30 January 2009

Will the 'stimulus' work

No, I'm not being obnoxious. Well, I'm not only being obnoxious; the 'stimulus', at least initially, is mostly going to preserve jobs, not stimulate new ones.

Ah, but here's Megan McArdle:
There are really two quite separate debates going on over the stimulus, but they're being jumbled together into one gigantic ad hominem. My take on both--pardon for being perhaps a tad obvious, but I think the debate has had a tendency to wander off into the weeds, so it's useful to be a little general from time to time:

Question #1 Will a fiscal stimulus work?

Define "work". If the question is "Can borrowing money and spending it increase our measured GDP figure?" then yes, it is trivially true that stimulus "works". So why don't we borrow a zillion dollars and spend all of it? We could quadruple our standard of living overnight?

Y'all can read the rest here:http://meganmcardle.theatlantic.com/archives/2009/01/dissecting_the_stimulus_debate.php

Ben Stein via the American Spectator

A Bleak Day

By Ben Stein on 1.29.09 @ 9:31AM

I love this. The new kind of politics of hope. Eight hours of debate in the HR to pass a bill spending $820 billion, or roughly $102 billion per hour of debate.
He's a-talkin' about the stimulus, Mr. Stein is.
Only ten per cent of the "stimulus" to be spent on 2009.
Which still bids fair to light off a really hard to control inflation at a time when we're blessed with an administration which is likely to think that price controls are the way to fix inflation.
Close to half goes to entities that sponsor or employ or both members of the Service Employees International Union, federal, state, and municipal employee unions, or other Democrat-controlled unions.
I realize you're reaching for modifiers, Mr Stein, but "Democrat-controlled unions" is a trifle redundant.
This bill is sent to Congress after Obama has been in office for seven days. It is 680 pages long. According to my calculations, not one member of Congress read the entire bill before this vote. Obviously, it would have been impossible, given his schedule, for President Obama to have read the entire bill.
Yep, there's a read the bills act which has been proposed for -- ye gods! -- over a decade now. RTB is good advice for alcon, the 43rd and 44th POTUS' not least, but honored of them all!
For the amount spent we could have given every unemployed person in the United States roughly $75,000.

We could give every person who had lost a job and is now passing through long-term unemployment of six months or longer roughly $300,000.
Both actions would have avoided major bonuses -- they're actually closer to commissions, did you know that? -- and released cash into the economy, probably through necessities: groceries, rent, things like that. Waaayyyy to sensible an idea.

How long until the debt incurred under this program is so immense that it causes a downgrade in the sovereign debt of the USA? What happens to us then?
Outstanding questions, Mr. Stein. We have a structural, unfunded deficit of over $50 Trillion (trillion, with a T). If we can't borrow money to delay the day of reckoning, we can -- lessee-- reduce benefits or raise taxes. OOORRRRR, we could just print up $50 trillion and dump the greenbacks into the economy. Can you say 'hyperinflation'? I knew you could.
This has been a punch in the solar plexus to the kind of responsible, far-seeing, mature government processes that are needed to protect America. This is more than the pork barrel. This is a coup for the constituencies of the party in power and against the idea of a responsible government itself. A bleak day.

Unfortunately, it is only the latest in a long series of such days stretching across decades of rule by both parties, to the point where truly responsible government is only a distant echo of our forgotten ancestors.
Amen, Brother Stein. Amen

27 January 2009

Hyperinflation & the Stimulus Package

Dr Peter Boettke makes a point that really needs to be made about the inflationary effects of dumping almost a trillion bucks into the economy:
Government can raise revenue in one of three ways: (1) tax, (2) borrow and (3) inflate. The natural proclivity of democratic governments is to pursue public policies which concentrate benefits on the well-organized and well-informed, and disperse the costs on the unorganized and ill-informed. And there are strong reasons why this bias in policy making will also be biased toward shortsightedness --- pay out the benefits now, and worry about the costs down the road. Thus, the natural tendency for elected government officials is to borrow (rather than tax) and then inflate (rather than tax). Deficit financing, accumulating public debt, and monetization of the debt.

Now a lot of individuals have been claiming that economics as a scientific discipline has been rocked by our current crisis, both due to our failure to "predict" it and our inability to "fix" it with a consensus on the right public policy. And anyone not deeply read in the history of our discipline, or who received their university education in economics in the second half of the 20th century can be excused for such a reading of the situation. This would be the most logical interpretation one could arrive at --- especially if you not only listen to President Obama say that we must work past the dead ideologies of the past and the "do nothing" arguments (as if that argument has been actively pursued since Grover Cleveland).

Read the rest here (you can also click on the post's title):

Yep, the D president that last rocked my world was ol' Grover. The next D was Wilson who's on my list -- near the top too -- as Presidents who weren't ready for the deep end of the pool.