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If people could afford to be unemployed while those new industries got on their feet, maybe. But the more pressing concern is that these new, healthier businesses wouldn't have been American ones. Historically that mindset would have worked, but we're in an increasingly global economy now. We can't count on a failing American business to be replaced by a stronger American business.

Erm, you're waiting for nothing since I already linked to various articles which talk about who was saying what. Including the Congressional Budget Office (which you apparently think is a fine source since you just used them), a former VP of the Federal Reserve Bank and the Chief Economic Analyst for Moody's.


Be that as it may, and without really commenting on your ideas, the fact remains that they credit the stimulus with preventing a deeper recession/depression. Whether or not such a deep downturn would have been a "good" thing in a long term is another conversation entirely. Saying "They kept us from a deeper depression but I think we should have gone through it" might be a legitimate argument but it still starts with the phrase "They kept us from a deeper depression" which is the part that sticks in Gbaji's and Varus's craws.


It may not be your concern if American businesses fail due to recession and never come back but it is government's concern. Even if you don't want it to be, you'll be hard pressed to find any Congresscritter saying "Fuck it. Let's let unemployment get to 25% and see what happens. We'll be better off in the long term and, if not, hell it ain't like you have a right to a job..." Governments which do have a "fuck it" attitude towards unemployment tend to fall under the weight of the hungry mobs and your precious free market Republic won't be around anyway.

Edited, Feb 11th 2011 4:18pm by Jophiel

Take away the words in brackets though Joph. I did not interpret your words "them guys" to mean just those people who wrote those studies. I took it broadly to mean "those economists who believe that stimulus spending works". Given that your own statement was a speculation about my own argument, isn't it silly to try to make hay out of a completely contrived contradiction?


I did not say that those who wrote the studies were the same people who advised Obama. You just invented that after the fact in order to create a BS argument. My argument is not based in anyway on those being the exact same people, so I'm not sure what you think you gain by arguing this point.

Yes. Try rereading it. I'll wait.

Yes, they are. And if you guys would stop just blindly supporting whatever the side you like says, you'd see it. The entire economic theory upon which the stimulus spending (a whole lot of spending in fact) was based on does assume that economic output can be measured purely by dollars flowing around and not by goods and services actually produced. So if I pay you $100 to insult me and then you pay me the same $100 to insult me back, we have generated $200 dollars worth of economic output according to this theory. If I pay someone $500 to dig a hole, and then a second guy another $500 to fill the hole in, I've generated $1000 of economic activity.

What the theory fails to address is that you really only have the original $100 (or $500) that existed as the result of some prior actually productive endeavor. Money is a placeholder for real goods and services. When we start looking just at the monetary policy and ignoring the value of the things those dollars represent, we can easily arrive at absolutely absurd conclusions (like handing the same money back and forth in exchange for things that would otherwise have no value somehow makes us all richer).'


What's so amazingly ironic about this is that those who do understand what's going on and are able to step back and say "that's absurd" are often the ones labeled as not understanding what's going on, by the very people so caught up in the numbers that they lose sight of the larger picture. This is further muddled by the fact that the math being used does work and does accurately model monetary effects in most cases. But when one stops measuring those effects as a result of "honest" economic activity and starts trying to manipulate the outcome by manipulating the numbers, you get absolutely wrong results.


Let me give an example that might make more sense. If more people have usable and valuable skills, more people will be employed at good wages. Those wages represent the value of whatever it is they do (making widgets, whatever). If the value of their widget making skills is high, they will be paid more because they are generating more value to their employer. As a result, the laborers will have more spending cash and will turn around and buy more widgets (and other things of course). This supports the whole process. We could step back and look at the trend and see that because more people buy stuff (increased consumption), the producers of those things have greater profits and can thus hire more workers. So there's a connection between consumption and employment.

But here's where it goes wrong: Someone just looking at the money flow might conclude that all you have to do is hand more money to consumers and you'll create more employment, thus "stimulating" the economy. But the flaw in that thinking is that the reason why the dollar used to buy something is worth something to the producer of the good is because of the value of what the labor that earned the dollar produced in the first place. If that dollar was earned as a result of making something (or providing some service related to the making of something), then increased consumption results in increased "real" profits in the market, and thus will lead to increased employment and more wages and more consumption potential, completing the circuit. If that dollar is *not* earned via that process, it doesn't. For exactly the reason why paying people do to things that aren't themselves valuable doesn't make anyone more wealthy. It does not increase the total value of the monetary supply in the system.


The principle behind the idea of demand side stimulus spending (most demand side spending really) assumes that you can artificially create an effect by short circuiting the system. But if you skip the whole "making something of value to others" step, you aren't really accomplishing anything. Worse, in order to get those dollars to artificially increase consumption, you had to take them from somewhere else. The "somewhere else" usually ends out being a part of the economy which would otherwise have made things of value to others. Thus, the net effect over time is negative.


It's really not speculation. It's common sense and math. You can't just hand something between two people and make more of the thing you're handing around. You just can't. And anyone who honestly steps back and looks at what we're doing economically can see this. It's just that so many people get so caught up in the money calculations and formulas that they don't see that those calculations and formulas only work if certain assumptions are left in place. When you remove those assumptions (like removing the connection between dollars and productivity), you break the chain, and those same formulas don't accurately predict outcomes anymore.

Edited, Feb 11th 2011 4:28pm by gbaji

I noticed varus didn't answer my direct questions. I'd say it's because he can't. And we won't know anything until Monday since he doesn't have a computer at home.

Ya you really Gbaji'd your initial post if thats what your intent was.

At the risk of seeming bellicose, go fuck a cactus.

Ah, that's runny. I think I'll reload my webpage and read that again, it was such a good laugh.

What's so amazingly ironic about this is that those who do understand what's going on and are able to step back and say "that's absurd" are often the ones labeled as not understanding what's going on,

Yeah, it's amazingly ironic that people who liken the modern understanding of macroeconomics to a zero sum closed system, as if it were two kids running a fucking lemonade stand in their house which contains exactly three other people, are laughed at.


It's really not speculation. It's common sense and math

No, fuckstick, it isn't. This the whole problem. It's not "common sense".

It's incredibly complex, not only internally in the US, but in the ruthlessly viscous global market. Every millisecond there are thousands of transactions waiting to exploit the thinnest advantage in any trade. There's fraud, there's collusion, there are multiple, completely inefficient markets, smashing against each other instantaneously. There are nation states working with great malice to destroy our economy. The smartest people in the world dedicate their lives to the SLIGHTEST systemic edge in understanding, and almost all die as failures.

The idea that you even vaguely understand how even very specific narrow aspects of macroeconomics work *is preposterous*.

It's magic to you. It's religious dogma. You pick something that sounds reasonable, that sounds like "common sense" and decide it's right, but it's obviously complete guesswork on your part. It's not completely your fault, of course, there are people intentionally lying about how the system works for their own gain. You are defenseless against this, utterly, because your lack of real education equates to an inability to judge, so you pick what fits the rest of your worldview. That's easiest, right?

Let me make a guess here: Every single thing you believe politically and philosophically is also what's best for the US economy, right? Gay marriage would be detrimental to the economy, right? So would raising taxes, ever, right? I haven't looked at Townhall in a year so I'm a little lost as to what you actually believe...oh wait, illegal immigration, bad for the economy right? Everything right?

How amazingly consistent. The cause and effect is the interesting part, though, isn't it? You START with the position, then look into the economics and SHAZAM! It's beneficial! You're a natural! No wonder you think it's "common sense".

One of the biggest and certainly the most dangerous lies of our political system is that no problem is too complex for the average to understand and have an opinion about. That everything can be so simplified that anyone can apply "common sense" and arrive at the answer with the best outcome.

It just is not true. Understanding many issues takes a tremendous amount of work. Understanding this particular issue almost certainly many times more than most.

YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.
YOU DO NOT UNDERSTAND IT.


I don't care if you want to regurgitate oversimplified explanations you've latched onto for whatever reason, but PLEASE spare the rest of us from having to pretend to participate in this ludicrous conceit where we take you seriously and "discuss" economics with you.

More than that, the next time something seems "obvious" to you that would spur the economy that hasn't occurred in policy, consider the very likely fact that you are fucking missing some "obvious" thing and that people who've dedicated careers to it aren't just confused.

Thanks.

He's partially correct. Low teacher salaries don't help.