Krugman - Debt Reduction = Increased Spending

[Master Shake]

Re: Krugman - Debt Reduction = Increased Spending

LMAO! How about if we ask Rush Limbaugh if Obama is making life better?

[pescamaaan]

Re: Krugman - Debt Reduction = Increased Spending

Yes, certainly even more socialism is what we need to solve the problems caused by a mixed socialism/capitalism model in healthcare.

And by that logic, if socialism is the solution in health care rather than returning to a fully "for profit" [shudder! profit! ugh] true free market health care model, then logically socialism is the way to go as far as supplying the other necessities.

Let's have socialist food production. Food is more essential than health care, right? Without food you die right away. If socialism is the best way to get medical providers and manufacturers to provide affordable health care, then it logically must be the best way to provide food.

Same for housing - let's save money by adopting a universal socialist housing system. That will save workers from having to pay for a place to live, right? Wow, what savings! Every family will get a nice little one-room unit in a nice tall cement housing complex building. For free! Wow!

And socialist clothing production. No more inefficient private "for profit" producers of clothing! Government panels will decide what the latest fashions should be, the thread counts of bed linen, and so on. Lots of savings there! Just get rid of that expensive profit.

And socialist transportation systems. The government will provide everyone with free bus passes. Huge savings for those who have to travel to work!

We already have a mostly socialist education system, let's make it socialist all the way, from preschool through graduate school. (Oh wait, Obama's already doing this.)

And socialist employment, period. Let everyone work for the government - this frees up private industry from ALL costs associated with the labor force!

I can really see where the savings to private companies will be huge from this elimination of expensive private sector health care, food, clothing, shelter, transporation, and employment. Huge savings! All by eliminating profit!

Geez, why should an economic system need profit, anyway? People should work for no profit, for no gain at all. They should just say to themselves, "ask not what the government can do for me, ask what I can do for the government." Or "to each according to his needs, from each according to his abilities." All this profit stuff is evil anyway. Get rid of the profit and you can really save money!

Too bad my grandfather, who lived in the bad old days of a private "for profit" health care system, and was able to have a surgery and stay in the hospital for 12 days in 1944 at a total cost of $84.75, couldn't live to see the day when we were on the cusp of having "free" health care brought to us socialist-style courtesy of those who don't seem to have learned anything from the socialist economies in the former U.S.S.R., Cuba, or pre-"socialism with Chinese characteristics" China. We in America have been missing out on how great they had it!

We're already there, no?
+socialized food production: Massive subsidies for agriculture
+socialized housing: mortgage interest tax deductions, govt backs +90% of all mortgages?
+socialized transportation: amtrak, GM, Chrysler, etc

[ThePythonicCow]

Re: Krugman - Debt Reduction = Increased Spending

I could have named Gore and Henry Kissinger as well.

Fortunately, the Nobel committee is becoming more subtle in their ways ... that or William Engdahl's conspiracy theories more bizarre. For Engdahl's take on the latest Nobel Peace Prize to Liu Xiaobo, see The Geopolitical Agenda behind the 2010 Nobel Peace Prize.

[Starving Steve]

Re: Krugman - Debt Reduction = Increased Spending

Let's think about California before the California Water Project--- a public-works project. Most of California was a bleached desert, part of the Mojave Desert, Kern Desert, the Imperial Desert, Armagosa Desert, Lower Colorado River Desert, and Sonoran Desert group.

When the CWP was built, the state's water shortage was solved. Arid wasteland was converted into cropland. Not only that, people in Southern and Central California obtained a reliable and abundant water source, so people could afford to live in homes in the suburbs. The cost of living was driven-downward.

Not to sound like "grow our way out of deficits", California became more productive. The spending upon the CWP not only created jobs, it lowered the cost of food and it lowered the cost of water. Initially, the spending upon the CWP allowed Los Angeles and San Diego and San Jose to grow outward, and that spending put a lid on what land costs were worth in Southern California and Central California, too.

My own parents bought a bungalow in San Jose in 1960, partly because they could afford the bungalow thanks to abundant water for development in California which came from the California Water Project. The cost of the bungalow: $17,950. The bungalow was built just off of Blossom Hill Road, nine miles south of San Jose.

The fact that my parents did not have to go deeply into debt to buy the bungalow made my parents happy. There were no issues about "habitat preservation", nor "urban sprawl", nor "long-term sustainability", nor "bio-diversity" ..... That was the era when people solved problems with the help of government, and government did not place artificial limits upon urban development. Government served the people, and that is what traditional liberalism was all about.

Half-a-century later, the Obama bunch were elected to Washington on a "change" agenda, and when they governed, they didn't even know what liberalism was all about. Instead, their agenda became bailing-out bankers and conserving habitat for birds. Hope became their energy plan, and spending on waste became their economic programme.

[tsetsefly]

Re: Krugman - Debt Reduction = Increased Spending

Is Krugman worried that the Republicans are going to curtail spending? That's like worrying about a elephant stampede in Alaska. It just won't happen. He may not like the way they spend or that they decrease taxes but in the end deficits will continue exploding. I read somewhere that the GOP identified 1 billion in spending cuts. That's like going to the barber and getting one hair cut.

As I have stated many times the tea party started from the "libertarian/republican ron paul movement" then got infiltrated(not totally) by the neocons and moralist. The way to separate a "real" tea party minded candidate is by looking at their views on foreign policy. IF they want to continue the current policy of fighting wars overseas and policing the war then they are neocons. The other way is to see if they rely on social issues way too much (againt abortion and gay marriage, this should be at the bottom of what to do list for any politician that people are concerned with gays getting married is beyond me).

The overwhelming majority of republicans dont even want to touch military spending, thus they are not serious about spending cuts. Any talk about spending cuts will have to include cutting military spending...

[Ghent12]

Re: Krugman - Debt Reduction = Increased Spending

The California Water Project works. The Hoover Dam works. The SF Bay Bridge works. The Golden Gate Bridge works. The Aswan Dam on the Nile River in Egypt works. Canada's socialized-medicine works. Medicare in the U.S. works. Social security works. Canada Pension works. The Canada Old Age Security Plan works. The Nelson River Project in Manitoba works. The Interstate Highway System in America works. The St. Laurence Seaway works. The Bonneville Dam works. The Tennessee Valley Authority works. FDIC works. Canada Deposit Insurance works.

It would seem to me that socialism works, at least more often than not.

Or maybe you haven't learned enough about capitalism from Wall Street and the games being-played there. De-regulation hasn't taught you any lessons about why we need socialism?

Except for the examples of "working" healthcare and pension plans, the rest of those are large-scale public projects. Is it any surprise that a huge (forced through taxes) inflow of capital increases the wealth of a region?

Hoover Dam does work, but what would have been the impact on Great Depression America if Hoover Dam and all of the other enormous public projects had not been brought into being through taxes and public debt? What dozens, hundreds, or thousands of private projects had to be scaled back or never even dreamed of because of Hoover's and FDR's manic response to the crash of 1929? How much was sacrificed to make the area around Hoover Dam into a high-capital, thriving region? I would be willing to bet that the government can make any given region of the world into a lush-appearing island of fertility and wealth in a sea of desert or snow and ice--but at what cost? Ask Dubai how their Palm Islands are turning out.

As for medical and pension plans, their effectiveness is dependent in part upon the government that runs them. The US heavily-government-entangled healthcare system right now is appalling because our government is not designed, nor should it ever try to implement, a Federal distribution system of anything yet that is essentially what has been allowed to develop because of the influence of the various high-stakes interests involved. In fact our system was originally designed to remove government roadblocks. Just look at the Commerce Clause of the US Constitution--it is practically screaming, "I authorize Congress to end individual state mandates on insurance policies" which effectively form state trade embargoes, yet the Commerce Clause is used to literally regulate every other aspect of the economy which has only an extremely tenuous link to the actual wording of the Constitution.

We are designed to be decentralized and place trust in the people, but the various interests in health insurance, big pharma, and etc. have long ago dug their claws into the system. Healthcare is inextricably linked to government already, and eliminating for-profit health insurance will do essentially nothing to help meet the needs of people. It would be probably a lot like the Defense Department acquisition system--a mix of good and bad but anything that is on time and on budget is an exception to the rule.

It is incredibly unlikely that our designed-to-be-decentralized system can effectively implement a smooth, streamlined healthcare policy at the Federal level. That leaves us with the "bad old days" of absurdly cheap, mostly free-market health care of decades ago.

[Munger]

Re: Krugman - Debt Reduction = Increased Spending

Except for the examples of "working" healthcare and pension plans, the rest of those are large-scale public projects. Is it any surprise that a huge (forced through taxes) inflow of capital increases the wealth of a region?

Hoover Dam does work, but what would have been the impact on Great Depression America if Hoover Dam and all of the other enormous public projects had not been brought into being through taxes and public debt? What dozens, hundreds, or thousands of private projects had to be scaled back or never even dreamed of because of Hoover's and FDR's manic response to the crash of 1929? How much was sacrificed to make the area around Hoover Dam into a high-capital, thriving region? I would be willing to bet that the government can make any given region of the world into a lush-appearing island of fertility and wealth in a sea of desert or snow and ice--but at what cost? Ask Dubai how their Palm Islands are turning out.

Yes. The private sector was doing a wonderful job putting those millions of unemployed people to work. The private sector is doing a wonderful job putting the idle human resources to work right now.

How much potential capital is being wasted as the unemployed sit idle when they would gladly be building a power plant or repairing a road?

Your rant is a complete fallacy. There is no "crowding out" when the unemployment rate is over 25%.

[Munger]

Re: Krugman - Debt Reduction = Increased Spending

No, they won't cut spending, but they also won't extend the automatic stabilizers, such as unemployment etc. Also, their idea to get the economy going it trickle-down tax cuts for the rich, which has little to no effect when the recipient is not liquidity-constrained.

[tsetsefly]

Re: Krugman - Debt Reduction = Increased Spending

Yes. The private sector was doing a wonderful job putting those millions of unemployed people to work. The private sector is doing a wonderful job putting the idle human resources to work right now.

How much potential capital is being wasted as the unemployed sit idle when they would gladly be building a power plant or repairing a road?

Your rant is a complete fallacy. There is no "crowding out" when the unemployment rate is over 25%.

Because there is no money to hire people and current government policies leave companies uncertain about the future...

For all the programs FDR did unemploymen was still in the high teens by 1940. So that clearly isnt the way to go...

[Ghent12]

Re: Krugman - Debt Reduction = Increased Spending

Yes. The private sector was doing a wonderful job putting those millions of unemployed people to work. The private sector is doing a wonderful job putting the idle human resources to work right now.

How much potential capital is being wasted as the unemployed sit idle when they would gladly be building a power plant or repairing a road?

Your rant is a complete fallacy. There is no "crowding out" when the unemployment rate is over 25%.

The private sector did a marvelous job sorting things out after the crash of 1920. What was different between the crash of 1920 and the crash of 1929? The difference is that President Wilson was suffering from the aftermath of a stroke during 1920 and essentially had no response to the economic crisis, while Presidents Hoover and Roosevelt were actively "using every trick in the book" (paraphrased) in response to 1929's crash.

The private sector does what it knows is profitable, and meeting peoples' needs is generally always profitable.

You can either waste hundreds of billions to trillions in "shovel ready projects" like we have (allegedly, even though a dismal amount went to infrastructure and most went through political money troughs) and try to revitalize the economy Keynesian style, which is presently failing, or you can enact more free-market measures that provide some measure of certainty about the future. The only certainty that businesses have now is that there will certainly be high taxes in the future to pay for the failed Bush/Obama policies and therefore they will certainly not be expanding their businesses by hiring.

[Munger]

Re: Krugman - Debt Reduction = Increased Spending

This is going to go nowhere, but I'll give it one shot.

The private sector did a marvelous job sorting things out after the crash of 1920. What was different between the crash of 1920 and the crash of 1929? The difference is that President Wilson was suffering from the aftermath of a stroke during 1920 and essentially had no response to the economic crisis, while Presidents Hoover and Roosevelt were actively "using every trick in the book" (paraphrased) in response to 1929's crash.

What's the difference between 2001 and 2010? It's called a massive debt overhang. The policies that worked then can't work now.

The private sector does what it knows is profitable, and meeting peoples' needs is generally always profitable.

During periods of debt deflation and rising unemployment, the most profitable thing to do is to sit on a wad of cash. Which is what business are doing.

You can either waste hundreds of billions to trillions in "shovel ready projects" like we have (allegedly, even though a dismal amount went to infrastructure and most went through political money troughs)

It's not waste when people are sitting around doing nothing. This is the #1 thing Austrians or whatever will not address: how does it make sense to have people sitting idle? No real business cycle theorist has ever explained it. Because it makes no sense at all.

and try to revitalize the economy Keynesian style, which is presently failing,

Hardly the case -- a tepid stimulus to begin with, watered down to mostly tax cuts. The effect was minimal, as predicted -- and its over at this point.

or you can enact more free-market measures that provide some measure of certainty about the future.

Like?

The only certainty that businesses have now is that there will certainly be high taxes in the future to pay for the failed Bush/Obama policies and therefore they will certainly not be expanding their businesses by hiring.

The #1 issue with business is a lack of customers -- i.e., demand. Check the polls. And the uncertainty they have is in regards to the economy.

It's a straw man. Similar to when democrats say that they are going to get "banks lending again" -- as if that is the problem. Small business don't need more loans, nor are they failing to hire because of uncertainty -- they need more customers!

But I know, mises.org is much more fun than reality.

[thriftyandboringinohio]

Re: Krugman - Debt Reduction = Increased Spending

Because there is no money to hire people and current government policies leave companies uncertain about the future...

For all the programs FDR did unemploymen was still in the high teens by 1940. So that clearly isnt the way to go...

Both ideas are currently popular chestnuts in certain circles.

The notion of "uncertainty" is delightfully ill-defined and of little provable consequence. The claim holds that business people large and small are paralyzed by some fear that a law may be enacted or repealed against their preference, and so they won't hire people, expand markets and thrive, even though they otherwise could. Baloney. They deal with hurricanes, earthquakes, and fierce international competition in the daily course of their business, but we are asked to believe that somehow the mere existence of a democratic congress brings them to a standstill due to apprehension about what congress MIGHT do.

Second, you assert that if a corrective policy was not completely effective quickly it was therefore wrong or wholly ineffective. Some problems are big and tough, and some corrections are partial or take a long time to work.

[Ghent12]

Re: Krugman - Debt Reduction = Increased Spending

It's not waste when people are sitting around doing nothing. This is the #1 thing Austrians or whatever will not address: how does it make sense to have people sitting idle? No real business cycle theorist has ever explained it. Because it makes no sense at all.

Actually that gets addressed numerous times by Austrian economists and theorists. People sitting idle, doing absolutely nothing, is far and away preferable to those same people toiling away and either wasting resources or being counterproductive. If doing something is preferable to doing nothing, then digging and refilling holes in the ground is the cure we need, but that is something that makes no sense at all.

Of course, based upon what you have answered, doing something, even if it is very close to nothing, is worth it no matter the cost. That is insane--ignoring the cost is a recipe for failure.

[c1ue]

Re: Krugman - Debt Reduction = Increased Spending

Thus, the reasoning underlying the lowering of interest rates is to eliminate the interest income of the savers to encourage them to spend their savings, thus allowing the debtors to pay off their debts. The other way at it is inflation or debt jubilee.

The problem with Krugman - besides that he is a hypocritical idiot - is that his 'theories' do not in any way account for growth.

It is not necessary that savers must sacrifice their savings in order for debtors to pay their debts.

It IS necessary that debtors have income, and that their debts don't rise faster than income growth.

The policies which Krugman blithely lumps together as 'stimulus' do nothing to address the ways by which income growth can be promoted.

In a literal sense, Krugman is a 'zero sum' type.

Of course I could be charitable and say that in reality he is being a stealth advocate for inflation targeting. But in reality, that would be giving him too much credit.

[Raz]

Re: Krugman - Debt Reduction = Increased Spending

The problem with Krugman - besides that he is a hypocritical idiot - is that his 'theories' do not in any way account for growth.

It is not necessary that savers must sacrifice their savings in order for debtors to pay their debts.

It IS necessary that debtors have income, and that their debts don't rise faster than income growth.

The policies which Krugman blithely lumps together as 'stimulus' do nothing to address the ways by which income growth can be promoted.

In a literal sense, Krugman is a 'zero sum' type.

Of course I could be charitable and say that in reality he is being a stealth advocate for inflation targeting. But in reality, that would be giving him too much credit.

Thank you, sir. I couldn't agree more.