Well, New Republic senior editor Noam Scheiber is coming out with a book criticizing the Obama administration’s handling of the recovery, and one of the apparent revelations is that Christina Romer, chair of the president’s Council of Economic Advisers, wanted a much bigger stimulus than they recommended. This is a bit interesting because this isn’t new information. Romer admitted in interviews when she left the White House that she wanted a bigger stimulus; the economic team simply didn’t think Obama would accept a stimulus package that big.
While I haven’t read Scheiber’s book, given he writes for TNR, I’m betting he thinks the $1.8 trillion upper bound Romer really wanted to recommend (about the size Paul Krugman was pushing at the same time) would have pulled the economy out of recession faster. If only politics didn’t get in the way, then perhaps . . . While he admits in his TNR article that the larger number wasn’t going to be adopted, nothing in the tone or discussion even hints at the ineffectiveness of the $800 billion that was spent to no avail.
It should be pretty clear to most practical economists that the $800 billion stimulus didn’t work, and the reason it didn’t work wasn’t because it wasn’t big enough. The spending side of the stimulus equation was designed to expand government and lock state and local governments into higher long-term spending, either by funding new government jobs or expanding programs like Medicaid. The stimulus failed because it was the wrong policy directed at the wrong problems and siphoned through an inept mechanism for implementing anything — government. (See Veronique de Rugy’s critique here and mine here.) Even Obama admitted that nothing was really shovel-ready in government.
The lesson from the failed stimulus is that the economy is not a set of levers that technicians simply need to pull to get the machine rolling again. It doesn’t matter if their name is Krugman, Summers, Romer, or Friedman. The economy is simply too complex to expect that a massive dumping of cash into its gears is going to set everything right again.
If giving money to people would help the economy, then there is no need to work. Indeed, with all of the money spent between the Bush and Obama Administrations we should have seen growth skyrocket according to this analysis. However, that has never been the case since government spending took root in mainstream economics. Unfortunately, such an observation is now considered blasphemy because it obviously does not lead to more power for pols and government supporting cronies.
CAPCHA is "face the music". In due time, sir, in due time.
Reply to this commentLinkReport AbuseAppealing to Extremes is a logical fallacy, and a poor choice of argument.
Reply to this commentLinkReport AbuseSo, are you saying that the amount of spending between both the Bush and Obama Administrations worked?
By the way, there is no appealing to extremes in the argument. If there were, I would have only said Obama Administration.
Reply to this commentLinkReport AbuseOh, you didn't write this?
"If giving money to people would help the economy, then there is no need to work. "
I could have swore that I read that Appeal to Extremes in your post. Maybe I need to get my glasses checked....
"So, are you saying that the amount of spending between both the Bush and Obama Administrations worked? "
What do you mean 'worked?' Government spending doesn't necessarily create jobs, though it can. It doesn't necessarily lead to advancement of the economy - though it can. Only those who seek to take an extreme position on such matters have a black-and-white view of the effects of gov't spending.
Reply to this commentLinkReport AbuseGovt spending can create jobs. Unfortunately the taxing and borrowing needed to support that spending destroys at least as many jobs.
Reply to this commentLinkReport AbuseBroken Window Fallacy: External Link
Reply to this commentLinkReport AbuseYes, I did write that if giving people money helped the economy then there is no need to work. In what way is that an extreme statement? There is entire philosophy built up on such a notion. It's called communism, and it's off-shoot adherent socialism.
"Government spending doesn't necessarily create jobs, though it can. It doesn't necessarily lead to advancement of the economy - though it can."
A contradiction, which is the problem with government spending. You cannot spend money without first earning it. Government spending is a net subtraction on the economy, not a net plus. If government spending was a net plus, the government could raise the tax rate to 100% and no one would mind. People mind it when the tax is raise even a percentage point and look for ways to shelter income. Seems to me the extreme position is the one where people think that government spending doesn't necessarily create jobs, though it can.
Reply to this commentLinkReport Abuse"Yes, I did write that if giving people money helped the economy then there is no need to work. In what way is that an extreme statement?"
Well, first - it's clearly untrue. Second, nobody is making the argument you are attacking (that's a Strawman fallacy). Third, you are exaggerating the argument people are actually making (that gov't spending can stimulate the economy) in order to make it seem ridiculous. That's a logical fallacy. It doesn't advance your argument - it just makes it look like you don't know much about how to advance an argument.
Here, you really need to read up on this before posting any further:
External Link
"Seems to me the extreme position is the one where people think that government spending doesn't necessarily create jobs, though it can."
History is quite clear on the validity of this point. Now you're just coming off as ignorant.
"You cannot spend money without first earning it."
Really? You might want to tell both banks and credit card companies this, as you are positing that their business models are faulty and that they don't exist.
Reply to this commentLinkReport AbuseHow did the banks and credit card companies not earn the money that they spent? Did they steal it from someone? They provided a service, and got paid for providing that service.
Reply to this commentLinkReport AbuseWow, just--no. Do you really think banks spend only as much as they collect in fees? No way--they're spending money that they hold. They borrow and lend. This is why it's problematic to moralize the economy in terms of who's "earned" money and who hasn't. Banks don't "earn" everything they spend, and it would be very bad for the economy if they could spend only what they earned.
Reply to this commentLinkReport Abuse"Banks don't "earn" everything they spend, and it would be very bad for the economy if they could spend only what they earned."
I don't know if this comment is directed at me, thanks to the convoluted format here, but banks indeed don't spend everything they earn because Federal Reserve requires them to have a ready reserve to meet demand deposits should savers decide to pick up their money and run. However, banks certainly do mean to leverage themselves as much as possible in order to make a steady profit to cover requirements, lending fees and the like. No one stated that banks can only spend what they've earned, and I don't know what you've read that made you say such a thing. My point is that in order for banks to operate they by definition need savers to capitalize them. Otherwise, what's the point of a bank?
Reply to this commentLinkReport AbuseNo, banks do not spend the money that they hold on deposit. They lend it.
They then earn interest on that money. Part of which is given back to depositors in the form of interest on deposits, the rest is paid to employees, suppliers, and investors. The rest of the money that they spend they earn in the form of fees for services performed.
So yes indeed, banks earn every penny that they spend.
Reply to this commentLinkReport Abuse1) It is not untrue
2) I introduce no strawman. I responded to the statement in which you addressed.
3) Stimulus spending IS ridiculous and the idea that lots of money can be used to stimulate the economy has been tried no once, not twice, not three times, but FOUR times during 2008 - 2010 (rebate checks Bush, the first housing mortgage program, TARP, Obama stimulus, Cash for Clunkers).
Simply because you do not like the facts does not mean that the argument does not stand.
"Really? You might want to tell both banks and credit card companies this, as you are positing that their business models are faulty and that they don't exist.."
And how exactly did banks and credit card companies come into possession of money to lend? There must be SAVERS in that equation somewhere from which banks and credit card companies (but then I repeat myself) gets the money to lend out to borrowers. How do people SAVE money without first earning it? Only a person that is, oh I don't know, IGNORANT about finance and economics would say such a thing. Then again, there are lots of people who are economists and financiers much smarter than I who believes as you do.
And you introduce your link to deflect attention from the fact that you can't credibly argue your point, namely that the stimulus worked and had its intended effect. Nice going, TheFish! This one ups you on Obamacare and gay marriage.
Reply to this commentLinkReport Abuse"And how exactly did banks and credit card companies come into possession of money to lend?"
Are you serious? You are misunderstanding my argument on it's most basic level.
If I get a loan from a bank, or a line of credit from a credit card company, I am spending money that I didn't earn. If the US gov't borrows money (by a variety of methods) to finance expenses in excess of taxes that came in, it's spending money that wasn't earned by US citizens. Your initial statement said nothing about where the money came from to be spent, it only addressed that which had been earned, and it was incorrect.
As for your points,
1) you were clearly wrong, only a child would be unable to realize that
Reply to this commentLinkReport Abuse2) you did introduce a strawman, you just don't know enough about logic to realize it
3) the CBO and almost every other economist in the world says you're wrong about this as well. I can't state it any plainer than that. Outside of a few right-wing think tanks, nobody agrees with what you have written here. But that's probably because they understand finance and economics far better than some fool on the internet.
The sad thing is that the aquatic one actually believes he's constructed a cogent argument.
Reply to this commentLinkReport AbuseNo, TheFish, you are misunderstanding your argument at the most basic level.
You have now introduced a strawman into your argument to try to make yourself look right. In order for you to borrow money, you still need to have the capacity to be able to pay it back. When a bank lends you money, they have an expectation at some future date that you will pay them back. In other words, YOU ARE ASKING TO BORROW MONEY NOW WITH THE PROMISE OF GIVING THEM YOUR FUTURE EARNINGS AT LATER DATE. The premise has not changed. You must always earn money before you can spend it.
1) Sticks and stones, but this is TheFish
2) There is no strawman introduced. Once again, I addressed your argument completely. If you are not logical enough to recognize that, that is your problem. Do not try to pass that on me.
3) The CBO can say a lot of things, but the CBO was also wrong. It too predicted that unemployment would match somewhere close to the Obama Administration's estimate. Funny, you didn't even address that point. And if I hear almost every other economist says X I'm going to start calling you names. I can name many economists who disagreed with the stimulus such as Veronique DeRugy, Douglas Holtz-Eakin, Larry Kudlow, Thomas Sowell, John Taylor, Robert Barro, Milton Friedman, Dick Armey, Walter E Williams, etc. What do these economists have in common? They're all conservative to libertarian leaning. I'm pretty sure all of your economists will be leftish, assuming you can name leftish economists other than Paul Krugman, Brad DeLong, and anyone who worked in the administration. Guess what that makes this now? A political argument, which is probably why economics is useless at this point.
You're tiresome, TheFish. At least on Obamacare you tried to argue with conviction. Here you just sound like a whining idiot.
Reply to this commentLinkReport AbuseYou really don't know what you're talking about. In a fiat money system, the fed creates money. You know, the process that in another post you would no doubt argue is "printing money". I'm shocked that you got so many up votes for writing something so economically illiterate. Perhaps you should take Economics 101?
Reply to this commentLinkReport Abuse"History is quite clear . . ."
Reply to this commentLinkReport AbuseAnd you're accusing someone else of having a weak argument, Mr. Fish?
Irony is lost on most liberals.
Reply to this commentLinkReport AbuseAs usual, you are wrong. Reductio absurdium is a valid logical critique.
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