The Economist: Food Stamps & UnEmp Benies Best Stimulus!?!? Better than Tax Cuts!

[Zander]

In the short run, yes, paying unemployment benefits does have a stimulative effect on the economy. But over the long term, they are a drain. Otherwise we could simply give unemployment benefits to every person in the country and ABRACADABRA- we'd have a booming economy.

If you pay a man to do nothing, he will do nothing. Doing nothing does not help grow the economy....

 

[EdwardBaiamonte]

You think if I take a million bucks to Russia and spend it in the form of rubles, it hasn't created economic activity because those dollars aren't dollars anymore. Got it.

Econ 101, it called the balance of payments because the dollars that leave the USA come back to balance the transaction. You spend the rubles in Russia, but the dollars then get spent back in the USA!!

So care to try again to explain how a dollar is magical when spent by liberals and not when spent by those who earned it??

 

[Uncensored2008]

wow man that's like magic man. You give the liberal $1.00 they spend it and it turns into $1.73. What happens if you let the guy who earned the dollar spend it himself? Only a liberal can spend magically?

It's the multiplier effect.

Because the money is spent in totality, it generates $1.73 in economic activity as merchants hire to meet the demand and buy from suppliers.

It all sounds good, except what is being omitted is that about $6 are spent on the REAL welfare recipient - government workers, for every dollar of food stamps that gets into the hands of the needy.

IF we take only the value of the food stamps that the recipient receives, then the numbers posted by the Economist are accurate. However, IF the wages of all the hosts of federal, state and county employees, along with the systems and infrastructure supporting the program are accounted for, then each dollar in the hands of the end user costs taxpayers $7, $1 for the food stamp and $6 for the bureaucracy.

Suddenly the $1.73 return becomes a $5.27 loss.

This is like a kids lemon-aide stand. A child sells lemon-aide for a quarter a cup and is happy as a clam. Of course they got the sugar, lemons and cups from moms pantry. Those cost mom 60 cents for each cup sold - but the child doesn't see it as a loss.

 

[IndependntLogic]

You think if I take a million bucks to Russia and spend it in the form of rubles, it hasn't created economic activity because those dollars aren't dollars anymore. Got it.

Econ 101, it called the balance of payments because the dollars that leave the USA come back to balance the transaction. You spend the rubles in Russia, but the dollars then get spent back in the USA!!

So care to try again to explain how a dollar is magical when spent by liberals and not when spent by those who earned it??

LOL! OMG are you REALLY that um "special"? Really? So if I take a million to Russia and just put it in the bank there forever, it magically comes back to the USA to be spent? Really? Okay Forrest!

Wait. This is rich. You think currency conversion = econmic activity? So if we took all the money out of all the banks in the USA and put it into Mexican banks, there would be no economic collapse or adverse effect because it is magically spent in the USA when converted!

Seriously please tell me you're just like pretending to be this uh, special.

 

[IndependntLogic]

wow man that's like magic man. You give the liberal $1.00 they spend it and it turns into $1.73. What happens if you let the guy who earned the dollar spend it himself? Only a liberal can spend magically?

It's the multiplier effect.

Because the money is spent in totality, it generates $1.73 in economic activity as merchants hire to meet the demand and buy from suppliers.

It all sounds good, except what is being omitted is that about $6 are spent on the REAL welfare recipient - government workers, for every dollar of food stamps that gets into the hands of the needy.

IF we take only the value of the food stamps that the recipient receives, then the numbers posted by the Economist are accurate. However, IF the wages of all the hosts of federal, state and county employees, along with the systems and infrastructure supporting the program are accounted for, then each dollar in the hands of the end user costs taxpayers $7, $1 for the food stamp and $6 for the bureaucracy.

Suddenly the $1.73 return becomes a $5.27 loss.

This is like a kids lemon-aide stand. A child sells lemon-aide for a quarter a cup and is happy as a clam. Of course they got the sugar, lemons and cups from moms pantry. Those cost mom 60 cents for each cup sold - but the child doesn't see it as a loss.

Well you're solid. Maybe YOU could explain to ol' Ed that economic activity to him (and hell if you're successful, let him know taking money out of the country doesn't magically bring it back etc...).

Obviously, food stamps and unemployement are costs. Just like the military, libraries, tax breaks and so on. Any times the government provides a service or pays for anything (or doesn't collect), its a liability and not an asset.
Obviously unemployment & foodstamps aren't meant to be profitibile. Neither is the military etc...
The article states one point only: Of the various things the government doles out, these two generate the most economic activity. Nobody is going to outsource jobs to India with foodstamps. Nor are they going to build their pension. They spend them as soon as the get them.
It is better for us to have fewer people on food stamps and unemployment. Duh. I just hadn't thought of them in terms of economic activity before and found the article interesting.

 

[Uncensored2008]

Well you're solid. Maybe YOU could explain to ol' Ed that economic activity to him (and hell if you're successful, let him know taking money out of the country doesn't magically bring it back etc...).

The point is, to claim this as an example of Keynesian stimulus working is disingenuous. We are not realizing more economic activity than taxpayer money expended.

Obviously, food stamps and unemployement are costs. Just like the military, libraries, tax breaks and so on. Any times the government provides a service or pays for anything (or doesn't collect), its a liability and not an asset.
Obviously unemployment & foodstamps aren't meant to be profitibile. Neither is the military etc...

But that wasn't the way it was presented. It was presented as unemployment and food stamps being a good economic stimulant. That only works if all the costs are ignored, ala the lemon-aide stand.

The article states one point only: Of the various things the government doles out, these two generate the most economic activity.

But the conclusion is false, because most of the costs are ignored.

Nobody is going to outsource jobs to India with foodstamps. Nor are they going to build their pension. They spend them as soon as the get them.

That's true, and if not for the costs associated this would be a valid point.

It is better for us to have fewer people on food stamps and unemployment. Duh. I just hadn't thought of them in terms of economic activity before and found the article interesting.

It's bad data - false and misleading.

 

[uscitizen]

wow man that's like magic man. You give the liberal $1.00 they spend it and it turns into $1.73. What happens if you let the guy who earned the dollar spend it himself? Only a liberal can spend magically?

So you think Moody's is Liberal eh? One of those highly sophisticated and knowledgable Conservs are you? Tell ya what. Go ask one of them thar "Liberal Elitist" about the difference between government stimulated economc activity and currency value. Actually, CaliGirl could probably explain it to you too.
I would but honestly, I'm finding you kinda entertaining.
Tell ya what. If you ask reeeeally nicely, I'll explain it.

BTW, based on your understanding, we should never cut taxes at all.

why be so afraid to explain how a dollar become magical when a liberal spends it. You fool no one by trying to change the subject. Do you fool yourself?

Food stamps and such ALL get spent rollig back into the economy.
Tax cuts do not all get spent.
Just to keep it simple for those economically challenged ones.

 

[EdwardBaiamonte]

LOL! OMG are you REALLY that um "special"? Really? So if I take a million to Russia and just put it in the bank there forever, it magically comes back to the USA to be spent? Really? Okay Forrest!

as I said its called the BOP ( balance of payments). Look it up! We buy Chinese stuff and they must get yuan for it so the dollars must come back here. BOP!!

As I recall you were pretending that a tax cut of $1.00 resulted in 50 cents of spending and nothing more while government spending of $1 magically turned into 1.73. Care to admit you were wrong?

 

[EdwardBaiamonte]

Food stamps and such ALL get spent rollig back into the economy.
Tax cuts do not all get spent.

why be so afraid to tell us what happens to tax cuts??? Is the money burned or made into paper clothing or rollig in cigarettes??

 

[EdwardBaiamonte]

It's the multiplier effect.

yes, an educated liberal would argue that by taxing $1.00 you create a new round of stimulative spending (as recipient buys food, for example) that otherwise would not have taken place; thus the value of the dollar in terms of new economic activity is $1.73.

What is admitted is that if left in private hands the money would have been spent too but on real sustainable economic activities and not to create a food bubble and the recession it will cause when the bubble is popped.

 

[IndependntLogic]

Well you're solid. Maybe YOU could explain to ol' Ed that economic activity to him (and hell if you're successful, let him know taking money out of the country doesn't magically bring it back etc...).

The point is, to claim this as an example of Keynesian stimulus working is disingenuous. We are not realizing more economic activity than taxpayer money expended.

Obviously, food stamps and unemployement are costs. Just like the military, libraries, tax breaks and so on. Any times the government provides a service or pays for anything (or doesn't collect), its a liability and not an asset.
Obviously unemployment & foodstamps aren't meant to be profitibile. Neither is the military etc...

But that wasn't the way it was presented. It was presented as unemployment and food stamps being a good economic stimulant. That only works if all the costs are ignored, ala the lemon-aide stand.

That is a very valid point. Then again, if that were applied to the military for example, I'd bet the result in terms of ratio would still put unemployment ahead of the military. Does this mean I think more people should be on UE? No. The commentary is only how much of the money ends up being spent solely in the USA and how far it goes from OU

But the conclusion is false, because most of the costs are ignored.

Nobody is going to outsource jobs to India with foodstamps. Nor are they going to build their pension. They spend them as soon as the get them.

That's true, and if not for the costs associated this would be a valid point.

It is better for us to have fewer people on food stamps and unemployment. Duh. I just hadn't thought of them in terms of economic activity before and found the article interesting.

It's bad data - false and misleading.

Hmmmm. You make such logical and reasonable points, I'm going to give it another read. Like I said, the only reason I found it of interest is because I'd never thought of UE benies or food stamps in terms of economic activity before.
That being, said, I try not to be like those here who can never have an open mind to differing views. If I see something that's just plain stupid, I obviously ignore it or have a bit of fun with it but I have learned a few things here. Cheers.

Okay so I re-read it and I think it's sound. It doesn't claim that having large numbers of people on food stamps or unemployment are good for the economy , else I would never have concurred. it simply states that of the things the government spends money on, these two result in the highest level of economic activity / stimulus per government dollar spent. I find that sound.

 

[EdwardBaiamonte]

the things the government spends money on, these two result in the highest level of economic activity / stimulus per government dollar spent. I find that sound.

more importantly, money spent privately does not create bubbles that deflate and cause recession when the libs withdraw the artifical non sustainable stimulus.