and here were 3 of our preceding posts to give some context:

HIM:
No pork. No BS. No more "Meet the new boss, same as the old boss."

ME:
ha!!! you think 20bn in funding towards green energy is pork? you think ~100bn in school re-investment funding is pork?

how about extending unemployment and health care coverage to the 8% of the population that is unemployed? they wont spend that money?

or this crap from the right about pay-roll tax payers who "dont pay taxes".

maybe you are coming at this from the left and want MORE infrastructure spending - in which case - I agree with you - but I think Obama wanted to reach out the hand of bi-partisanship KNOWING that the Rush Limbaugh-conservatives would slap it away along with any legitimacy they would want for the 2010 elections.

anyways - sorry for the rant.

HIM:
1/8th of this pork at least goes to people who do not work -- only about 10% of it will be spent in 2009. No stimulus at all.
Sent from: Captain James Tiberius Kirk (10 ) Sent: 12:37 AM
"
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We were told that it would keep people from winding up on the streets. Only $11 billion goes to housing assistance.

We were told that it would help Americans who got laid off. Only $4.6 billion goes to employment and training programs, and $27 billion to expand unemployment benefits. (By contrast, the bill raises Medicaid spending by $89 billion.)

We were told that it had to be passed immediately. But the Congressional Budget Office notes that large portions of the spending cannot even begin until spring and will take three to eight years to complete."

Well said, Babak. I couldn't agree more. I think the plan is probably imperfect (what plan isn't?)... and I would say that it isn't large enough.

Many conservatives claim that FDRs programs didn't get us out of the depression, that WWII did... 1) that's a distortion as significant improvements in the economy including unemployment levels were seen well before our entry into WWII, 2) conservatives at the time fought tooth and nail against the New Deal programs and when FDR retreated a bit a few years into his presidency, the economy worsened (1937) for a while, 3) it is well documented that war-related employment is one of the least-helpful types of employment to the economy... consider the destruction and death that accompanies all war spending... all of which has huge long-term costs... not to mention that there is not as much synergy with other industries... building bridges helps the entire economy, for example... building a tank, not so much, 4) even despite the fact that war-time employment is less than ideal, such government sponsored employment still helped the economy significantly - suggesting that increases to New Deal programs such as WPA would have had an even more dramatic effect... and that FDR's programs would have ended the depression earlier if they were larger and more well-funded than they were (as war-time spending was far larger than the New Deal spending)...

It is "interesting" to me how much conservatives are squawking about this plan - yet were pretty cool with giving $700 B to investment bankers (who produce nothing) without oversight. And what exactly has the $350 B spent so far in that gotten us? Give to the rich? Great plan. Tax cuts for the rich? Great plan. Employ and educate some people and build some schools and roads? Bad plan. Tax cuts for the middle class and poor? Bad plan. It really chaps my hide.

the funniest (and maybe most illustrative) 'squawking' I heard this week was the heartfelt defense of executive bonuses that Giuliani offered.

To think - poor executives of these financial banks are being asked to give up multi-million dollar bonuses, corporate jets, $2million bathroom renovations - and for what? just because their companies have been in the red for the past 3 quarters... such liberal rubbish. </ sarcasm >

I only hope that our weak-kneed leader in the Senate does not fail the American people once again. I soooooo wish he would step down and let a Dodd, Levin, or Leahy take the spot. Feingold would be the best - but wont happen in our lifetime.

Apparently leadership positions in Congress carry enormous advantage for the "incumbent"... virtually the only way to rid us of Reid and his pathetic leadership is for him to lose his seat in the Senate entirely (which, being in Nevada, a light red state, would not be too hard to do). It would be one of the few times where I would likely be hoping for the Republican to win. Ugh. To my mind, the only way for Reid to avoid dissappointing us again is for Obama to bring him to heel. Reid is, after all, a wimp.

I dont remember hearing a single economist at the recent world economics forum badmouthing the stimulus packages, the common view is that we're in for a bad 2-3 years instead of facing another great depression because of the responsible reaction taken

I think if you want to explain away the complete lack of opposition from qualified people you need to resort to insane conspiracy theories

There are plenty of well-respected economists who don't like the stimulus.

http://www.cato.org/special/stimulus09/cato_stimulus.pdf
http://gregmankiw.blogspot.com/2009/01/cochrane-on-fiscal-stimulus.html

Like me.

As European, I want also make a remark. I think it is good if you have a stimulus for investments. Investments in infrastructure, like energy, roads, rail, education etc. The USA starts lagging behind with these kind of things.

If it is a stimulus for just lowering taxes or giving back money, then I think you should have a sound fiscal policy.

Lucas

sswang - CATO is a libertarian purist organization. I've been there dozens of times, debated them, listened to them, and even worked with them in a coalition on a specific issue. (I like their foreign policy positions).... but they are so libertarian they'd really rather not see any government at all... lol.

most economists think this stimulus is too small - not too big.

Haha diplomat. You are a closet well respected economist?

Economists have problems with varying details of the plan, but the overall debate is not whether there should be a stimulus, but how should it be done etc. If you are completely against then Kestas is right to lump you in with conspiracy theorists.

Just a point on executive bonuses though. Although its easy to blame things on millionaires and ask them to tighten their belts. In reality you are just weakening your countries ability to compete for the top managers. Your corporations will be worse off over what is a relatively small amount of money that shareholders choose to hand out.

I understand that $18 B of the $350 B given so far to struggling/failing investment banks went to executive bonuses. Is $18 B a small number? How about 5% of the total bailout?

Even Ronald Reagan responded to a recession in a Keynesian fashion. In the 1981-82 recession Reagan increased spending and implemented tax cuts... Keynesian in design - and effect (though conservatives would be loathe to admit it)... Most suggest that these policies led to a swift economic recovery.

Sure CATO is libertarian. But the link is not to a CATO paper, it's to a bunch of non-CATO economists (including many at top universities) who disagree with the stimulus. There's also the other link which you ignored completely. Disagree with them, fine, but you can't honestly claim that there is a "complete lack of opposition from qualified people" as Kestas did, or call them conspiracy theorists.

As a foreign national working in the US I just hope whatever kind of stimulus there is going to be is not going to favor US taxpayers with a US passport over US taxpayers without a US passport, as was the case with last year's stimulus check. Yes... that's right... I didn't get one. In Europe we call that discrimination with respect to nationality... under Bush it was called stimulus.

Back to topic... even though most people know in principle it's good to spend the extra bucks to keep the economy rolling... when the check arrives and the credit card statement says you owe $5000, guess where the stimulus is going to be... but we see the same with banks so I'm not sure stimulating companies would work better.

sswang,
John Cochrane - the economist from the second link - says "First, if money is not going to be printed, it has to come from somewhere.". Nonsense. Ever heard of wealth creation? A person that is employed creates wealth that an unemployed person does not. If the stimulus effectively employes people - both directly and indirectly (in part through increasing their value to the economy through education, for example)... if the stimulus does these things reasonably well then it's effect on the economy will be positive. (Not to mention other savings - through keeping people healthy, for example).

Putting people to work was the sole reason given for the WWII-related portion of the recovery from the depression. A stimulus package such as this does more than that as it's jobs help the economy more than military and arms industry jobs do. Jobs create recovery.

I was linking not to endorse their arguments but merely to refute the point that the only opposition is crackpots. It is not so.

ah... well, actually I do think that John Cochrane is a crackpot. He is firmly in the neo-con/Friedman economic school of thought... a true-believer in privatization of government functions, an end to social spending, and deregulation... the sort of nonsense that got us into this mess. That school of thought, shaky in its theory, has been discredited in practice. The result of such policy is concentration of wealth, destruction of the middle-class, increase in poverty... and eventual crash and burn. But, since there is that concentration of wealth, there will always be proponents of this approach.

I'm glad i've been able to engender such a reflective and elucidating discourse rather than some of the ad-hominum attack-laced conversations I've seen on some of the other threads.

sswang - you are absolutely right that there are solid thoughts on both sides of this issue as there are on any and all issues of relevance. if everyone DID agree - life would be so much easier. but I think it IS undeniable that the preponderance of economic wisdom is positively inclined to THIS stimulus package and more not less.

let me add this overarching point first: Economics is an inexact science (if one can even call it a science) and humanity has just barely begun to comprehend the inner-workings of human economic behavior. mainly, this is due to three factors... 1) an inordinate amount of variables. 2) the necessary axiom that economic actors are rational (that they make efficient decisions - but they don't always) and 3) that you can place a monetary value on EVERYTHING - well, you cant b/c in many cases the 'value' is not at first obvious (ie. future value of education, ramifications of pollution, increased productivity resulting from better health care, or the value of 'happiness' etc.).

Given these shortcomings in the 'science' - one is left with the most basic tool in the scientists toolbox. experimentation or more colloquially known as 'trial and error'.

well - let me say this - over the past 8 (some would argue 28) years we certainly have seen the "error" of our economics way.

so... lets take a look at the most basic arguments of the conservative ideology on economics (its acolytes bent in prayer at the alter of Milton Friedman) - known to most as supply-side or 'trickle-down' economics.

* De-regulation.

expected result: allow for private capital to go towards highest reward investments - thus the 'market' can be most efficient.

actual result: individuals w/ capital take advantage of lax regulations (inspired by greed) to invest in short-term gains vs long-term investments.

* Low capital gains taxes:

expected result: the higher profit margins (due to low taxes) result in more capital investment, thus job creation and economic growth

actual result: higher profit margins feed higher salaries for those at the top of the economic ladder leading to the HIGHEST EVER income disparity since the dawn of capitalism.

* Privatization:

expected result - more efficient service distribution for utilities, transport, commodities, etc.

actual results - lack of high-capital investment in 'infrastructure' such as a modern power-grid, high-speed rail, public transport. exemplified by slowest transit rail in the western world, the NE power outage of 2004, The Enron debacle, uneven broadband connectivity, and commodity speculation leading to bubbles.

* Health Care and pension privatization:

expected results: efficient distribution of services. 'market' decisions to increase effectiveness and higher returns for pensions.

actual results: the worst health care system in the western world at the highest per capita income with the most uncovered citizens. HUGE disparities in service based on socio-economic class. An excessive burden on American businesses compared to international competitors. on the pension front, we've been lucky we didnt have to find out the actual results of social security privatization (though we have a good idea since the DOW has dropped about 33% in 3 months).



I have written enough... but let me finish with this though/opinion.

just like 'communism', supply-side capitalism is Utopian in theory - but in practice and implementation it is marred by the human element. The same greed that undermines communism also undermines capitalism. That is why you NEED institutional safeguards... or in another words, a relatively intrusive governmental regulatory framework to protect the proletariat/consumer from the bourgeoisie/investor.

wow - that was long. (ps. I apologize in advance for any misspellings, or grammar mistakes above. also - I am no expert, these are some personal thoughts and opinions and certainly open to dispute by others.)

The economy needs to learn how to fix itself. The purpose of government is to create laws and defend its citizens. Nothing more, nothing less.

I'd rather have the private sector run things because when an employee screws up he can be fired. You can't just fire a bureaucrat. The private sector's hardly perfect, but go to the DMV and see if you really want that sort of people planning and second guessing the economy.

invictus -

first - the DMV is state run and differs state to state. second - the idea that government bureaucracy is inherently less efficient is a bit of a myth. you ever try to get to customer service when dealing with your phone company or with microsoft? how's that experience? peaches and roses? dont think so.

'service' is always a rough patch - even for the private sector. and in fact, the DMV deals with a HUGE number of 'customers' quite effectively considering their constraints, both on price and on being forced to cater to all comers.

in fact, did you know that social security has a 2-3% overhead cost? and Medicare has one of the lowest - you'll never find a private company with THAT low of an overhead cost - not to mention the 8-10% profit-taking that gets tacked on (ie, private health care orgs).

so there is no reason to assume that the public sector is inherently less efficient - this is a fallacy that has been (quite successfully) propagated by the dominant conservative orthodoxy in the US political process.

that said - the private sector does serve a massive purpose - in creativity, in entrepreneurship, and in reaching higher productivity. but that does not mean that there is not an under-utilized role for the public sector in our society.

diplomat - learn to fix itself? explain what you mean. as for 'create laws' and 'defend its citizens'.... that's simplified. defend its citizens could be construed to include regulation (on banking, on manufacturing, on drugs, toys, food, even defense against politicians). and creating laws - of course - but what are the limits of those laws? should government make laws about private behavior? in the bedroom? how about smoking pot or drinking alcohol. how about traffic laws? my point is that you cant simplify it that easily.

in fact, political theory tells you that the role of government is the 'legitimate use of force' but its the word "legitimate" and the relative degree of "force" that various political ideologies debate at length.

so basically, I'm suggesting that your statement is a truism rather than a edifying statement on the role of government.

Bureaucracy is less efficient because the people working there aren't as accountable. It takes a lot of effort to fire a government employee. At my private grade school a teacher was fired because he really wasn't very good at teaching. At my public middle school (the Catholic high school's two hours away) a teacher was caught having sex in a science lab and the gave him a job at the local high school!

Government is a bizarro land that inevitably gets disconnected with its constituents. The less power it has and the closer that power is kept to the people the better things are.

How can you ever say some pencil pusher in Washington knows better than I do how I should spend my money?

invictus -

certainly the conventional wisdom says that bureaucracies are inefficient - but that does not take into account the 'type' of work that the public sector engages in, and the customer base it serves. also - when public sector employees earn only 50-80% of their private sector counterparts, you do end up with less productive workers (though at a reduced labor cost). for example, a secretary at a law firm vs one at HUD or something. not to mention managerial level work, 2-300k max vs $2-3mil.

as for teachers - dont even get me started... when starting salaries are 25k what the hell do you expect? if it was not for the love of children and the common good, I dont even know what we'd do.

of course, you know that private institutions charging 10-20k per Annam pay THEIR teachers even less... b/c of the lack of union protection and the fact that most the students are trust-fund kids rather than broken-home kids.

as for government - our views differ a bit on the utility of government and again - the functions it serves. Government makes macro policy to affect the whole not individual service for purchase (often something an individual would never buy - like a road, or a library, or a tank). when government engages in some sort of action, it is ALWAYS based on some congressional statute and congressional appropriation - which means you DID have a say in it.

I also want to make a point to all the conservatives who always complain about paying higher taxes... 2 actually.

1) In no other country in the world can you MAKE as much money as you can in the US. so just like a luxury product that requires a premium price, a higher income requires a premium 'price' (ie taxes). so get over it and go buy your Gulf Stream jet.

2) you know when revolutions happen? when income disparity reaches a peak for a given society. so if you want to keep the pitch-forks at bay - you should WANT the least amongst us in society to be at least 'content' with minimal subsistence (ie. food, shelter, health - which means pension security, health care, education, and food stamps).

so my word on this is that if YOU want the 'good' life - pay for it by providing a 'contentful' life for the bottom 50%. and you do that through 'government' - you CANT do that through business since there is no profit margin.

but I can respect libertarian philosophy on wanting independence - its just that I think the philosophy is short-sighted.

thoughts?

We're just not gonna agree then. You're making pretty cogent argument, though. We just have different beliefs.

Keynes was right about spending and this stimulus needs to get passed ASAP.

@ Invictus - thank you for the comment - and I do concur that we are likely to continue our disagreement, but if you do have the time - I'd love to get your (or others') responses to my arguments/points/thoughts.... I find that I'm more likely to better explain and even understand my own ideas when they are rigorously tested.

@ Thucydides - indeed.

Babak - "I'm glad i've been able to engender such a reflective and elucidating discourse rather than some of the ad-hominum attack-laced conversations I've seen on some of the other threads."

-OK great. if you are interested in talking to the wider audience, please loose the verbiage. we are moving into a post-American age and the sooner we recognise the better for our world outlook. this includes using the language to make it more inclusive for all readers/listeners.

I agree with you 50/50, but please cut out the jargon.

"we are moving into a post-American age and the sooner we recognise the better for our world outlook. this includes using the language to make it more inclusive for all readers/listeners."

I don't know which is more troubling about that post, the assumption that a post-American world is somehow desirable or that we should dumb down the language. You want China running things and we all talk in pidgin?