The single most important phrase in economics is....

[kiwiman127]

I thought government didn't create jobs per many of our GOP friends?
That being the case,,where are all the "Job Creators"? Seems to be that they went into hiding ever since Capital Gains taxes dropped to a record low.

 

[Dragon]

Now let us take another look. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $250 that he was planning to spend for a new suit.. .. The glazier’s gain of business, in short, is merely the tailor’s loss of business.

To make this analogy fit the circumstances from World War II, the grocer would already have a suit and everything he needs, and the $250 would come out of funds that were sitting around doing nothing, because the market for groceries was slack enough that the grocer couldn't justify expanding his store or opening a new branch.

War is destructive, that's true. The government would have been much better off spending that kind of money on public works or some such in the 1930s, rather than on instruments of destruction in the '40s. But because people are stupid, and because as a result he didn't do that, the war served a good economic purpose in the U.S.: it forced FDR and Congress to do what they should have done already.

 

[Uncensored2008]

To make this analogy fit the circumstances from World War II, the grocer would already have a suit and everything he needs, and the $250 would come out of funds that were sitting around doing nothing, because the market for groceries was slack enough that the grocer couldn't justify expanding his store or opening a new branch.

So it's all just magic then?

Funds as sitting around doing nothing, and all the meanies just won't give you any because they're stingy?

Well dayum..

War is destructive, that's true. The government would have been much better off spending that kind of money on public works or some such in the 1930s, rather than on instruments of destruction in the '40s.

So there were no public works projects and no massive deficit spending in the 30's?

But because people are stupid, and because as a result he didn't do that, the war served a good economic purpose in the U.S.: it forced FDR and Congress to do what they should have done already.

You're Humpty Dumpty, aren't you? Reality doesn't suit you, so you have invented one that does, and loudly demand that it is just so...

 

[Dragon]

So it's all just magic then?

Funds as sitting around doing nothing, and all the meanies just won't give you any because they're stingy?

What does "stingy" have to do with it? It's just business. If the demand is there for the goods your expanded business will produce, you invest the money and expand. If it's not, you don't. A business can't be called "stingy" for not investing money it's sure to lose. Nevertheless, when people are out of work, when demand for goods and services is down because people don't have money to spend, capital piles up and does nothing, not because business owners are stingy but because they're not stupid.

In situations like that, either the government invests the money or nobody does. The money is not removed from the productive economy because it wasn't being invested anyway.

So there were no public works projects and no massive deficit spending in the 30's?

There was no massive spending on public works in the 1930s. It was not zero, but it was nowhere near enough.

As usual, pointless insults without cognitive content are snipped and will not receive a reply, as they deserve none.

 

[Nosmo King]

of course thats idiotic and liberal and shows that as a liberal you lacked the IQ to comprehend the post to which you are responding.

1) the government can't prime the pump since there is no pump. Re-read

2) when it tries it only creates a bubble that makes things worse

3) if a bank won't or can't sell money or a car company wont or can't sell cars it is because government has interfered with the economy and prevented people from doing what they are in business to do.
I know thats way way over your head, but at least I tried

You're too short for that gesture~ Addison DeWitt

I see that as a liberal your economic knowledge is exactly 0.0

Do you think no one noticed that you tried to change the subject with an insult?

Can you find even one liberal who can respond to the OP with a tiny bit of intelligence? What does that tell you about liberalism?

All you've done in this thread, and throughout the entire board is hurl insults rather than contradict Liberal arguments. I can see you are "projecting" as your shrink no doubt has already pointed out. You cannot argue with effectiveness due to your inbred inclination to insult first, smear second and run away once you "think" your work is done.

I shall no longer suffer your foolishness any longer. Brutus, you are not worth the key strokes.

 

[expat_panama]

..."Job Creators"? Seems to be that they went into hiding ever since Capital Gains taxes dropped to a record low.

Interesting, we could look at how employment levels vary with cap. gains taxes. You interested?

 

[Rozman]

Economists agree: Stimulus created nearly 3 million jobs - USATODAY.com

It amazes me the numbers getting put out there...

In many speeches the President goes on and on about how many jobs the Stimulus created.
It always seems to go up...
Debbie Wasserman Peterman Diego Salazar Michaels Schultz..... brags about how many consecutive months this administration created jobs...

Now we up to 3 million jobs created from stimulus....
Now it's like 18-19 straight months of millions and millions of jobs created....

Why is unemployment still so high and has not changed.
Why is the President going out and telling us we need another Stimulus....
Why is Ed Schultz crying on TV about the 99ers not being given ANOTHER extension of
unemployment benefits....

The Stimulus worked and created millions of jobs
The Stimulus worked....18 months of new and shiny jobs every month.

Unemployment is still the same.
Many are still without jobs 2 years later.

How many Americans are buying into this administration doing a great job on the economy.

 

[Brutus]

But if someone who has a bunch of money that they aren't using pays someone to dig a hole and fill it back up - and that hole digger spends that money - then the money is in the economy when it otherwise might not be.

A 100% perfect example of perfect liberal ignorance. People always use their money. Even if they put it in a bank, the bank then lends out 10 times that amount ( its called fractional reserve banking for a reaason) for sustainable profitable uses to grow the economy.

Digging a hole or federal spending just creates a wild guess or artificial stimulus bubble ( like the housing stimulus bubble or Obama's bubble) that bursts misallocated resources. This causes a recession that the free market must then sort out by reallocating those resources to their proper sustainable Republican free market places.

All liberals lack the IQ to understand these basics; that is why they are liberals who are defined primarily by a belief in magical government.

 

[Dragon]

Interesting, we could look at how employment levels vary with cap. gains taxes. You interested?

If you want, it might be mildly interesting.

If you're suggesting that the drop in CG tax had nothing to do with the fact jobs aren't being created, I more or less agree. It might have had a tiny effect by encouraging unloading of assets rather than investment in long-term proposals like industrial expansion, but the main factor is the high unemployment rate itself, coupled with a change in consumer borrowing and spending habits and/or bank policies towards same.

 

[Brutus]

I thought government didn't create jobs per many of our GOP friends?
That being the case,,where are all the "Job Creators"? Seems to be that they went into hiding ever since Capital Gains taxes dropped to a record low.

more perfect liberal ignorance!! Another obvious variable to consider relative to labor force participation is, the current Great Recession which all agree is a housing recession, not a cap. gains recession.

 

[Uncensored2008]

What does "stingy" have to do with it? It's just business.

Business? No, it's not business. Treasury floating T-Bills to the fed and pumping out trillions in debt is not "business." No business behaves in such a manner, if they try they are bankrupt in a matter of days.

If the demand is there for the goods your expanded business will produce, you invest the money and expand. If it's not, you don't. A business can't be called "stingy" for not investing money it's sure to lose. Nevertheless, when people are out of work, when demand for goods and services is down because people don't have money to spend, capital piles up and does nothing, not because business owners are stingy but because they're not stupid.

What does any of this have to do with deficit spending to create a multiplier effect in order to stimulate an economy out of a recession?

In situations like that, either the government invests the money or nobody does. The money is not removed from the productive economy because it wasn't being invested anyway.

Government investing in infrastructure or make work projects has zero impact on capital improvements by private concerns.

Obama sending $100 billion to the Teachers Union in California to support their retirement system didn't add a new mill for Pedro's Machine shop. Widening the 210 freeway didn't buy a new XRay machine for Dr. Huang's dental practice.

Nor were these funds even under the pretense of doing such.

Do you understand how Keynesian stimulus is supposed to work? I'm not trying to be insulting here, but it appears that you don't.

In VERY simplified terms, Keynes postulated that the recessionary portion of the business cycle was created by a lack of confidence in consumers which caused them to stop spending, creating a loop-back structure that reverberated through the economy and fed itself through further job loss, which led to less consumer spending, and the cycle spins.. Now Murray Rothbard demonstrated that this is not in fact correct, but this is the foundation for Keynesian theory.

So Keynes held the position that government spending in the market would have a similar reverberation, which Keynes calls the "multiplier effect." The government spends $100 on a make work project and pays Joe to dig a hole and fill it back in. Joe takes that $100 and buys groceries and gasoline. The grocer then replenishes stock due to selling, but buys more than he sold as he sees an upward trend. Ditto the gas station. Thus the effect of the government expenditure has spawned economic activity in excess of the $100 spent. The supplier of the grocer hires people to keep up with the new demand who are paid wages, who in turn buy goods, spawning more activity and soon the original $100 has spawned 4 or 5 times its original value, what Keynes called "5 turns."

That is the basic theory. Problem is, it doesn't work.

There was no massive spending on public works in the 1930s. It was not zero, but it was nowhere near enough.

So no WPA then?

As usual, pointless insults without cognitive content are snipped and will not receive a reply, as they deserve none.

 

[Dragon]

What does any of this have to do with deficit spending to create a multiplier effect in order to stimulate an economy out of a recession?

You really don't see the connection? One common argument against doing this is that it will draw capital out of the private sector and so amount to robbing Peter to pay Paul, with the government doing so less efficiently by some sort of mystical cosmic law or something. That in essence was what you were getting at with your grocer and his broken window, which he repaired instead of buying a new suit. The reality is that right now, there is a huge amount of capital that is doing nothing productive because there is no good incentive to do so. Taxing that capital away and doing something with it will not hurt the economy but help it; we will have, not money that is being invested by the government that would otherwise be invested by private industry (=money to repair the window instead of buy the suit), but rather money that is being invested by the government that would otherwise be doing nothing productive at all (=money to repair the window instead of shoved under the mattress).

And yes, I do understand how Keynesian stimulus is supposed to work. The multiplier effect, by the way, is an inherent quality of all spending, not just government spending, and so is not central to the concept.

So no WPA then?

During its eight years, the WPA spent a total of $11 billion. During the four years of fighting, not counting Lend-Lease and the Marshall Plan, we spent $193.5 billion in 1940 dollars. So that's $1.375 billion per year compared to $48.375 billion per year.

Of course, the WPA wasn't the only New Deal program, but if you add all of them together you still end up with peanuts compared to the war spending.

 

[expat_panama]

...how employment levels vary with cap. gains taxes. You interested?

If you want, it might be mildly interesting. If you're suggesting...

Suggesting before even looking at the numbers is dumb, although that's what most people do. I plotted it out--

--and now we can all do our own suggesting although it won't matter for two reasons. One is that the fact you're the only person that's even "mildly interested" and without looking you've already decided--

..."Job Creators"? Seems to be that they went into hiding ever since Capital Gains taxes dropped to a record low.

The other reason's because capgain taxes have been cut to raise revenue, and Obama has already told us he wants them hiked regardess of how much revenue drops becuase he wants to stick it to the rich no matter what.

Better hearing it in his own words at FLASHBACK: Obama Says Raising Taxes Not About Revenue But About Fairness - Katie Pavlich .

 

[Brutus]

with the government doing so less efficiently by some sort of mystical cosmic law or something.

not cosmic!!!! 10,000 bankers will loan out more carefully in sustainable profitable ways because their business depends on it. It is life and death. A libtard bureaucrat monopolist will lend to Solandra and care far far less and know far far less and suffer far far fewer consequences.

(money to repair the window instead of shoved under the mattress).

except repairing windows causes a deeper recession by misallocating resources to a liberal make work bubble that bursts when the spending stops and taxing to pay for it begins.

you still end up with peanuts compared to the war spending.

actually libtards have spent us $14.5 trillion into debt and there was no stimulus, let alone a multiplier, but there is a liberal bubble Great Recession with home prices already depressed as much as at the height of the Great Depression.

If war made an economy boom we'd just make tanks and dump them in the ocean. Only an idiot or a liberal would fall for that. The war did help in that it destroyed every economy in the world except ours!

 

[Dragon]

Suggesting before even looking at the numbers is dumb, although that's what most people do. I plotted it out

And as I suspected, there's not much correlation either way. So it's unlikely the cut in capital gains tax had much to do with the employment figures, as I said.

One is that the fact you're the only person that's even "mildly interested" and without looking you've already decided

That quote was not from me.

The other reason's because capgain taxes have been cut to raise revenue

I suggest you look into that one again. That cuts in capital gains taxes raise revenue is a myth. It's an illusion created by the fact that the cuts are always announced some time before they go into effect, thus anyone with assets to unload who has the brains God gave a rutting ram in mating season holds onto them until the lower tax goes into effect, and sells them then. Thus, you get a big DROP in capital gains revenue during the months before the lower tax goes into effect, followed by a big INCREASE immediately after it does, the net effect of which is a drop, because the assets that would have been sold at the higher tax rate are instead sold at the lower one. The claim that capital gains taxes raise revenue is made by looking at the immediate aftereffect of the cut and ignoring what went before.

Regardless of what Mr. O said about fairness, raising capital gains tax rates will also raise revenue.

 

[bripat9643]

And the Bush experts all thought this would be over in 6 months.

so your point is?

It would have been over in six months if it wasn't for all of Obama's attempts to "fix" it.

 

[bripat9643]

Any economy based mostly on debt is not a stable platform.

did someone disagree??????????????

Just most all the right wingers during the Bush years.

Name one "right winger" who came out in favor of more debt.

 

[Dragon]

Name one "right winger" who came out in favor of more debt.

Ronald Wilson Reagan.

Although admittedly that wasn't during the Bush years.

Actually high deficit spending in times of peace and prosperity has become SOP under Republicans, which may or may not equate to "right wingers" -- increasingly it does. My theory is that this is a feature not a bug. When the government borrows money instead of taxing it, this means that a rich person (and generous donor to Republican election campaigns) does not have his money just taken from him by the government to fund public expenses, but instead is able to lend the government the same money at interest. And not only that, but service on the debt takes up a portion of tax revenues in the future, reducing the available revenues for providing government services that disproportionately help the non-rich. Deficit spending therefore amounts to a transfer of wealth from the non-rich to the rich, in a way that's too complicated for most people to figure out. So I think it's done deliberately and not because Republicans suck at math or something.

 

[editec]

There are times when pumps need priming.

There are times when economies need stimulating, too.

 

[expat_panama]

That quote was not from me.

Huh, all these text blocks end up looking alike after awhile. So we agree that it was a stupid quote. Good.

...That cuts in capital gains taxes raise revenue is a myth...

Actually, it's a 'myth' that it's a myth, but there's so much to it that Obama and his interviewer just decided to simplify it all by saying 'cuts-increase-revenue'. What we got is low rate gives us rising revenue and rate hikes force a spike sell-off followed by declining revenue.

Saying "cuts in capital gains taxes raise revenue" is a simplification. Saying "cuts in capital gains tax-cuts lower revenue" conflicts with reality.