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

[kylinrouge.livejournal.com]

but it's not stupid at all and displays how the fundamental rules of money apply in all situations large and small.

The Fundamental Rules of Money, a PhD thesis by brucestein. I don't know if you follow the Austrian school of idiocy, but it's very similar to their whole shtick of 'all conventional rules of economics are wrong, except for us everything we say without proof is truth'.

Nor is your vehemence at both misinterpreting my call for realizing efficiency and subsequent fiat declarations.

There's nothing wrong with that. The wrong part comes in at Step 1 = slash spending without a plan to actually make the system be more efficient. Not that I expect you to draft up a comprehensive reform bill that makes the system cheaper and still provide the same level of service to people, but it seems that most Republicans advocate slashing spending with zero plans to make the system better. They just want to gut it first.

[kylinrouge.livejournal.com]

I'm sorry that all debt shares the trait of not going away until you stop incurring it

I'm sorry that you're incapable of critical thinking and must boil down complex concepts into absurd analogies and non-sequiturs.

[kylinrouge.livejournal.com]

Absurd analogies. Straw man it up more, please. I'm enjoying it.

[kylinrouge.livejournal.com]

Uh, it's absurd by the definition of the word. You know- wildly unreasonable? Illogical?

I'm repeating myself with this: A government cutting back on social spending is not the same as an individual making voluntary donations to a charity.

[kylinrouge.livejournal.com]

Why the analogy doesn't work, babby version:

1. Someone donating $200 to the Red Cross is not the same as a government giving someone food stamps with which they can buy food.

2. Governments have responsibilities for caring for individuals under their care. Individuals don't have that responsibility, and we grant that to the government because we know that individuals won't.

3. I hope a poor people steals all your food after you've cut them off from food stamps.

[kylinrouge.livejournal.com]

THe thing you like is bad! The thing I like is great! that's my argumEnt hurr

social programs are not charities.

1. you're attempting to assist society by assisting the lowest elements of society from complete ruin.

2. charities give money out of philanthropy, governments do it because they're trying to maintain control of the goddamn country.

You're right in one case, in that food stamps is inefficient, because we should just be handing people money without all these strings attached.

the best part about your reply is two straw mans back-to-back. i never claimed that the red cross doesn't help anyone in need, and i never claimed that food stamps is a completely efficient system.

the best part is that when you donate money to red cross you're not donating it to be spent in any efficient way. if you donate money to japanese earthquake victims your money may not actually go to japanese earthquake victims.

strawmans and absurd analogies. that's all you got.

[kylinrouge.livejournal.com]

the red cross doesnt even exist to help poor people get food. that's not its original purpose. you can't substitute one for the other.