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"Second order effects, second order effects, second order effects. You are making the common-sense assumption that if you cut people's benefits off, they will s

"Second order effects, second order effects, second order effects. You are making the common-sense assumption that if you cut people's benefits off, they will simply have less money, and not change their behavior at all. That's not how it works. Common sense is not just wrong, it is pathologically wrong when thinking about the economy." So what happens, then, when they're evicted, can't make a car payment, and can't feed themselves? For starters, being evicted in a lot of cities is enough to make it _extremely_ difficult to find a new place. And libertarian pixie dust doesn't pay the rent. I have to ask: have you ever _been_ on unemployment? I have. It's enough to keep you treading water. It's substantially less than the wages I had when I was employed. Do you imagine that people _enjoy_ barely making ends meet? Now, I'm sure there are some people who can do it. Good for them. Recognize, however, that that's a privilege. They can afford to live with approximately half of whatever they were making before! They probably don't have a family, aging parents, or medical problems, nor any substantial debt. "Total economic collapse if we don't stop spending so much money on destroying wealth, no matter how good it makes you feel to do it." I don't even know what this means. I mean, I think I know what it's supposed to mean. If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy." The implicit assumption is that most rich folks earned their wealth rather than inherited it. I don't buy it. They were largely born on third base and concluded that they hit a triple. I have no idea what this "soft-headed spending" refers to, either— if you're talking about the stimulus, well, I'm unsympathetic. If no one else is spending, the government can run at a deficit and mitigate the problem. Business was manifestly not stepping up. And personally I agree with Krugman, et al, that the stimulus wasn't big enough. We're in agreement that belt-tightening is disastrous, but that is precisely what animates the author's sentiment. No matter how bad everyone wishes it to be so, the jobs are gone. Punishing those who had the misfortune to be caught in the blowback from Wall Street's epic failure seems misguided and counterproductive. Expecting folks who're already in the hole to pony up thousands of dollars to retrain themselves is the height of privileged thinking. Bottom line: you won't "fix" unemployment by pretending the unemployed don't exist.

jerf 16y ago
I'm not Keynesian. I think the past few years have disproved it. Actually I think the past few decades have disproved it and I can't help but be a bit cynical about how a superceded (for good and sufficient reasons) economic theory suddenly revived itself when the government needed it. Destroying wealth occurs when you pay money to sit on their hands. Currency is moving around, but it's not doing anything, and given that wealth is actually consumed to keep people alive (they eat, they live somewhere, etc), if they aren't generating enough wealth to even offset that consumption (let alone a surplus) then there's wealth destruction going on. Look at the situation in isolation for a moment. Dollars go in to the unemployed house, a roughly equal number of dollars flow out, that all looks neutral. But that's just currency. Look at the flow of wealth. Food flows in and disappears. Housing is consumed. Wear and tear is put on possessions. Imagine if absolutely everybody in the economy is doing that, not because this is actually possible but because it shows the situation in stark colors. It doesn't matter how many dollars you pump into that economy, it can't work, the food and shelter and objects for possessions have to come from somewhere. That's the difference between "currency" and "wealth" in a nutshell. You can't fix the economy by shuffling money around and shutting down wealth production. (Nor is the government all that good at wealth production. How much mining does the government do? How much food does it grow? It's more complicated than that, but this is closer than most other ways of thinking about it.) So... 'If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy."' No, not even close, when I say it. I actually mean real wealth is being consumed and not replaced, nothing to do with taxes. That's what actually matters, not little dollar symbols. An excessive obsession with the dollars while ignoring the wealth is arguably the main reason the government's response has been so inadequate. Taking money away from people generating wealth and shunting it into a wide variety of ineffective areas of the economy makes things worse, not better. There's no way out of this entire problem, of which over-extended benefits is only one small part, without pain. You think you have a solution to easing the pain, and it does ease it locally, but your way generates more pain globally, and eventually that catches up to us. Like, the last couple of years and the ways things are going the next few years too. Again, I reject your attempt at moral authority. Your way leads to disaster, the one we're all but headed full bore for right now. That pain is necessary now is not because of my choices today, it is because of the choices already made. I'm not advocating pain, I'm announcing the fact it's already here. We've got a gangrenous limb and you're upset because I'm not willing to go along with the "keep pumping more anesthetic in and it's all fine because there's no pain" plan. Yeah, I'm not, but I don't think I'm the one with a morality problem when I suggest the gangrenous limb should be addressed sooner rather than later.

jerf 16y ago

I'm not Keynesian. I think the past few years have disproved it. Actually I think the past few decades have disproved it and I can't help but be a bit cynical about how a superceded (for good and sufficient reasons) economic theory suddenly revived itself when the government needed it. Destroying wealth occurs when you pay money to sit on their hands. Currency is moving around, but it's not doing anything, and given that wealth is actually consumed to keep people alive (they eat, they live somewhere, etc), if they aren't generating enough wealth to even offset that consumption (let alone a surplus) then there's wealth destruction going on. Look at the situation in isolation for a moment. Dollars go in to the unemployed house, a roughly equal number of dollars flow out, that all looks neutral. But that's just currency. Look at the flow of wealth. Food flows in and disappears. Housing is consumed. Wear and tear is put on possessions. Imagine if absolutely everybody in the economy is doing that, not because this is actually possible but because it shows the situation in stark colors. It doesn't matter how many dollars you pump into that economy, it can't work, the food and shelter and objects for possessions have to come from somewhere. That's the difference between "currency" and "wealth" in a nutshell. You can't fix the economy by shuffling money around and shutting down wealth production. (Nor is the government all that good at wealth production. How much mining does the government do? How much food does it grow? It's more complicated than that, but this is closer than most other ways of thinking about it.) So... 'If I consult my phrasebook, "destroying wealth" is usually code for "taxing the wealthy."' No, not even close, when I say it. I actually mean real wealth is being consumed and not replaced, nothing to do with taxes. That's what actually matters, not little dollar symbols. An excessive obsession with the dollars while ignoring the wealth is arguably the main reason the government's response has been so inadequate. Taking money away from people generating wealth and shunting it into a wide variety of ineffective areas of the economy makes things worse, not better. There's no way out of this entire problem, of which over-extended benefits is only one small part, without pain. You think you have a solution to easing the pain, and it does ease it locally, but your way generates more pain globally, and eventually that catches up to us. Like, the last couple of years and the ways things are going the next few years too. Again, I reject your attempt at moral authority. Your way leads to disaster, the one we're all but headed full bore for right now. That pain is necessary now is not because of my choices today, it is because of the choices already made. I'm not advocating pain, I'm announcing the fact it's already here. We've got a gangrenous limb and you're upset because I'm not willing to go along with the "keep pumping more anesthetic in and it's all fine because there's no pain" plan. Yeah, I'm not, but I don't think I'm the one with a morality problem when I suggest the gangrenous limb should be addressed sooner rather than later.