News Obama for President: Experienced Leader

[mege]

The Republicans have been steadfast in stalling public-works projects (you know, the bridges, highways, etc) that could employ workers on short notice that might possibly help Obama's chances. That will not go unnoticed when the primary process is done, and the general election enters its early stages. The Democrats are not stupid enough to ignore the advantages that could accrue from decrying and detailing the stalling and obstructionism used in Congress to game the system using arcane rules.

Like the Keystone pipeline?

Do you honestly believe that 'keeping unemployement high' is why these projects are being turned down? That's quite an indictment.

 

[Jimmy Snyder]

Currently Obama is polling well against each of the Republican candidates and against generic Republican too. If the employment picture improves from here, it could be a problem for Republicans.

 

[Evo]

Anyone see Obama's speech today? He interrupted my tv show.

 

[Gokul43201]

Gallup did a poll last week (with a fairly large sample size - don't recall the actual number), and estimated a seasonally adjusted Feb unemployment number of 8.6%, which is an increase from the 8.3% in Jan. And last I checked, Intrade was going at 8.4% or 8.5%. BLS numbers for Feb should be here soon - we'll see how it goes. The Jan dip was encouraging, but historically expected because of its Jan-ness.

The way I see it, if the unemp numbers are still in the 8's come November, Obama is toast. If it's at 7 or better, the Republicans are toast. If unemployment is in between, then it comes to gas prices. If gas is close to $5, Obama will need unemployment to be in the 6's or he'll have a hard time getting re-elected.

Basically, the outcome of election will likely come down to a bunch of factors that are only weakly related to who the people in the race are.

 

[WhoWee]

The Republicans have been steadfast in stalling public-works projects (you know, the bridges, highways, etc) that could employ workers on short notice that might possibly help Obama's chances. That will not go unnoticed when the primary process is done, and the general election enters its early stages. The Democrats are not stupid enough to ignore the advantages that could accrue from decrying and detailing the stalling and obstructionism used in Congress to game the system using arcane rules.

Can you name any of these projects (that Republicans are stalling)?

 

[mheslep]

Gallup did a poll last week (with a fairly large sample size - don't recall the actual number), and estimated a seasonally adjusted Feb unemployment number of 8.6%, which is an increase from the 8.3% in Jan. And last I checked, Intrade was going at 8.4% or 8.5%. BLS numbers for Feb should be here soon - we'll see how it goes. The Jan dip was encouraging, but historically expected because of its Jan-ness.

The way I see it, if the unemp numbers are still in the 8's come November, Obama is toast. If it's at 7 or better, the Republicans are toast. If unemployment is in between, then it comes to gas prices. If gas is close to $5, Obama will need unemployment to be in the 6's or he'll have a hard time getting re-elected.

Basically, the outcome of election will likely come down to a bunch of factors that are only weakly related to who the people in the race are.

Agreed.

 

[turbo]

Can you name any of these projects (that Republicans are stalling)?

Miss this?

http://thehill.com/video/administration/180469-obama-a-bridge-between-ohio-and-kentucky-

http://thehill.com/blogs/floor-acti...highway-bill-for-political-reasons-says-reid-

 

[daveb]

Unemployment is still 'high' compared to long term averages, right? Just because it's going down doesn't mean he's safe from the historical perspective. I was addressing CharLimit's statement about incumbency being a good bet, but there's more to it than just being the man with the stuck currently.



http://caffertyfile.blogs.cnn.com/2...mployment-over-7-2-is-president-obama-doomed/

There have been only 4 presidents who could have beeen reelected (Johnson, Ford, Carter, and Bush #1) but were not. Johnson chose not to run for relection, and both Carter and Bush faced strong and charismatic opposition. This leaves only Ford. The statistic is meaningless.

 

[Jimmy Snyder]

There have been only 4 presidents who could have beeen reelected (Johnson, Ford, Carter, and Bush #1) but were not. Johnson chose not to run for relection, and both Carter and Bush faced strong and charismatic opposition. This leaves only Ford. The statistic is meaningless.

There was no way that Ford could have been reelected.

 

[WhoWee]

Miss this?

http://thehill.com/video/administration/180469-obama-a-bridge-between-ohio-and-kentucky-

http://thehill.com/blogs/floor-acti...highway-bill-for-political-reasons-says-reid-

Nice try - some additional info on the Brent Spence Bridge.

http://www.brentspencebridgecorridor.com/

Voters thought it was going to be a beneficiary of the Stimulus Bill. From the campaign of Josh Mandel - regarding comments by Senator Sherrod Brown (D-OH).
http://www.politifact.com/ohio/stat...andel-says-sherrod-brown-promised-ohio-river/

"Don’t buy their promises.

One particular bridge spanning the Ohio River comes with a claim of a broken promise that Josh Mandel’s camp is pressing as an election issue.

"Sherrod Brown promised that the first stimulus bill would fund the Brent Spence Bridge … and now he is embarrassed to stand there with the president after both of them broke their promise," Mandel’s campaign said in a news release.

Mandel, currently Ohio’s treasurer, is a Republican who wants to oust Brown, a Democrat, from his U.S. Senate seat in the 2012 election. The news release, distributed Sept. 28,2011, by Mandel campaign spokesman Joe Aquilino, criticized Brown on several fronts.

The reference to the Brent Spence Bridge, which carries traffic for Interstates 71 and 75 across the Ohio River, refers both the federal stimulus package Congress approved two years ago and to a recent visit President Barack Obama made to promote a second stimulus bill. Brown was not present, saying he had congressional business to attend to in Washington.

Before Congress passed the American Recovery and Reinvestment Act of 2009, better known simply as the stimulus act, lawmakers across the country were discussing whether the federal government should funnel billions of dollars into bridge, road and sewer projects. Brown believed so, saying that by funding "shovel-ready projects," the government could begin filling the country’s extensive infrastructure needs while putting Americans back to work.

Among Browns comments then was one that referred to the Brent Spence Bridge. Transportation planners say the 48-year-old bridge needs to be replaced. It is cramped, has poor visibility and carries more than twice the 80,000 vehicles a day it was designed for, according to the Cincinnati Enquirer. But coming up with the estimated $2.4 billion is a problem that has has dogged local and state governments in Ohio and Kentucky.

Enter Brown. In an appearance on MSNBC’s "Morning Joe" program on Jan. 28, 2009, Brown said that "we do need to do direct spending on job creation. That means shovel-ready projects for water and sewer systems, whether it's the Brent Spence Bridge in Cincinnati that will put a lot of people to work and help with economic development, or whether it's a water and sewer system in Defiance, Ohio or in Nashville. It's pretty clear to me that we need direct spending on projects that are ready to go, particularly, green projects that put people to work immediately but also help longer term and economic development.""



further down in the article


"Facing questions about the bridge, a White House spokesman stressed the same day as Obama’s speech that the Brent Spence project is merely "an example" of the kind of project that could get funding in Obama’s new $447 billion stimulus proposal.

Many details remain to be worked out, including how a particular component, a $10 billion infrastructure bank, would work. It is not clear whether this -- or a bigger infrastructure bank that Brown proposes -- could be used toward the eventual Brent Spence project.

So let’s stipulate: Brown said in 2009 that the Brent Spence Bridge was the kind of project the first stimulus could pay for, using it as an example of a shovel-ready project. He clearly suggested that the bridge could be built with stimulus money.

It didn’t happen. And the project was not shovel-ready."

 

[daveb]

Nice try - some additional info on the Brent Spence Bridge.

http://www.brentspencebridgecorridor.com/

Voters thought it was going to be a beneficiary of the Stimulus Bill. From the campaign of Josh Mandel - regarding comments by Senator Sherrod Brown (D-OH).
http://www.politifact.com/ohio/stat...andel-says-sherrod-brown-promised-ohio-river/

"Don’t buy their promises.

One particular bridge spanning the Ohio River comes with a claim of a broken promise that Josh Mandel’s camp is pressing as an election issue.

"Sherrod Brown promised that the first stimulus bill would fund the Brent Spence Bridge … and now he is embarrassed to stand there with the president after both of them broke their promise," Mandel’s campaign said in a news release.

Mandel, currently Ohio’s treasurer, is a Republican who wants to oust Brown, a Democrat, from his U.S. Senate seat in the 2012 election. The news release, distributed Sept. 28,2011, by Mandel campaign spokesman Joe Aquilino, criticized Brown on several fronts.

The reference to the Brent Spence Bridge, which carries traffic for Interstates 71 and 75 across the Ohio River, refers both the federal stimulus package Congress approved two years ago and to a recent visit President Barack Obama made to promote a second stimulus bill. Brown was not present, saying he had congressional business to attend to in Washington.

Before Congress passed the American Recovery and Reinvestment Act of 2009, better known simply as the stimulus act, lawmakers across the country were discussing whether the federal government should funnel billions of dollars into bridge, road and sewer projects. Brown believed so, saying that by funding "shovel-ready projects," the government could begin filling the country’s extensive infrastructure needs while putting Americans back to work.

Among Browns comments then was one that referred to the Brent Spence Bridge. Transportation planners say the 48-year-old bridge needs to be replaced. It is cramped, has poor visibility and carries more than twice the 80,000 vehicles a day it was designed for, according to the Cincinnati Enquirer. But coming up with the estimated $2.4 billion is a problem that has has dogged local and state governments in Ohio and Kentucky.

Enter Brown. In an appearance on MSNBC’s "Morning Joe" program on Jan. 28, 2009, Brown said that "we do need to do direct spending on job creation. That means shovel-ready projects for water and sewer systems, whether it's the Brent Spence Bridge in Cincinnati that will put a lot of people to work and help with economic development, or whether it's a water and sewer system in Defiance, Ohio or in Nashville. It's pretty clear to me that we need direct spending on projects that are ready to go, particularly, green projects that put people to work immediately but also help longer term and economic development.""



further down in the article


"Facing questions about the bridge, a White House spokesman stressed the same day as Obama’s speech that the Brent Spence project is merely "an example" of the kind of project that could get funding in Obama’s new $447 billion stimulus proposal.

Many details remain to be worked out, including how a particular component, a $10 billion infrastructure bank, would work. It is not clear whether this -- or a bigger infrastructure bank that Brown proposes -- could be used toward the eventual Brent Spence project.

So let’s stipulate: Brown said in 2009 that the Brent Spence Bridge was the kind of project the first stimulus could pay for, using it as an example of a shovel-ready project. He clearly suggested that the bridge could be built with stimulus money.

It didn’t happen. And the project was not shovel-ready."

You forgot the rest of the article from Politifact (my bold).

Does this make it a broken promise? PolitiFact Ohio discussed this with the National Republican Senatorial Committee, whose spokesman, Jahan Wilcox, says that Brown certainly made a strong suggestion that a casual listener might equate to a promise.

We agree. That’s an element of truth that that factors into why we are not ruling Mandel’s claim about a broken promise to be entirely False.

But Mandel used a strong word: promise. He did not say Brown broke his suggestion. He said Brown broke a promise. Brown never made a promise, which is a critical difference. It is why Mandel’s claim gets a rating of Mostly False.

 

[WhoWee]

You forgot the rest of the article from Politifact (my bold).

Did the Republicans block the bridge - did Senator Sherrod Brown (D-OH) promise the bridge - would the bridge have been included in Stimulus II? Like I said - nice try - to blame Republicans for blocking this project.

 

[WhoWee]

In the news - IMO - you couldn't make this stuff up if you tried.

http://campaign2012.washingtonexami...proposes-raising-volt-tax-credit-10000/415346

"Obama promotes proposed $10,000 Volt tax credit"

"According to the White House, Obama will proposes that the tax credit is "available at the point-of-sale by making it transferable to the dealer or financier, allowing consumers to benefit when they purchase a vehicle rather than when they file their taxes."

The president first proposed an update to the tax credit in February.

Last week, General Motors announced plans to temporarily suspend production of the Volt and the layoffs of 1300 employees due to sluggish sales.

The MSRP for a Chevy Volt is estimated at $39,145. But even with a $10,000 tax credit, you could own a Chevy Impala full size car for $25,760, $4000 cheaper than the subsidized Volt."

my bold
This isn't a tax credit - it's a rebate paid at the point of sale by the Government?

 

[Evo]

In the news - IMO - you couldn't make this stuff up if you tried.

http://campaign2012.washingtonexami...proposes-raising-volt-tax-credit-10000/415346

"Obama promotes proposed $10,000 Volt tax credit"

"According to the White House, Obama will proposes that the tax credit is "available at the point-of-sale by making it transferable to the dealer or financier, allowing consumers to benefit when they purchase a vehicle rather than when they file their taxes."

The president first proposed an update to the tax credit in February.

Last week, General Motors announced plans to temporarily suspend production of the Volt and the layoffs of 1300 employees due to sluggish sales.

The MSRP for a Chevy Volt is estimated at $39,145. But even with a $10,000 tax credit, you could own a Chevy Impala full size car for $25,760, $4000 cheaper than the subsidized Volt."

my bold
This isn't a tax credit - it's a rebate paid at the point of sale by the Government?

Apparently you can make it up. I can't believe you fell for this WhoWee, you should know to double check sources.

Obama urges shift to new energy technologies
By ANNE GEARAN, Associated Press – 3 hours ago

President Barack Obama on Wednesday made his most urgent appeal yet for the U.S. to wean itself from oil, calling it a "fuel of the past" and demanding that the country broaden its approach to energy.

Mindful of the political dangers of high gas prices, he said shrinking demand for oil must drive the solution.

Obama, promoting his energy policies in a politically prominent state that will host the Democratic National Convention, called on Congress to provide $1 billion in grants to local communities to encourage greater use of fuel-efficient technologies. The administration's goal is to make electric vehicles as affordable and convenient as gasoline-powered vehicles by 2020.

The president also proposed greater tax incentives to encourage the purchase and use of more fuel-efficient vehicles.

Obama's $1 billion incentive for local communities is designed to promote use of advanced technologies such as more charging stations for electric vehicles. Obama has called for 1 million plug-in vehicles on American roads by 2015.

Obama also was calling for increasing a tax incentive to $10,000 from $7,500 for people who purchase certain advanced vehicles.

http://www.google.com/hostednews/ap/article/ALeqM5hlnm93loFhEFqHFBl9GopmsSyZlQ?docId=ffa64da68d074eacb78b68005c9a400d

 

[mheslep]

I'm missing how the AP article contradicts the Washington Examiner article? Both state that Obama is calling for a raise of the tax incentive on EV's such as the Volt to $10K.

 

[Evo]

I'm missing how the AP article contradicts the Washington Examiner article? Both state that Obama is calling for a raise of the tax incentive on EV's such as the Volt to $10K.

Because the article WhoWee posted, which is not mainstream, more or less skewed the truth to make it seem that Obama was wanting the government to pay people to specifically buy the Volt. That's absolutely false.

Starting with the false headline

Obama promotes proposed $10,000 Volt tax credit

It is not a "Volt" tax credit.

Then WhoWee stated it wasn't a tax credit, it was an instant rebate at point of sale, yet he furnished no proof of this and I find no proof of it.

Whowee knows better than to post such misinformation as contained in that article. He used to be so good at checking sources and being a great example of how people should vet the information before they post and if it's questionable to not post it.

 

[Gokul43201]

No contradiction that I can tell. However, both the Examiner's headline and WhoWee's choice of quotes make it look like Obama is singling out the Chevy Volt for special treatment (noteworthy, if it were true), while in fact, the tax benefit applies for all high-efficiency vehicles, including natural-gas-powered commercial trucks.

 

[Gokul43201]

Then WhoWee stated it wasn't a tax credit, it was an instant rebate at point of sale, yet he furnished no proof of this and I find no proof of it.

I've seen that corroborated (I use that loosely, I can't be sure they're independent sources) by another source: http://wot.motortrend.com/obama-ask...er-cars-include-commercial-trucks-177641.html

 

[Evo]

I've seen that corroborated (I use that loosely, I can't be sure they're independent sources) by another source: http://wot.motortrend.com/obama-ask...er-cars-include-commercial-trucks-177641.html

Today's article on CNN mentions nothing about it being an "instant rebate", just an increase of the current tax credit.

It will be interesting to see how it pans out.

http://money.cnn.com/2012/03/07/autos/alternative-fuel-cars/index.htm

 

[mheslep]

Because the article WhoWee posted, which is not mainstream, more or less skewed the truth to make it seem that Obama was wanting the government to pay people to specifically buy the Volt. That's absolutely false.

Starting with the false headline It is not a "Volt" tax credit.

The headline was incomplete, misleading perhaps, but not absolutely false. There are exactly 11 EV's currently for sale in the US that qualify the credit. Of these, only the Chevy Volt (~6000) and Nissan Leaf (~8000) have annual sales above one thousand units per year.

Then WhoWee stated it wasn't a tax credit, it was an instant rebate at point of sale, yet he furnished no proof of this and I find no proof of it.

The Examiner reference Whowee quoted may not have been acceptable, but it is nonetheless correct according the WhiteHouse website:

The President is proposing to transform the existing $7,500 tax credit for electric vehicles into a rebate that will be available to all consumers immediately at the point of sale.

http://www.whitehouse.gov/sites/default/files/other/fact-sheet-one-million-advanced-technology-vehicles.pdf

 

[Evo]

http://www.whitehouse.gov/sites/default/files/other/fact-sheet-one-million-advanced-technology-vehicles.pdf

That was proposed in 2008 and never happened.

The headline was incomplete, misleading perhaps, but not absolutely false. There are exactly 11 EV's currently for sale in the US that qualify the credit. Of these, only the Chevy Volt (~6000) and Nissan Leaf (~8000) have annual sales above one thousand units per year.

This has absolutely nothing to do with sales volume.

The truth.

Obama urges shift to new energy technologies
By ANNE GEARAN, Associated Press – 3 hours ago

President Barack Obama on Wednesday made his most urgent appeal yet for the U.S. to wean itself from oil, calling it a "fuel of the past" and demanding that the country broaden its approach to energy.

Mindful of the political dangers of high gas prices, he said shrinking demand for oil must drive the solution.

Obama, promoting his energy policies in a politically prominent state that will host the Democratic National Convention, called on Congress to provide $1 billion in grants to local communities to encourage greater use of fuel-efficient technologies. The administration's goal is to make electric vehicles as affordable and convenient as gasoline-powered vehicles by 2020.

The president also proposed greater tax incentives to encourage the purchase and use of more fuel-efficient vehicles.

Obama's $1 billion incentive for local communities is designed to promote use of advanced technologies such as more charging stations for electric vehicles. Obama has called for 1 million plug-in vehicles on American roads by 2015.

Obama also was calling for increasing a tax incentive to $10,000 from $7,500 for people who purchase certain advanced vehicles.

http://www.google.com/hostednews/ap/article/ALeqM5hlnm93loFhEFqHFBl9GopmsSyZlQ?docId=ffa64da68d074eacb78b68005c9a400d

 

[mege]

http://www.gallup.com/poll/153161/Unemployment-February.aspx

Gallup is reporting an increase in unemployment and underemployment for last month.

Regardless of what the government reports, Gallup's unemployment and underemployment measures show a sharp deterioration in job market conditions since mid-January. This is consistent with a similar decline in Gallup's Job Creation Index to +13 in the second week of February, from +16 for January. It is also consistent with an economy that continues to struggle with modest growth, particularly as gas prices surge. Further, it suggests that it is premature to assume the condition of the economy will not remain a major issue for Americans both financially and politically in 2012.

 

[Evo]

Figures from Reuters today.

WASHINGTON (Reuters) - Employment grew solidly for a third straight month in February, a sign the economic recovery was broadening and in less need of further monetary stimulus from the Federal Reserve.

Employers added 227,000 jobs to their payrolls last month, the Labor Department said on Friday, while the unemployment rate held at a three-year low of 8.3 percent - even as more people returned to the labor force.

Economists polled by Reuters expected payrolls to increase 210,000 last month and the jobless rate to be unchanged.

It marked the first time since early 2011 that payrolls have grown by more than 200,000 for three months in a row - bolstering President Barack Obama's chances for re-election.

http://finance.yahoo.com/news/february-jobs-gains-seen-strong-060614362.html

 

[mheslep]

Figures from Reuters today.
http://finance.yahoo.com/news/february-jobs-gains-seen-strong-060614362.html

Understand roughly that many jobs need to be created for the employment rate to cover population growth (i.e. immigration) and just stand still. Remember that 2.6 million jobs were lost in 2008; substantially stronger growth will be required to gain them back.

 

[Evo]

Understand roughly that many jobs need to be created for the employment rate to cover population growth (i.e. immigration) and just stand still. Remember that 2.6 million jobs were lost in 2008; substantially stronger growth will be required to gain them back.

We agree on this point. I personally don't think we can create enough jobs to accommodate the population growth. There are just too many people needing jobs now. IMO, high unemplyment is something we will have to accept for quite awhile. Companies have learned to do with fewer employees, especially at management levels, IMO.

 

[Gokul43201]

Understand roughly that many jobs need to be created for the employment rate to cover population growth (i.e. immigration) and just stand still.

We can quantify the "many", at least approximately. Pop growth rate is close to 1% (I think). How big is the labor force? Around 150M? So, to stand still, we need to add 1.5M jobs a year or about 125,000 a month. If we can add 200,000 a month consistently, that is definitely better than stand-still. At that rate, unemp should drop by about 0.6% a year or thereabouts, probably not fast enough to give Obama much cushion, come November. At 400,000 a month he'd be sitting pretty. But in the game of expectations management I suppose most anything is possible. Dropping into the 7's could be hailed as a big deal, if orchestrated cleverly.

Remember that 2.6 million jobs were lost in 2008; substantially stronger growth will be required to gain them back.

"...substantially stronger growth will be required to gain them back" as quickly.

 

[mheslep]

We agree on this point. I personally don't think we can create enough jobs to accommodate the population growth. There are just too many people needing jobs now. IMO, high unemplyment is something we will have to accept for quite awhile. Companies have learned to do with less employees, especially at management levels, IMO.

I don't see why not. In the Reagan years, '82-'89, 20 million US jobs were created, with a much smaller economy ($3T to $5.7T) than the US has now ($15T).
http://www.presidentreagan.info/jobs.cfm

 

[Gokul43201]

I don't see why not. In the Reagan years, '82-'89, 20 million US jobs were created, with a much smaller economy ($3T to $5.7T) than the US has now ($15T).
http://www.presidentreagan.info/jobs.cfm

Recovery from a run-of-the-mill recession tends to be historically much faster than recoveries from financial crises. Don't have the time to cite sources now, but if that statement doesn't sound reasonable to you, I can look for references later.

 

[mheslep]

Recovery from a run-of-the-mill recession tends to be historically much faster than recoveries from financial crises. Don't have the time to cite sources now, but if that statement doesn't sound reasonable to you, I can look for references later.

The '80 recession was bad. Unemployment over 10% (as you posted earlier), inflation was 9.4%. I generally agree that the recession of 2008 was(is?) the worst since the 30's, but not with the Obama excusing hyperbole that '08 destroyed the world and that everything else by comparison was run-of-the-mill.

With regards to financial panics, I can find six prior 1819, 1837, 1873, 1901, 1907, 1929, and now 2008. One can ~see the financial panics, but in most cases they seem momentary to me, except for '29 and now.

 

[Pythagorean]

Not to mention the global economy has undergone rapid changes in the last 20 years, globalization has become stronger, communication across the globe faster.

 

[BobG]

I don't see why not. In the Reagan years, '82-'89, 20 million US jobs were created, with a much smaller economy ($3T to $5.7T) than the US has now ($15T).
http://www.presidentreagan.info/jobs.cfm

The high unemployment around '80-'81 was partially caused by anti-inflation measures, plus older factories were being closed in the rust belt as newer factories were being built in states with lower taxes/wages. Nationwide, unemployment was high, but unemployment wasn't evenly distributed.

Unemployment caused by government measures (or by the federal reserve hiking up interest rates) are more likely to be effected by government measures to lower unemployment.

But, even with more jobs being created overall in the 80's, true changes in the economic environment (manufacturing moving out of the rust belt states) were a permanent disaster for the rust belt, with unemployment mainly decreasing because younger people moved places where there were more jobs (Buffalo - population decreasing from 580,000 in 1950 to only 261,000 in 2010; Cleveland - population 914,000 in 1950 to 397,000 in 2010; etc).

High unemployment in 2008-2011 was caused by market forces that will be longer lasting. Some of those market forces are entirely domestic and seemingly should correct itself much faster than it has, but a big piece of that unemployment is do to jobs moving overseas and that part will definitely take longer to recover from (and may be permanent). And I don't think moving to China, India, etc, is nearly as attractive an option as merely moving to a new state.

 

[Jimmy Snyder]

But, even with more jobs being created overall in the 80's, true changes in the economic environment (manufacturing moving out of the rust belt states) were a permanent disaster for the rust belt, with unemployment mainly decreasing because younger people moved places where there were more jobs (Buffalo - population decreasing from 580,000 in 1950 to only 261,000 in 2010; Cleveland - population 914,000 in 1950 to 397,000 in 2010; etc).

The numbers don't support your argument. I'm using wiki which has slightly different numbers from yours.
The population in Buffalo in 1950 was 358,000. So the decrease from 1950 to 1980 was 38% but the decrease from 1980 to 2010 was only 27%.
wiki Buffalo, NY

The population in Cleveland in 1950 was 915,000 and in 1980 was 573,000. So the decrease from 1950 to 1980 was 37% but the decrease from 1980 to 2010 was only 31%.
wiki Cleveland

In other words, the population decline in these cities was faster before Reagan than after for the time period that you chose. Perhaps using different time periods will support your argument, but these don't.

 

[BobG]

The numbers don't support your argument. I'm using wiki which has slightly different numbers from yours.
The population in Buffalo in 1950 was 358,000. So the decrease from 1950 to 1980 was 38% but the decrease from 1980 to 2010 was only 27%.
wiki Buffalo, NY

The population in Cleveland in 1950 was 915,000 and in 1980 was 573,000. So the decrease from 1950 to 1980 was 37% but the decrease from 1980 to 2010 was only 31%.
wiki Cleveland

In other words, the population decline in these cities was faster before Reagan than after for the time period that you chose. Perhaps using different time periods will support your argument, but these don't.

The point is that government policies can only have a limited impact on unemployment; not that Regan was ineffective. Government policies won't change the underlying problems in a community's economic environment. And, in this case, I used a declining population as the indicator that these communities had serious uncorrectable problems, since high unemployment could be due to either temporary problems, long term or permanent problems, or a combination of both.

Given your numbers (which are correct), one could argue that Reagan's policies lessened the impact of the Rust Belt's underlying problems, but he definitely couldn't eliminate them because those cities had/have problems that go beyond anything that government can control.

Likewise, given increases in productivity while unemployment remains high suggests the current unemployment problem is beyond the scope of things that government policies can correct on their own. High unemployment may be a long term problem that has to be corrected by changes in the market and in changes in the behavior of Americans - things that take longer to happen than just lowering tax rates and interest rates.

 

[turbo]

There is very little a president can do on his own, but with some cooperation from Congress, we could get thousands of infrastructure projects going, fixing up roads and bridges that are deteriorating before our eyes. Such projects don't just employ the steelworkers, earth-movers, pavers, etc at the job-sites. The money ripples out to cement kilns, gravel providers, asphalt plants, steel mills, and the businesses in communities where those businesses are located. Just think how Caterpillar would react if the demand for their heavy equipment doubled (or more) practically overnight.

Such spending would be a whole lot smarter and more effective than bailing out gamblers on Wall Street.

 

[mheslep]

The high unemployment around '80-'81 was partially caused by anti-inflation measures, plus older factories were being closed in the rust belt as newer factories were being built in states with lower taxes/wages. Nationwide, unemployment was high, but unemployment wasn't evenly distributed.

Agreed.

...High unemployment in 2008-2011 was caused by market forces that will be longer lasting. Some of those market forces are entirely domestic and seemingly should correct itself much faster than it has, but a big piece of that unemployment is do to jobs moving overseas and that part will definitely take longer to recover from (and may be permanent). And I don't think moving to China, India, etc, is nearly as attractive an option as merely moving to a new state.

I agree that in the background competition from China has slowed US manufacturing growth, and continues to do so. China however was a small part of the couple million jobs that suddenly disappeared beginning in the fall of 2008. I don't think all those jobs suddenly went to China. The US suffered a financial panic from bad risks taken in the housing market that were suddenly exposed. Credit was cut off to many. With the housing bubbled made suddenly apparent, housing and commercial construction suddenly stopped.

Since the panic, I argue that the recovery has been anemic due to the impact of uncertainty on US investment. This uncertainty has come about from unprecedented deficit spending by the federal government on top of a 100% GDP debt, galloping regulation, and unpredictable hiring costs due to the health care law and the whims of Sec. Sebelius.

 

[OmCheeto]

We agree on this point. I personally don't think we can create enough jobs to accommodate the population growth. There are just too many people needing jobs now. IMO, high unemplyment is something we will have to accept for quite awhile. Companies have learned to do with fewer employees, especially at management levels, IMO.

My boss called me seconds before I was to leave work on Friday. He gave me the go ahead to buy the machine I wanted, that will eliminate 30% of my staff.

I am, the 1%...



Unless of course, I'm part of that 30%. I've been thinking a lot lately, and yesterday I ran my numbers through my spreadsheet, and they said my idea will work. Has anyone filed a patent lately? And where do I get a business license? Is anyone here at the forum running an S class corporation? I also need to know about liability insurance. Can multiple patents that build upon one after the other be filed at the same time, or do I have to file them sequentially? Can I go public with a 100 billion dollar IPO with just an idea? Can I employ 10 million people as an S class corporation? Does anyone know what my mini-rant has to do with Obama's candidacy?...

http://images.cheezburger.com/completestore/2010/2/16/129108479903934925.jpg​

Ah ha! Cheezeburger.com!

Yes, I know. The graph is ancient news. But I wished for an L-shaped recovery, and now I've got it, and I've got everyone by the proverbial euphemistic metonymies.

 

[CAC1001]

Recovery from a run-of-the-mill recession tends to be historically much faster than recoveries from financial crises. Don't have the time to cite sources now, but if that statement doesn't sound reasonable to you, I can look for references later.

Recoveries from financial crises can be quick as well, it depends on the financial crises. The 1929 stock market crash had a pretty fast recovery initially (an entire year went by before the depression started, which was due to a combination of bad policies), and the 1987 stock market crash was twice the size of the 1929 crash. The 2000 crash was even larger. But in all of these, the economy only experienced a minor recession. What hurt the economy really badly with this recent crisis was that it was a real-estate bubble, and real-estate crashes tend to be extremely hard blows to an economy.

I do wonder if part of the current economy's performance is due to this administration and uncertainty created by its policies such as the healthcare bill, the increased debt from the stimulus, increased regulations, and so forth. I also wonder if the administration is over-regulating aspects of the economy through the EPA. One thing I think that is a huge drag on the national economy, that the president unfortunately has little control over, is California. California's is the largest economy in the nation, but their government there is destroying it by regulating so much (LINK1, LINK2). Until California can fix itself (which will probably never happen anytime soon), the whole nation is going to be dragged by it.

There is very little a president can do on his own, but with some cooperation from Congress, we could get thousands of infrastructure projects going, fixing up roads and bridges that are deteriorating before our eyes. Such projects don't just employ the steelworkers, earth-movers, pavers, etc at the job-sites. The money ripples out to cement kilns, gravel providers, asphalt plants, steel mills, and the businesses in communities where those businesses are located. Just think how Caterpillar would react if the demand for their heavy equipment doubled (or more) practically overnight.

Such spending would be a whole lot smarter and more effective than bailing out gamblers on Wall Street.

Longer-term, this could be great for economic growth, but short-term, this will not create any economic growth because to finance it, the government either would have to tax the current economy and then re-inject the money back into it, or tax the future economy (take on debt), or do some combination of the two. So there's no net wealth creation. You also run into the major problems regarding the environment. 2012 is not the 1930s, when there was no EPA and if they decided they were going to build a road, well they just went ahead and built the road. Today, you decide to build a road, and you'll get the EPA and who-knows how many environmental organizations first demanding that every mile (or fraction of a mile) be assessed thoroughly to see what the environmental impact of the road will be. And if it is found that building said road will harm some obscure plant or bug or whatnot, the whole project could be scrapped.

 

[turbo]

Longer-term, this could be great for economic growth, but short-term, this will not create any economic growth because to finance it, the government either would have to tax the current economy and then re-inject the money back into it, or tax the future economy (take on debt), or do some combination of the two. So there's no net wealth creation. You also run into the major problems regarding the environment. 2012 is not the 1930s, when there was no EPA and if they decided they were going to build a road, well they just went ahead and built the road. Today, you decide to build a road, and you'll get the EPA and who-knows how many environmental organizations first demanding that every mile (or fraction of a mile) be assessed thoroughly to see what the environmental impact of the road will be. And if it is found that building said road will harm some obscure plant or bug or whatnot, the whole project could be scrapped.

Nothing happens in a vacuum. If you put a few million people back to work with some short-term borrowing/stimulus, those are people who will be paying taxes instead of relying on unemployment. Once they are back on their feet, they will spend money in their own communities, employing even more people, who also will have taxable incomes. Main Street should have been bailed out instead of Wall Street, IMO, for just this reason.

 

[Gokul43201]

Here's the paper I was talking about earlier where I'd read about recovery times from financial crises: http://www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf

On the other hand, I recently came across a paper that claims the current recession is essentially unrelated to the financial crisis of 2007. Again, I'll need some time to find it (and to read more than just the introduction and conclusions)

 

[CAC1001]

Here's the paper I was talking about earlier where I'd read about recovery times from financial crises: http://www.economics.harvard.edu/faculty/rogoff/files/Aftermath.pdf

Thanks, that looks very interesting.

On the other hand, I recently came across a paper that claims the current recession is essentially unrelated to the financial crisis of 2007. Again, I'll need some time to find it (and to read more than just the introduction and conclusions)

The crisis of 2007 or 2008? Because 2007 was the housing bubble bursting, 2008 was the financial system collapsing due to the housing bubble having burst.

 

[CAC1001]

Nothing happens in a vacuum. If you put a few million people back to work with some short-term borrowing/stimulus, those are people who will be paying taxes instead of relying on unemployment. Once they are back on their feet, they will spend money in their own communities, employing even more people, who also will have taxable incomes. Main Street should have been bailed out instead of Wall Street, IMO, for just this reason.

Yes, but they'll be paying taxes to the government with money that the government got either by taxing or borrowing, so there's no real net change. It would be an artificial demand. True demand can only come from the private-sector. There is also the problem of whether such government "demand" could crowd out private-sector investment. An alternative though could be an infrastructure bank that is a government entity that utilizes private-sector funds to finance infrastructure projects. This gives the benefit of infrastructure work without the government having to either tax or take on debt.

 

[ParticleGrl]

Yes, but they'll be paying taxes to the government with money that the government got either by taxing or borrowing, so there's no real net change.

It depends entirely on what was happening with the taxed or borrowed money. If the workers were paid with money from bond issues, and banks bought the bonds with money from reserves, then its essentially just newly printed money- this is one of the primary mechanisms by which the money base increases.

True demand can only come from the private-sector.

Thats clearly nonsense, like its sister claim that the government can't create value. Remember that an economy is just a system for organizing labor and the products of that labor. Clearly, the government can employ labor, and can use the products of labor. Many of the people employed by the government will be doing valuable things (scientific research, for instance).

All of the demand for 'people who make laws' for instance, will be in the government.

Now, it is true that the mix of labor/resources will be different with and without government- but that doesn't mean the government is 'artificial' in any way. Its just a different societal choice. Historically, in fact, markets governed by democratic governments with strong institutions have been better at producing wealth than weak governments.

Longer-term, this could be great for economic growth, but short-term, this will not create any economic growth because to finance it, the government either would have to tax the current economy and then re-inject the money back into it, or tax the future economy (take on debt), or do some combination of the two. So there's no net wealth creation.

This is also nonsense. If I borrow money now, invest it, and the investment gains value, then I've created wealth. THATS HOW WEALTH CREATION WORKS. To see that your argument is nonsense- note that it implies equally to the private sector. Your argument implies that no wealth can be created ever, and everything is 0 sum.

Further, if I can pay for things NOW and tax the FUTURE economy, this will obviously have a big short term boost unless people respond to the taxes they have to pay several years down the road. All empirical evidence suggests that people don't respond like that- changes in taxes NOW have changes in consumption NOW.

 

[CAC1001]

It depends entirely on what was happening with the taxed or borrowed money. If the workers were paid with money from bond issues, and banks bought the bonds with money from reserves, then its essentially just newly printed money- this is one of the primary mechanisms by which the money base increases.

Yes, but it's still ultimately government taking money out of the economy in one form and injecting it back in in another form. That isn't going to create economic growth.

Thats clearly nonsense, like its sister claim that the government can't create value.

There is nothing nonsense about it. True demand only comes from the private sector. The government cannot create any demand, because it's "demand" is demand that it must take out of the private sector in one form and injected back in. As for creating value, maybe in a very few limited circumstances, but for the most part, government is absolutely awful at this. If government could actually create value, then socialism would work.

Remember that an economy is just a system for organizing labor and the products of that labor. Clearly, the government can employ labor, and can use the products of labor. Many of the people employed by the government will be doing valuable things (scientific research, for instance).

Government can employ labor only in that it must first take wealth from the private-sector and use that wealth to pay its labor. Government doing scientific research could be a form of value creation, but even then, it's still the private-sector that will determine whether that research is of actual commercial value, and if so, will adopt that research and use it to create new products and services.

All of the demand for 'people who make laws' for instance, will be in the government.

And all of those people are funded with wealth taken out of the private-sector in some form.

Now, it is true that the mix of labor/resources will be different with and without government- but that doesn't mean the government is 'artificial' in any way. Its just a different societal choice. Historically, in fact, markets governed by democratic governments with strong institutions have been better at producing wealth than weak governments.

Government in every form is always a leech on society. That is why it requires taxes to operate. Of course societies with democratic governments and strong institutions do better than weak governments. Weak governments means lots more corruption, lack of law and order, and thus a chaotically functioning economy.

This is also nonsense. If I borrow money now, invest it, and the investment gains value, then I've created wealth. THATS HOW WEALTH CREATION WORKS. To see that your argument is nonsense- note that it implies equally to the private sector. Your argument implies that no wealth can be created ever, and everything is 0 sum.

I think you're missing my point. It's like the different between a person using credit-card debt to fund a lifestyle versus using credit card debt to make actual investments. As I said, longer term, government borrowing money or taxing money to repair and/or build new infrastructure could be seen as an investment in that the infrastructure can facilitate additional economic growth that will then generate additional tax revenue, so that it pays for itself (and this is assuming that the infrastructure does this in the longer-term). But in the short-term, borrowing or taxing to build infrastructure is not unto itself any creation of wealth. All of the companies and workers that would get lots of money from such infrastructure projects, that isn't wealth that was created, it's just a redistribution of money from one sector of the private economy to another.

The arguments for stimulus are never that said stimulus will result in infrastructure that will then pay for itself down the line by generating additional economic growth, it's that the actual infrastructure programs themselves are economic stimulus, which is not true. It would be like saying the government should build a bunch of shopping malls in the Nevada desert. If those malls will generate income down the line, then it can be an investment. But the stimulus argument is that just the act of constructing the shopping malls, regardless of whether or not they will be used, is stimulative of the economy. One other thing to keep in mind is that even with regards to trying to pursue legitimate investments, the government is extraordinarily inept at doing this sort of thing, because politics play a role and it's the old "a person spending someone else's money is never as careful as someone spending their own money."

Further, if I can pay for things NOW and tax the FUTURE economy, this will obviously have a big short term boost unless people respond to the taxes they have to pay several years down the road. All empirical evidence suggests that people don't respond like that- changes in taxes NOW have changes in consumption NOW.

There's nothing obvious about it. If anything, it can have a large negative drag on the economy, because if people see the debt being increased by a very large amount, it can cause them to behave in ways that make the attempt at stimulus counter-productive. For example, people may fear inflation in the near-future as a result of the debt, and cut back on their spending. If that happens, then the attempt to increase demand in the economy actually decreased it. It depends on how much is being spent and how large the debt already is. People also may hoard the money. The other thing you're ignoring is that there is not going to be any net economic growth from such spending. If you take on a bunch of debt to inject a bunch of money into the current economy, yes it could increase consumer spending now, but at the expense of what spending will be in the future economy. It also can hamstring the current economy due to the debt being increased.

For example, if the debt was low, and the government sent all 300 million Americans a check for $20,000 (equivalent ot a $6 trillion stimulus), that could make the current economy boom, because everyone gets a lot of money to spend and the debt isn't high enough where adding an extra $6 trillion hamstrings it. BUT, that $6 trillion isn't any free lunch. It is money that is just being spent NOW as opposed to later, and it won't be there to spend later, as we shorted the future economy of it. Yes, if "invested" it could yield true economic growth, but good luck at getting the government to properly invest $6 trillion, as the government is notoriously bad at allocating capital.

Another problem that can occur is that if the taking on of debt to spend money in the current economy is stimulative, you might end up preventing the actual private economy from recovering because you are replacing the private-demand with an artificial government demand that is funded by shorting the future private economy. So if for example the private economy is in a recession that it will naturally cycle out of and recover, and then the government decides to inject $6 trillion into it, that is an artificial demand and can stall the private economy from recovering.

 

[ParticleGrl]

Yes, but it's still ultimately government taking money out of the economy in one form and injecting it back in in another form. That isn't going to create economic growth.

But empirically, historically, it can. Read Milton Friedman on the money base. If Milton was right, stimulus works, as does expanding the money base.

As for creating value, maybe in a very few limited circumstances, but for the most part, government is absolutely awful at this.

Are courts valuable? How about national labs? Are laws valuable? Is the enforcement of contracts valuable?

When you say "take demand from the private sector" what you mean is that people working in government aren't working in the private sector. The question is- are courts valuable enough that its worth taking some smart people out of the private sector to keep a legal sector working . Is fundamental research valuable enough that its worth taking people out of the private sector, etc. In many cases, I contend the answer is yes. There is nothing artificial about this.

Weak governments means lots more corruption, lack of law and order, and thus a chaotically functioning economy.

Therefore- government is valuable and the existence of government creates value. You agree.

But in the short-term, borrowing or taxing to build infrastructure is not unto itself any creation of wealth.

Lets say I have lots of unemployed workers and a broken road. Now, let's say I have few unemployed workers and a road being fixed. In which situation is society wealthier?

Money is just a way to allocate stuff,its a shared delusion. You shouldn't get too hung up on national debt. It doesn't make the private sector richer or poorer in the long term- every dollar owed is owed TO SOMEONE. It just redistributes claims in the private sector.

Try and remember the economy is things, and people building things. Ultimately, your argument should come down to things, and the people building them. Government debt is a policy tool, its not debt in the same way credit card debt is.

One other thing to keep in mind is that even with regards to trying to pursue legitimate investments, the government is extraordinarily inept at doing this sort of thing, because politics play a role and it's the old "a person spending someone else's money is never as careful as someone spending their own money."

Government investment has been responsible for most of the high tech products in your home. Without government funded research, there would be no internet, no ipad, no google. To say that this is 'extraordinarily inept' is just silly.

 

[CAC1001]

But empirically, historically, it can.

No it can't because it defies economics. That's part of why stimulus has never worked anywhere. The only exception would be if the government managed to legitimately invest the money it was borrowing or using debt to spend, which has happened (such as the New Deal infrastructure which lead to economic growth later on), but really only in cases where there was no infrastructure but a lot of economic growth potential existed if only the infrastructure would be built. Once you have said infrastructure in place, building more infrastructure isn't necessarilly any investment.

Read Milton Friedman on the money base. If Milton was right, stimulus works, as does expanding the money base.

Milton Friedman was very skeptical of Keynesian stimulus. He was one of the main people to call it into question and point out its faults (he pointed out that you could "create jobs" by hiring one group of people to dig holes and another group to fill them back in; you could create even more jobs by equipping everyone with spoons as opposed to shovels). He also called into question the Keynesian idea that expanding the money supply leads to economic growth. He pointed out that expanding the money supply can lead to inflation.

Are courts valuable? How about national labs? Are laws valuable? Is the enforcement of contracts valuable?

Maybe we are having a difference of opinion on the term "value." By value, I mean commercial value, wealth. Functions of government that are valuable are not wealth, they take wealth in order to fund their existence. For example, having a strong military is valuable, but it costs money, it doesn't make money.

When you say "take demand from the private sector" what you mean is that people working in government aren't working in the private sector. The question is- are courts valuable enough that its worth taking some smart people out of the private sector to keep a legal sector working . Is fundamental research valuable enough that its worth taking people out of the private sector, etc. In many cases, I contend the answer is yes. There is nothing artificial about this.

They are valuable enough in the sense of being valuable to the existence of society, but in terms of wealth or commercial value, they are a drag. All government in this sense is a drag. Government itself is an evil, but it's a necessary evil.

Therefore- government is valuable and the existence of government creates value. You agree.

Government is "valuable" in the sense of facilitating a functioning society so that people can live their lives and wealth can be created. But government is not valuable in terms of having any commercial value and government doesn't create commercial value, it provides the functions that facilitate wealth creation (rule of law, protection of private property, infrastructure development, etc...).

Lets say I have lots of unemployed workers and a broken road. Now, let's say I have few unemployed workers and a road being fixed. In which situation is society wealthier?

The road costs money to be repaired which has to come from somewhere. It could facilitate wealth creation in the future maybe, in which case then it could pay for itself, but unless it's a toll road, it isn't valuable in a commercial sense (wealth). If the government is fixing it, then it is just re-distributing private-sector money for a project that may well not generate any money down the line. The road is valuable in the way law and order is valuable, not in the sense of wealth value.

Money is just a way to allocate stuff,its a shared delusion. You shouldn't get too hung up on national debt. It doesn't make the private sector richer or poorer in the long term- every dollar owed is owed TO SOMEONE. It just redistributes claims in the private sector.

Try and remember the economy is things, and people building things. Ultimately, your argument should come down to things, and the people building them. Government debt is a policy tool, its not debt in the same way credit card debt is.

Yes, money is the medium of exchange. But it is representative of the amount of goods and services being produced in society. The government takes, by force, some of all of the goods and services everyone produces by taking away some of their money. The national debt is concerning because with a large debt, if the interest rates go up, it can take up a lot more of the federal budget to continue to service the debt. And most nations do not do well with large amounts of debt on the economy.

Government investment has been responsible for most of the high tech products in your home. Without government funded research, there would be no internet, no ipad, no google. To say that this is 'extraordinarily inept' is just silly.

Nothing silly about it. Ask government bureaucrats to start investing in companies and industries and see the results. Government is horrible at allocating capital. Don't make the mistake of confusing government-funded research with government successfully investing. Yes, government funded a lot of research that led to the development of lots of various electronic and computer technologies, but it was the private-sector that adopted those technologies and made them into the various products and services. Companies formed like Intel, Microsoft, Google, Dell, Apple, etc...(those are the most infamous) along with others. And various private-sector venture capital firms are who financed them. The U.S. government didn't run any venture-capital agency that decided to pick and choose what the companies and industries of the future would be.

Most of the research and development the government funded relating to these technologies was for purposes of national defense, not as a form of industrial policy to drive the economy. The economic growth was a byproduct of it. What is valuable to national defense is not necessarilly valuable in a commercial sense. Developing a new battle tank or fighter plane has no private-sector demand, it's demand from the government, which buys it with wealth taken out of the private-sector. Since electronics and computer technologies were so crucial to the national defense, the government funded research into them, but this also yielded great technology that the private-sector adopted. Also the Internet and GPS facilitated new goods and services.

 

[JonDE]

There's nothing obvious about it. If anything, it can have a large negative drag on the economy, because if people see the debt being increased by a very large amount, it can cause them to behave in ways that make the attempt at stimulus counter-productive. For example, people may fear inflation in the near-future as a result of the debt, and cut back on their spending. If that happens, then the attempt to increase demand in the economy actually decreased it. It depends on how much is being spent and how large the debt already is. People also may hoard the money. The other thing you're ignoring is that there is not going to be any net economic growth from such spending. If you take on a bunch of debt to inject a bunch of money into the current economy, yes it could increase consumer spending now, but at the expense of what spending will be in the future economy. It also can hamstring the current economy due to the debt being increased. .

This doesn't really make a lot of sense for several reasons. First, if inflation is high, it makes people WANT to spend there money, not hoard it. If housing prices are skyrocketing, you buy a house as fast as possible, while you can still afford it, and it could be a good investment, as your loan would, in real dollars, would depreciate in value. Further, government debt is a very small factor in the overall economy. A 1 trillion stimulus might seem like a lot, but when you compare it to 74 trillion in assets, and 14 trillion in GDP, the number looks much smaller. Also when you compare it to the massive decrease in new private debt, that 1 trillion means nothing. Also you can't look at government debt in a vaccuum. That is not the sole driver of the monetary base, nor is it even the largest.

 

[ParticleGrl]

No it can't because it defies economics.

Crack open Mankiw's book, or Romer's (the only two I have on my shelf, or I'd reference others). I'm willing to be literally any economics macro book will side with me, so clearly it doesn't 'defy economics'- in facts its LITERALLY textbook economics. Do you know what an IS-LM model is? Some economists might not like the model, but it doesn't "defy economics."

That's part of why stimulus has never worked anywhere.

Show me any study of multipliers that suggests they have NEVER worked. This claim is just ludicrous.

Milton Friedman was very skeptical of Keynesian stimulus... He also called into question the Keynesian idea that expanding the money supply leads to economic growth. He pointed out that expanding the money supply can lead to inflation.

Have you actually read Friedman's academic work? Friedman believed that failure to print money was THE prime mover behind the great depression. He didn't disagree with Keynes that stimulus could help the economy- he argued that the manipulating the money supply was a better lever! Instead of spend in a recession you increase the monetary base. Instead of tax in a boom, you tighten the money base. Friedman was the original monetarist!

Maybe we are having a difference of opinion on the term "value." By value, I mean commercial value, wealth.

But most importantly, wealth is not money. Wealth is capital, goods, etc. When we say "X creates wealth" we don't mean money, we mean stuff. A new process for building widgets creates wealth if it let's you make more widgets for a given set of inputs. If moving workers around let's you make more widgets and distribute them to a larger portion of society, then that shift of workers creates wealth.

We can measure stuff we have in money, though the results aren't perfect. Do we expect GDP per capita to be higher win countries with stronger institutions or weaker ones? Do we expect strengthening institutions increases GDP per capita? Then we expect government creates wealth.

Functions of government that are valuable are not wealth, they take wealth in order to fund their existence.

My argument is that without functioning government institutions, our country would build a lot less widgets. Therefore, government creates wealth.

Government is "valuable" in the sense of facilitating a functioning society so that people can live their lives and wealth can be created.

Facilitating a functioning society = letting society build more widgets = creating wealth. Wealth is not money!

The government takes, by force, some of all of the goods and services everyone produces by taking away some of their money.

NO! Money is not wealth! The government takes "wealth" out of society by taking WORKERS and WIDGETS. The most scarce asset the government takes out of the private society is labor- but if taking that labor leads to more widgets for all, then its adding to the private sector.

The national debt is concerning because with a large debt, if the interest rates go up, it can take up a lot more of the federal budget to continue to service the debt

If the government raised more taxes and used them to pay on bonds, where did the money go? It went from a taxpayer to a bond holder- which might not be ideal but it isn't pulling resources from the private sector, its just juggling things around in the private sector.

Ask government bureaucrats to start investing in companies and industries and see the results.

Half of silicon valley, including google. Such a terrible job...

Yes, government funded a lot of research that led to the development of lots of various electronic and computer technologies, but it was the private-sector that adopted those technologies and made them into the various products and services.

Then the government created wealth, and an abundance of it. I'm not saying it did it in a vacuum, of course the private sector helped.

If I build an amazing device, and you market and sell the device, which of us created the wealth? Obviously, BOTH of us.

The U.S. government didn't run any venture-capital agency that decided to pick and choose what the companies and industries of the future would be.

Google, as one example, was directly funded at startup from a government grant.

Since electronics and computer technologies were so crucial to the national defense, the government funded research into them, but this also yielded great technology that the private-sector adopted. Also the Internet and GPS facilitated new goods and services.

Purpose doesn't matter wealth is wealth. If having a GPS or an Ipad makes you more wealthy, than the government creates wealth. It does it in partnership with the private sector, sure, but that doesn't mean the government doesn't create wealth.

I think a chunk of your analysis is confused by your strange theory of value.

 

[CAC1001]

Crack open Mankiw's book, or Romer's (the only two I have on my shelf, or I'd reference others). I'm willing to be literally any economics macro book will side with me, so clearly it doesn't 'defy economics'- in facts its LITERALLY textbook economics. Do you know what an IS-LM model is? Some economists might not like the model, but it doesn't "defy economics."

Saying that you are creating wealth by taking money out of the economy and injecting it back in defies the basic principles of economics, with the exception of something that is actual investment (such as infrastructure in certain circumstances or financing research that yields results (note these are all long-term stimulative measures)).

Show me any study of multipliers that suggests they have NEVER worked. This claim is just ludicrous.

Nothing ludicrous about it. There is a reason why economists became skeptical of fiscal stimulus in the first place, which is that it wasn't working. If it worked so well, then there'd be no debate about it the way there is. We'd have an enormous body of evidence that it works. Things like socialism or raising interest rates in a recession, we know from experience that these do not work. They as a result aren't really debated anymore. But with fiscal stimulus, it is far less certain, although the evidence really leans against it. Look at Japan, which spent $2 trillion (half their GDP) on fiscal stimulus, and it still didn't stimulate economic growth. One could argue the limited growth they've had is a result of all that spending, but then how much spending is required for healthy growth? 100% of the GDP? (I wouldn't say a stimulus is "working" if one must spend over half the GDP to get miniscule economic growth).

Every economist who has won the Nobel Prize in Economics for work in macreconomics after 1981 (Robert Lucas, Robert Mundell, Fynn Kydland, Edward Prescott, Edmund Phelps) has either completely dismissed or seriously questioned the Keynesian policy of fiscal expansion to increase economic activity and reduce unemployment. All of them won by building on the work of Friedman and how he pointed out the flaws with fiscal stimulus.

Have you actually read Friedman's academic work? Friedman believed that failure to print money was THE prime mover behind the great depression. He didn't disagree with Keynes that stimulus could help the economy- he argued that the manipulating the money supply was a better lever! Instead of spend in a recession you increase the monetary base. Instead of tax in a boom, you tighten the money base. Friedman was the original monetarist!

Friedman disagreed about fiscal stimulus in the form of government spending being able to help the economy. In his Capitalism and Freedom he devotes an entire chapter to debunking this claim even. If anything, he was one of the primary critics of it at the time. In terms of monetary stimulus, he understood as you are saying (about failure to keep the banking system solvent and reducing the money supply caused the Depression). But that doesn't change the fact that he also recognized that increasing the monetary base is not necessarilly going to increase economic growth. He was one of the first to recognize that inflation is tied to the government printing too much money. To quote him:

Inflation is always and everywhere a monetary phenomenon.

The conventional Keynesian belief had been that you could increase economic growth by increasing the money supply. The belief was you could have high unemployment and low inflation or high inflation and low unemployment, because the two are supposedly inversely-related (the classic Phillips curve). So economists sought to balance the two. They were thrown completely off-balance in the 1970s when stagflation hit.

But most importantly, wealth is not money. Wealth is capital, goods, etc. When we say "X creates wealth" we don't mean money, we mean stuff. A new process for building widgets creates wealth if it let's you make more widgets for a given set of inputs. If moving workers around let's you make more widgets and distribute them to a larger portion of society, then that shift of workers creates wealth.

Those extra widgets though are worthless unless there's private-sector demand for them. Moving workers around that are being paid by the government isn't real demand.

We can measure stuff we have in money, though the results aren't perfect. Do we expect GDP per capita to be higher win countries with stronger institutions or weaker ones? Do we expect strengthening institutions increases GDP per capita? Then we expect government creates wealth.

Government doesn't create wealth in this sense, it just facilitates the environment that leads to wealth creation. I am not arguing that good government isn't necessary for wealth creation, it is, but the government itself doesn't actually create the wealth, that's the private-sector.

My argument is that without functioning government institutions, our country would build a lot less widgets. Therefore, government creates wealth.

Any my argument is that while good functioning government institutions are necessary, unto itself, government does not create wealth.

Facilitating a functioning society = letting society build more widgets = creating wealth. Wealth is not money!

Wealth isn't money, but money is representative of wealth.

NO! Money is not wealth! The government takes "wealth" out of society by taking WORKERS and WIDGETS. The most scarce asset the government takes out of the private society is labor- but if taking that labor leads to more widgets for all, then its adding to the private sector.

Not sure I am understanding you here. Money, in the right supply in the economy, represents the wealth in the economy. The government doesn't take workers and widgets, it takes money from people, through taxes. It uses that money (wealth) it takes by force in order to pay its various workers.

If the government raised more taxes and used them to pay on bonds, where did the money go? It went from a taxpayer to a bond holder- which might not be ideal but it isn't pulling resources from the private sector, its just juggling things around in the private sector.

That depends on who holds the bonds. If it's going to a foreign country, then it's taking wealth out of the U.S.'s private sector and sending it to another country. And how much of the federal revenues go towards servicing the interest on the debt is one of the things the credit-rating agencies look at when rating the nation's debt.

Half of silicon valley, including google. Such a terrible job...

Silicon Valley is a private-sector phenomenon. None of the major companies to come out of it came into being due to government bureaucrats making the calls in the way private-sector venture capital firms and banks do.

Then the government created wealth, and an abundance of it. I'm not saying it did it in a vacuum, of course the private sector helped.

If I build an amazing device, and you market and sell the device, which of us created the wealth? Obviously, BOTH of us.

The government didn't create the devices though. The private-sector did that. The government just funded the initial research and development that led to the technologies which the private-sector adopted. It was government-financed research that led to the development of the transistor. But it was Intel corporation that developed the microprocessor.

Government can only do things that can facilitate wealth creation, such as provide for law and order, protect property rights, lay the groundwork for a sound financial and banking system, build infrastructure, finance research into different areas, etc...but the actual wealth creation must be done by the private-sector.

Google, as one example, was directly funded at startup from a government grant.

This is different then government investing money. A company must apply for a grant if it wants one. The grant doesn't mean the government is taking partial ownership of the company in exchange for capital.

Purpose doesn't matter wealth is wealth. If having a GPS or an Ipad makes you more wealthy, than the government creates wealth. It does it in partnership with the private sector, sure, but that doesn't mean the government doesn't create wealth.

Nope, it means that the private-sector has created wealth via the various things put in place by the government.

I think a chunk of your analysis is confused by your strange theory of value.

There are different types of value. Personally, I would value a computer scientist or a medical doctor as being of more value to society than a movie star. But society has decided that it values the entertainment provided by movie stars far more than it values the skills of a computer scientist or medical doctor, so movie stars get paid a lot more. Economic value, versus the other forms of value, are different.

 

[CAC1001]

This doesn't really make a lot of sense for several reasons. First, if inflation is high, it makes people WANT to spend there money, not hoard it. If housing prices are skyrocketing, you buy a house as fast as possible, while you can still afford it, and it could be a good investment, as your loan would, in real dollars, would depreciate in value. Further, government debt is a very small factor in the overall economy. A 1 trillion stimulus might seem like a lot, but when you compare it to 74 trillion in assets, and 14 trillion in GDP, the number looks much smaller. Also when you compare it to the massive decrease in new private debt, that 1 trillion means nothing. Also you can't look at government debt in a vaccuum. That is not the sole driver of the monetary base, nor is it even the largest.

Inflation acts as a tax on people, and a tax can decrease demand, not increase it, so it would depend. A $1 trillion stimulus is very large when you already are dealing with a very large amount of debt. And the real debt level faced by the U.S. government is likely far greater than the current $15.5 trillion, because the federal government is on the hook for the social welfare state and for the individual states and all their obligations, which drives the real debt load possibly up to $50 or $60 some trillion.

 

[JonDE]

Inflation acts as a tax on people, and a tax can decrease demand, not increase it, so it would depend. A $1 trillion stimulus is very large when you already are dealing with a very large amount of debt. And the real debt level faced by the U.S. government is likely far greater than the current $15.5 trillion, because the federal government is on the hook for the social welfare state and for the individual states and all their obligations, which drives the real debt load possibly up to $50 or $60 some trillion.

If you want to look at inflation as a tax, you have to view it as a tax on savings, not on material goods. Material goods prices should increase with inflation while your savings doesn't. This discourages saving. It drives demand up. In the opposite view, deflation has been one of the things that all economist fear most, as it decreases demand. Why buy a house if that house is going to be cheaper tomorrow?
Also you can't look at future obligations as how it would effect today. First future debt is hugely related to GDP growth which is extremely hard to predict and has continuosly proven the bears wrong on that aspect. Second, it has no effect on today. It is a tool to help plan for the future. Monetary base effects inflation, i.e. real dollars being spent in the economy right now. Not future dollars possibly being spent in the future effecting today.