Harvard surprised to find conservatives right.

Discussion in 'Economy' started by Quantum Windbag, May 26, 2010.

  1. Quantum Windbag
    Offline

    Quantum Windbag Gold Member

    Joined:
    May 9, 2010
    Messages:
    58,308
    Thanks Received:
    5,014
    Trophy Points:
    245
    Ratings:
    +5,221
    This is one of the reasons I love Harvard, they can be surprised at the simplest things. How often have conservatives claimed that more government spending actually means fewer jobs? Now they can point to that bastion of liberalism and gloat.

    Stimulus Surprise: Companies Retrench When Government Spends — HBS Working Knowledge

    Maybe we can get the government to stop spending trillions of dollars to help us now.
     
  2. rdean
    Online

    rdean rddean

    Joined:
    Aug 9, 2009
    Messages:
    60,204
    Thanks Received:
    6,905
    Trophy Points:
    1,840
    Location:
    chicago
    Ratings:
    +15,037
    The complete report can be found here:

    http://www.people.hbs.edu/cmalloy/pdffiles/envaloy.pdf

    You may want to read it. Especially this part on page 21:

    We then explore if the government’s hiring of skilled labor may be especially
    harmful to private firms when there is scarce employable labor (a notion of full
    employment), while conversely, with slack in the labor market, government hiring shocks
    may have an attenuated effect. To investigate whether the crowding out of corporate
    employment is particularly pronounced when unemployment is low, we split seniority
    shocks into those that occur when the state’s unemployment rate is above its long-run
    average and those that occur when it is below. As Table VIII reports (in Column 3), the
    coefficient on firms in states with low unemployment is -0.016. For firms in states with
    high unemployment, the coefficient is 0.024 larger, which is sufficient to reverse the effect
    entirely (even considering the main effect of High Unemployment itself). This result can
    be interpreted as providing evidence consistent with the view that government stimulus
    crowds out private sector employment when the economy has little slack in the labor
    market, but does not when the economy is experiencing significant slack in the labor
    market.


    In case that doesn't make sense, they are saying when unemployment is low, that's when nearly everyone has a job, government stimulus could do more harm than good, but during high unemployment, the opposite happens.

    That makes sense, so I would agree with what the paper is saying, more or less. Unfortunately the only example they give is an electric company from the 1930's.

    So to me, they are saying that when the economy is good, government competition with private industry is bad, but when the economy is bad, a stimulus program is good.

    What you seem to be saying is "don't spend", which is what every economist said would put us into a "Great Depression". So not only did Republican policies damage the economy, more Republican polices would only extend the damage and make it worse.
     
    • Thank You! Thank You! x 1
  3. william the wie
    Offline

    william the wie Gold Member

    Joined:
    Nov 18, 2009
    Messages:
    7,325
    Thanks Received:
    677
    Trophy Points:
    175
    Ratings:
    +1,632
    No one is saying don't spend but there is spending and there is spending. DARPA style prize money spending has been creating innovative industries and less skilled support jobs since at least the RN's Longitude Clock prize in the mid 1700s. Bureaucratic stimulus packages to use an example from Keynes' General Theory tend to be useless show projects like the pyramids Keynes lauded have little lasting value.
     
  4. rdean
    Online

    rdean rddean

    Joined:
    Aug 9, 2009
    Messages:
    60,204
    Thanks Received:
    6,905
    Trophy Points:
    1,840
    Location:
    chicago
    Ratings:
    +15,037
    For the right, anything they don't understand is a "useless" project.

    Examples:

    Our produce and fruit industries depend on honeybees to pollinate. The honeybee population has been dying off for a few years. This is a huge problem and could be a national disaster if it isn't already. Beekeepers don't have the money to "fund research". This has to come from the government. During the last election John McCain and Sarah Palin called such research "pork" and McCain even joked about a "honeybee factory".

    Honey Bees Disappearing: Still A Problem : Discovery News

    Then there was a study on bear DNA that the Republicans ridiculed as "pork". Bears play an important role as an apex predator. Too much inbreeding and you could ruin the existing population. Republicans don't understand science and have no respect for science.

    McCain's Beef with Bears?—Pork: Scientific American

    Not every earmark is "pork". But the way Republicans ridicule what they don't understand it might as well be. If it were up to them, we would be living in the stone age.
     
    • Thank You! Thank You! x 1
  5. Quantum Windbag
    Offline

    Quantum Windbag Gold Member

    Joined:
    May 9, 2010
    Messages:
    58,308
    Thanks Received:
    5,014
    Trophy Points:
    245
    Ratings:
    +5,221
    I have to say, it is nice to see someone actually take the time to read something before replying. Even if I disagree with your conclusions, I at least know I am discussing this with someone intelligent.

    I am not saying don't spend, I am saying what conservatives have always said. Government spending does not equal private sector success or jobs. The government has been spending more and more for the better part of a century, and the only clear result is more government employees. Spending for the sake of spending is wrong.

    The reasons for this are varied, and the availability of skilled labor is only one factor. This alone ahould be the largest argument against government spending, as the government already employs more people than the private sector. More government spending will only result in more government employees, and fewer workers for the private sector, thus further burdening the economy.

    Yes, some government spending is necessary. I will even acknowledge the fact that I live in the real world, and that if we simply eliminated the government spending that is unnecessary the impact on our economy would result in a short term negative that would outweigh the positives for many years.

    That does not mean we should not work toward eliminating that spending. we are approaching the point where we will not have a choice, even Obama admits what we are doing is unsustainable while he merrily goes about spending more. How does that make any sense?
     
  6. Quantum Windbag
    Offline

    Quantum Windbag Gold Member

    Joined:
    May 9, 2010
    Messages:
    58,308
    Thanks Received:
    5,014
    Trophy Points:
    245
    Ratings:
    +5,221
    Why do we need earmarks to pay for these projects? Don't get me wrong, I agree they are useful, but earmarks are, rightfully, ridiculed by everyone. I know that even useful projects can be pork if more money is spent on them than needed.

    What we really need is accountability for every penny spent. If $4.8 million is being spent to study bear DNA in Montana I want to know it is not being used to build a hunting lodge, or paying for excursions to the Caribbean.
     

Share This Page