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Author Topic: Did the Stimulus work?  (Read 4594 times)

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Offline Jude

Re: Did the Stimulus work?
« Reply #25 on: September 14, 2011, 03:44:14 PM »
Prosperity in capitalism comes from the same thing on the macro level that it does from the micro level -- new economic strategies and products.  The internet was responsible for the prosperity of the 90s, and after that bubble burst we've failed to supplant it with anything new, novel, and substantial.  In its place there are a whole host of new macro economic strategies that have risen to prevalence (and have been rising really since the 80s) -- that's all supply side economics is: a new way to squeeze more out of old models.

We need to focus on emerging technologies and new markets, but we don't have the infrastructure (and I don't mean physical infrastructure) to do so.  Our pathetic achievements in Science and Mathematics are the product of an incurious, lazy culture of self-appointed experts with a scientific literacy that lags behind Europe and brains facilities for critical thought that have long since atrophied.  We are the incarnation of populism gone bad.

The fact that we don't make things here anymore (which isn't true) has nothing to do with our current predicament.  It's that we're not making enough good, new ideas at this point to keep our global edge.

We're losing the intellectual battle, and that's not something that can be righted by a stimulus bill or a new WPA.  We need a cultural shift, and I doubt it'll happen.
« Last Edit: September 14, 2011, 03:45:59 PM by Jude »

Online Vekseid

Re: Did the Stimulus work?
« Reply #26 on: September 14, 2011, 07:39:07 PM »
From where?  I haven't heard this.

Just look up corporate cash reserves and excess bank deposits. I've linked both from previous discussions here and they last totaled ~3.4 trillion when I looked. Companies and banks want to do something with this money, not have it lose real value to inflation.

Quote


Unemployment rate in the US 1910–1960, with the years of the Great Depression (1929–1939) highlighted.

Source: http://en.wikipedia.org/wiki/Great_Depression

Did he start the program at the very peak and bring things down to the valley, before it started rising again after 1937?  I guess I can see that it made a bit of a dent, but not really.

There was a prior program that the WPA was based on, but only focused on youth.

And I'm not sure how you'd call a 30% drop 'a bit of a dent' - it sustained three million jobs on its own. If Obama managed to drop U6 to ~12%, I don't think you'd deny that he'd be in a vastly superior political position.

Quote
I just remember what Henry Morganthau, the Secretary of the Treasury for FDR said on the matter: “We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong…somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises…I say after eight years of this administration we have just as much unemployment as when we started…And an enormous debt to boot!”

The US mobilization during World War II sure as hell proved him wrong. Which is telling, considering wars are particularly bad things to invest in. A similar level of mobilization in infrastructure development, environmental restoration, and/or space exploration would be vastly superior.

Quote
Certainly not claiming that they all need to go point blank, but I think we do need to go through a lot of this stuff and prune.  However, that's another argument.  I should probably start up a thread on that.

Why is it that sometimes we need to have people buy debt and other times we can just print more money?  I still don't really understand that.

It's not an either-or proposition. You can't print Zimbabwe style. I don't think I need to explain why. In a Keynesian system (a la what guided the postwar boom up until the 70's), you print enough so that you reflect the overall depreciation of durable goods, which is generally thought to be 4%-5%.

But that brings in relatively little money - though you can use it to pay debts with less inflation risk than handing it to people who will spend the money. If you want lots of money, you either need to borrow excess reserves, impose taxes, or both.

Quote
That would mean that the communist society wouldn't actually work until such technology existed, though, right?  We're certainly not at the utopia where people only need to work one hour a month.  Or am I missing something?

That specific vision would not work until then, but it is more specific than communism. Central planning's main problem is logistics, and modern computing allows that to be handled reasonably well, which is why China and companies like Wal-mart can continue to thrive. It's certainly not ideal - it retards the pace of innovation and the spread of new ideas. Communism's other traditional problem is a lack of accountability and transparency, but a strong constitution can help with that (and I am of the opinion that America's is due for some polishing in that regard).

Quote
Personally, I always thought that it should be "to each according to his effort."  I don't think the freeloading guy with higher needs than a hard worker should get more of the resources.

And at that point, he wouldn't. The freeloader would be vegitating in some virtual reality Universe of Ultracraft, using up a negligible fraction of his energy allotment while the laborer was busy terraforming Mars.

But there are cases where we benefit from supplying someone elses need. Health care is a good example. You benefit from your neighbor and the beggar down the street being vaccinated, not being sick, and not being afraid to go to the doctor if they get sick. You benefit from them being able to work, rather than being forced to resort to crime to survive.

Quote
I think I'm confused on what you mean here.  I'll still try to explain what I'm saying and you can help me understand how it fits in.

When we make a machine to do something, someone else has to repair the machine.  When we build something new, there's always another level where humans are needed.  That's going to be true until machines are self-aware, and even then, you'll still need the "grand masters" for various things, but I don't know if you're familiar with that sci-fi story.

But this requires fewer and fewer people, until, eventually, someone comes up with a code of ethics for an AGI to follow and promote that (we hope) benefits the human race as a whole. This is actually occurring right now in the programming field.

Quote
For example, in Charlie and the Chocolate Factory (spoilers ahead), Charlie's dad had the job of screwing caps on the end of toothpaste tubes.  He ended up getting replaced by a machine, but then he got a job repairing the machine.

Maybe the issue I'm having is that, yes, technology lowers the need for human labor in certain areas, but its existence necessitates new areas for human labor in other areas.  Wouldn't that have some effect on the disruption thing?

Disruption just means one piece of equipment gets obviated by another.

The overall reduction in labor required for society to function has been going on for centuries, and is continuing - just look at how productivity rose while jobs continued to be lost. It has enabled the rise of an educated class that can be dedicated to research, which has sped the process along further. It has enabled the rise of a massive entertainment class alongside of it.

We don't 'need' those classes - but they are certainly nice to have! But those are the only two places jobs can expand into in the very long term - and computers can take their jobs, too, though we might not allow that, if only to stave off ennui.

Of course, this all depends on the people in charge of the machines either being highly diverse, or noble. Right now, that is not the case.

Offline Zakharra

Re: Did the Stimulus work?
« Reply #27 on: September 15, 2011, 11:57:51 AM »
That's the argument for increasing supply, at least as I understand it.  If you flood the market with lots of such things, the price will drop to make it easier for other people to afford them.  The argument for demand is quite different.

However, here's the basics:

If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.
If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.
If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.

 That also ignores, increased supply AND increased demand.  I noticed that particular qualification was left out. That can lead to lower prices and high demand.

Online Vekseid

Re: Did the Stimulus work?
« Reply #28 on: September 15, 2011, 07:13:04 PM »
Or higher prices, as when supply chases (does not quite catch up with) demand as in e.g. oil.

Offline Zakharra

Re: Did the Stimulus work?
« Reply #29 on: September 15, 2011, 07:24:42 PM »
 Possibly. Oil, I've noticed doesn't quite work the same as other commodities. The supply can be fine, as it is now and has been in the past, yet the price goes up when anything seems to 'threaten' the market. Even the Libyan rebellion did that.  Yet when the incident passes and oil resumes it's normal flow, the price of gas and diesel rarely drops to it's former level. Even when  oil does drop, there's no corresponding drop in fuel prices.

Offline Jude

Re: Did the Stimulus work?
« Reply #30 on: September 15, 2011, 08:11:07 PM »
"Necessities" don't follow market rules very well.  The fact that oil is a non-renewable source makes it difficult.

It isn't like food or electricity either where you can simply find new venues of production.  Oil expansion isn't as easy or possible.

Online Vekseid

Re: Did the Stimulus work?
« Reply #31 on: September 15, 2011, 09:05:11 PM »
It's more that refined oil has a half-life. A small disruption in refining can throw prices up, while an oversupply of refining will drive prices down. Oil is also a bit inelastic, that is, demand decreases less than linearly with with changes in price, so it takes a ~2.5% increase in price to reduce demand by 1%.

Offline Aludiana of the Dusk

Re: Did the Stimulus work?
« Reply #32 on: September 16, 2011, 01:06:06 PM »
Infrastructure where I live currently, and had lived in Missouri up until about a year ago this past May was just plain awful. Granted, where I lived in Missouri we were outside of town on a gravel road. At some point during the five years I lived there, money became an issue and I don't know if it was the county or the state, but it was decided that since that area was primarily populated by the Amish, who don't pay taxes (they do actually), that the Amish could take care of their roads. I remember one winter my husband's grandmother went out and bought a snow plow attachment for her van to help plow the road so that the English people could get onto a drivable road and get to work. They stopped coming around and grading the roads too, which leaves them an awful mess and probably contributed to why we were having to get new tires at least once a year.

Now, the city I live in mow has a bypass for one of the major non-interstate US highways that cuts through the middle of town. Its in such bad shape that it would actually cost less to build an entirely new bypass that would bypass the current bypass so that is what they are going to do. And in my neighborhood, there are barely any storm drains. Maybe one on each street corner; which may be fine for the people who live near street corners. But for everybody else, and especially the people who live on the cul de sacs like I do; if there is heavy rain for more than 15 or 20 minutes, the street turns into a river, and our yard becomes a pond. The standing water has actually gotten so deep that my corgi can swim in it. Ducks have made nests and laid eggs in my garden. Nobody seems willing to do anything about that or even talk about fixing residential streets though.

Offline Oniya

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Re: Did the Stimulus work?
« Reply #33 on: September 17, 2011, 06:03:23 PM »
Here's the report on our infrastructure from the American Society of Civil Engineers.  It's dated 2009, but I doubt the numbers have gotten any better with the current economic climate. 

Offline Roxy Rocket

Re: Did the Stimulus work?
« Reply #34 on: September 21, 2011, 02:37:29 PM »
(removed for now)
« Last Edit: July 28, 2012, 12:28:35 AM by Roxy Rocket »

Offline Oniya

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Re: Did the Stimulus work?
« Reply #35 on: September 21, 2011, 03:10:44 PM »
I find that the economist Robert Reich does a good job of explaining things in layperson's terms.  I'm sure I've linked to him up-thread, but he's easy enough to find.

Offline Roxy Rocket

Re: Did the Stimulus work?
« Reply #36 on: September 21, 2011, 03:54:58 PM »
(removed for now)
« Last Edit: July 28, 2012, 12:28:52 AM by Roxy Rocket »

Offline Oniya

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Re: Did the Stimulus work?
« Reply #37 on: September 21, 2011, 06:12:02 PM »
How about looking at the way he writes/talks instead of how Wikipedia writes/talks about him.

http://marketplace.publicradio.org/display/web/2011/08/10/reich/

Offline Jude

Re: Did the Stimulus work?
« Reply #38 on: September 21, 2011, 10:37:20 PM »
A commenter on that article said it best.
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I'm still puzzled at the folks insisting that the problem is debt and taxes. The Reich approach is pretty standard Keynes. Demand is low because consumers have little or no money and are concerned about their jobs, if they have them. Corporations are sitting on 2.5 trillion dollars in cash, but are quite logically unwilling to invest in production because there are no customers. There is little that would change this if government were left out of the equation. Bring in the feds, spend money (yes, borrowed money. That 2.5 trillion can be put to work with treasury bonds, at least) on infrastructure and energy efficiency, things we need in the long run anyway. BUT it has to be large enough to knock unemployment down and turn the mood of consumers. When they start feeling more comfortable with their long term position, they'll start buying and companies, again logically, will start investing in production to make a profit off of these potential customers. Simple, albeit expensive in the short term. Supply side says the problem is that the wealthy/job creators don't have enough money to work with. (2.5 trillion not enough to cover costs, apparently.) Or are concerned about all those taxes (which are at their lowest point in 50 years.) Or are spooked by the debt (which is not out of line with debt over the last 20 years, during which we had both boom and bust times.) There is no inherent logic in supply side economics aside from the standard "Why make money when the government will just take it from you" nonsense that doesn't stand up to the basic light of current taxation levels. Yes we have a debt problem caused by both overspending and undertaxing. (Yes, undertaxing. We have some of the lowest tax rates in the industrial world.) When we get out of this ditch we should definitely start working on both of those issues. But we have to get out of the ditch first.

Offline Oniya

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Re: Did the Stimulus work?
« Reply #39 on: September 21, 2011, 10:43:05 PM »
Reich has advocated the government becoming the 'customer of last resort' in other blog entries.  I'm pretty sure I've seen him reference going for the infrastructure as a source of jobs as well.  It was the lack of 'economic jargon' that I was focusing on, compared to the Wikipedia article.

Offline gaggedLouise

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Re: Did the Stimulus work?
« Reply #40 on: September 22, 2011, 11:30:57 AM »
With the recessive conditions described in that WP comment on Reich, you could argue that supply and demand are in balance. People aren't buying because they have no jobs and next to no money to spend, or if they have jobs they don't feel confident about the near future; and many corporations are not investing or hiring people anymore because the demand is very low. Okay. It's an equilibrium, but a too low equilibrium, and doesn't really reflect the skills and aspirations of either side, or their possible purchase power if there would be more renewing growth and more jobs and goods created.

Having a reserve army of tens of millions of people who are outside the ordinary labour market and ready to jump in on any job, even with wages as low as in China, isn't going to drive real growth. It would drive some share stocks up, but not lift the main street market.
« Last Edit: September 22, 2011, 11:36:43 AM by gaggedLouise »

Offline Oniya

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Re: Did the Stimulus work?
« Reply #41 on: September 22, 2011, 11:50:19 AM »
The thing is, if you take that in conjunction with the state of America's infrastructure as described by the American Society of Civil Engineers, there is a lot of work that's needed.   That can provide consistent work for that workforce for long enough to get the retailers and manufacturers hiring, which hopefully opens up more jobs for people to move into, even after the construction reaches an acceptable level.  (I mean, let's face it, construction work never really ends.)

Offline Roxy Rocket

Re: Did the Stimulus work?
« Reply #42 on: September 23, 2011, 03:18:23 AM »
(removed for now)
« Last Edit: July 28, 2012, 12:29:43 AM by Roxy Rocket »

Offline Asuras

Re: Did the Stimulus work?
« Reply #43 on: September 23, 2011, 11:06:33 PM »
The stimulus was too small. Some people - like Paul Krugman - thought it was too small in 2009. I thought it was okay and I was wrong. One can argue that it was ill-managed, but the bigger issue is just that it was too small. In 2009, we were looking at Great Depression II and throwing $700 billion (4% of the economy) wasn't enough.

And that doesn't take into account "downside risks to growth" (Bernanke), "headwinds" (Obama), or "shit that we didn't see coming that will fucking murder us" (me) like the European debt crisis combined with slowdowns in China and Japan.

People point to high levels of unemployment and say that the stimulus didn't work. The fact that unemployment stopped rising when the stimulus went into effect - like I said, we were looking at Great Depression II -  indicates that it did at least staunch the bleeding.

Offline AndyZTopic starter

Re: Did the Stimulus work?
« Reply #44 on: September 23, 2011, 11:31:56 PM »
People point to high levels of unemployment and say that the stimulus didn't work. The fact that unemployment stopped rising when the stimulus went into effect - like I said, we were looking at Great Depression II -  indicates that it did at least staunch the bleeding.

Part of the issue I have there is that they said that if it was put into effect, the unemployment rate would never go above 8%, but it went up past 9%.  So I'm not sure how it stopped rising.  Wasn't it at like 7% when they implemented it?

Offline Asuras

Re: Did the Stimulus work?
« Reply #45 on: September 24, 2011, 01:35:19 AM »
Part of the issue I have there is that they said that if it was put into effect, the unemployment rate would never go above 8%, but it went up past 9%.  So I'm not sure how it stopped rising.  Wasn't it at like 7% when they implemented it?

When Obama took office (you may have to backdate that chart to 5Y) he was already presiding over a country around 8% unemployment.

Again, I'm not celebrating how awesome the stimulus was, but given the gigantic hole we were facing we could have done far, far worse. And we should keep digging ourselves out of it now.

Offline krakenknight

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Re: Did the Stimulus work?
« Reply #46 on: September 28, 2011, 02:59:12 AM »
You do realise that every American citizen owes $80000 personally to China. The fact is that american spending behaviour is not fiscally responsible or in fact feasable. As someone who lives in a country with 42% unemployment I think American's have forgotten that they need to build inroads to the rest of the world to stay competitive.

The America of the 50s was built on Military spending and until the end of the Reagan years that economic model worked, however America didn't shift how its economy worked after that to adjust to the new climate. Germany went heavily into industry, China and India Manufacturing and Japan technological innovation.
The US culturally stagnated, preferring to outsource its industry and continue with unrealistic borrowing practices. The problem is that in the current climate America can't compete with Chinese and Indian Manufacturing so they go out of business, and a lack of new industry creation after the dot com collapse has made Venture Capitalists wary to taking risks.
Someone needs to break the US reliance on credit or the world economy will never properly recover.

Offline Jude

Re: Did the Stimulus work?
« Reply #47 on: September 28, 2011, 09:17:59 AM »
You do realise that every American citizen owes $80000 personally to China.
That number can't possibly be correct.  With a population of roughly 300 million, it would mean we owe China roughly 24 trillion dollars, which is higher than the United State's total debt (not just the portion owed to China) by about 10 trillion dollars.

EDIT:  If this is to be believed, China owns about 900 billion worth of our debt:  http://www.guardian.co.uk/news/datablog/2011/jan/18/us-federal-deficit-china-america-debt

That puts them at about $3000 dollars per person.  Muuuch less worrying.

EDIT:  http://www.guardian.co.uk/news/datablog/2011/jul/15/us-debt-how-big-who-owns - and by the latest numbers, we're still not quite up to 4k per person.
« Last Edit: September 28, 2011, 09:27:26 AM by Jude »

Offline krakenknight

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Re: Did the Stimulus work?
« Reply #48 on: September 28, 2011, 10:13:53 AM »
That number can't possibly be correct.  With a population of roughly 300 million, it would mean we owe China roughly 24 trillion dollars, which is higher than the United State's total debt (not just the portion owed to China) by about 10 trillion dollars.

EDIT:  If this is to be believed, China owns about 900 billion worth of our debt:  http://www.guardian.co.uk/news/datablog/2011/jan/18/us-federal-deficit-china-america-debt

That puts them at about $3000 dollars per person.  Muuuch less worrying.

EDIT:  http://www.guardian.co.uk/news/datablog/2011/jul/15/us-debt-how-big-who-owns - and by the latest numbers, we're still not quite up to 4k per person.

My apologies I made a math mistake I meant in total to all creditors and it was only $40000. The 80000 was the figure an accountant friend and I kicked around after we discounted those people unable to pay due either to age or monetary circumstances.

Sorry honest mistake, not trying to overinflate on purpose.

Offline Oniya

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Re: Did the Stimulus work?
« Reply #49 on: September 28, 2011, 10:24:02 AM »
I'd stick with 'kicking around' the $40,000, if you want to make the point without hyperbolizing.  By 'discounting' the people that would be unable to pay (or any group of people), you automatically negate the phrase 'every American citizen'.