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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]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[/quote]

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.[/quote]

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.
[/quote]

Oops that last bullet point was supposed to be up above.  Fixed it here.[/quote]

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