Wednesday, March 11, 2009

A Dweeb asks: Can America be saved? Paul Krugman.

When Dr. Krugman asks, Can America be saved?, we have to ask from what do we need saving?
So I read this:

Boehner said Americans want government to practice the same financial restraint they have been forced to exercise: “It’s time for government to tighten their belts and show the American people that we ‘get’ it.”

and I wonder if this country can handle the crisis we’re in. Remember, John Boehner is, in effect, the second-most influential member of the GOP (after Rush Limbaugh). And while Democrats hold a majority, it’s not enough of a majority to make the minority party irrelevant.

So the fact that Boehner’s idea of economics is completely insane matters.

What’s insane about Boehner’s remark? He’s talking about the current economic crisis as if it were a harvest failure — as if we faced a shortage of goods, so that the more you consume the less is left for me. In reality — even most conservatives understand this, when they think about it — we’re in a world desperately short of demand. If you consume more, that’s GOOD for me, because it helps create jobs and raise incomes. It’s in my personal disinterest to have you tighten your belt — and that’s just as true if you’re “the government” as if you’re my neighbor.
Yes there is this perception in society and Economists have not been able to dispel that when demand goes down that more belt tightening may not be the answer as the collective. But if all we do is to transfer wealth from the future to now how is this moral for us to it? {I am not saying that I believe that only that is the koan that he must address.}

But we face the isolation paradox and yes please Dr. Krugman, Thoma, etc spend all your money and if you would be so nice, buy some of my products or my wife is in Architect and I am sure she could use the work. The government does not have unlimited resources, it too much abide by some constraints, whether we are approaching that is the question.

Dr. Krugman for me also does not use a more refinement in his analysis than just "demand" and then interpreting that to me consumer demand. A better understanding is absorption in describing a recession or depression. In a basic economy we have Consumers and Business denoted by Investments {planned and unplanned} and Government and lastly the World {exports-imports}. Yes we have unplanned investments by business happening now and consumer spending is down and exports while helped the US in certain months has also dried up as a way to raise absorption. It seems that business in this environment is not willing or even able to increase planned investments to make up the shortages right now and Obama is not making things any better with populist rhetoric. If there is no way to know with certainty what the returns on investments are going to be then business increases its risk aversion levels and thus does not invest. The stock market seems to be indicating these sentiments.

He may think that the Big Push might help us but we still have to think if Government deficits now have a positive benefit to society and not just feel good promises as well as expansion of the welfare system.
Plus, who is “the government”? It’s basically us, you know — the government spends money providing services to the public. Demanding that the government tighten its belt means demanding that we, the taxpayers, get less of those services. Why is this a good thing, even aside from the state of the economy?

Again, this is what the leaders of a powerful, if minority, party think. Can this country be saved?
Yes, we are the government and we do not have Polyarchic Government. But the question he fails to address is whether conservatives in general believe that we are getting value out of those services. Where is the NPV analysis of these projects?

Well, I am sure he is just sitting at home worrying about the Republican Party. But his attitude does not match his concern. I mean if he thinks that "the second-most influential member of the GOP (after Rush Limbaugh)" is going to win friends and influence people then he must be a Libtard. Why not try to correct his mistakes instead of being a political hack?

Instead he sides with Practical Pelosi.
Pelosi open to another stimulus if necessary Economists say it's working, but may not be big enough
"You have to keep the door open to see how this goes," Pelosi said. "But we must give it time to work."
"There's a drum beat of optimism in regard to this package and this president, that is very positive," Pelosi said. She said it would take time for the stimulus to have an impact, but she hoped confidence would return to families and markets quickly.
So a week is enough? a month? We have not even started to seriously hand out the dough and talk about we need more is just silly. But Dr. Krugman eats that up. Sure glad neither of them are at the Fed.
Allen Sinai, chief global economist for Decision Economics, said the stimulus would probably create 2.5 million jobs in the first two years. "Initially, the jobs created may be a little disappointing, but over time, over a three-year period, I think 3 million new jobs is not unrealistic at all."
Despite that forecast, the stimulus is a good policy, Sinai and two other economists agreed.
It just may not be big enough.
I agree in using econometrics as a tool, but there comes a point when there are so many factors that just guessing or a dartboard can be better. Of course they are "creating or saving jobs". How do you prove you "saved" a job based on some indirect effect. That is aside from the paychecks for specific tasks in the government checking account.

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