Cafe Hayek - Latest Comments in Stopping the Stimulus

Re: Stopping the Stimulus

Mezzanine — Sat, 17 Jan 2009 15:38:16 -0000

jorod - there are too many entrenched interest groups that want big government. We will never see decreases in government, only increases.

Re: Stopping the Stimulus

jorod — Fri, 16 Jan 2009 10:30:47 -0000

Let's cut government spending and cut tax rates by 50%. I think it would be cheaper than TARP and do more good.

Re: Stopping the Stimulus

J L. Manzano — Fri, 16 Jan 2009 10:22:56 -0000

Could be that the stimulus is a show of "overwhelming force" somewhat like the Colin Powell Iraqi strategy and break the ice jam of frozen capital hanging out there. Perhaps dome of the money will not enter the economic main stream to tempt inflation. It may be "sterilized" operationally and turn out to be still-borne. If it produces some true jobs and investments that are supportable now and in the future, good on. If, however, it produces consumption with no prospect of repayment through future growth, productivity and income, it will turn out to be a Madoff con. Obama can than use the Greenspan line. "I made a mistake."

Re: Stopping the Stimulus

Mezzanine — Fri, 16 Jan 2009 10:13:22 -0000

John Dewey - the US economy has alot of intertia built up. It only took 5 years of irresponsibility and incompetence to wreck it.

Re: Stopping the Stimulus

John Dewey — Fri, 16 Jan 2009 07:26:35 -0000

mezzanine: "the general problem I believe throughout America is incompetence at all levels. I see it every day in business ... "

And yet, somehow, the U.S. with 5% of the global population produces 25% of the global manufacturing GDP. Somehow, the U.S. GDP per capita is matched by no other nation with a diverse economy. Somehow, the U.S. standard of living is the envy of the world.

Re: Stopping the Stimulus

SP — Fri, 16 Jan 2009 05:05:30 -0000

I think the whole idea of government stimulus runs counter to the common sense notion that you cut back during the lean times. I think the mass of the people could be pursuaded by this "common sense" argument if it came from the mouth of somebody they trust and respect. Unfortunately, there aren't any such figures around today to make it. Instead you've got Obama, whom they do trust and respect, telling them to trust him on stimulus, that it will work even if they don't understand exactly why. I think at this point people are going to let their trust and admiration of Obama supercede their common sense skepticism.

Re: Stopping the Stimulus

Polybius — Thu, 15 Jan 2009 22:45:10 -0000

Excellence has nothing to do with this.

Who controls your interests now, you, or the state?

And who did we just elect to tend to our national affairs? A collectivist? Not that he’s any different than the previous guy….

For the mob, habituated to feed at the expense of others, and to have its hopes of a livelihood in the property of its neighbors, as soon as it has got a leader sufficiently ambitious and daring, being excluded by poverty from the sweets of civil honors, produces a reign of mere violence. Then come tumultuous assemblies, massacres, banishments, redivisions of land; until, after losing all trace of civilization, it has once more found a master and a despot.

Re: Stopping the Stimulus

Mezzanine — Thu, 15 Jan 2009 22:14:47 -0000

Mesa - the general problem I believe throughout America is incompetence at all levels. I see it every day in business and of course government is 99% incompetent. I'm wondering if there was ever a time America used to stand for excellence as a principle.

Re: Stopping the Stimulus

Mesa Econoguy — Thu, 15 Jan 2009 20:26:19 -0000

My wife says I repeat myself a lot.....

Re: Stopping the Stimulus

Mesa Econoguy — Thu, 15 Jan 2009 20:07:01 -0000

Most people I would argue would understand the nature and concept of the government being the spender of last resort when consumers, investors and trade have all frozen up.

Posted by: muirgeo

Time to dispel clueless muirgeo economic myths/misconceptions:

1) The government is the LENDER of last resort, and apparently spender of last resort, too. Gee, how come?

2) Democrats created the modern Social Security welfare state, see here and here;

3) Confusing “spender” with “lender” above is mildly linguistically humorous, but expected from far-below average intellects like muirgeo;

4) Blaming modern managerial capitalism for the current financial market distress is like pyromanics complaining about fire dept. response time (perverse incentives);

5) There is no economic philosophy/history/genre extant which deals with half-socialist state economic failures, which is what we currently find ourselves in, mostly thanks to muirgeo & his/her friends.

Public choice theory, to it's credit, and to our foolish detriment, says we should have made this choice long ago, in a public forum. Unfortunately, that forum was corrupted long ago, again by foolish, pseudoeducated people like this "doctor."

This long march through the institutions (including the Clintons and their corrupt friends) has resulted in our current fiscal position: on the brink of a major financial catastrophe, incented by government requirements dictated by foolish liberals, with a socialist time bomb on the doorstep.

It's time to ask yourself, what do you really believe in? What do you think is right? Who should bear responsibility?

Re: Stopping the Stimulus

Mesa Econoguy — Thu, 15 Jan 2009 20:04:03 -0000

Most people I would argue would understand the nature and concept of the government being the spender of last resort when consumers, investors and trade have all frozen up.

Posted by: muirgeo

Time to dispel clueless muirgeo economic myths/misconceptions:

1) The government is the LENDER of last resort, and apparently spender of last resort, too. Gee, how come?

2) Democrats created the modern Social Security welfare state, see here and here;

3) Confusing “spender” with “lender” above is mildly linguistically humorous, but expected from far-below average intellects like muirgeo;

4) Blaming modern managerial capitalism for the current financial market distress is like pyromanics complaining about fire dept. response time (perverse incentives);

It's time to ask yourself, what do you really believe in? What do you think is right? Who should bear responsibility?

Re: Stopping the Stimulus

Bob OBrien — Thu, 15 Jan 2009 19:27:47 -0000

The economist I trust above all others is Paul Volker. Does anyone know what Mr Volker "really" thinks of this $800+ Billion spending plan?

Re: Stopping the Stimulus

Henri Hein — Thu, 15 Jan 2009 16:06:06 -0000

As more anecdotal pointers, though I live in the home state of Nancy Pelosi, one of the biggest driver of these bailout plans, the responses I get to my own comments lean between curious and sceptical.

I don't meet anyone who will voice support of the plans to my face, but perhaps they support it anyway and are willing to disclose the support in anonymous polls.

Re: Stopping the Stimulus

Craig — Thu, 15 Jan 2009 15:49:18 -0000

"Do you know that the bail out money alone they gave AIG would have put over $400,000 in to the pockets of every legal US citizen over the age of 18....."

Wow! I mean there are about 225 million Americans over the age of 18 and if we gave each of them $400,000 that would be stupendous! I had no idea that the bail-out of AIG cost $90 trillion. No wonder people are pissed off.

Um, you don't by any chance work for the government do you?

Re: Stopping the Stimulus

Mcwop — Thu, 15 Jan 2009 11:33:53 -0000

I wish I could stop it, because if you ARE going to do it then do it right - the most stimulative manner for immediate results.

Unfortunately, the first pass of the plan just released (1/15) does not seem very stimulative with public works projects accounting for only $43-85 of $825 billion. The biggest chunk goes to tax rebates, a lot will go to states to close budget shortfalls, and Medicaid.

Much of the money appears to be targeted to items that might reduce some need to cut workers, maintain state wage increases, provide some increased benefits to the unemployed (extra $25 per week) but not much to increase employment - which was supposed to be the main goal.

Maybe this changes, but the first pass looks weak.

Re: Stopping the Stimulus

Chris H — Thu, 15 Jan 2009 10:53:21 -0000

I think the Rodney Murray post after it belongs in the Hall of Fame!!

Re: Stopping the Stimulus

Mezzanine — Thu, 15 Jan 2009 10:53:10 -0000

Prices indicate relative scarcity of a good/service. However some utopians think that nothing should have a price. Now, the only way to enforce that is the gulag.

Re: Stopping the Stimulus

Mark — Thu, 15 Jan 2009 10:14:26 -0000

Lee Kelly wrote:

"Prices are messengers about economic realities. When reality changes, prices change to convey a new message. But this relation does not work in both direction: changing prices does not create a corresponding change in reality. When the government stresses the importance of "stabilising prices", they are trying to prevent prices from signalling a change about the real economic situation."

Excellent post, man!! This belongs in the cafe hayek hall of fame.

Re: Stopping the Stimulus

Rodney Murray — Thu, 15 Jan 2009 09:27:05 -0000

I bet the 43% that think it is a good idea are not thinking any further than the fact that they might get a fat check from Uncle Obama 'Who cares what it does to America...I just want my money.' Uncle Obama can keep his check I don't want it.

Re: Stopping the Stimulus

Lee Kelly — Thu, 15 Jan 2009 08:50:23 -0000

The current expansion of corporate welfare is demoralising, and its support by those who have for years decried Bush's corporatism is sickening.

Some people seem to think about the economy like the hull of a ship, and these failing companies are holes which need to be plugged. The implication is that unless such action is taken the entire ship will eventually sink. But this is nonsense. The U.S. Government has undermined the hull's integrity. It is like a sponge with water seeping in everywhere. Pressing down to stop the flow of water in one place will just redirect it to come out somewhere else.

Prices are messengers about economic realities. When reality changes, prices change to convey a new message. But this relation does not work in both direction: changing prices does not create a corresponding change in reality. When the government stresses the importance of "stabilising prices", they are trying to prevent prices from signalling a change about the real economic situation.

The discrepancy between reality and prices will keep growing, and create even more malinvestments and misallocation of resources. By way of these bailouts to auto industry and banking institutions, they are sending the false signal to hire more people and redirect more resources toward these failing industries. It is the economic equivalent of going insane, as your perception of reality grows ever more distant from the actuality.

Re: Stopping the Stimulus

Andrew_M_Garland — Thu, 15 Jan 2009 08:38:16 -0000

I find that positive views of stimulus are general and unthinking. "Spending money must be good", "We must do something", "The free market has failed, so we must rely on the political market".

Questions and doubts about stimulus are supported by facts, history, and a simple question: "When has it ever worked?", and "Did it work last February?. Remember the significant, short-term improvement in people's lives from the $150 billion stimulus plan Feb 2008? Uh, we don't remember, because it wasn't noticeable.

The stimulus proposition: "Give me your savings, and I'll improve your lives and give you sustainable careers in a brighter future. [psst, aide talks into ear of politician] Uh, I mean, I'll either do that, or I will prevent things from getting any worse than they really have to be. Trust us to try really, really hard, and if things don't work out, at least you know that we tried hard."

Ask people, and also point them to some information.

Why Spending Stimulus Plans Fail via WSJ.com.

Other articles about stimulus

Re: Stopping the Stimulus

Eugene — Thu, 15 Jan 2009 08:18:00 -0000

Okay well the other bail out money never "trickled down". So why dont we try a trickle up effect? Do you know that the bail out money alone they gave AIG would have put over $400,000 in to the pockets of every legal US citizen over the age of 18.....

I wonder how many houses that could have saved from foreclosure. Or even how many new cars people would have got out to buy.

Um maybe give us the money and let us "the people" spend what we need to on ourself and taking care of our families. That way the big business does not get bigger with our goverment money.

Re: Stopping the Stimulus

scott clark — Thu, 15 Jan 2009 06:41:48 -0000

Bill James wrote the following in regards to understading baseball:

But perspective can only be gained when details are lost. A sense of the size of everything and the relationship between everything -- this can never be put together from details. For the most essential fact of a forest is this: The forest itself is immensely larger than anything inside of it. That is why, of course, you can't see the forest for the trees

He was talking about the fact that sports writers would tell you about this player's alcohol addiction, what the locker room smelled like, what was said on the plane coming to the game, the inside view. James was going to write about the outside view. This difference between insider and outsider views may be relevant to why some economists, especially the ones with access to the upper levels of government or the ones angling for access, can support the stimulus. I think it also serves Lee Kelly's point that where are those economists when times are good calling for surpluses and shrinking government expenditures. They are too busy looking at a few individual trees to really take in the whole forest.

Re: Stopping the Stimulus

gappy — Thu, 15 Jan 2009 03:24:39 -0000

I don't know if there is any merit to asking around. It's not the case that the opinion of the majority is correct, at least on technical matters. Otherwise, we could advance Economics or Mathematics by referendum on specific claims and theorems.

There are plenty of common-sense objections to the stimulus. There also are very serious arguments in favor of the stimulus, and they are contingent on the form and size of the stimulus. "Stopping the stimulus" via a grassroot campaign is a way of trivializing the problem, or worse. It's demagogy in the original meaning of the word.

Re: Stopping the Stimulus

geoih — Thu, 15 Jan 2009 02:57:19 -0000

Quote from muirgeo: "Most people I would argue would understand the nature and concept of the government being the spender of last resort when consumers, investors and trade have all frozen up."

I think most people understand that anything the government spends, has to be taxed out of somebody. It's not like there is a trillion dollars sitting in a back room somewhere and they finally decided to spend it. Its all made up, an illusion. People understand that.

The people that still support the "stimulus" are probably just not expecting to be the ones that end up paying for it (but when the inflation starts, they will pay).