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Cutting spending in a deflationary recession is never a good idea. You want to execute spending cuts when the economy is vibrant and growing, not when your GDP

Cutting spending in a deflationary recession is never a good idea. You want to execute spending cuts when the economy is vibrant and growing, not when your GDP is shrinking and your unemployment numbers are kissing double-digits. If anything, Obama hasn't been doing enough spending on projects that will be putting people to work in the next 1-2 years.

nazgulnarsil 18y ago
Deficit spending is based on the fallacy of increasing aggregate demand. taking money from people and then spending it on government projects doesn't increase aggregate demand because you've just decreased demand by the same amount by taxing people in the first place. How is this any different from normal redistribution? You're redistributing from the private sector to public works contractors. Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital. Money is a commodity. When the government prints more it reduces the value of all other dollars in circulation. This inflation is a hidden tax that we will be paying off for years.
- olefoo 18y ago
  > Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital. You are absolutely correct. Dams, Bridges, Interstate Freeways, Air Traffic Control and Nuclear Power Plants all work so much better when they are built entirely by private enterprise. In cases where they were built using public obligations, they provide very little benefit and do not enable other industries.
  - Radix 18y ago
    You're changing the subject a bit from micromanagement of smaller more specific interests to infrastructure, which I would expect more people to agree should be regulated, and especially in the case of dams and freeways, should be government backed.
    - olefoo 18y ago
      Obviously I was not sarcastic enough. Look: public infrastructure spending stimulates the economy on multiple levels; directly, through spending on contractors and suppliers (who in turn buy from their contractors and their suppliers) and indirectly by creating public benefits that create new opportunities and enable new industries; and through the fact that it engenders stability (a dam has a lifespan measured in centuries if it's maintained, a functional transportation link is not likely to vanish overnight, and so forth). The thing is that these benefits are diffuse enough (though they are measurable) that no single commercial entity can afford the risk that they might not be able to capture those benefits. The blinkered view that all public spending is automatically evil prevents clear discussion of the possible alternatives. Not all public spending is equal, some projects deliver more overall benefit than others. I guess my take is that those who are strident in their distaste for any public spending are patsies in the hands of the special interests who are trying to capture as much of the benefits of public spending as possible.
      - nazgulnarsil 18y ago
        you're completely ignoring my original point. government money comes from somewhere. I'd recommend a basic course on economics before going off on details. http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf
        olefoo 18y ago
        That is patronizing and wrong. I did address your point fairly directly modulo the sarcasm. Public infrastructure provides economic benefits throughout the economy, enabling more economic activity; which more than makes up for the money withdrawn from circulation by taxation. If you cannot wrap your head around this concept. You have no business lecturing others about basic economics. Governments are not exempt from economic forces, in fact a very good argument could be made that they are created and sustained by economic necessity. To put that argument in the simplest terms; governments save us money. My other point is that blind negative rage toward all public spending makes you an easily manipulated member of a mob. A mob that others are adept at using to shelter their favored projects.
- dpapathanasiou 18y ago
  "Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital." Japan's experience on public works spending as a recession stimulus is mixed: "Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste." http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=1&pagewanted=print http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r...
anamax 18y ago
> If anything, Obama hasn't been doing enough spending on projects that will be putting people to work in the next 1-2 years. The CBO says that growth would restart by the end of the year without the stimulus. If that's true, why do we need additional spending afterwards? Note that Keynes said counter-cyclical spending while Obama's spending establishes a higher baseline. (The only significant savings is for Iraq after Bush said that we'd be out.)

nazgulnarsil 18y ago

Deficit spending is based on the fallacy of increasing aggregate demand. taking money from people and then spending it on government projects doesn't increase aggregate demand because you've just decreased demand by the same amount by taxing people in the first place. How is this any different from normal redistribution? You're redistributing from the private sector to public works contractors. Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital. Money is a commodity. When the government prints more it reduces the value of all other dollars in circulation. This inflation is a hidden tax that we will be paying off for years.

olefoo 18y ago
> Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital. You are absolutely correct. Dams, Bridges, Interstate Freeways, Air Traffic Control and Nuclear Power Plants all work so much better when they are built entirely by private enterprise. In cases where they were built using public obligations, they provide very little benefit and do not enable other industries.
- Radix 18y ago
  You're changing the subject a bit from micromanagement of smaller more specific interests to infrastructure, which I would expect more people to agree should be regulated, and especially in the case of dams and freeways, should be government backed.
  - olefoo 18y ago
    Obviously I was not sarcastic enough. Look: public infrastructure spending stimulates the economy on multiple levels; directly, through spending on contractors and suppliers (who in turn buy from their contractors and their suppliers) and indirectly by creating public benefits that create new opportunities and enable new industries; and through the fact that it engenders stability (a dam has a lifespan measured in centuries if it's maintained, a functional transportation link is not likely to vanish overnight, and so forth). The thing is that these benefits are diffuse enough (though they are measurable) that no single commercial entity can afford the risk that they might not be able to capture those benefits. The blinkered view that all public spending is automatically evil prevents clear discussion of the possible alternatives. Not all public spending is equal, some projects deliver more overall benefit than others. I guess my take is that those who are strident in their distaste for any public spending are patsies in the hands of the special interests who are trying to capture as much of the benefits of public spending as possible.
    - nazgulnarsil 18y ago
      you're completely ignoring my original point. government money comes from somewhere. I'd recommend a basic course on economics before going off on details. http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf http://www.fee.org/pdf/books/Economics_in_one_lesson.pdf
      - olefoo 18y ago
        That is patronizing and wrong. I did address your point fairly directly modulo the sarcasm. Public infrastructure provides economic benefits throughout the economy, enabling more economic activity; which more than makes up for the money withdrawn from circulation by taxation. If you cannot wrap your head around this concept. You have no business lecturing others about basic economics. Governments are not exempt from economic forces, in fact a very good argument could be made that they are created and sustained by economic necessity. To put that argument in the simplest terms; governments save us money. My other point is that blind negative rage toward all public spending makes you an easily manipulated member of a mob. A mob that others are adept at using to shelter their favored projects.
dpapathanasiou 18y ago
"Prove to me that the public works contractors will produce more jobs than the private sector would have with the same capital." Japan's experience on public works spending as a recession stimulus is mixed: "Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste." http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r=1&pagewanted=print http://www.nytimes.com/2009/02/06/world/asia/06japan.html?_r...

anamax 18y ago

> If anything, Obama hasn't been doing enough spending on projects that will be putting people to work in the next 1-2 years. The CBO says that growth would restart by the end of the year without the stimulus. If that's true, why do we need additional spending afterwards? Note that Keynes said counter-cyclical spending while Obama's spending establishes a higher baseline. (The only significant savings is for Iraq after Bush said that we'd be out.)