Krugman: Republicans Have No Coherent Opposition to Spending

[Velleity]

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All they have is an empty set of slogans, reinforcing the conclusion that there is no place for "conservatives" in our government:

http://thinkprogress.org/2008/12/30/krugman-stimulus-package/

[ivanm]

All they have is an empty set of slogans, reinforcing the conclusion that there is no place for "conservatives" in our government:

http://thinkprogress.org/2008/12/30/krugman-stimulus-package/

The post is long but some points are raised. I have a question, why does the Republicans want to shrink the middle class as one poster surmised.  Does this term refer only to unionized employees?  On dailykos.com the middle class is synonomous with unionized workers.

[Velleity]

The post is long but some points are raised. I have a question, why does the Republicans want to shrink the middle class as one poster surmised.  Does this term refer only to unionized employees?  On dailykos.com the middle class is synonomous with unionized workers.

Ah, the great mystery of "conservative" thought. Do "conservatives" really want to redistribute wealth to the top 1%? Or is this just a biproduct of their ideology and they're just too stubborn or too stupid to realize it?

Either way you can look at lassaize faire and you cannot deny that concentration of wealth, along with boom and bust cycles (now called bubbles) are part of the deal. But look at "conservativism" throughout history, Ivan, and you will see a common pattern of shifting power away from the masses and into the hands of some small, "natural" group. Todays' "conservatives" are no different whether they will own up to or not.

They do not own up to it unless you really push them, and then they sort of own up to it but they will still deny the ramifications.

You have to admit that right now, Ivan, "conservatives" are in complete disarray. I am amazed. However the root causes of their problems are strikingly obvious even if "conservatives" won't face them openly and honestly. Their philosophies are not academically sound. They are anti-intellectual. "Supply side" economics is not a legitimate school of economic thought. It never has been a legitimate school of economic thought, like "creation science" has never been legitimate science.

What "conservatives" have is a bunch of slogans.

I was watching CNBC yesterday and this guy gets on, does not fess up to being a "supply-sider" because that train has left the station, and he starts spewing the same old crap about how we can't spend money to take up the slack in capacity and how tax cuts are the only way to do it because it affects supply. That's a bunch of crap, Ivan. There is absolutely no evidence that anything the government will do will ever affect supply. None. Zero.

This guy was spewing the same old slogans. Take a good, hard look at where we are today. In good measure it is because for the last 30 years we eschewed legitimate economic thought in favor of those slogans.

I could go on, but back to your question. Why do Republicans want to shrink the middle class? Republicans want to shrink the middle class because one of their favorite unstated slogans is "tough shit for you". They don't want the middle class to have power and when people complain about their condition Republicans want to tell them "tough shit for you", you're just not good enough and it's your own damn fault.

Or maybe you have a better explanation? My theory on this is still a work in progress and I would like to know your thoughts.

[ivanm]

Ah, the great mystery of "conservative" thought. Do "conservatives" really want to redistribute wealth to the top 1%? Or is this just a biproduct of their ideology and they're just too stubborn or too stupid to realize it?

Either way you can look at lassaize faire and you cannot deny that concentration of wealth, along with boom and bust cycles (now called bubbles) are part of the deal. But look at "conservativism" throughout history, Ivan, and you will see a common pattern of shifting power away from the masses and into the hands of some small, "natural" group. Todays' "conservatives" are no different whether they will own up to or not.

They do not own up to it unless you really push them, and then they sort of own up to it but they will still deny the ramifications.

You have to admit that right now, Ivan, "conservatives" are in complete disarray. I am amazed. However the root causes of their problems are strikingly obvious even if "conservatives" won't face them openly and honestly. Their philosophies are not academically sound. They are anti-intellectual. "Supply side" economics is not a legitimate school of economic thought. It never has been a legitimate school of economic thought, like "creation science" has never been legitimate science.

What "conservatives" have is a bunch of slogans.

I was watching CNBC yesterday and this guy gets on, does not fess up to being a "supply-sider" because that train has left the station, and he starts spewing the same old crap about how we can't spend money to take up the slack in capacity and how tax cuts are the only way to do it because it affects supply. That's a bunch of crap, Ivan. There is absolutely no evidence that anything the government will do will ever affect supply. None. Zero.

This guy was spewing the same old slogans. Take a good, hard look at where we are today. In good measure it is because for the last 30 years we eschewed legitimate economic thought in favor of those slogans.

I could go on, but back to your question. Why do Republicans want to shrink the middle class? Republicans want to shrink the middle class because one of their favorite unstated slogans is "tough shit for you". They don't want the middle class to have power and when people complain about their condition Republicans want to tell them "tough shit for you", you're just not good enough and it's your own damn fault.

Or maybe you have a better explanation? My theory on this is still a work in progress and I would like to know your thoughts.

You seem to be lecturing me but let me say this.  I agree with some of what you are saying.  As to what constitutes middle class Americans, I had never thought of it in terms of the political power they as a group might have, just their income or wealth.  Yes, the Pubs do seem to want to concentrate the power in the hands of a few, which would be the rich it seems.

Isn't that in line with what a conservative wants to do, resist change and tightly hold the reigns of power?  It is as if they are paranoid about sharing wealth and power for fear they will lose control of the situtation.  Now I am not suggesting it would be good to entrust power and wealth to those who can't even tie their shoe laces or who lack the sense of responsibility to themselves and to the community, but I think it is time to replace the cabal of experts who can't tie their laces either.  I believe in the idea that there is strength in diversity too, and in the case of Obama being president I hope the fact that he is part Negro, which brands him to be black, will help to mend our international image.  This morning's front page on msnbc.com has two articles on our image and how it is in need of repair.

As to tax breaks supposing to stimulate investment, I haven't  looked at any details on the issue, but it sure hasn't reduced our national deficit.  Maybe the problem is that spending still surged ahead of revenues even though the revenues may have grown.  But simple inflation in the absence of a dowturn can make the numbers appear so that revenues have grown.

Nope, I was never all that keen on supply side economics, and if I remember correctly the national debt under Reagan really
balloned.  It has been said we won the cold war by out spending the Ruskies, but where did the money come from?  I'd say we borrowed it after looking at the national debt figures in the US Abstract.

I am not interested in class warfare or playing games of ideology, and I think that was what took the Republicans and their stinkin' conservative movement down.  Nor am I wanting to fleece the rich to hand it to the poor, which is all I see over at dailykos.com.  I am a pragmatist and somewhat of a populist, and I think that if folks at the state and local level could be become more self sufficient and less dependent upon the federal Treasury and less depenent upon corporate America for many of their survival needs such as food, shelter, and energy, then the masses would indeed have more power.  They could simply refuse the play the blame game or the borrowing game because they would have a measure of independence and could flip big oil the bird, to name just one act of defiance and disgust with things as usual.

Gotta go to breakfast.   

[ivanm]

It may not be a good thing to start pushing around the top 1% of wealth holders.  They don't have to invest their new risk capital in US based ventures where the unions and the socialistic tax and spend politicians will just soak up the profits.  Haven't the Democrats learned a damned thing from reading about the failures of socialistic economies.  The darned fools ate their seed corn and then killed the geese that laid the golden eggs.

Big investors can easily move their money to offshore ventures and can import the luxury they are accustomed to, so pissing off this crowd is not the coolest thing to do.  We have seen industry after industry go off shore but does anyone ever stop to wonder why?  Talk about not having a plan, when comptetitors from the highly socialistic countires of Europe can clean our plow then there must be more to it than conservatism or the lack of it at work.

Notoc is a Brit, and probably can relate to what I am talking about.  Why is it that D-8 CATS, at some $250,000 a copy, are made in France?  How about the vaunted 747s, still the queens of the sky?  Why are they being made in large part in Taiwan or where ever it is they come from?   

Why is it the Pubs promote trade with Red China and at the same time claim to despise communism?  It is the same old song, the profit or bottom line.  What the idiots fail to see is that once the consumer, which is also the voter, gets it up the ass then the next election is payback time.  Ideology has its place but you sure as hell cannot spread it on your bread.  I think what is lacking in America is the old spirit of independence where both the Dems and the Pubs had to get out and earn their place in Congress by works and not by words.

[lucy]

In the end it really is all about $$$ or the illusion thereof...

Trillions lost so far, from what I have read, but those "trillions" themselves are an illusion...taxes are real.

[ivanm]

Vel I would appreciate it if you were to explain something for me. You are a professional person with a law degree and you once said you were a financial advisor.  By that I assume you help those with money to make wise investmensts so their nest eggs will grow.  From what you apparently charge you are not dealing with just small potatoes but with large sums of money.

If you are so adverse to those that have money and own capital goods such as businesses then how in good concscience can you advise anyone to invest?  And in what do they invest unless it is municipal or government bonds, annuities, CDs, and the like?  I may be wrong, but even the annuity companies invest those proceeds in things that return a profit to the holder of the annuity.  To me that means investing in the business community as well as in government debt. 

You favor the consumer over the producer and appear to favor the government securities over the private sector risks.  I got news for you, without producers of some sort, even without laborers who are in a sense producers, there would be no money for taxes and the governments couldn't borrow shit.   

I think you need to explain your attitude towards the private sector because it appears to be at odds with your career or the service you offer your clients. 

[lucy]

Ivan, I think the plan was to de-industrialize the West and build a capital/industrial base in India, China, and other developing nations....to equalize the world and prepare for a new order of things...this is happening by design, perhaps, not by accident/The financial realm is included, from the looks of things...a new center of world power is evolving and who knows where the path leads, really, but Americans can no longer sustain being the "consumer-class" of the world since so much of that consumption has been fueled by credit and false assumptions about wealth, imo.

It really is an "elitist" dream-world...some are lucky, some are not. Some work hard for what they have, some do not...some are destined for wonderful things, some are doomed.

[Velleity]

Vel I would appreciate it if you were to explain something for me. You are a professional person with a law degree and you once said you were a financial advisor.  By that I assume you help those with money to make wise investmensts so their nest eggs will grow.  From what you apparently charge you are not dealing with just small potatoes but with large sums of money.

I have never said that I was a financial advisor, unless you consider estate planning to be financial advice. I consider that to be legal advice, and I never, ever give financial advise.

If you are so adverse to those that have money and own capital goods such as businesses then how in good concscience can you advise anyone to invest?

I am not adverse to those who have money and own capital goods. I am interested in a healthy economy and I believe in Keynesian economics. If you want to conflate that with "socialism", there's not much I can tell you. However if you do conflate mainstream Keynesian economics with socialism, you don't understand either Keynesian economics or socialism and you are very much in error.

And in what do they invest unless it is municipal or government bonds, annuities, CDs, and the like?  I may be wrong, but even the annuity companies invest those proceeds in things that return a profit to the holder of the annuity.  To me that means investing in the business community as well as in government debt. 

I don't know what you're trying to say here. I am not opposed to investing and I don't know how you reach that conclusion.

You favor the consumer over the producer and appear to favor the government securities over the private sector risks.  I got news for you, without producers of some sort, even without laborers who are in a sense producers, there would be no money for taxes and the governments couldn't borrow shit.

Again, I don't know how you conclude that I "favor the consumer over the producer". That is not what economics is about.

The basic premise of Keynesian economics is simple.

GDP = Consumer Spending (C)   + Investment (I) + Government Spending (G) + (Exports (X) - Imports (I).

There is nothing controversial about that. It is, in fact, the GDP equation. It is an accounting equation. An idiot at NoPC was telling me that I didn't know what I was talking about when I cited this equation because of all kinds on nonsense that doesn't pertain to the basic point. Yes, there is all kinds of legitimate debate on the efficacy of G but that has nothing to do with the basic concept here.

This also happens to be the demand side of the equation, but we digress.

You seem to be implying that you subscribe to Say's Law. Google that if you're interested. Suffice it to say that I don't subscribe to Say's Law.

Now if you look at the deflationary spiral that we're in, and that we were in back in 1929, you might see that the problem is not an inability to produce. The problem is that people are not buying.

Supply will always equal demand at the equilibrium price point. The supply curve is the marginal cost of making the last unit of whatever it is being supplied. That is, suppliers will produce quanitities up to the point where they will make no more profit on the last item produced.

This has something to do with a concept known as the law of diminishing returns.

There is a lot more to this, but this is already too much of a lesson. There are better resources than me if you're really interested. The bottom line here, Ivan, is that the government is the consumer of last resort and there is no good reason why the government should not step in and consume when consumer demand isn't sufficient.

That could be stated better, but I have already put too much time into this.

I think you need to explain your attitude towards the private sector because it appears to be at odds with your career or the service you offer your clients. 

Ivan, you are my friend and I don't wish to have a pissing match with you. I have more than enough of that from Notoc.

However there is nothing at odds between my career and mainstream Keynesian economic thought. It is, in fact, exactly the opposite.

You are a bright fellow. Do look into Keynesian economics. I highly commend it.

Don't listen to rightist rhetoric. It is wrong. It is detrimental.

Paul Krugman is an excellent starting point, by the way. He has an excellent book that he just updated. His last book, "Conscience of a Liberal" is great too. So is his blog at the NYT.

[lucy]

Maybe not ALL Republicans...here's a hilarious video by Fred Thompson

http://www.youtube.com/watch?v=RKc4XFK0iVY
	Small | Large

[Velleity]

Maybe not ALL Republicans...here's a hilarious video by Fred Thompson

http://www.youtube.com/watch?v=RKc4XFK0iVY

You see, I don't think this is funny at all. Fred Thompson has no idea what he's talking about. This is serious disinformation Lucy.

And he's wrong. It is not spending that got us into this problem that we're in right now. It's Fred Thompson's lassaize faire ideas that got us here.

[lucy]

Spending and leveraging money you don't have or buying or credit or selling toxic debt instruments based on spending that was over and beyond ability to pay WERE very much a part of the problem....We cannot continue to spend/consume without producing real value....

So, it is a matter of difference of views, not disinformation....Von Mises rings a bell/

Mish Shedlock has a great site, btw, from which I got the video.

[Velleity]

Spending and leveraging money you don't have or buying or credit or selling toxic debt instruments based on spending that was over and beyond ability to pay WERE very much a part of the problem....We cannot continue to spend/consume without producing real value....

So, it is a matter of difference of views, not disinformation....Von Mises rings a bell/

Mish Shedlock has a great site, btw, from which I got the video.

The housing crisis is due to the fact that people do not have sufficient funds to pay for those houses, and they do not have sufficient funds to pay for those houses because their real incomes have declined.

That, Lucy, is the root cause of the problems.

Unless you can give me good economic reasons why people's real incomes should decline, I still say it is indeed disinformation. I say that people's real incomes did not have to decline. I say that incomes did not have to be redistributed to the top 1% in this country. We did not have to have booms and busts. None of this is new territory, and we knew how to avoid every bit of this crisis.

Anyone telling you anything else is disinforming you.

As for Von Mises, these people's economic point of view is about as discredited as it can be at the moment. As I told Ivan, if you're really interested in understanding this you do need to understand Keynesian theory.

And it's not like when I point you to Keynes I'm pointing to some small, obscure figure here.

[lucy]

Another point of view about Keynesian economics...

" GOVERNMENT SPENDING

The Keynesian assumes that in a recession, the world is no longer suffering from scarcity. He believes that there are no remaining opportunities for profit in serving future consumers. The Keynesian believes that the central government must intervene and spend money in order to stimulate the economy. Expected private demand for future goods is insufficient to persuade entrepreneurs to invest money to meet this demand. The expected return on capital is zero. The Keynesian economist believes that the government gets money from lenders, and that by spending this money, the government can increase demand by consumers. This increased demand stimulates the economy. There will be economic growth, and therefore the government will reap a positive rate of return on its investments. This is what politicians are promising. "The government will be repaid." It is a fantasy, but even if it comes true, this will benefit the government, not taxpayers.

Keynes was quite clear on one point: it does not matter what the government invests in. It does not matter if the government spends every dime on building pyramids. Or the government can bury paper money in jars, and hide these jars around the community. This way, individuals will have an incentive to go out and dig up jars of money, and therefore this will stimulate the economy. You might think I am exaggerating here, but this is specifically what Keynes taught in his supposedly magnum opus, The General Theory of Employment, Interest, and Money (1936)."

link  http://www.lewrockwell.com/north/north672.html

I just don't think it makes sense for people to be buying at all when they have to rely on credit. I have made the same mistake myself, and it hurts to admit this, but it is a bad way to run an economy/

Bankers win. They even get bailed out by taxpayers, for that matter.... Everyone else loses in the long run....Manufacturers lose as well ultimately because eventually no one is left to buy the stuff they didn't or don't need in the first place....etc...everything has been built around the real estate market the past few years, and so much like dominoes, those businesses are going to probably go into great decline soon.

[Velleity]

What you posted here is very misleading, Lucy. Keynes did not say that it was good to spend just for the sake of spending.

You will not understand Keynesian economics if all you do is seek out libertarian rhetoric, or any other rhetoric for that matter. You have to understand the theories of supply and demand.

I have yet to see one person on here or on NoPC who even begin to understand the theories of supply and demand.