America Burns, Government Chases Baseball
BY Herschel Smith
14 years, 2 months ago
Roger Clemens is scheduled to be arraigned in federal court. He will likely enter a not guilty plea. I would too, as the government’s case probably has a fatal flaw. In other news, the Chairman of the Joint Chiefs of Staff doesn’t seem to be very interested, and is talking about other things.
The national debt is the single biggest threat to national security, according to Adm. Mike Mullen, chairman of the Joint Chiefs of Staff.
Tax payers will be paying around $600 billion in interest on the national debt by 2012, the chairman told students and local leaders in Detroit.
“That’s one year’s worth of defense budget,” he said, adding that the Pentagon needs to cut back on spending.
“We’re going to have to do that if it’s going to survive at all,” Mullen said, “and do it in a way that is predictable.”
I can only say I sure am glad that this administration has its focus on the right things and my best interests at heart.
On August 29, 2010 at 10:07 pm, Burk said:
Not sure where your irony lands here, but in case you agree with Mullen, he is talking out of his, er, ear, with no knowledge of economics but high knowledge of right wing talking points. The government needs to spend more to put more people back to work, hopefully productively rather than militarily, but whatever it takes, we need more of it.
On August 29, 2010 at 10:24 pm, Herschel Smith said:
I see, it’s the government that creates jobs, not industry, or business, or private citizens.
Sheesh. It seems that you guys would give up on socialism / Kenesian economics / Statism when it has failed it adherents for so many years. Your faith in the state is impressive … and stolid, in the face of the unmitigated disaster of its record.
On August 30, 2010 at 7:16 am, TSAfabet said:
@ Burk: there are none so blind as those who refuse to see.
Nearly $1Trillion (TRILLION!!) spent on Porkulus and what do we have to show for it? Oh right…3 million jobs “saved.” Convenient. What’s that? Oh, we didn’t realize just how awful an economic mess George W. left us. Why, when you look at it that way, it is just amazing that the unemployment rate is ‘only’ 9.5 percent (or, if you include those who are underemployed or have given up looking, it is closer to 20 percent). It could be so much worse without all that government spending. Gee, that Porkulus bill should have been much, much bigger, come to think of it.
And, of course, everyone knows that mountains of sovereign debt don’t really matter. Greece and the other Euro PIIGS… well that’s different. International economics don’t apply to the U.S. And, well, China would never dream of using their enormous holdings of U.S. Treasuries as leverage in any way. We can rest easy knowing that China will always continue to finance our deficit spending endlessly into the future.
But FDR spent a ton and rescued the country from the Great Depression, didn’t he? So that’s what we need to do this time, right? Except, none of that spending brought down unemployment. Just the opposite. Government spending sucked up capital that otherwise would have been available to create jobs and spent it on ineffective, inefficient and wasteful programs that extended the Depression (whereas Europe recovered much sooner). It was World War II that pulled us out of the Depression and finally brought unemployment down.
On the other hand… every time we have cut taxes in the face of a recession, we have come out of it relatively quickly and with government tax revenues brimming. Eh. Coincidence.
On August 30, 2010 at 12:29 pm, Burk said:
Hi, All!
The government (being us in our communal guise) is indeed ultimately responsible for running the economy, which means both printing the money and supplying conditions for employing the citizens. In world war II, that meant commandeering all productive capacity for the war effort. In normal times, it means supporting and regulating private trade so that everyone has maximal freedom within the straightjacket of contract and other law.
Right now, it means printing enough money to stave off deflation in the wake a collapse in bank lending and a flight to safe savings. Economic demand fell off a cliff, and we have millions of people unemployed, ready to do whatever work the private or public sectors want them to do.
If the public sector can productively employ them, it should. We need roads rebuilt, wars fought, train lines laid, etc. and so on. There is no shortage of needs for labor in the US. The government can and should buy all available labor while the downturn lasts to make our country a better place for all, as well as maintaining skills and incomes for the unemployed. And it should pay less than market rates so that those workers are motivated to return to the private sector when they can.
Can we afford this? The lesson of Greece is completely irrelevant. Greece does not print its own currency and has to borrow on private markets. Greece can (and should) default. We are in a totally different situation, able to spend as much as we wish, limited only by inflation in the currency we issue. Borrowing that money via bonds is a monetary operation, not financially connected with government spending, despite the legal strictures we are left with from older financial models.
Our deficit is equivalent to private savings, which are very popular right now. Do you own bonds? Do you want to own more? Probably yes to both. When the economic ship rights itself, (hopefully sooner with further government help), these dynamics will reverse, and bonds will be less attractive vs private risk, and government revenues will go up.
In all honesty, we will always and should always have a government deficit, due to our export trade position, which is always in deficit. The government has to cover the leakage of dollars to those overseas who want to hold them by printing and spending more. When China finally decides that holding dollars isn’t doing them so much good, then all this will reverse.. they will buy dollar goods and investments, the dollar will weaken, we will get jobs back, and they will finally enjoy the riches they have been piling up. And our government will not have to print so many extra dollars.
This is called modern monetary economics.
Incidentally, the lesson from FDR was that he didn’t spend enough. As soon as fiscal hawks tried to cut spending, the country entered a double-dip, and the only thing that really resolved the depression was the spending spree of world war II. You might want to read your Keynes.
On August 30, 2010 at 1:30 pm, Burk said:
Incidentally, what failed in the recent collapse is faith in private markets, de-regulation, and casino finance. Keynes is the explainer of the current collapse, as is Hyman Minsky’s theory of the financial cycle. You will recall the the 50’s and 60’s were a wonderful time, run under Keynesian auspices.
Now the rich are trying to hold onto the narrative any way they can, by dismissing state powers and responsibilities except when it is handing money to them directly (bank bailouts). The poor? Who cares about them? They can rot on the unemployment lines.
On August 30, 2010 at 2:12 pm, Herschel Smith said:
Okay, Burk. Rest a little. Let me take another stab at trying to explain what IS and IS NOT going on here.
We all know what Keynes teaches. What I did was challenge his model, and you responded by telling us to read him again. Catch up, dude.
Let me take a different approach here. It’s all about presuppositions and paradigms. Since it’s my blog, I guess I can use any example I wish. I’ll start with Greg Bahnsen and Gordon Stein, debate “Does God Exist,” campus of the University of Ca. at Irvine. It’s a particularly good one since not only do the arguments come out, but Bahnsen hands Stein his hat and Stein has to scamper away with his tail between his legs.
Bahnsen argues for God’s existence because of the impossibility of the contrary: there is no accounting for universal, invariant abstract entities without God. So point: Bahnsen is arguing from the basis of presuppositions, something that many logisticians and philosophers do. I agree.
But there is further development. What about the evidence, asks Stein? Bahnsen replies that if someone can logically demonstrate that his world view is contrary to the evidence, then he will relinquish his world view. No one to date has successfully done that (and I would add, no one will).
So the evidence weighs in, just not before the presuppositions are made. That’s contrary to the way logic is done. You have your own presuppositions, I have mine. You are as entitled to argue from the basis of your own presuppositions as am I. I grant you that latitude, you do it for me.
Then we compare world views and results. The evidence repeatedly shows that Keynes’ model is wrong-headed. It doesn’t work. It runs contrary to the evidence. It has failed us. The data shows it.
So are you able to relinquish your presuppositions? Apparently not. Instead of FDR’s policies extending the depression, you argue that he should have printed and spent even more. The government is our savior.
This reminds me of the story about the dead man who walked into the hospital:
http://www.captainsjournal.com/2010/08/16/going-soft-on-kandahar/
On a different note, it is refreshing and satisfying to see a liberal argue for higher deficits, higher spending, more debt, more government control, and less defense spending. Honesty is the best policy, and I appreciate yours.
On August 30, 2010 at 3:49 pm, Burk said:
Hi, Herschel-
That’s quite a can of worms you open up there. But let’s stick with Keynes. Operating Keynesian policy takes discipline just as any other type of policy. It is not a free lunch, especially when it comes to inflation. But it does recognize the true dynamics of the system, so that one can operate the levers effectively.
If you look at countries that have weathered this recession more successfully, they have spent more in fiscal stimulus. That includes China and Australia. Those that spent less have done less well, or, like Germany, had less drop-off in demand. This is not rocket science, and there is plenty of evidence for those who look. The collapse of private activity was huge, so one needs to make it up, or suffer the long-term consequences of under-potential activity and especially unemployment (if you care).
I appreciate that you have your ideological position, and even flaunt presuppositions you don’t care to go back to investigate and test. It is your blog. But talking points and assertions don’t make an argument. At the current time, for instance, the Fed is out of ammunition. They have babied the banks, and the banks aren’t responding. No lending. Where else is recovery supposed to come from? The tooth fairy? From the animal spirits of our plutocratic class? They are all buying government bonds. You couldn’t come up with a more classic Keynesian scenario.
Sure, Keynes was misused in the 60’s and 70’s, as the government spent too much and taxed too little. But conservative economics since then has led to persistently and unnecessarily high unemployment, to decaying infrastructure and public services, to higher income inequality, and to the spectacular failures of the deregulated financial sector we have just experienced.
One’s unhappiness (or perhaps only my unhappiness!) should be properly directed, not abused and redirected by those same plutocrats (via FOX et al.) for continuing their escape from responsibility and their control of the levers of economic and political power.
##
Incidentally, I could just as well argue against god because of the impossibility of it. If anything is impossible, that is it. But in addition, when you add up the lack of positive evidence, the continued regression to ever-vaguer arguments, and the voluminous psychological evidence of our propensity to hold such irrational beliefs, it becomes clearer that presuppositions can and should be reexamined.
With best regards!
On August 30, 2010 at 4:20 pm, Herschel Smith said:
No, Burk, you can’t just as easily argue for the impossibility of God, and most (knowledgable) philosophers don’t even try. The arguemts are much more nuanced and complicated than that. You are apparently not well read in this area.
My arguments are quite clear, I think. At any rate, be prepared to be specific when you charge me with lack of clarity. I have been charged with many things, some true, some not, but not even once lack of clarity (that I recall). That’s a new one.
You are missing it, Burk. You are committed to your world view, I understand. And so, it must be that the paradigm is being improperly applied. It can’t be the paradigm that’s wrong! That would call into question your most passionately held beliefs!
Conservative economics, Burk, is not Keynes. And it isn’t deficit spending, and it isn’t debt, and it isn’t creation of wealth or jobs by the government. The government cannot accomplish any of those things. Any “conservative” who professes that the government can accomplish those things is a fake conservative. Conservative economics hasn’t failed us. Don’t believe the fake conservatives. Hold them in suspicion, because they are hypocrites.
Conservative economics means that the government steps out of the way, doesn’t take what doesn’t belong to them, stops over-regulating, and allows the market to create wealth.
Your world view will continue to fail you. In a year you’ll have more excuses, and in five years even more. You know how to do it right, and everyone else does it wrong. Ten years from now there will be even more, and the exuses will all be different if you start cataloging them now. But you’ll still be making excuses.
Your savior government will always and forever disappoint you. It will always let you down. It will never accomplish the things you desire it to. Never.
On August 30, 2010 at 4:22 pm, Herschel Smith said:
Oh, and in the future when typing God, use a capital G. It’s as gramatically correct as using a capital letter for my name or yours.
On September 1, 2010 at 8:36 am, Warbucks said:
At the risk of stereotyping my bias and ignorance I respectfully submit the “Uncommon Knowledge” interview by Peter Robinson of the Hoover Institute, of Amity Shales, author of several books including “The Forgotten Man, a new history of the Great Depression. http://fora.tv/2008/05/28/Uncommon_Knowledge_Amity_Shlaes
Amity Shlaes offers a scholarly discussion on the subject of “received wisdom” from the formative years of the Great Depression, that government made it better verses government made it worst by making the Depression last until the 1940. Overall a reasonable 36 minute investment of your time …. right after the elitist 1-minute add for Mercedes.
On September 1, 2010 at 8:40 am, Warbucks said:
WATCH FULL PROGRAM
01. Received Wisdom of the Great Depression03 min 20 sec Add to Profile
02. The Forgotten Man02 min 51 sec Add to Profile
03. Did Hoover Misjudge the Stock Market Crash?02 min 45 sec Add to Profile
04. The Gold Standard01 min 53 sec Add to Profile
05. Hoover02 min 49 sec Add to Profile
06. Defining the New Deal00 min 41 sec Add to Profile
07. Hoover02 min 23 sec Add to Profile
08. The National Recovery Act 03 min 25 sec Add to Profile
09. Political Economic Bullying01 min 38 sec Add to Profile
10. The New Dealers06 min 26 sec Add to Profile
11. Putting the New Deal Behind Us01 min 54 sec Add to Profile
12. Ridding of Social Security01 min 47 sec Add to Profile
13. Letting The Actors Tell Their Own Story02 min 47 sec Add to Profile
On September 1, 2010 at 9:06 am, Warbucks said:
You have by now probably listened to the above video’s and not many similarities between the mood and actions of the 30’s seem to be repeated by the actions of our current era.
May I bring one other little book, mostly unread, just published in mid-2010 to your attention: “Alien Mind, The Thought and Behavior of Extraterrestrials” by George LoBuono. While I find many scientific and spiritual faults with LoBuono’s thesis, he is the first of his kind to engage the subject and one is compelled to admire LoBuono’s determination to maintain the independence of our global evolution. Why read such an outlandish subject as covered by LoBuono you ask? Call it the compelling gene of human intuition if you have never had a UFO experience.
On September 1, 2010 at 9:08 am, Warbucks said:
typo correction: “not many similarities” should be “note many similarities”… oh, God, with a capital “G”… my kingdom for an edit button!