Free Republic’s Key to Success
Is Monthly Donors
Donate monthly, and a sponsoring FReeper will contribute $10
Or give what you can
Save Lazamataz! He’s fading fast!
Posted on 04/29/2011 10:52:31 AM PDT by MissesBush
For three long years, the U.S. has been undertaking an experiment in economic policy. Could record levels of government spending, waves of new regulation and political credit allocation, and unprecedented monetary stimulus re-ignite growth? The results have been rolling in, and they represent what increasingly looks like an historic mistake that deserves to be called the Keynesian growth discount.
The latest evidence is yesterday's disappointing report of 1.8% in first quarter GDP. At this stage of recovery after a deep recession, the economy is typically growing by 4% or more as consumer confidence returns and businesses accelerate investment as their profits revive. Yet in this recovery consumers are still cautious and business investment remains weak.
Some of the first quarter's growth slump is due to seasonal factors such as bad weather and weaker defense spending. In the silver lining department, the private economy grew faster than the overall GDP figure because government spending declined. But even maintaining the 2.9% growth rate of 2010 would mark an historic underachievement for a recovery after a recession that was as deep as the one from late 2007 to mid-2009.
...The most recent recession of comparable depth and job loss was in 1981-1982, when unemployment hit 10.8%. Huge chunks of industrial America shut down and never re-opened. Yet once the recovery began in earnest in the first quarter of 1983, the economy boomed. As the nearby table shows, growth exceeded 7.1% for five consecutive quarters, and it kept growing at nearly a 4% pace for another two years. Growth didn't dip below 2% in any quarter until the second three months of 1986. This was the Reagan boom.
Now look at the first seven quarters of the current recovery. Only briefly has growth hit 5%, in the fourth quarter of 2009
(Excerpt) Read more at online.wsj.com ...
One wonders how many times this Keynesian experiment has to fail before they stop trying. It didn’t work during the Great Depression, it hasn’t worked during Japan’s lost two decades, and it hasn’t worked now in the Little Depression. The theory is bunk.
This particular episode may become known as the “Kenyan Growth Discount” to future historians...
A totally awesome video:
Fight of the Century: Keynes vs. Hayek Round Two
http://econstories.tv/2011/04/28/fight-of-the-century-music-video/
Remember, it’s not only the failure of Obamanomics, but it’s the failure of Bushonomics. Bush was also a Keynesian who abandoned Reagan’s supply side economics. If you had carefully read the WSJ article you would have seen this:
“Most striking is that this weak growth follows everything that the Keynesian playbook said politicians should throw at the economy. First came $168 billion in one-time tax rebates in February 2008 under George W. Bush, then $814 billion more in spending spread over 2009-2010, cash for clunkers, the $8,000 home buyer tax credit, Hamp to prevent home foreclosures, the Detroit auto bailouts, billions for green jobs, a payroll tax cut for 2011, and of course near-zero interest rates for 28 months buttressed by quantitative easing I and II. We’re probably forgetting something.”
Before 2008, Bush and his big-government Republicans were borrowing heavily while going on a massive government spending spree. Have you forgotten? How the heck do you think Bush tripled the deficit and lost Congress in 2006?
Deficits actually went down from 2004-07. It went up prior to that yes, but part of it was the economic slow down. Bush was certainly not primarily a Keynesian. He was much more a supply sider based on his 2001 and 2003 tax cuts. A one time tax rebate of $168 billion hardly makes him a Keynesian. At least that was stimulus from the tax side rather than the spending side.
That said, did Bush spend too much? Of course. But I don’t think it was with the idea he was stimulating the economy by doing so. He was pushing the “compassionate conservative” thing which is what drove the over-spending, esp. at a time the economy was growing nicely and didn’t need stimulating. Additionally, some of the deficit of course was the needed increase in homeland security and military spending the wake of 9-11 which also had nothing to do with Keynesian policy.
It’s true, when it came to economics, Bush was nearly as stupid as Obama is. About the only thing he did right is he believed in keeping taxes low.
Of course it is. I just wish that those professors of economics who preached the Keynesian gospel to me all those years--in the face of how it failed in the Great Depression--could be around to face the facts of how it failed in Japan.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.