What is good economic stimulus?

[padren]

I thought the question itself could use a thread, since a lot of posts right now sort of go around this question.

 

 

After seeing some of the "pork" highlighted by republicans that is just "flagrant spending" and not economic stimulus really made me wonder about what exactly is good economic stimulus. There are some ideological differences in approach, but from what I can tell:

 

1) Job Creation.

Spend money putting people to work. Most easily done from the public center (parks, roads, etc) but perhaps increases in grants could help businesses higher more employees, if the grants had stipulations regarding use for hiring US citizens. The private sector job creation (other than via private companies bidding on public projects) seems messy, because businesses often hire to steal employees away from other businesses, and moving employees around doesn't help in the long run.

At the same time, people may quit to get a government job or work on a government contract for a private company, so I guess it works both ways. I am curious which works better.

 

One risk is of course, private businesses will have to do well enough to keep those people on a year from now, or the economy will have to pick up so employees can get into new jobs before the money goes dry. Government spending programs that simply increase of course run a risk of getting grandfathered - and dismantling them can be wasteful I suppose.

 

It has the benefit that we can create jobs that also help towards a better future - better roads, infrastructure, upgraded computers, etc. But as you tune the job creation schemes towards any given end, I would guess you run a risk of targeting a specific workforce which may not be hurting that bad...and just stealing employees from solvent companies.

 

2) Free Money.

Perhaps "free" is not the correct term for bailout money but banks wouldn't be lining up for it if the free market could offer deals that good, so it must at least be "freer" in the long run. I guess it makes banks more solvent so they can feel more confident loaning out money, but I also wonder if people are actually solvent enough to borrow more money. If you don't have a job, it's hard to justify a new loan.

 

3) Tax breaks.

This item kind of confuses me - I understand the principles of Milton economics but is the argument about entitlement (those who pay out should get back first) or that it is the most efficient way to move that money, by not collecting it in the first place? I could see it being more efficient (from china -> US gov -> program spending vs. people -> us gov & china -> us gov -> program spending & us gov -> people) but I have to admit I personally don't feel too confident that most of that would be spent in the economy, but I honestly don't know. I do think this becomes a point of contention because of a confusion between whether it is sound economically vs. if it is ethically imperative, by which I mean if someone is predisposed to small government then it's easy to feel tax cuts should morally be the first step, without discussing the actual pros and cons of it's use as an economic stimulant.

 

Anyway, these are just some of my thoughts, which as I am sure everyone can tell are somewhat confused.

I somewhat accept it is needed at this point, but I find it hard to evaluate the elements of what should be in such a plan because politically it seems to be more based on partisan ideology rather than a crunching of the numbers.

 

So, what really are the pros and cons of the various approaches, if we ignore whether they lean towards bigger government or lower taxes, or whatnot?

[iNow]

I'm short on time, and about the run out the door, so please don't take my short post as if I don't think this is an awesome topic idea. In short, though, pros are that it injects money and creates liquidity. Basically, it's like adding some WD-40 or all-in-one oil to the proverbial joints of our economy. Stiff joints don't move, loose ones do... and that movement is self-reinforcing. The cons are figuring out a way to pay for it later, when we can only forecast how much we'll make back on the investment... basically, huge risk with an uncertain payback or payoff time. The amount we'll recover is a really fuzzy number. Also, where we direct it matters, as recent debates can attest.

 

More than anything else, though, it's a last resort. The only reason the government needs to do this is because they are the only ones who can right now.

 

 

Yeah, I'll definitely need to come back to organize my thoughts on this and articulate better. Sorry for the curtness. There really are both good and bad parts of this, and they all have merit. What upsets me about what we here being discussed by the naysayers of the bill and shared in the media are ridiculous nonsense that really matter little in terms of scope and relative to the overall.

[ParanoiA]

Interesting stuff padren. I guess my impulse is to direct a "stimulus" to the problem. What is the actual problem? What is a recession?

 

I'm sure I'll be taken to task for this, but it seems to me the problem is human behavior. A recession seems to be a psychological condition. Since people are aware of economic strife, they're sitting on money. They're not excuting any business plan as it's all on hold, waiting for things to turn up and stabilize. We undermine ourselves. If we all woke up tomorrow morning and totally forgot there's an economic crisis, we'd probably go buy that car, rent that lot to open our business, buy some tools for the shop, hire some employees to gear up for the summer, etc.

 

So, to me, when we talk about stimulus, I think about techniques that will alter our perception of the economy. Or techniques that intice us to defy our fear of the state of affairs and take a chance anyway. If we all just agree not to participate in the recession, we won't have a recession. That's why I keep going on about investor confidence - that's shorthand to express the whole nature of fear to risk or release capital. And I believe that is the problem.

 

So how do you get someone to take a chance anyway? Offer them a deal they can't refuse, or tempt their opportunist nature. I think that's why republicans like tax cuts so much, and I do too. I think if you cut the capital gains, and reward investment with other breaks, then you activate their inner opportunist and cause them to risk capital. Of course, that's not enough because they may risk some capital but that doesn't mean they will invest in anticipation of a thriving market. Instead I think they invest with the idea the market will be sluggish - because the outlook is still bleak. So while tax cuts lure them to spend some money, it doesn't change their analysis of future events, so the investment is small, more inconsequential.

 

That's the part I have a bit of a time with. I'm not sure how you provoke them to invest in lieu of a thriving market so they'll spend more money and get things moving. Hire 5 guys intead of 2. Order two loads of material instead of one. That sort of thing.

 

That's why I keep going on about time and patience and ignoring the media's incessant sensationalism on the matter. Stop reminding everyone everything sucks, please. I can't help but think we'll recover faster when we have a positive outlook, even if it's somewhat artificial.

[npts2020]

I have written some about this very subject in relation to bringing our transportation system and communication and power grids into the 21st century by integrating them and automating the road/rail system and powering them with wind and solar energy. I could write all day about this but will try to put a few ideas forth while being brief. Firstly I would like to state for the record that I am less concerned about the actual size of government than I am with its ability to do the things the citizens living under it expect. Secondly, I believe the federal government is the only entity that has a reasonable chance of success at being able to accomplish a project of this scale. Thirdly, creation/conversion (DoT?) of some overseer entity will be required for design, construction, maintanence, and operation of the system and it may be desirable to use novel methods of organizational structure.

As anyone who even cursorily views a proposal to bring about wide-scale change in the way land transportation occurs knows, the costs of even small changes is staggering and difficult to estimate with any precision. The best guestimates I have been able to put on a system that covers approximately half of todays public roadways run between $12-50 Trillion, with high end being more likely for anything substantially better than what exists now. Even at the high end, however, I believe the system would be more than cost effective (we spend $1.5-2 trillion every year just for fuel). I see no reason that roadway integrated with utilities cannot be prefabricated and laid more quickly and cheaply than paving takes place today. The bonus is that we eliminate most of the 40% of the petroleum use of our nation that is consumed by transportation and save 40,000 lives a year. An automated personal transit system has recently become technologically feasible on a large scale and for the first time able to be substantially better than the system that currently exists. Trouble is it will do little in the short term.

[ecoli]

The problem is that we're trying to use monetary and fiscal policy to reinflate a bubble that was a result of mis-investment. The recession is not the problem, its the cure.

[Pangloss]

It's worth noting that much of what we're talking about here isn't a matter of having government do it, but rather having government pay for it. So the reasonable concern that government isn't very good at building or developing things (by committee, with ideologies and special interests getting in the way) is averted. That's not always the case, but it is when we're talking about infrastructure development, whether it's physical highways or virtual ones. So in a sense we're using the government to do the thing it's best at (collecting spending our money) and using business to do the thing it's best at (efficiently applying money to affect change of some kind).

 

This is distinct from, for example, a public works program like those fostered under the New Deal's Works Progress Administration, which was considered a laughable joke even then for its inefficiency and the laziness of its workers.

---

Merged post follows:

Consecutive posts merged

The problem is that we're trying to use monetary and fiscal policy to reinflate a bubble that was a result of mis-investment. The recession is not the problem, its the cure.

 

The problem I have with the above is that it's backward-looking instead of forward-looking. Hindsight is 20/20, and in the end it doesn't really matter why we're here, so long as we learn something from it. Laissez-faire would have us never learn anything; in fact insists that forward progress is a bad idea (see quote above).

 

Even worse, it actually seems to thrive on the zero-sum aspects of economics. The new mixed model has proven that economics doesn't have to be a zero sum game, but they would have us return to a gold standard (denying the multiplicative value of money) and actually sees it as desirable that most workers remain ignorant and exploitable.

 

The current society that we live in could never have been achieved under that reasoning. It just could not have. I acknowledge the deficiencies of such an approach -- we have to do better about deficit spending and debt. But those are surmountable problems, not ideology-breakers.

 

Simply put, a mixed economic model works. And because it works, clearly a pure economic model (like socialism or capitalism) is simply no longer an option for the modern world. Don't get me wrong, we need those inputs -- they remind us of what the pitfalls are. But we can never actually use their most extreme, ideological advice. We need to keep them as museum pieces, carefully ensconced behind clear plastic windows with little openings so the sound can get through (but a little tinny and distorted).

Edited February 6, 2009 by Pangloss
Consecutive posts merged.

[iNow]

I could write all day about this but will try to put a few ideas forth while being brief. Firstly I would like to state for the record that I am less concerned about the actual size of government than I am with its ability to do the things the citizens living under it expect.

 

I find this simple point to be very profound. We can quibble about details, but you've marvelously summed up the context of the issue with this one straight forward statement. Well said, npts2020.

[padren]

...In short, though, pros are that it injects money and creates liquidity. Basically, it's like adding some WD-40 or all-in-one oil to the proverbial joints of our economy. Stiff joints don't move, loose ones do... and that movement is self-reinforcing. The cons are figuring out a way to pay for it later, when we can only forecast how much we'll make back on the investment... basically, huge risk with an uncertain payback or payoff time. The amount we'll recover is a really fuzzy number. Also, where we direct it matters, as recent debates can attest.

 

More than anything else, though, it's a last resort. The only reason the government needs to do this is because they are the only ones who can right now.

 

I agree with the general assessment, but I am curious about how much 'stimulus return' we get for various types of spending of stimulus money. Personally I like the "big infrastructure" ideas that both inject money and create a better more efficient state (investing in green tech, better roads, better science, etc) but I can't help but to think as we "target in" on specific objectives, we also narrow the target of who gets that money to those that improve infrastructure... who may or may not be the best targets for immediate "economic lubrication" for the short term goal of the stimulus. You risk targeting the few businesses doing well, and just stealing workers from successful sectors, which has a lower benefit in job creation.

 

Essentially, I am curious about all the "pork" in the bill that gets discussed as if it's burning money - those railing against money for contraception because, while planned parenthood may be against their ideology, they make no argument one way or another if people that work at planned parenthood will use that money in a manner that stimulates the economy, nor whether preventing unexpected pregnancies will allow young couples to continue with schooling/get better jobs... or if it will lessen spending because they don't have the spending pressures of a growing family.

It's a rather small amount of the total money - hardly worth mentioning if not for the ideological conflicts, but I find it really interesting as a case in point because all the talk is about ideology, and none is about it's merits towards the economy. It's just assumed if it's "bad ideology" it's bad stimulus period, which is a gross partisan assumption in my mind.

 

Applying that logic to other contended issues - health care, unemployment reform, education funding etc, I wonder where these issues that are being called "liberal trojans bursting the seams of their wooden horse" but I find it really interesting to evaluate these in terms of their economic impacts, on sliding scale regarding their effectiveness at achieving the goal of economic stimulus.

I think if we had a Republican president, house and senate, we'd see the exact same thing but in the other direction. Dems would be decrying stimulus spending that favored Republican solutions as an ideological trojan horse. I think it would again be important to evaluate the merits of each line item separate from ideology, but it makes me skeptical of both sides to think of how much we've been "stimulating" the economy in terms of giving huge contracts to Haliburton and the like through out the course of the Iraq war. I thought war spending tended to create jobs and stave off recessions, but clearly that has not been happening, and I wouldn't mind understanding the answer to that better.

---

Merged post follows:

Consecutive posts merged

I'm sure I'll be taken to task for this, but it seems to me the problem is human behavior. A recession seems to be a psychological condition. Since people are aware of economic strife, they're sitting on money. They're not excuting any business plan as it's all on hold, waiting for things to turn up and stabilize. We undermine ourselves. If we all woke up tomorrow morning and totally forgot there's an economic crisis, we'd probably go buy that car, rent that lot to open our business, buy some tools for the shop, hire some employees to gear up for the summer, etc.

 

I know that's a factor, but at the same time I think you can't ignore underlying issues that could lead to persistent problems. To use a very remedial example (which is probably the most advanced that I can fully wrap my head around ) you can take a small town as an example, with lots of local businesses and such. The economy is good, they produce goods that are sold out of town, they buy goods from out of town, but employment is up. Then you get a "super store" and food chains coming in, which undercut local businesses and send large amounts of money out. (Note: I know lots of extremists out there over hype this issue, I'm just using it as an example)

Next thing you know the local economy is suffering, and no one is exactly sure why.

Once the psychological factor kicks in and no one dares invest things really get bad, but it's not the only issue. If everyone woke up the next day and forgot, they'd still be in a town where a huge amount of money goes out every month - perhaps more than comes in.

 

That's a somewhat remedial example, and personally I favor globalization in the long term (not an isolationist) but I if such a situation can occur even in a small town what risks are there for a nation? This one type of issue probably wouldn't be enough to make or break an economy, but I am quite ignorant to the myriad of other factors that could have a real impact, that have nothing to do with psychology.

They may not even exist in any measurable manner and it could all be psychological, I am just not prepared to dismiss the possibility just yet, which leads me to the thought the underlying economy may need to be tuned up for it to function globally in a way that doesn't lead directly to the state we are in now.

[iNow]

I need to think more on your response. You asked some good questions. You did, however, mention pork, so I'll comment quickly on that. Considering the scale of this effort, I'm actually pretty comfortable at how low the level of pork is. There are a lot of really good ideas in there, and some pretty amazing projects, and of course a few "not so good ideas" or pork related nonsense. However, I think it's been fairly well minimized.

 

What eats me up inside, really, is just how much science based programs that were part of the bill are being culled right now. That type of investment is incredibly low risk and often has huge returns... but, no... that's what's being removed from the bill. I'm rather frustrated by that right now. Of course, it's brought to us by our conservative Senator friends.

 

 

 

http://pandasthumb.org/archives/2009/02/science-gets-th.html

 

US Senators Ben Nelson (D-NE) and Susan Collins (R-ME) are proposing to cut the stimulus/spending package by roughly 10%. Their staff have identified several “useless” programs included in the bill, and it appears that they consider science funding to be one of those useless pursuits.

 

Over the last 50 years, much of our economic development has been driven by science, and at a time when the US is faced with losing its scientific dominance to China and the EU, the US needs increased science funding. Give a man a fish, he eats for a day. Teach him how to fish, and he will eat for a lifetime. Fund fishing research, and your children all eat for a lifetime.

 

From the list of stimulus projects that are on the cutting block:

• NSF
  100% cut ($1,402,000,000)
  
  
• NASA exploration
  50% cut ($750,000,000)
  
  
• NOAA
  34.94% cut ($427,000,000)
  
  
• NIST
  37.91% cut ($218,000,000)
  
  
• DOE energy efficiency & renewable energy
  38% cut ($1,000,000,000)
  
  
• DOE office of science
  100% cut ($100,000,000)
  
  

 

 

Yeah... useless programs, those.

 

 

Either way, I've been personally impressed at how minimal the pork has been considering the nature of this action. YMMV.

[padren]

What eats me up inside, really, is just how much science based programs that were part of the bill are being culled right now. That type of investment is incredibly low risk and often has huge returns... but, no... that's what's being removed from the bill. I'm rather frustrated by that right now. Of course, it's brought to us by our conservative Senator friends.

 

I find that really upsetting, but do we have any figures as to what the current spending levels are on those programs?

 

For instance, I see NASA's budget on Wikipedia is proposed to be $20.211B, up from $17.318B in 2008. I am guessing that $1.5B is being added on top of the budget via the stimulus package, which they propose cutting to an increase of only $0.75B.

 

While I'd prefer the cut didn't happen at all, it accounts for under 5% of NASA's total budget. I am sure that money would go to very good use, regardless of percent, but the percents work out pretty heavily on some other programs.

 

The National Science Foundation only has a budget of $6.02 billion for 2008 and a $1.4B proposed added in the package. This amounts to nearly 25% of the overall budget, which could have a high impact.

 

I am curious about how the other numbers stack up for the rest of their cuts, but I don't really have time to dig into it at the moment.

 

I am admittedly very biased, but to call science funding "useless" and laud themselves on "uncovering such blatant pork" (how I read it) it's one of the few times the world "audacity" actually comes up in my mind.

[Pangloss]

Essentially' date=' I am curious about all the "pork" in the bill that gets discussed as if it's burning money - those railing against money for contraception because, while planned parenthood may be against their ideology, they make no argument one way or another if people that work at planned parenthood will use that money in a manner that stimulates the economy, nor whether preventing unexpected pregnancies will allow young couples to continue with schooling/get better jobs... or if it will lessen spending because they don't have the spending pressures of a growing family.

 

It's a rather small amount of the total money - hardly worth mentioning if not for the ideological conflicts, but I find it really interesting as a case in point because all the talk is about ideology, and none is about it's merits towards the economy. It's just assumed if it's "bad ideology" it's bad stimulus period, which is a gross partisan assumption in my mind.[/quote']

 

It's not an assumption at all -- it simply doesn't matter. The question isn't whether an item in the spending bill has any beneficial impact on the economy, but whether it is the most effective use for the purpose designated. That's what we were told this bill would be. That makes the inclusion of such spending ideological in nature, not economic. And certainly the people criticizing that spending may be partisan, but two wrongs don't make a right -- the spending does not belong there. Period.

 

That spending must be debated as a separate issue. Not doing so constitutes foisting one over on the American public. And we were also told that this would be the era of more honesty and responsibility in government, so we need to hold them to that promise as well, and not excuse it when it is used in a direction we happen to like.

 

That is also, by the way, the argument against earmarks. So be careful what you wish for.

 

(This also applies to the two posts above about science spending, btw. This is ONE SPENDING BILL, and the fact that it happens to be the equivalent of the entire budget just twelve years ago is no excuse to throw every item imaginable into it just to avoid normal debate.)

[padren]

It's not an assumption at all -- it simply doesn't matter. The question isn't whether an item in the spending bill has any beneficial impact on the economy, but whether it is the most effective use for the purpose designated. That's what we were told this bill would be. That makes the inclusion of such spending ideological in nature, not economic. And certainly the people criticizing that spending may be partisan, but two wrongs don't make a right -- the spending does not belong there. Period.

 

Either you misunderstood what I mean or I misunderstand what you meant, so I'll try to be more specific and if I just misunderstood you please feel free to clarify.

 

1) One suggestion I've heard quoted is during this sort of crisis, the government should pay people to dig holes and fill them back up again. That creates jobs, but doesn't really net any larger benefit.

 

2) Another approach would be to pay people to dig holes that we've needed to make larger, and fill wholes we've been trying to fill, so we create jobs and net some benefit in the long run.

 

3) Another approach (less beneficial as stimulus than the first I would imagine) is give the money to people who will move it into Swiss bank accounts, and sit on it until they feel better about using it.

 

What I see most of this bill being about, is #2, but it has problems. Since the Dems are in control, they are deciding which holes should be bigger, and which we should be trying to fill. Some of those holes they want to fill up, Republicans have been trying to dig deeper for years and some that Dems want to dig deeper, Republicans have been trying to fill - specifically because of an ideological difference of opinion between the two parties on which holes are best filled/dug to improve the welfare of the nation.

 

The problem I have is right now I see most of the attacks on the bill coming against spending that runs against a specific ideology - without addressing it's relative effectiveness at stimulating the economy.

 

I am no fan of funding faith based programs - but if we crunched the numbers and determined that was the best bang for our buck I'd put ideology aside in the name of getting our economy rolling again.

The last thing I would want to see is Democrats railing against it because it's a Republican idea that gains favor with their base. If the Democrats wanted to oppose such spending, it better be about it's relative effectiveness compared to other programs we could fund so as to get the highest possible return on our money.

 

The thing is I am sure a lot of the spending based more on ideology (to the point of abuse) than it is on it's effectiveness, and if the drafters were not biased, it would never make it in. At the same time, the people critiquing the spending are doing so based on ideology, not based on an item's relative effectiveness. That said, I think a lot of what is considered "slipped in for ideology" was actually included innocently as stimulus... whether the drafters objectively assessed that effectiveness well or not is another matter - but those aren't the result of abusing the crisis.

 

 

That's basically why I started this thread: to try to discuss the actual effectiveness of the various elements spending proposed in terms of maximizing return on investment towards stimulating the economy without concern as to whether it leads us in a more liberal or conservative direction.

 

It's not about if any given element has any economic benefit at all, but which ones have the best, which ones that have the best could be larger or if they max out at a point, and which ones are completely useless. It's probably more complex, as some may provide great benefits in the long term but yield poorly in the short with various shades of gray in between. But the question of how you spend money best to jump start an economy is one I find rather interesting, and sadly there is very little talk about those mechanics going on in the national debate - it's all ideological political rhetoric at this point. Due to that, I figure at least we can have that discussion here.

[iNow]

I think if we had a Republican president, house and senate, we'd see the exact same thing but in the other direction. Dems would be decrying stimulus spending that favored Republican solutions as an ideological trojan horse. I think it would again be important to evaluate the merits of each line item separate from ideology, but it makes me skeptical of both sides to think of how much we've been "stimulating" the economy in terms of giving huge contracts to Haliburton and the like through out the course of the Iraq war. I thought war spending tended to create jobs and stave off recessions, but clearly that has not been happening, and I wouldn't mind understanding the answer to that better.

It's OT, but google pointed me to a pretty good discussion about exactly that over here.

 

---

line[/hr]

 

 

The problem I have is right now I see most of the attacks on the bill coming against spending that runs against a specific ideology - without addressing it's relative effectiveness at stimulating the economy.

Great post, man. I completely agree with pretty much all of your points. The one I quoted above is part of the reason our government has been so borked for so long. I, and I think many others, are okay with debate on merit and objective fact, but that's not what we get out of our congress. Instead of academia-based university level discussion we instead get kindergarden level booger throwing as debate, and it's killing us as a nation.

 

I can be won over by a good argument. It happens all of the time, and I frequently switch positions after considering a well articulated justification for a point of view. I'll tell you, though, that I won't be won over by simple labels and fear ("oh, that's socialist" or "that's too liberal" or all of the other ridiculous and completely irrelevant comments which get tossed around). My concern, however, is that the majority of the American populace can/will be persuaded by such non-arguments. Perhaps suitable for another thread. I don't want to divert your primary point:

 

 

 

That's basically why I started this thread: to try to discuss the actual effectiveness of the various elements spending proposed in terms of maximizing return on investment towards stimulating the economy without concern as to whether it leads us in a more liberal or conservative direction.

I personally see the greatest benefit being in renewable energy and converting our transportation system away from the internal combustion engine. I think the economic impact of this will be ginormous, and it has the added benefit of reducing greenhouse gas emissions.

[ParanoiA]

I know that's a factor' date=' but at the same time I think you can't ignore underlying issues that could lead to persistent problems. To use a very remedial example (which is probably the most advanced that I can fully wrap my head around ) you can take a small town as an example, with lots of local businesses and such. The economy is good, they produce goods that are sold out of town, they buy goods from out of town, but employment is up. Then you get a "super store" and food chains coming in, which undercut local businesses and send large amounts of money out. (Note: I know lots of extremists out there over hype this issue, I'm just using it as an example)

Next thing you know the local economy is suffering, and no one is exactly sure why.

Once the psychological factor kicks in and no one dares invest things really get bad, but it's not the only issue. If everyone woke up the next day and forgot, they'd still be in a town where a huge amount of money goes out every month - perhaps more than comes in.[/quote']

 

Well, I see the point you're making but that would only apply if the economy were winding down before the actual correction cycle kicked in. In other words, the economy was humming along fine until this latest cycle which preceded the housing crunch and subsequent financial crunch. We may not like the character of that economy - losing manufacturing, stepping up consumerism (the piggie effect, I call it), but it is an evolved result. It's not like China came in over night and stole 5 million jobs and took half of our manufacturing.

 

So if the economy could function well in that context before correction (that is if the correction is not directly related to the piggie effect) then I would think it could function well after the correction as well. That's not to say I like our newer consumerism economic avatar, and I do fear where that will lead. I welcome attempts to steer us back to more industrialization if it doesn't expand the state.

 

It's a rather small amount of the total money - hardly worth mentioning if not for the ideological conflicts, but I find it really interesting as a case in point because all the talk is about ideology, and none is about it's merits towards the economy. It's just assumed if it's "bad ideology" it's bad stimulus period, which is a gross partisan assumption in my mind.

 

I'm not so sure. I think the accusation is that the pork is defined as that which doesn't stimulate anything, but rather seems generated from ideological imperatives. So the argument becomes about ideology, when really it should be about the fact this is a stimulus bill, not the president's proposed budget.

 

The republican argument, as I've heard it anyway, is that the democrats are using the bipartisan stimulus initiative to attach pet projects that have been dormant and rejected for years previous. Without a line item veto, you can really use national exigencies to sneak stuff through. So it becomes entirely partisan and thus cooperation falls by the wayside. Of course, it's the pot calling the kettle black. I like the line item veto for this reason. In a way, you can hold the president accountable for not using that power if they allow such pork. So, when the president says "no earmarks" or claims no ideological opportunism, then they must prove it with their pen.

 

Also, I see alot of posts complaining about the republican's definition of "non-stimulus" related items, but I haven't seen the flowchart that supports such things as being stimulating for the economy. For instance, does investment in NASA stimulate the economy? I'm not sure how. I like that kind of investment, but as part of the presidential budget, not as part of a stimulus package. My mind could be changed if someone could support how these things stimulate the economy.

 

 

Firstly I would like to state for the record that I am less concerned about the actual size of government than I am with its ability to do the things the citizens living under it expect.

 

Really, this seems to be the dividing line I think. Some of us disagree with the things the citizens living under it expect the government to do. I too agree wholeheartedly with your statement here. I don't care how big the government has to be to enforce laws against violent crime, protect us from foreign invasion, uh..keep peanut factories from shipping deadly bacteria across the country..etc.

 

However, I don't expect my government to police the globe, subsidize bad investment, bailout failing capitalists..etc. So that appears to be the heart of it, I think.

 

The problem is that we're trying to use monetary and fiscal policy to reinflate a bubble that was a result of mis-investment. The recession is not the problem' date=' its the cure. [/quote']

 

The problem I have with the above is that it's backward-looking instead of forward-looking. Hindsight is 20/20, and in the end it doesn't really matter why we're here, so long as we learn something from it. Laissez-faire would have us never learn anything; in fact insists that forward progress is a bad idea (see quote above).

 

It doesn't really matter why we're here? That explains why you insist on reinflating bad investment, leaving you destined to keep cycling over and over again. How is that progessive and forward looking?

 

Laissez-faire would have us learn something for sure. We learn to not invest in bad ideas or else we lose our ass. Your idea of continuing the bad investment keeps us from learning anything or moving forward since it presupposes, by your own words, that it doesn't matter why it's happening.

 

I think the point ecoli is trying to make is that you're trying to solve a solution. Diluting the solution to tame the bad taste just dilutes the cure as well, takes longer to play out.

 

Again, all of the models "work". But that doesn't mean society likes how they work. It's clear that our society doesn't like the natural corrective effects of a purer form of capitalism. So, I agree with you that modern society insists upon it, but I don't think it's required. We're just becoming more and more collective, more and more security driven and less and less driven by individual opportunism and the liberties and consequences that go with that. The consequences are nothing new and nothing revolutionary - expansion of the state at the expense of liberty.

 

And if that's what modern society wants, there's not much guys like ecoli and I can do about it. We simply prefer a more brief hard medicine approach, to keep the state small and preserve as much individual pursuit as we can. But I don't think that means it's not forward looking, or insists on a lack of progress. Not at all.

Edited February 7, 2009 by ParanoiA

[Pangloss]

1) One suggestion I've heard quoted is during this sort of crisis, the government should pay people to dig holes and fill them back up again. That creates jobs, but doesn't really net any larger benefit.

 

I agree. And I don't see any sign of that anywhere in any of the stimulus proposals.

 

 

The problem I have is right now I see most of the attacks on the bill coming against spending that runs against a specific ideology - without addressing it's relative effectiveness at stimulating the economy.

 

Yes there is a lot of that going around, but that doesn't mean there isn't any legitimate analysis and criticism taking place. You just need to look more closely, IMO. This is one of the reasons I follow politics in the first place, so I can better separate the signal from the noise.

 

 

Laissez-faire would have us learn something for sure. We learn to not invest in bad ideas or else we lose our ass. Your idea of continuing the bad investment keeps us from learning anything or moving forward since it presupposes' date=' by your own words, that it doesn't matter why it's happening.

 

I think the point ecoli is trying to make is that you're trying to solve a solution. Diluting the solution to tame the bad taste just dilutes the cure as well, takes longer to play out.

 

Again, all of the models "work". But that doesn't mean society likes how they work. It's clear that our society doesn't like the natural corrective effects of a purer form of capitalism. So, I agree with you that modern society insists upon it, but I don't think it's required. We're just becoming more and more collective, more and more security driven and less and less driven by individual opportunism and the liberties and consequences that go with that. The consequences are nothing new and nothing revolutionary - expansion of the state at the expense of liberty.

 

And if that's what modern society wants, there's not much guys like ecoli and I can do about it. We simply prefer a more brief hard medicine approach, to keep the state small and preserve as much individual pursuit as we can. But I don't think that means it's not forward looking, or insists on a lack of progress. Not at all.[/quote']

 

Perfectly legitimate points, and in the end a mixed approach isn't so much proven as it is popular. I admit that, but I would just point out that it's not just a question of what you and ecoli could do about it, it's a question of what any democratic human society can ever accomplish, even with perfect information management and education. I submit that a democratic society will always be intolerant to some degree of loss and pain, which means that a democratic society will always be a mixed economy. So why tilt at windmills? This isn't just the way it is, it's the way it always will be, because it cannot be any other way.

[ParanoiA]

I submit that a democratic society will always be intolerant to some degree of loss and pain, which means that a democratic society will always be a mixed economy. So why tilt at windmills? This isn't just the way it is, it's the way it always will be, because it cannot be any other way.

 

Damn that hurts. I suppose that's true, but then there's always the chance we evolve to a more disciplined mindset, or that specious efforts to avoid loss and pain will eventually inflate it traumatically, causing us to rethink how we gauge loss and pain. Maybe a hundred years from now, letting the economy correct itself without buffers will be the preferred method of avoiding loss and pain.

 

So, those of us who advocate a more purer form of capitalism must maintain our roles to contribute to that evolution, and to the democracy since it's essentially a net result of the people's diverse voices.

[npts2020]

There have been some great points made in this discussion, definitely a lot to think about. IMO the biggest problem with the stimulus package is that we are trying to solve long-term problems with short-term solutions. Propping things up the way they currently are is a short term solution (its effectiveness can be argued) that does little to address the reasons we got into this mess to begin with (fiat currency, over-inflated derivative market based on an over-inflated housing market, large fluctuations in enegy prices, Ponzi scams both institutional and individual, etc.).

The so-called "leaders" in America are telling the people that it is a bad time for everyone that is going to require major sacrifices from us all (globalization, national debt, environmental degradation, etc.) yet make no sacrifices of their own. In the midst of the "worst economic crisis" since the Great Depression (maybe ever) the most expensive campaigns ever conducted for public office unfolded in front of everyone. Do these people then get together and attempt to explain why things have happened the way they did (hint it is to their advantage if nobody can figure out what is going on)? Do they make some symbolic sacrifice of their own, like cut their salaries by $1 or require all congressmen to get their own health care? No, They propose spending more of our money than has ever been spent (IMO people are being naive to believe that it will not cost more than advertized). This has been bi-partisan (even if house republicans would have you believe differently) both before and after the most recent election, which is still going on, costing us even more $$.... Anyway, the point is that it is only businessmen for the most part who are able to accumulate the resources to run for large scale public offices (national, statewide, some large citywide offices), which automatically puts an extreme bias toward business oriented solutions (not arguing for or against) or at least ought to be expected. The problem is that many of the business oriented solutions are detrimental to society and/or individuals i.e. current and previous bailouts, carbon emissions, tax breaks to corporations over individuals, etc. Personally I would like to see the government completely take over any failing "business-too-big-to-fail" and do one of several things;

A)sell its assets outright,

B)operate it into an orderly bankruptcy and sell-off,

C)take over and operate the business outright if it is so vital to have it until it is no longer needed,

D)some combination of the above.

Yes, this will require government to be responsible and will be more trouble than simply printing more money and "loaning" (wink wink) it to those who couldn't manage the money to begin with but I believe it would send a clear message that in a capitalist country, capitalists are expected to support themselves.

[Pangloss]

Damn that hurts. I suppose that's true, but then there's always the chance we evolve to a more disciplined mindset, or that specious efforts to avoid loss and pain will eventually inflate it traumatically, causing us to rethink how we gauge loss and pain. Maybe a hundred years from now, letting the economy correct itself without buffers will be the preferred method of avoiding loss and pain.

 

So, those of us who advocate a more purer form of capitalism must maintain our roles to contribute to that evolution, and to the democracy since it's essentially a net result of the people's diverse voices.

 

Or it may be the other way around. Economics doesn't have to be a zero-sum game with some people winning and others losing. Everyone can win. That's not "discipline", it's a greater awareness of potential.

 

We're talking about variables here, not certainties -- there's nothing certain about market economics, or any other form of economics. So why assume that the variables are all on your side? Isn't that... faith?

[ParanoiA]

Or it may be the other way around. Economics doesn't have to be a zero-sum game with some people winning and others losing. Everyone can win. That's not "discipline", it's a greater awareness of potential.

 

We're talking about variables here, not certainties -- there's nothing certain about market economics, or any other form of economics. So why assume that the variables are all on your side? Isn't that... faith?

 

Sure that's probably more likely, actually, but I have no reason to believe a managed economy would achieve that better than an economic system that respects potential loss. There doesn't have to be losers, just like we don't have to die young, but the pressure of that potential pushes us to evolve smarter.

 

I believe managing an economy keeps the individual from evolving toward a more proficient performance as thoroughly as a systemic balanced economy does. One protects them from their bad decisions, low pressure to repeat mistakes, while the other leaves the responsibility at their doorstep, where it began.

 

Remember, I'm not advocating laissez faire capitalism, rather I'm taking issue with the notion it doesn't teach anything or move forward.

 

The kind of economy you and others prefer is not compatible with my priority toward personal freedom, and likewise laissez faire dependence on market forces tends to act like tombstone legislation in that damage has to be done before it gets checked. That's cool when we're talking about low quality pots and pans, but not so much for bacterial infected peanut factories.

 

My question is, do you consider government regulation for safety and whatnot within an otherwise laissez faire economy as "mixed"?

[npts2020]

My question is, do you consider government regulation for safety and whatnot within an otherwise laissez faire economy as "mixed"?

 

Sure doesn't laissez faire imply no control other than the "market".

[ParanoiA]

Sure doesn't laissez faire imply no control other than the "market".

 

Yes, but I'm not sure that pure capitalism with the exception of safety regulation would be considered "mixed" or not. "Managed" is a long jump from laissez faire that implies far more than mere safety regulation.

[bascule]

The problem is that we're trying to use monetary and fiscal policy to reinflate a bubble that was a result of mis-investment. The recession is not the problem, its the cure.

 

One "cure" for a leaky dam is to just let the dam collapse. Then all that pent up water will come gushing out, destroying everything in its path. But the body of water will return to its "natural" mode of behavior, unpredictable with occasional bouts of seasonal flooding.

 

Or you can try to shore up the dam...

[ecoli]

One "cure" for a leaky dam is to just let the dam collapse. Then all that pent up water will come gushing out, destroying everything in its path. But the body of water will return to its "natural" mode of behavior, unpredictable with occasional bouts of seasonal flooding.

 

Or you can try to shore up the dam...

 

It's a bad metaphor, because you're assumption is that we have enough building material left to patch the dam and that patching the dam will produce a state more desirable than the turbulent flow (especially for long term) - maybe the dam will wipe out some migratory fish species or bankrupt the community building the dam, prevent investment in new methods of electrical generation or irrigation systems, etc etc etc

[padren]

It's a bad metaphor, because you're assumption is that we have enough building material left to patch the dam and that patching the dam will produce a state more desirable than the turbulent flow (especially for long term) - maybe the dam will wipe out some migratory fish species or bankrupt the community building the dam, prevent investment in new methods of electrical generation or irrigation systems, etc etc etc

 

Except for when its not?

 

It could be a bad metaphor if the assumption proves false, but it could also prove to be a good metaphor if the assumption proves to be true. It may boil down to ideological differences but I lean towards that 1) we can patch the dam, and 2) it will produce a state more desirable than the turbulent flow, especially for the long term.

[ParanoiA]

It's a ridiculous metaphor because it doesn't compare a natural dam to a man-made one. We're talking about two different economic systems that both "hold water", only one method could be said to hold water better and more consistent.