Posted on 01/12/2009 1:00:46 PM PST by AIM Freeper
If economic illiteracy were a disease, The New York Times would be terminal.
The Times’ understanding of economics boils down to a simple formula — tax cuts, bad; spending, good. The Times thinks it’s not only possible, but desirable, to try to spend our way out of a recession caused by over-spending, deficits and misplaced priorities.
An editorial in yesterday’s Times urges President-elect Barack Obama to spend more — apparently, $800 billion isn’t enough of a “recovery package” — jettison his call for business tax breaks (which amount to less than $1 for every $5 of new spending) and forget entirely about his promise to cut taxes for those who make up to $200,000 a year.
The paper’s prescription for our economic woes is extended unemployment benefits (we certainly wouldn’t want to encourage the jobless to get out and look for jobs) and shoveling more money at the states to invest in “the nation’s crumbling and outdated infrastructure.”
Is it possible for The Times to say “infrastructure” without adding the modifiers “crumbling” and “outdated”? Funny thing, no matter how much the states get for highway repairs (from the gas tax, general revenue, tolls and federal aid), the infrastructure is still crumbling and outdated.
While The Times is all for tax cuts for “low and middle-income” Americans (at least in theory), it is apoplectic at the idea of cutting taxes on the rich (a term it never defines).
It reasons that while middle-class tax cuts will “stimulate the economy” — by resulting in immediate spending — upper-income taxpayers are more likely to save, which supposedly will result in little economic benefit.
How does The Times think the rich will save — by shoving their tax refunds into a piggy-bank? Their tax savings will be invested in stocks, bonds and mutual funds, which will lead to more capital investment and more job creation — far more than simple spending on consumer goods.
Investment, which leads to job creation, which in turns leads to long-term consumer spending, is essential to a recovery. It’s amazing that the editorial board of America’s self-styled newspaper of record can’t grasp basic economic principles.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
I can’t take any more. How can building roads stop the recession. Are stock brokers sposed to get out there and push shovels? This is insane Heavy infrastructure constuction is done by heavy machinery nowadays. Not labor. I have been working marine construction building a bridge. 10 man crew laying dirders and pilings. Thats all we need. We have huge cranes, tugs, barges etc. Don’t need any labor. Same with highways.
‘Funny thing, no matter how much the states get for highway repairs (from the gas tax, general revenue, tolls and federal aid), the infrastructure is still crumbling and outdated.’
As a business owner in the transportation industry, the amount of money we send to the US Treasury for use taxes (2290, F.E.T., fuel taxes, etc), our roads and bridges should have been paved in gold!
In the past 16 years, only 11% of these taxes have been spent on infrastructure. ($450B in the past 4 years).
I’m not saying anyone on the Times’ staff has read Keynes (I mean, who does, really?), but the conventional economic theory of the MSM is pop-Keynes through and through. Why? Well, that’s what government wants to do anyway, and the MSM are government cheerleaders (despite the fact that they oppose specific government officials, namely Republicans).
A have a simple curative for them. Go read Hazlitt and Bastiat. I won’t demand that they dig too deep. Bastiat and Hazlitt are simple enough for everyone to understand, which is not to say that they are any less profound than the economists that only academics bother with.
Of course. Socialists don't understand economics.
If it weren't for FR I wouldn't know the New York Times existed.
They don't have too firm a grasp on reality.
“’Funny thing, no matter how much the states get for highway repairs (from the gas tax, general revenue, tolls and federal aid), the infrastructure is still crumbling and outdated.’”
I don’t know how it is elsewhere, but here in Minnesota they spend our money on monorails and bike paths that no one uses.
I’ll grant the liberals that part of our infrastructure literally crumbled with the 35W bridge collapse. But money raining down from the heavens (/Obama) wouldn’t have helped, since no one recognized it as a problem until it was big a problem. What do the spenders think, that if we had all the money in the world we could replace absolutely everything, and in the process some things that might have crumbled would be taken care of without our knowing it?
It sounds like Don Feder needs a refresher course in basic economics himself. Unless it is an IPO or a new stock offering there is no capital investment made by purchasing stocks or mutual funds. It is simply a transfer. 2/3 of our economy is driven by consumer spending.
It sounds like Don Feder needs a refresher course in basic economics himself. Unless it is an IPO or a new stock offering there is no capital investment made by purchasing stocks or mutual funds. It is simply a transfer. 2/3 of our economy is driven by consumer spending.
Although I do not support the idea of government spending as a way to "stimulate the economy," (see the Fallacy of the Broken Window) I'm sure you can understand that new business for the heavy machine companies (those that build them and those that deliver them) does create job growth, even if there is not an actual increase in the use of laborers.
The only problem with the government spending the money to do that is that government makes inherently uneconomic decisions, and had it not spent the money on a "stimulus" but instead allowed the people to keep and spend their own money, there would have been just as much new economic activity -- only it would actually be economically productive. Government boondoggles -- for all the economic activity they create -- tend to waste productive resources and make us all poorer in the long run.
Obviously, you don't live in Pennsylvania where four "supervisors" to stand around, hold signs and rearrange cones are required for every actual worker filling potholes.
Then there are our glorious turnpike toll collectors who average $25/hour here in an area where an average home sells for about $125K.
Your problem is that you work in the evilllll private sector where productivity is expected.
One would do better using a Magic Eight Ball than taking economic/financial advice from anyone associated with the NYT.
Some people are dumb about money. The NYT and its management make those people look brilliant.
My opinion. If the government creates ajob we will lose 3 real jobs.
And your response is a bit simplistic too.
The money going into the stock market is fungible. Suppose all the money of a certain venture capitalist went into the Google IPO. In order for that venture capitalist to go to yet another IPO, he has to sell the Google stock to somebody else. That's where a mutual fund or individual buying a bit of Google stock helps. It allows the venture capitalist to go on to yet another venture.
So money from the small guy and mutual funds buying the more conservative post-IPO versions of the stock allows the risk taking venture capitalist to realize the IPO profits and provides the cash for the next new venture.
Cut the flow of conservative money going into the stock market, and stock prices will drop and the guys looking for risk (who are actually simply looking for high returns and willing to take risk to get it) can get their 10% or 20% (or whatever) from safer places than new IPOs.
You are making the assumption that that transaction is only happening between venture capitalists, which is not the case. In fact I would suggest it is but a very small portion of the case.
The fact is that we are looking to stimulate purchasing, or better yet consumerism, which has dramatically fallen off. Numerous factors to that equation, no doubt.
The important thing right now is primarily based on how you get consumer confidence back up to where people are willing to buy stuff.
I am a business owner. A tax break would be nice, but it doesn’t solve my largest problem. And that problem is that people aren’t buying my wares. They have been for the past 15 years. So, a tax break to me while welcomed does not solve my largest issue, and that is people buying my wares. I need the consumer to have enough confidence to spend his money. Right now that is not the case. Me getting a tax break is not going to change that. I want more money in the consumers hands.
More money in my hands at this pojnt is not going to create more jobs. When people start buying my product, then I can create more jobs. I am eliminating $1 million in payroll before the next quarter. That is hard to do when the average salary is $40k.
As an economist i will say that I would hope for a 50/50 split in consumer and governemt interdiction. I’m betting it will be more like 20 consumer and 80 government. But government spread is not all that bad. And here is why. From what has beel proposed so far you get a second order efficiency as far as dollars allocated. The dollars flow through the government first, but the end result is prestty much that same. The difference being is that the government can direct where they want the first stage to go. So, as a populace we at least get things we need to Aget done, i.e. infrastructure,accomplished. Joe who is doinf the work will spend his paycheck in whatever way he chooses which will still inpact the consumerism of our economy.
1. There is nothing wrong with that. The end result is that you get a public benefit as well as a consumer stimulous second order. But it is ultimately directed in a certain area.
2.Fannie and Freddie? What money did they get until recently? They were private companies that were backed by the Fed. Bas example as far as what we are talking about.
3..I think you would need to check your facts on that. The railways, the highway system both of which were integrak in making our economy what it was were federal programs.
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