IMF: Austerity decreases wages and increases unemployment

[Truthmatters]

They will just keep supporting the historically failed ideas of the right.

what is your best example of a failed idea of the right? Why be so afraid to tell us what it is?

I gave you one in the post you silly git

 

[Brutus]

Just denying the cold hard facts culled out of the worlds historic numbers is not very smart

who's denying them?? Of course you can tax and spend to get a brief inflationary bounce, but is that a way to grow an economy. If so explain how or admit as a liberal you have no ability to do so? Sorry

 

[Brutus]

They will just keep supporting the historically failed ideas of the right.

what is your best example of a failed idea of the right? Why be so afraid to tell us what it is?

I gave you one in the post you silly git

so why be so afraid to give your best one now? Are you too liberal,i.e., slow, to do so? Sorry.

 

[Truthmatters]

Just denying the cold hard facts culled out of the worlds historic numbers is not very smart

who's denying them?? Of course you can tax and spend to get a brief inflationary bounce, but is that a way to grow an economy. If so explain how or admit as a liberal you have no ability to do so? Sorry

That is not WHAT this study shows.


do you always ignore the facts?

 

[Truthmatters]

IMF: Austerity boosts unemployment, lowers paychecks - The Washington Post

 

[Brutus]

Just denying the cold hard facts culled out of the worlds historic numbers is not very smart

who's denying them?? Of course you can tax and spend to get a brief inflationary bounce, but is that a way to grow an economy. If so explain how or admit as a liberal you have no ability to do so? Sorry

That is not WHAT this study shows.


do you always ignore the facts?

1) what does it show
2) what was ignored??????????????????

 

[Brutus]

austerity-boosts-unemployment-lowers-paychecks

All agree that if government fires some of its make- work employees unemployment goes up! A child knows that!!! just not a liberal for whom it is profound.

 

[pgm]

Absolutely.

Why is it you think that the poorly disguised "stimulus" bill went primarily to bail out state legislatures that had overspent?

I'd give odds that we'd be better off had those states dumped agencies and bureaucrats to balance the books, and let those people go on unemployment until they could find productive work.

You seem like a Friedrich Hayek.

There's something I've been dying to ask a Hayekian. Do we go back and blow up the firms that we bailed out that would have failed otherwise?

(I'll put a separate thought in a separate post).

 

[pgm]

" The historical evidence also shows that fiscal consolidations based on spending cuts are less painful than those based on tax hikes. "

From the IMF report, wonder if Obama has read this? BTW, how strange is it to lower the payroll tax on one hand and raise personal income taxes on the other, to the same people?

Nah, it's not to the same people. A payroll tax cut benefits low-income workers more, while the tax increases that Obama proposes affect high-income workers more. I still think tax increases are pretty foolish in this economy, though. However, the end of the payroll tax break is a tax hike, so there should really be universal support for extending them, at the minimum.

Of course thats liberal and so idiotic. Does it mean the liberals have to always increase spending so wages and employment will always rise? If it was so simple and liberal we'd never have to worry would we?

I'm having a little trouble understanding your syntax, so I apologize in advance if I misunderstand your point.

The first thing you have to keep in mind is that in this austerity analysis, spending cuts and tax hikes are virtually indistinguishable (although, as Wiseacre pointed out, tax hikes are worse). The concern is only with the deficit. I don't think it found that increasing spending will cause wages and employment to rise. What it found is that cutting spending or raising taxes will cause wages and employment to shrink. However, there are inherent advantages to doing this. What this study suggests is not that cuts should never be done, but rather cuts should not be done while unemployment is so high and wages are depressed.

Essentially, make mid-term adjustments after solving short-term problems. If you have a deficit problem, it can be made worse through austerity because you suppress wages and therefore suppress revenue. If, however, you wait until economic recovery (whether that's through government interference or simply waiting out for a cyclical recovery), you improve your medium-term fiscal health. Cuts hurt the economy, but in the short-term, not the long-term.

Also, it is possible to spend your way out of a recession, but it's a lot easier to do it if you have huge budget and trade surpluses like China. I'm not arguing the U.S. spend like China. I'm merely saying we shouldn't be cutting back just yet.

 

[Norman]

And just how many times has this international mafia federation been wrong in the past?


Though I actually agree. It is pretty obvious that deficit spending reduces unemployment and decreases wages, BUT it also increases... DEFICITS (and long term structural problems)! So which of those effects is greater?

 

[Wiseacre]

" The historical evidence also shows that fiscal consolidations based on spending cuts are less painful than those based on tax hikes. "

From the IMF report, wonder if Obama has read this? BTW, how strange is it to lower the payroll tax on one hand and raise personal income taxes on the other, to the same people?

PGM:
Nah, it's not to the same people. A payroll tax cut benefits low-income workers more, while the tax increases that Obama proposes affect high-income workers more. I still think tax increases are pretty foolish in this economy, though. However, the end of the payroll tax break is a tax hike, so there should really be universal support for extending them, at the minimum.


Wise:
I was under the impression that Obama's Job Plan calls for the payroll tax to be reduced for employers, many of whom will be the same people he wants to raise taxes on. You realize these people file their business profits as personal income, right?

Frankly, that payroll tax cut doesn't seem to be working. Nor do I think Obama's extension of that will help much either. That's probably heresy for a fiscal conservative like me, but I don't think the results will be worth the cost.

 

[Brutus]

Cuts hurt the economy, but in the short-term, not the long-term.

how could cuts hurt the economy when they leave more money in the private sector which is 100% the source of real economic growth. Government spending can at best create a bubble that bursts further hurting the economy.[/quote]

Also, it is possible to spend your way out of a recession,

how on earth is that possible when government spending can only create bubbles that burst and make the recession worse???

 

[Wiseacre]

" Also, it is possible to spend your way out of a recession "

I don't think so, do you know of any instance where this happened?

 

[Brutus]

Frankly, that payroll tax cut doesn't seem to be working. Nor do I think Obama's extension of that will help much either. That's probably heresy for a fiscal conservative like me, but I don't think the results will be worth the cost.

can't say if its working or not given housing crisis, China, India, Europe, etc etc. We tried everything else not we need to get back to capitalistic basics everywhere possible.

 

[Oddball]

And just how many times has this international mafia federation been wrong in the past?


Though I actually agree. It is pretty obvious that deficit spending reduces unemployment and decreases wages, BUT it also increases... DEFICITS (and long term structural problems)! So which of those effects is greater?

Hint: There ain't no free lunch.

 

[Brutus]

Hint: There ain't no free lunch.

A liberal lacks the IQ to comprehend that! To them government is magical and so can tax, borrow, regulate, and spend to improve the economy.

The truth is that unless they can improve or invent goods and services, which they obviously can't, they cant help the economy.

We got from the stone age to here not because of liberal government magic, but because Republican capitalists invented new goods and services.

 

[pgm]

how could cuts hurt the economy when they leave more money in the private sector which is 100% the source of real economic growth. Government spending can at best create a bubble that bursts further hurting the economy.

How can reducing the money supply leave more money in the private sector. We are talking about government spending cuts, tax increases or both.

The government spends money in the private sector. When it cuts taxes, it takes less money from the private sector. I don't see how consolidation could possible not hurt the economy.

how on earth is that possible when government spending can only create bubbles that burst and make the recession worse???

Ask China. It spent $586 billion--38% on infrastructure. That's about 10% of GDP. As a result, Chinese growth outpaced expectations. Anyway, I'm not arguing for stimulus, I'm just saying it's possible.

Frankly, that payroll tax cut doesn't seem to be working. Nor do I think Obama's extension of that will help much either. That's probably heresy for a fiscal conservative like me, but I don't think the results will be worth the cost.

That's not heresy for a fiscal conservative. A true fiscal conservative would believe that we should never run a budget deficit. A true fiscal conservative would prefer deficits be closed with spending cuts, but not completely rule out tax increases.

(A tax increase would be dumb in this economy, though).

 

[Brutus]

how could cuts hurt the economy when they leave more money in the private sector which is 100% the source of real economic growth. Government spending can at best create a bubble that bursts further hurting the economy.

How can reducing the money supply

as a liberal you are of course very confused. In this case you've got monetary and fiscal policy confused

leave more money in the private sector. We are talking about government spending cuts, tax increases or both.

when liberals raise taxes from the private sector, they harm the private sector that is 100% the source of economic growth. Remember that rule and you'll never go wrong

The government spends money in the private sector.

1) yes but it costs a round of private sector buying when those purchases are not made but are made later by the government. This lsows the economy

2) more importantly, government spending creates bubbles that burst and cause recession. Private spending is real and sustainable. Got it now??

When it cuts taxes, it takes less money from the private sector.

all humans agree, so?????????

I don't see how consolidation could possible not hurt the economy.

who said anything about consolidation??? It seems you have no background in this subject. Am I right?


how on earth is that possible when government spending can only create bubbles that burst and make the recession worse???

Ask China. It spent $586 billion--38% on infrastructure. That's about 10% of GDP. As a result, Chinese growth outpaced expectations. Anyway, I'm not arguing for stimulus, I'm just saying it's possible.

Japan has now entered its 3rd "lost decade" because of stimulus bridge to no where spending. China is growing hugely because it has a meager standard of living compared to the rest of the world, but is now a part of the world.

Frankly, that payroll tax cut doesn't seem to be working. Nor do I think Obama's extension of that will help much either. That's probably heresy for a fiscal conservative like me, but I don't think the results will be worth the cost.

That's not heresy for a fiscal conservative. A true fiscal conservative would believe that we should never run a budget deficit. A true fiscal conservative would prefer deficits be closed with spending cuts, but not completely rule out tax increases.

(A tax increase would be dumb in this economy, though).[/QUOTE]


In sum, there is no liberal who dares defend Keynes and Obama.