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.
... 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 ...
The author doesn't really adress the issue. If we agree that the working force is a limited ressource, then it follows that if the government use that ressource for something less productive than how the private sector would have used the ressoruce, wealth is destroyed. The question is whether the private sectorr in fact would have used the ressource efficiently. I guess many kensians would argue that the private sector is in a crisis, and if unemployment rises then the alternative cost is very small, and wealth is created.
While this to some extent is true, its not true if we measure long-term effects (my crisis gets prolonged-argument). But you can't entirely dismiss that government can't create wealth on a short-term basis.
On January 29 2012 07:14 Falling wrote: Hey Hider, use the edit button. You are quite consistently double posting. Thanks.
Im just always afraid of people writing stuff while im editting (and then not writing my editted post). Never throught that the double posting is that big a problem (does a lot of people get annoyed by it?).
You know, it's rather funny because more than 50% of this thread is basically "You're wrong. I'm right" talk. Because I have not seen much improvement in anyone's view on things..( not saying that my view is good or whatever )
On January 29 2012 07:10 Hider wrote: While this to some extent is true, its not true if we measure long-term effects (my crisis gets prolonged-argument). But you can't entirely dismiss that government can't create wealth on a short-term basis.
Uhm, yes I can because it is insanely dumb.
... mexico could do with a government that got control of their drug cartels and that would be a perfect case of government creating wealth by creating order.
To say that 'wealth' is by definition created only in the private sector, means that if goods and services are provided by a company ineffectively, that is creating wealth, and if it's created by the government effectively, that is not creating wealth.
If the government owns a valuable company in your nation (oh, like Statoil), and that company creates wealth, government is creating wealth.
To state that 'government can't create wealth' is mindblowing to me because it's the same as saying 'people can't create wealth' ... the stupidity is just staggering.
Now, I am not arguing that government can't be working like shit, provide tons of unneccessary jobs, and be a pain in the ass ... but the 'simple truth' is 'simply provable wrong'. And shows that you don't understand a thing about economics - at all.
Or simply don't know what the term 'wealth' means in economics ...
On January 29 2012 07:10 Hider wrote: While this to some extent is true, its not true if we measure long-term effects (my crisis gets prolonged-argument). But you can't entirely dismiss that government can't create wealth on a short-term basis.
Uhm, yes I can because it is insanely dumb.
... mexico could do with a government that got control of their drug cartels and that would be a perfect case of government creating wealth by creating order.
To say that 'wealth' is by definition created only in the private sector, means that if goods and services are provided by a company ineffectively, that is creating wealth, and if it's created by the government effectively, that is not creating wealth.
If the government owns a valuable company in your nation (oh, like Statoil), and that company creates wealth, government is creating wealth.
To state that 'government can't create wealth' is mindblowing to me because it's the same as saying 'people can't create wealth' ... the stupidity is just staggering.
Now, I am not arguing that government can't be working like shit, provide tons of unneccessary jobs, and be a pain in the ass ... but the 'simple truth' is 'simply provable wrong'. And shows that you don't understand a thing about economics - at all.
Or simply don't know what the term 'wealth' means in economics ...
I dont think you understand what I wrote. First of all I actually wrote that you couldn't dismiss that government could create wealth on a short-term basis.
Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its similar to the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
And it's actually much easier to make the argument that long term, government creates wealth, by making the argument for strong public education and infrastructure being a foundation that is needed for private companies to have access to the resources they need to create their wealth.
Liberals argument is can be rewritten like this to show you how stupid it is:
"Private companies cannot create wealth, because the jobs they provide could always be provided by the government or other companies. They are simply transferring wealth into their own pockets (profits) from someone else who would otherwise provide the same service and create the same wealth. They are leeches on society, and it's best if government runs all companies - that way no private companies are running off with part of the wealth that they didn't even create in the first place, because it was created by the actual workers that did the work".
I am sure some lunatic communist would read that and nod to himself in agreement, but it's equally stupid.
There is no difference between private companies and government in their ability to create wealth.
There are differences in how effective they are in some sectors, where it's better to have government employees,and where they should be private employees, but to suggest that wealth cannot be created in either the private OR the public sector, is just pure stupidity.
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
And it's actually much easier to make the argument that long term, government creates wealth, by making the argument for strong public education and infrastructure being a foundation that is needed for private companies to have access to the resources they need to create their wealth.
Take is easy please. We simply have differing definitions of what it means to "create wealth." Of course government can create an environment and an ordered system which allows wealth to be created, that's one of the central roles of the government. I just don't define that as "wealth creation" or "job creation," it's the creation of an environment which is conducive to a successful economy.
When people speak of "job creation," which is what I was referring to very specifically in my post, they are referring to subsidized work projects designed to immediately employ people. It simply needs to be noted that every job which is ever created in such a way is necessary diverting resources and therefore jobs from other areas, and so isn't a creation at all, merely a transfer. If you want to argue that the government invests money better than businesses do, you can argue that I guess, but that's a different argument entirely.
On January 29 2012 07:50 aebriol wrote: There is no difference between private companies and government in their ability to create wealth.
lol this argument is just laughable. There is a HUGE difference in their ability to create wealth. The majority of government institutions do not have a profit incentive, and therefore have never come close to the typical business in terms of allocating scarce resources, cutting costs, assessing investments, etc.
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
Ok this is a definiton question. While your correct that it doesn't matter where wealth is created, this isn't the point. Liberal argumentation is that private comapnies always will do everything better than what the government would do. So if the companies take money from the government the private comapanies should in fact be more efficient with the money.
Here is an easy example: During one day a private company would produce 10 apples. A government company would only produce 2 apples. In this proces the government has destroyed 2 apples if they decided they were the ones who should produce apples.
Now you would argue that in fact 8 apples were produced and hence government added 8 apples to the wealth of the nation. This only makes sense if your an accountant, not as an economist. Since most textbooks agree with this definition of wealth creation, most keynesians would probably agree with the above definition, that wealth was destroyed in the proces (but they would obv. disagree with the realism and other stuff). But as an economist you have to think of the oppurtinity cost = How would the private companies these ressources. It seems to me that you have misunderstood what opputunity cost is. Oppurtunity cost is not equal to not using the ressorces at all.
Keynesians think they probably wouldn't produce any apples (if there weren't any demand), and then government would have created wealth of 8 apples (though I am not sure whether they value government produced products as much as private produced products, but thats besides the point).
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
And it's actually much easier to make the argument that long term, government creates wealth, by making the argument for strong public education and infrastructure being a foundation that is needed for private companies to have access to the resources they need to create their wealth.
Take is easy please. We simply have differing definitions of what it means to "create wealth." Of course government can create an environment and an ordered system which allows wealth to be created, that's one of the central roles of the government. I just don't define that as "wealth creation" or "job creation," it's the creation of an environment which is conducive to a successful economy.
When people speak of "job creation," which is what I was referring to very specifically in my post, they are referring to subsidized work projects designed to immediately employ people. It simply needs to be noted that every job which is ever created in such a way is necessary diverting resources and therefore jobs from other areas, and so isn't a creation at all, merely a transfer. If you want to argue that the government invests money better than businesses do, you can argue that I guess, but that's a different argument entirely.
On January 29 2012 07:50 aebriol wrote: There is no difference between private companies and government in their ability to create wealth.
lol this argument is just laughable. There is a HUGE difference in their ability to create wealth. The majority of government institutions do not have a profit incentive, and therefore have never come close to the typical business in terms of allocating scarce resources, cutting costs, assessing investments, etc.
Not every dollar spent in the private sector precludes a job. There are many kinds of investment and spending which create no more jobs than if half as much was spent on the same process. For example, luxury and performance cars versus "normal" cars. A luxury or performance car may cost 3-10x more than a normal car, but that doesn't employ 3-10x more people. The car is filled with more expensive parts and a more extensive manufacturing process, which in the end probably employs very few people more, if not finding a way to make the products with the same number of people. You might argue that the increased part prices factor into more employment elsewhere, but usually those "part costs" are created by inefficiencies in the manufacturing and higher raw material costs.
You can find these luxury costs all over the place in manufacturing. These are primarily what wealthy people spend their excess wealth on. Now, if you could somehow convince the wealthy to buy 10 Altimas instead of 1 Aston Martin, that WOULD create a ton of jobs. However, that's not the point of being wealthy and buying things in the first place.
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
And it's actually much easier to make the argument that long term, government creates wealth, by making the argument for strong public education and infrastructure being a foundation that is needed for private companies to have access to the resources they need to create their wealth.
Take is easy please. We simply have differing definitions of what it means to "create wealth." Of course government can create an environment and an ordered system which allows wealth to be created, that's one of the central roles of the government. I just don't define that as "wealth creation" or "job creation," it's the creation of an environment which is conducive to a successful economy.
When people speak of "job creation," which is what I was referring to very specifically in my post, they are referring to subsidized work projects designed to immediately employ people. It simply needs to be noted that every job which is ever created in such a way is necessary diverting resources and therefore jobs from other areas, and so isn't a creation at all, merely a transfer. If you want to argue that the government invests money better than businesses do, you can argue that I guess, but that's a different argument entirely.
On January 29 2012 07:50 aebriol wrote: There is no difference between private companies and government in their ability to create wealth.
lol this argument is just laughable. There is a HUGE difference in their ability to create wealth. The majority of government institutions do not have a profit incentive, and therefore have never come close to the typical business in terms of allocating scarce resources, cutting costs, assessing investments, etc.
Not every dollar spent in the private sector precludes a job. There are many kinds of investment and spending which create no more jobs than if half as much was spent on the same process. For example, luxury and performance cars versus "normal" cars. A luxury or performance car may cost 3-10x more than a normal car, but that doesn't employ 3-10x more people. The car is filled with more expensive parts and a more extensive manufacturing process, which in the end probably employs very few people more, if not finding a way to make the products with the same number of people. You might argue that the increased part prices factor into more employment elsewhere, but usually those "part costs" are created by inefficiencies in the manufacturing and higher raw material costs.
You can find these luxury costs all over the place in manufacturing. These are primarily what wealthy people spend their excess wealth on. Now, if you could somehow convince the wealthy to buy 10 Altimas instead of 1 Aston Martin, that WOULD create a ton of jobs. However, that's not the point of being wealthy and buying things in the first place.
The difference in jobs that you are talking about here are predicated on consumer demand, not upon what businesses choose to invest in or how efficiently they spend their resources, which is what we are talking about when we compare government vs. business efficiency. There is nothing either the government or the private sector can do to change consumer demand, so it's a moot point. Unless your argument is that we need to redistribute wealth in order to mold society's collective desires, then I will really start to get worried here...
On January 29 2012 06:19 Derez wrote: Newt's new SuperPAC attack ad:
(And as an idea, we might want to think about stopping the econ debate. It keeps coming back every 20 pages and never goes anywhere.)
Interesting, good way to criticize him in all ways (those who support big government.. cheating Medicare hurts the country, and for those who support smaller government...Mitts private experience becomes less private)
On January 29 2012 07:43 Hider wrote: Secondly, it doesn't matter how many "jobs" or companies the government owns and runs. Its not wealth creation. Sovjet didn't create wealth when they hired people to produce stuff the private sector would do a shitton more efficiently. They in fact destroyed wealth.
This was the point of liberal. Your not creating wealth when your taking ressources from 1 person and giving it to someone else. This is transfering of wealth, and in this proces (most of the time) wealth is destroyed.
So the point of liberal is that you have to think of the alternative cost. You can't look at wealth creation isolated. Its just look in the stock market. Real stock analyst don't consider a 4% return annualy as something that is nessarcily postive. It every other stock in the world gave a higher risk adjusted return, the 4% return is actually bad.
My point was that Liberal was provable dead wrong with what was written.
That you don't understand it isn't my problem. You don't even understand what you wrote yourself.
"Have to think of the alternative cost" - yeah. Why don't he? Why don't he check what the alternative cost of not having police, military, private property, judges, or politicians is?
When discussing wealth creation, you are discussing economics, and in economics, it doesn't matter where the wealth is created. It's ignorant (and stupid) to claim that wealth cannot be created by the government. It's also provable wrong. At least when you are talking about economics.
And it's actually much easier to make the argument that long term, government creates wealth, by making the argument for strong public education and infrastructure being a foundation that is needed for private companies to have access to the resources they need to create their wealth.
Take is easy please. We simply have differing definitions of what it means to "create wealth." Of course government can create an environment and an ordered system which allows wealth to be created, that's one of the central roles of the government. I just don't define that as "wealth creation" or "job creation," it's the creation of an environment which is conducive to a successful economy.
When people speak of "job creation," which is what I was referring to very specifically in my post, they are referring to subsidized work projects designed to immediately employ people. It simply needs to be noted that every job which is ever created in such a way is necessary diverting resources and therefore jobs from other areas, and so isn't a creation at all, merely a transfer. If you want to argue that the government invests money better than businesses do, you can argue that I guess, but that's a different argument entirely.
On January 29 2012 07:50 aebriol wrote: There is no difference between private companies and government in their ability to create wealth.
lol this argument is just laughable. There is a HUGE difference in their ability to create wealth. The majority of government institutions do not have a profit incentive, and therefore have never come close to the typical business in terms of allocating scarce resources, cutting costs, assessing investments, etc.
Not every dollar spent in the private sector precludes a job. There are many kinds of investment and spending which create no more jobs than if half as much was spent on the same process. For example, luxury and performance cars versus "normal" cars. A luxury or performance car may cost 3-10x more than a normal car, but that doesn't employ 3-10x more people. The car is filled with more expensive parts and a more extensive manufacturing process, which in the end probably employs very few people more, if not finding a way to make the products with the same number of people. You might argue that the increased part prices factor into more employment elsewhere, but usually those "part costs" are created by inefficiencies in the manufacturing and higher raw material costs.
You can find these luxury costs all over the place in manufacturing. These are primarily what wealthy people spend their excess wealth on. Now, if you could somehow convince the wealthy to buy 10 Altimas instead of 1 Aston Martin, that WOULD create a ton of jobs. However, that's not the point of being wealthy and buying things in the first place.
The difference in jobs that you are talking about here are predicated on consumer demand, not upon what businesses choose to invest in or how efficiently they spend their resources. There is nothing either the government or the private sector can do to change consumer demand, so it's a moot point. Unless your argument is that we need to redistribute wealth in order to mold society's collective desires, then I will really start to get worried here...
Of course I don't believe in "redistribution of wealth" in the way you would portray it. However, increasing taxes to assuage the fears of running to high of a deficit in pursuit of lowering unemployment through government, low-skill projects would likely cut into that luxury market more than markets which require more workers. What's more, these projects are within the confines of what is defined as government responsibility. Broadening the base of our ECONOMY, not our tax code, would greatly increase confidence in the economy and both short and long term outlook of the economy.
Idk, though, you might classify this as redistribution of wealth since it requires wealthier individuals to contribute more to the cause in terms of monetary investment.
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.
"Recedes quickly"?
What possible impetus can the private sector have to make the recession recede quickly when the governement and central bank does nothing?
Here's a graph showing that the current recession has lasted longer than the Great Depression in UK.
It also shows the recovery flatlining when the Cameron government cut spending.
If you want to see what happens when governments cut spending during recessions look at Europe.
If you want to see countries that successfully implemented government stimulus look at countries like China, and Australia. Even the US when compared to Europe.
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).
You act like it is the slowing of the firings in the haircut market is a bad thing, because the stimulus is temporary.
But that doesn't change the fact the demand has changed even temporarily, and the industry is correct to respond to it. Just as how the retail industry is correct to respond to a temporary increase in demand during Christmas.
In the case where the government does nothing, demand has changed, people will get fired, demand will therefore fall, and the vicious cycle will continue.
Even if there is a return to 500-500 equilibrium, it is better that the return occurs while people are working, and need not occur with high unemployment. Unemployment is a waste of resources that are doing nothing, and causes a vicious cycle, while stimulus causes a virtuous cycle through a fiscal multiplier.
Also, your example has no resemblance with reality.
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.
That's because actually getting that money to grow is harder and harder. Risk is extremely high right now because of: -Regulation uncertainty, given the tens of thousands of pages of new regulation pumped out every year, especially the financial reform in Dodd-Frank and Obamacare which still nobody understands. It's too byzantine to make good predictions on returns. -Regime uncertainty, given the large amount of anti-corporate rhetoric and very reactionary and populist/socialist nature of the OWS movement, companies are simply scared of being targeted. Cash on hand is a balance to that risk. -Lack of growth in the US market in general, which equates to a lack of demand domestically. Companies really want to make money and right now the best places to do that simply aren't here, so they're holding out for better markets to emerge elsewhere -Repatriation taxes, which keep profits held overseas from coming back to the US to be invested here. Another incentive to invest elsewhere.
Bottom line: companies are scared to invest, and increasing taxes on them won't reduce their risk.
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:
Please stop spamming this topic with propaganda that has long been discredited.
As for him being "racist", this would be the closest I can find.
Granted, it's his ignorance on the subject that makes it worth noting, not necessarily him being racist by any means. He seems to believe that collective groups of people outside of government will not and cannot be racist.
It's not propaganda but, your too blind from the truth where Obama lies in bed with Bankers.
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)
![[image loading]](http://3.bp.blogspot.com/_O2JHv7M-9RE/SutmqsjTX9I/AAAAAAAAAOM/XE7LcvVgSSg/s1600/Geithner%27s+world.jpg)
