PAUL KRUGMAN DEFINES THE ECONOMIC CHOICES STIMULUS vs AUSTARITY DEM. VS REP.

[Anonymous]

OP here, still awaiting to hear alternative thought on how to stimulate economy.
Credit card debt is at historic lows. Consumers have, (relatively) no money to spend = no need to hire staff to increase output.
Is conservative theory, limited to starve government, cut taxes and deregulate? UK tried austarity thus far, an abject failure, Med. countries like Greese & Italy tried feckless gov. spending no benefit
Is only answer let the biz cycle run its course and wait it out letting the lower/middle income sector hang out to dry?

[Anonymous]

Anonymous wrote:

Anonymous wrote:http://www.nytimes.com/2012/09/14/opinion/krugman-the-iphone-stimulus.html


The best analysis of why Romney's economic austarity plan will fail and Keynesian Econonics (government spending) will succeed in turning our economy around.
Conservatives please point out the flaws in Krugman's presentation

Ok I'll bite because I have some extra time this morning. But this is really the last time I'll try this...if those of you who worship at the alter of Klugman/Friedman and all things NYT really want some differing views they're readily available. If you want regular spoon-feeding, go to the parenting forum. But please, do not make the mistake of thinking dcum and RR ads in any way exemplify thoughtful and differing approaches to economic issues. I read the Times...and the WSJ and the Economist. What do you read beside the Post and NYT (and dcum!)

I don't deny a quarter of 2 of iphone sales will be good for the economy. It's the free market that's working here, not a simple demand push from ill-conceived programs like cash for clunkers (which only shift demand forward for a temporary sugar high with zero long term gain and higher deficits.) But to use a hot product as evidence that "demand, not supply, is holding the economy back" ignores:

--continued aggregate consumer debt as % of household net worth which inhibit spending as consumers continue a multi-year exercise in balance sheet repair
--if you look at the aggregate increase in consumer spending since crisis lows, indeed we've seen a rebound. But most of the increase has come from higher prices (inflation) not increased unit sales. A stressed consumer is spending to maintain standard of living
--yes businesses are sitting on cash. Can't we at least consider that regulatory uncertainty is an element in their reluctance to make investments? One example: cheap NatGas should incent mfg companies who use gas as a feedstock to be building new factories here. But we can't figure out if we'll embrace this new source or regulate it away.
--his quoting Keynes was really an embrace of Shrumpeter's creative destruction. We free-marketers are all for it. But not selectively (hurrah for Apple, boo to Walmart)
--"why not have govt spend on education and infrastructure" ok to infrastructure, but we blew through most of the stimulus $ on transfer payments and we fiscal conservatives believe in stubborn facts and numbers---we misallocated much of the stimulus money and there ain't much left. re: education spending, please let's see the data on efficacy of increased spending here before writing the checks...remembering the money we spend on our kids will need to be repaid by them too.
---"govt employment has plunged" can we ask why? Maybe it got way ahead of itself? Prior to the crisis, over the previous decade we had seen no net gain in pvt sector jobs; all employment growth had come from the public sector. Was that due to genuine need..or maybe just a sector run amok? I'm asking the question and searching for the data...how about you?

Finally, I'm not gonna engage in a long debate here with a Nobel economist. But there are plenty of equally-trained economist who will..they're out there, look for yourself.

I'll let your comment about "worshipping at the altar" aside. It is beneath you.

To your points:

*Deleveraging of consumer debt does hold us back in the short term, but it is by reducing spending and therefore demand. There is always a prior cause for reduced demand, but nevertheless it is the most immediate cause of slow economic growth.

*Companies sit on cash because of lack of demand. If demand existed and supply was constrained, prices would shoot up as people competed for scarce goods. Over the last 18 months the consumer price index has gone up 3% total. That is historically speaking very low. So the "regulatory uncertainty" argument is unsupported by price data. When you talk about "stubborn facts", this one is a brick wall sunk 80 feet into the ground.

*I think your point is good on how we allocated stimulus money. After we eliminate tax breaks, unemployment compensation, etc. precious little was real spending. And we have a huge backlog of infrastructure that needs to be completed, so I agree that is a good target. But this argument is one against the Obama administration. It does nothing to invalidate Keynesian economics.

Really in summary, I think most of your objections are to the government stimulus policies and not the principles of Keynesian economics. I think you have bought into the "regulatory uncertainty" propaganda but I am sure that a person like yourself can debunk it with your own thought experiments.

Thank you for providing a well considered response. I was almost giving up hope that someone would say anything of substance.

*As to the point about government employment plunging, I don't know what the numbers are. But again, none of this invalidates the economic principle. Your argument is essentially whether the policy is good or bad, not what effect it has on demand. Employed people spend money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:http://www.nytimes.com/2012/09/14/opinion/krugman-the-iphone-stimulus.html


The best analysis of why Romney's economic austarity plan will fail and Keynesian Econonics (government spending) will succeed in turning our economy around.
Conservatives please point out the flaws in Krugman's presentation

Ok I'll bite because I have some extra time this morning. But this is really the last time I'll try this...if those of you who worship at the alter of Klugman/Friedman and all things NYT really want some differing views they're readily available. If you want regular spoon-feeding, go to the parenting forum. But please, do not make the mistake of thinking dcum and RR ads in any way exemplify thoughtful and differing approaches to economic issues. I read the Times...and the WSJ and the Economist. What do you read beside the Post and NYT (and dcum!)

I don't deny a quarter of 2 of iphone sales will be good for the economy. It's the free market that's working here, not a simple demand push from ill-conceived programs like cash for clunkers (which only shift demand forward for a temporary sugar high with zero long term gain and higher deficits.) But to use a hot product as evidence that "demand, not supply, is holding the economy back" ignores:

--continued aggregate consumer debt as % of household net worth which inhibit spending as consumers continue a multi-year exercise in balance sheet repair
--if you look at the aggregate increase in consumer spending since crisis lows, indeed we've seen a rebound. But most of the increase has come from higher prices (inflation) not increased unit sales. A stressed consumer is spending to maintain standard of living
--yes businesses are sitting on cash. Can't we at least consider that regulatory uncertainty is an element in their reluctance to make investments? One example: cheap NatGas should incent mfg companies who use gas as a feedstock to be building new factories here. But we can't figure out if we'll embrace this new source or regulate it away.
--his quoting Keynes was really an embrace of Shrumpeter's creative destruction. We free-marketers are all for it. But not selectively (hurrah for Apple, boo to Walmart)
--"why not have govt spend on education and infrastructure" ok to infrastructure, but we blew through most of the stimulus $ on transfer payments and we fiscal conservatives believe in stubborn facts and numbers---we misallocated much of the stimulus money and there ain't much left. re: education spending, please let's see the data on efficacy of increased spending here before writing the checks...remembering the money we spend on our kids will need to be repaid by them too.
---"govt employment has plunged" can we ask why? Maybe it got way ahead of itself? Prior to the crisis, over the previous decade we had seen no net gain in pvt sector jobs; all employment growth had come from the public sector. Was that due to genuine need..or maybe just a sector run amok? I'm asking the question and searching for the data...how about you?

Finally, I'm not gonna engage in a long debate here with a Nobel economist. But there are plenty of equally-trained economist who will..they're out there, look for yourself.

I'll let your comment about "worshipping at the altar" aside. It is beneath you.

To your points:

*Deleveraging of consumer debt does hold us back in the short term, but it is by reducing spending and therefore demand. There is always a prior cause for reduced demand, but nevertheless it is the most immediate cause of slow economic growth.

*Companies sit on cash because of lack of demand. If demand existed and supply was constrained, prices would shoot up as people competed for scarce goods. Over the last 18 months the consumer price index has gone up 3% total. That is historically speaking very low. So the "regulatory uncertainty" argument is unsupported by price data. When you talk about "stubborn facts", this one is a brick wall sunk 80 feet into the ground.

*I think your point is good on how we allocated stimulus money. After we eliminate tax breaks, unemployment compensation, etc. precious little was real spending. And we have a huge backlog of infrastructure that needs to be completed, so I agree that is a good target. But this argument is one against the Obama administration. It does nothing to invalidate Keynesian economics.

*As to the point about government employment plunging, I don't know what the numbers are. But again, none of this invalidates the economic principle. Your argument is essentially whether the policy is good or bad, not what effect it has on demand. Employed people spend money.

Really in summary, I think most of your objections are to the government stimulus policies and not the principles of Keynesian economics. I think you have bought into the "regulatory uncertainty" propaganda but I am sure that a person like yourself can debunk it with your own thought experiments.

Thank you for providing a well considered response. I was almost giving up hope that someone would say anything of substance.

Oops that last bullet point was supposed to be up above. Fixed it here.

[Anonymous]

To ". OK, I'll bite.....

Question- How would you propose to incentivize NatGas, assuming the environmental effects are acceptable, unpaid for tax cuts naturally, when none are necessary. The last thing the energy sector, which is thriving, requires is additional tax cuts.
Counterpoint - with robotics, assuming availability of highly skilled labor and investment incentives, Apple could assemble at competitive unit costs vs Foxconn in China. Incentives would produce few jobs, 500 highly skilled engineers vs 15k hand assemblers in China. The trained skilled labor is not available here, capital costs would be astronomical vs # number of jobs created. Investment tax credits worth it?

[Anonymous]

OK so after all that, we got one halfway reasonable response. With it we got:

*Krugman is wrong because he is partisan

*ARRRRG I'm a pirate!

*One post somehow linking it to catholic priests having abortions (WTF but kudos for gratuitously working abortion into the thread)

*I don't know anything, here's a link that says what I feel (but which just rants on about libtards, etc.)

*And of course 8:56 ("I know the answer, but I won't share because you don't really want an answer")

What an embarrassing demonstration of conservative weak-mindedness. Kudos to the one among you who could actually string some thoughts together. I'll be interested to see if she replies to any of the responses.

[Anonymous]

Anonymous wrote:To ". OK, I'll bite.....

Question- How would you propose to incentivize NatGas, assuming the environmental effects are acceptable, unpaid for tax cuts naturally, when none are necessary. The last thing the energy sector, which is thriving, requires is additional tax cuts.
Counterpoint - with robotics, assuming availability of highly skilled labor and investment incentives, Apple could assemble at competitive unit costs vs Foxconn in China. Incentives would produce few jobs, 500 highly skilled engineers vs 15k hand assemblers in China. The trained skilled labor is not available here, capital costs would be astronomical vs # number of jobs created. Investment tax credits worth it?

Bite here

As far as I've read, gas industry isn't looking for tax help. In fact while it's a great headline to demonize the oil/gas biz, last I looked the total tax breaks to the industry were all of abt 4 billion w much of it taking advantage of incentives offered to all companies. Sure, watch the environmental challenges of a new industry (btw--environmental damage of all those electronics we toss out? water bottles in landfills?.) Just let 'em do their thing and see the great effects on US economy.

Re: Apple mfg, I suspect we're already seeing resurgence in US manufacturing as China labor costs increase and they have their own demographic challenges. I think this will take care of itself. Google "law of comparative advantage."

[Anonymous]

Anonymous wrote:OK so after all that, we got one halfway reasonable response. With it we got:

*Krugman is wrong because he is partisan

*ARRRRG I'm a pirate!

*One post somehow linking it to catholic priests having abortions (WTF but kudos for gratuitously working abortion into the thread)

*I don't know anything, here's a link that says what I feel (but which just rants on about libtards, etc.)

*And of course 8:56 ("I know the answer, but I won't share because you don't really want an answer")

What an embarrassing demonstration of conservative weak-mindedness. Kudos to the one among you who could actually string some thoughts together. I'll be interested to see if she replies to any of the responses.

assume this is OP; "bite" here closing up. Given your extraordinary pomposity and high-handedness (along with spelling errors) I'll pass on a complete reply as your comments on my post were quite selective. I will leave you (all) with one question:

Assuming yet more stimulus is the answer, at what point might you rethink? Let's say we stimulate with another, say, $500 billion and 3 years later we still have punk growth and high unemployment. At that point what's plan B? I'm pretty well steeped and educated in Keynesian economics--how much do you know about the Austrian school? This is really tough stuff and the stakes are enormous. With debt (all in including state/local) now near 80% of gdp my own view is that we're at sufficiently dangerous levels to make more deficit spending dangerous---to our kids and grandkids. I think it's terribly naive to think this is something we can fix later once the economy is humming again.

[Anonymous]

Anonymous wrote:Still waiting for actual conservative thinking in a post. This is like getting my kids to eat their broccoli. Btw someone copy/pasting a link saying libtard and jackass does not improve your position, even if it includes a spiffy if gratuitous picture of the founders. So put away that tricorn hat, it doesn't make you look any smarter than Sarah Palins glasses.

It's sad when people are so confident in the messages spoon fed to them that they can't even explain it themselves. Lazy lazy lazy.

It might have something to do with the fact that you are posting on a liberal leaning message board. Have you thought of that?

It always baffles me when people post questions like the OP did. If their question was genuine and if they wanted an honest dialogue, then they would have the courage post the question elsewhere, or maybe just frequent the plethora of editorials consolidated on Real Clear Politics. It is simply a thinly veiled attempt to once again listen to the shrill chorus of the faithful.

[Anonymous]

As a non-economist, I don't feel qualified to do more than try to understand the competing ideas in a general way. As a brief summary, how is this:

Keynesian: Once we get back to growth, the deficits will be taken care of by the increased taxes we'll receive and the fact that we won't need to spend as much, therefore we should hurry that up by priming the pump with government spending.

Austrian: The deficits will kill the future, therefore we should cut spending as much as possible, and accept a period of austerity. It will end eventually when we cycle back into growth, and we can hasten that with tax cuts.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OK so after all that, we got one halfway reasonable response. With it we got:

*Krugman is wrong because he is partisan

*ARRRRG I'm a pirate!

*One post somehow linking it to catholic priests having abortions (WTF but kudos for gratuitously working abortion into the thread)

*I don't know anything, here's a link that says what I feel (but which just rants on about libtards, etc.)

*And of course 8:56 ("I know the answer, but I won't share because you don't really want an answer")

What an embarrassing demonstration of conservative weak-mindedness. Kudos to the one among you who could actually string some thoughts together. I'll be interested to see if she replies to any of the responses.

assume this is OP; "bite" here closing up. Given your extraordinary pomposity and high-handedness (along with spelling errors) I'll pass on a complete reply as your comments on my post were quite selective. I will leave you (all) with one question:

Assuming yet more stimulus is the answer, at what point might you rethink? Let's say we stimulate with another, say, $500 billion and 3 years later we still have punk growth and high unemployment. At that point what's plan B? I'm pretty well steeped and educated in Keynesian economics--how much do you know about the Austrian school? This is really tough stuff and the stakes are enormous. With debt (all in including state/local) now near 80% of gdp my own view is that we're at sufficiently dangerous levels to make more deficit spending dangerous---to our kids and grandkids. I think it's terribly naive to think this is something we can fix later once the economy is humming again.

Bite, someone wrote a detailed reply to you, and you did not comment on it. Why?

[Anonymous]

"Bite, someone wrote a detailed reply to you, and you did not comment on it. Why?"

Because it's a pointless exercise. No one's views change here, Obama's gonna win, budget will continue to careen out of control, and my gold stocks will triple again.

I'll be fine, will watch this train wreck from the sidelines.

[Anonymous]

Anonymous wrote:"Bite, someone wrote a detailed reply to you, and you did not comment on it. Why?"

Because it's a pointless exercise. No one's views change here, Obama's gonna win, budget will continue to careen out of control, and my gold stocks will triple again.

I'll be fine, will watch this train wreck from the sidelines.

If it is pointless, you shouldn't have written to begin with. You have plenty of time to spar with people who shout insults. Yet a person makes the effort to reply to your actual content in a thoughtful way, and then you run. You are worse than Demotivational Poster Guy.

[jsteele]

Anonymous wrote:

Anonymous wrote:"Bite, someone wrote a detailed reply to you, and you did not comment on it. Why?"

Because it's a pointless exercise. No one's views change here, Obama's gonna win, budget will continue to careen out of control, and my gold stocks will triple again.

I'll be fine, will watch this train wreck from the sidelines.

If it is pointless, you shouldn't have written to begin with. You have plenty of time to spar with people who shout insults. Yet a person makes the effort to reply to your actual content in a thoughtful way, and then you run. You are worse than Demotivational Poster Guy.

Okay, I have to step in and defend Bite. If you were a serious Republican, wouldn't you be feeling a bit unmotivated today? Give the guy time to grieve.

[Anonymous]

Gold is not going to triple. You are so screwed if you think that. There is no way it's going to blow through the inflation adjusted price in 1980. Things were way worse then.