I totally screwed up my site. I was playing with alternative templates and downloading the old template didn’t actually back it up the way that I assumed it did.
Now I have to remember all the widgets and links and other crap I had on the site.
How frustrating.
Businesses and consumers are scared to spend because they are uncertain about the future, or so the theory goes. If someone would just inject a little cash into the system then it would all start moving again. They key is to get the spending going soon on projects that are “ready to go” and will make good use of idle resources right?
There seems to be a belief that there are a few people (namely ‘the government’) that can figure figure out what resources are idle and knows what projects are just sitting on a shelf ready to implement. That is clearly incorrect if you look at any of the boondoggles that are part of the current stimulus bill. It is primary composed of increased departmental budgets and infrastructure projects that will take years (and year) to complete.
If I had to come up with a stimulus bill – let’s leave aside whether or not its necessary – I would attempt to use the private sector to funnel the money.
There are problems with just giving business a bunch of cash – they use it for things like bonuses, airplanes and 0% interest, putting their competitors that don’t get cash at a disadvantage. And, call me a fool, I am uncomfortable letting tax dollars go towards picking winners.
Assuming that most companies are like mine, there have been millions and billions of dollars in capital projects that have been postponed because no one knows how bad the economy is going to get or how long the downturn will last. So there are projects that businesses will think will make them better off that they aren’t pursuing because they are simply trying to conserve cash.
Now you don’t want to just give them money and trust that they will use it in a productive way – but the government could match any capital spend that a business decides to undertake. There are a lot of productivity projects ready to go, we cut capital in half and there are probably twice that many projects that were proposed. (unlike government, the private sector actually has to make choices).
So it’s clear that the money could be spent quickly. Because the funding is only a match there is some likelihood that the spending would actually be productive (though not guaranteed). And this type of spending is more likely to re-absorb the unemployed resources, or at the very least stop the bleeding. It is certainly better than assuming that everyone that has been laid off could become a construction worker overnight.
So that is my plan – what do you think?
– Increase Social Security benefits, say by 30 percent, and a lower the eligibility age of Medicare to (say) 55 years of age. This would offset the deep drop in equity wealth of the elderly population, while favoring the poor. Expanding Medicare eligibility would permit more workers to retire, freeing firms from carrying health care costs for older workers.Social Security and especially Medicare are under deep water and will require cutting benefits or substantially raising taxes (probably both) in the next decade. Galbriath's solutions is... to make the problem drastically worse!
I just listened to Russ Roberts podcast on Keynesian economics – especially in relationship to the current economic situation.
Before I get to my question I would like to commend Roberts on his ability to be gracious to his guests. I find myself nearly jumping out of my seat wanting to challenge his guests on one thing or another. Roberts lets his guests have their say, he will challenge them – gently – on some of their points, but for the most part makes every attempt to make sure that their points are understood or understandable by his listeners. If you do not regularly listen to EconTalk then you are really missing out on one of the most educational hours that you could possibly had. I can’t recommend it enough.
Now on to Keynes.
So, if I understand the Keynesian perspective correctly, recessions are caused by a lack of demand. In order to correct the lack of demand the Keynesian remedy is to have government replace that demand by spending lots and lots (and lots and lots and lots) of money, thus replacing the lost consumer demand with government demand.
So take the current stimulus as an example. Consumers are spending as much as they used to which has led to a recession. The Obama economic team wants to ‘fix’ this by having the government spend close to a trillion dollars, thus replacing the nascent consumer demand, thereby stimulating the economy.
Now, if the stimulus was implemented in a best case scenario with all of the money spent in 2009 on projects that are ‘necessary’ – what happens in 2010? Doesn’t this new lack of demand put us exactly where we started? How is this a long term fix. It seems to me that Keynesian stimulus can be nothing but short term in effect.
Am I missing something?
I hope they spend a lot of time on this. In fact, Congress should make this their top priority and devote every effort into uncovering the truth.
The incoming Obama administration should launch a criminal investigation of Bush administration officials to see whether they broke the law in the name of national security, a House Democratic report said Tuesday.
The more time they spend on useless political grandstanding the less real harm they will be able to do.
A scientific theory can be disproved by a single counterexample, but it can never be proved true because that would mean it couldn’t be refuted; and – it’s faith, not science.
Quick! Which so called science seeks, above all else, to make sure that no one attempts to disprove it?
Detroit has had, arguably, the worst record ever. It really is almost amusing if it wasn’t so bad.
Many blame management, but that is only part of the story. Even if they were, miraculously, able to come up with the perfect game plan, they just don’t have the talent to implement it.
So just wiping out the top and calling it a day isn’t enough. But it isn’t really fair to clean out the labor in this is it? Well, if you consider that if management had been doing their job they wouldn’t be getting those huge paychecks anyway, consider it a short-term windfall that they didn’t really deserve anyway.
But it really isn’t their fault, and no one should be blaming them. They were looking out for themselves, just as you would in that position. You always think that you are worth more than you are – its human nature. But there is supposed to be someone there telling you that maybe you just aren’t good enough.
But that is irrelevant anyway, even if you were able to clean the slate at the top and the bottom it will be years before Detroit can really compete again. So what is the answer? To change the rules of the game?
That will have all sorts of unintended consequences. You won’t really want to be on Detroit because the changes may not be enough. But betting on the competition that has been running all over Detroit for years is risky as well. They are, after all, getting some incredible advantages.
And what rules do you change anyway? Give them 5 downs to get 10 yards? Maybe make touchdowns worth 10 points? Or maybe you just spot them an extra 20 yards every possession. How do you make sure that it makes it “fair” and not just giving them an overwhelming advantage in every game?
Wait. This is absurd? You thought I was talking about the Big 3? That would just be absurd.
And no, I’m not talking about selling a Senate seat.
“Large Hadron Collider will destroy Earth.” – Stakes $1000.
Why not make it $10K or even $100K? Its not like there is going to be anyone around to collect if you are wrong.
I was going to write a story about the Blagojevich story pointing out that politicians are only for sale because they have a lot to offer. But this post says almost exactly what I wanted to say, so I can maximize my comparative advantage (namely driving my daughter to school).
So the big news today is that the governor of Illinois has been caught doing explicitly what most politicians do with more subtlety every single day: selling off their power to the highest bidder. I can't help but note that yet another politician is indicted on corruption charges at the very same time we are handing over unprecedented power to the political class as we partially nationalize the banking system and, apparently, the Big Three auto companies.
I’m what you would call nominally agnostic. I was raised Catholic and was very involved in the church up until college. I quickly became very disillusioned with organized religion.
My opinions have morphed slowly over time into thinking that if there is a god, it is impossible for human to know what it is or what it truly wants. Its possible that some Creator is responsible for our universe. It is also possible that it is a cosmic accident. I’m OK with not knowing, it doesn’t really drive my behavior one way or another.
The upshot of all of this is that religion doesn’t have a very active role in my home life. Both of my girls were baptized in the church, but we don’t attend mass outside of the odd baptism or wedding. We celebrate Christmas and Easter, but they are family events, not religious ones.
Earlier this week my daughter, Alanna, was working on a homework assignment and I asked her what she was working on.
“I have to write a paragraph explaining whether I would rather live in the Middle Ages or the Renaissance.”
I jokingly asked if I got to be a King in the middle ages to which she rolled her eyes. “No, Dad. You are the same class as you are now.”
I told her the decision was easy – we would likely be artisans or merchants and life was much better for them in the Renaissance than the middle ages. She was worried though because non-Christians were killed in that era.
“I’d rather be a slave than dead.”
I pointed out that many that actually could make that choice made the opposite decision, but her statement surprised me. While we are certainly not actively involved in church, I wouldn’t necessarily describe the family as “non-Christian.”
My wife would absolutely describe herself as Christian and I don’t really discuss religion at home. My daughters are free to come to their own conclusions on the subject, so I don’t actively try to influence them. I am not a militant anti-religious person, I think that there are some positive aspects to religion in the community sense.
So I guess I have been successful in not instilling strong religious feelings in my kids – hopefully it leads to being open minded about the subject. I do wonder sometimes if I have taken the wrong tact and should have instead raised them in a more “mainstream” manner.
I guess only time will tell.
