wasn't actually what caused it). Keynesians genereally seem to see the problem in terms of demand shrinking. But if you could refer to some keynesians who predicted this crises I would like to hear/read their analysis.
It is relevant because the idea is that with Keynesian thought, you would have the money to spend in the bad times, because you saved them in the good times (or at least, you wouldn't go far into debt during the bad times, which you didn't repay in the good times).
It's not Keynesian to have an ever-increasing amount of debt that you can't pay off - ever.
So yeah, what should be done 'right now' you are correct about. However, 'right now' you shouldn't have the debt either. Which is kind of problematic when it comes to financing what should be done right now.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth. The jobs that were "created" when they were transferred from somewhere else are always visible, which is why people have the mistaken belief that the government actually is capable of creating jobs. What people don't see are the jobs which have been destroyed to create those new jobs, destroyed in the present through taxation and relative inefficiency, and destroyed in the future through payments on our debt and market corrections of over-investment.
The recession in the US is simply the destruction of jobs which were transferred to the past, but people can't see it in that light. The government's fiscal policies have been designed to foster over-investment in the economy, by setting the interest rates artificially low, by maintaining permanent inflation, by setting the fractional-reserve ratio, by insuring against losses ie. government backed mortgages, by fostering the expansion of credit and increased lending, etc. etc.
The government's policies created the housing bubble in order to escape the recession in 2001. We are simply feeling the effects of those policies today. And no, clearly this artificial boom/bust cycle is NOT healthy for an economy. It continues to consolidate wealth, which is then used as a justification to... get this.... EXPAND the governments control of the economy. All roads lead to Rome.
On January 29 2012 05:53 liberal wrote: The simple fact of the matter is the government isn't able to create jobs, only to transfer jobs, and isn't able to create wealth, only transfer wealth.
... I hope you know this part is wrong.
I mean, I know it sounds good, it's just provable wrong.
Look to China for example ... wealth creation and job creation right there ...
Or hell, look to Norway, and how active the government is here ... doing very well with unemployment rates ...
I am sure it sounds all cool and such, but it's a stupid idea that's easily proven 100% false.
Because you are arguing from a position that's not based on reality.
And when I see people quoting this post and thanking you for how excellent you are, I think it proves how caught up in the rhetoric people are so they don't examine the truth of what they are reading ...
EPT![[image loading]](http://www.washingtonpost.com/rw/2010-2019/WashingtonPost/2011/12/06/National-Politics/Graphics/w-billionaires.jpg)
![[image loading]](http://i.imgur.com/wmpeN.png)
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