Stimulus? Still a failure.

[badlydrawnjeff.livejournal.com]

The failure of the stimulus isn't exactly news, and hasn't been for some time. Thankfully, more and more people are getting on board.

For instance, it looks like we might not have needed it to begin with. Granted, since stimulus of this nature doesn't work, we never need it, but the justification for it isn't so strong anymore:

"We had to hit the ground running and do everything we could to prevent a second Great Depression," Obama told supporters last week.

...

IBD reviewed records of economic forecasts made just before Obama signed the stimulus bill into law, as well as economic data and monthly stimulus spending data from around that time, and reviews of the stimulus bill itself.

The conclusion is that in claiming to have staved off a Depression, the White House and its supporters seem to be engaging in a bit of historical revisionism.

...

The argument is often made that the recession turned out to be far worse than anyone knew at the time. But various indicators show that the economy had pretty much hit bottom at the end of 2008 — a month before President Obama took office.

Stanford's John Taylor showed us that tax credits and directed spending was fairly worthless:

Individuals and families largely saved the transfers and tax rebates. The federal government increased purchases, but by only an immaterial amount. State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers.

Some argue that the economy would have been worse off without these stimulus packages, but the results do not support that view.

Even Harvard's Robert Barro is on board to an extent. While he has yet to come around on the fact that stimulus has not ever been shown to work, he's at least noting that the merits of spending need to be more important than the stimulating impact:

"In the long run you have got to pay for it. The medium and long-run effect is definitely negative. You can't just keep borrowing forever. Eventually taxes are going to be higher, and that has a negative effect," he said.

"The lesson is you want government spending only if the programmes are really worth it in terms of the usual rate of return calculations. The usual kind of calculation, not some Keynesian thing. The fact that it really is worth it to have highways and education. Classic public finance, that's not macroeconomics."

With murmurings that we may need a second stimulus, the question remains as to why we'd pursue such a thing given the track record of the first. At this point, if you're still a proponent of Keynesian-style stimulus, why? What will it take to convince you that it will not succeed?

Comments

[underlankers.livejournal.com]

So pretty obviously Jeff lies and when he said "the only parts that aren't 100% accurate are the slave labor camps and secret police" he really means that George C. Marshall was the moral equal of Georgi Zhukov and the director of OSS was Lavrenti Beria.

[underlankers.livejournal.com]

See, I though you were referring to the OSS. That comment was not clear and I've had this go-round with you before where you've claimed that fascism, anarchism, and communism are the same and that FDR was both fascist and communist at the same time. So yeah, I actually do tend to think when you say fascist and communist you mean the actual murderous ideologies of the time period in question. But of course this is all your inability to own up to what the hell you actually say.

[underlankers.livejournal.com]

And when you're claiming that FDR and Stalin's administrative styles are similar to any great degree, I'm just going to note that Stalin depended heavily on Lavrenti Beria and on Yezhov before him, and that the Soviet state was a terror-state, dependent on the backhand to control its people. The USA of WWII had segregation and internment camps, but was a democratic society that held elections in the middle of a war.

If there's no NKVD in the WWII USA that in itself immediately makes Rooseveltian USA and Stalinist Russia night and day. They were never similar, and your myopic insistence that they were is the problem. You say that it's not claiming they were identical, but in reality, in my world where words mean what they mean, not what you want them to mean, the claim that Roosevelt and Stalin were similar means that you consider the New Deal equivalent to the Holodomor and the NVKD's murder squads.

[badlydrawnjeff.livejournal.com]

That I outright linked to the thread is a pretty clear indication I'm willing to own up to what I say. At least on this one you misunderstood me - it's an improvement over what you pulled earlier.

[underlankers.livejournal.com]

Not exactly, but more similar than you're willing to admit.
________

In my reality, Stalin was a member of the Politburo who during the Russian Civil War had already proven he was a treacherous, murderous sonofabitch who became ruler of the Soviet Union by being a master politician, relative to a Politburo filled with idiots. Stalinism began with collectivization, and at its height Stalinism's murderous assuming complete power over Russia and the rise of the NKVD gave it clear and nearly-identical natures to Hitler's party-state.

FDR, by contrast, won four terms in regular elections, embarked on rather limited social-welfare programs, and led the USA to victory in the largest war in US history. His Administration is rather narrowly "government" based and he was too much the New England aristocrat, moreso than Theodore in fact, to make it so. This to me is the difference: FDR was democratically elected and represented a 1930s democracy. Stalin's dictatorship only lacked Treblinkas and Sobibors, but otherwise every atrocity done by Hitler has a Stalinist counterpart.

Claiming that Ioseb Besarionvich Jugashvili and Franklin Delano Roosevelt were at all similar in terms of the political systems both steered is a ludicrous, idiotic idea of a crank who's read too much Rand.

[underlankers.livejournal.com]

Yes, you linked to the thread. I'm curious as to what you meant when you said FDR practiced extreme authoritarianism on par with Stalin's. Stalin murdered his way through Europe from 1928-1953, and his Red Army was as terrorized by the NVKD as the Wehrmacht was by the SS, with as many atrocities to its record as the Wehrmacht had to it. Stalin depended on terror too much for his own good to judge by how he died.

What in the fucking Hell did FDR do to remotely equal any of this in terms of authoritarianism? Social Security? Medicare? The draft?

[caerfrli.livejournal.com]

The stimulus was too little too late and riddled with tax breaks. A true stimulus package that involved hiring people to do some of the work that needs to be done in America may well have pulled us out of our economic troubles by now.

[badlydrawnjeff.livejournal.com]

Why would it have worked this time when it hasn't in the past?

[badlydrawnjeff.livejournal.com]

What in the fucking Hell did FDR do to remotely equal any of this in terms of authoritarianism? Social Security? Medicare? The draft?

Add those along with imprisoning citizens based on race, price controls, massive works projects, etc. They're similar - not the same, but similar. As I've always said. FDR was not an anti-fascist, he was a fascist along the lines of so many others.

[underlankers.livejournal.com]

No, neither he nor Stalin were fascists. If they had been, no Jews would have survived in Europe. Stalin was a Marxist, and thus his mass murder targeted classes more than ethnicities (there were exceptions, but he expelled as oppose to simply murdering them industrially, not that big a difference but a key one). Stalinism, unlike Nazism, was prudish, its lethality was more concentrated, and it made much better use of its potential as a conquering force.

FDR's Administration was undoubtedly authoritarian in some aspects, but then the USA as a whole has always had that strand in it, whether from slavery or its segregation-and-sharecropping successor.

[underlankers.livejournal.com]

None of which were FDR's fault, I might add.

[badlydrawnjeff.livejournal.com]

No, neither he nor Stalin were fascists.

And we'll never get a consensus on this. You think fascism is about things that it isn't.

[underlankers.livejournal.com]

I think that fascism is about what the fascists said it was about, yes. That puts me in a minority, even where "academics" as Root Fu would define the term are concerned. People have an extraordinary difficulty taking the fascists seriously by contrast to their nemeses. What makes that so is not apparent to me, the Stalinists weren't exactly any more accurate on things.

[geezer-also.livejournal.com]

He shoots, he scores!

[kylinrouge.livejournal.com]

Then we can agree to disagree. I go by the common, accepted definition of "a reduction in taxes," and I don't understand why you choose a more specific definition.

[kylinrouge.livejournal.com]

That's generally what I ask about tax cuts.

Serious question (with snide undertone ;) )

[geezer-also.livejournal.com]

Aren't you generally among the group that dismisses automatically anything that comes from the Heritage Foundation?

[badlydrawnjeff.livejournal.com]

I'm not proposing that tax cuts significantly benefit the economy the way people who defend stimulus spending do about that, however.

[gunslnger.livejournal.com]

See, there you go again. You take a simple statement, expand it hyperbolically and then create a new claim that you attribute to the other person, and then claim they're lying when they try to explain to you that that isn't what they said. So, you're either delusional and don't understand that you're doing this, which can be fixed and you can interact productively, or you're doing it intentionally, which makes it pointless to respond to you.

Re: Remember: there were no tax cuts.

[mrbogey.livejournal.com]

Deductions way more than tax credits were the name back in Reagan's day.

'Interestingly enough, we could do a lot to helping solve bond market instability by raising revenues.'

And not bailing out GM.

[geezer-also.livejournal.com]

Because Obama is the President?

(needless to say I can't think of a reason either ;) )

[kylinrouge.livejournal.com]

I don't see what the alternative is.

[johnny9fingers.livejournal.com]

Probably.

[johnny9fingers.livejournal.com]

That could be because the papers linked to are quite long and needed thorough reading. Even so, nevermind has nailed it. Jeff has misrepresented small parts of these papers or, more generously, been selective about the bits he's quoted in the OP, probably due to confirmation bias.

Nevertheless, Taylor's analysis is interesting.

He does seem to come out against tax rebates. His conclusion that tax rebates were largely saved by individuals and families, and that federal government increased purchases by "an immaterial amount" and "State and local governments used the stimulus grants to reduce their net borrowing (largely by acquiring more financial assets) rather than to increase expenditures, and they shifted expenditures away from purchases toward transfers" rather re-inforces my view that this spending should have been on infrastructure and capital projects, rather than acquiring more financial assets, or giving tax cuts/rebates/credits which were then saved or used to reduce levels of debt.

I quote his penultimate paragraph:

Others argue that the stimulus was too small, but the results do not lend support to that view either. Using the estimated equations, a counterfactual simulation of a larger stimulus package—with the proportions going to state and local grants, federal purchases, and transfers to individual the same as in ARRA—would show little change in government purchases or consumption, as the temporary funds would be largely saved. Of course, the story would be different for a stimulus program designed more effectively to increase purchases, but it is not clear that such a program would be politically or operationally feasible.

When I have time I shall read around this particular area rather more: as I am of the opinion that this debate ain't over yet by a long way. I'm sure Joe the Stig has an opinion. :)

[devil-ad-vocate.livejournal.com]

I need to know what herbs and spices work best with cat food.