Wednesday, February 04, 2009

Republican "Economics" and Propaganda

Nobel-winning actual economist Paul Krugman:
But the part that really got me was Broder saying that we need “the best ideas from both parties.”

You see, this isn’t a brainstorming session — it’s a collision of fundamentally incompatible world views. If one thing is clear from the stimulus debate, it’s that the two parties have utterly different economic doctrines. Democrats believe in something more or less like standard textbook macroeconomics; Republicans believe in a doctrine under which tax cuts are the universal elixir, and government spending is almost always bad.

The Republicans are really pissing me off. They have no legislative power, but they continue to play the media like a fiddle. Democrats control the White House, the Senate, and the House, but the great "liberal" media has had twice as many Republicans as Democrats on t.v. discussing the stimulus package.

And the Republicans are singing the same song as always: tax cuts! Wait, they're singing that other song, too: the experts are wrong! It's so obvious! So what if basically all the scientists in the world say that anthropogenic global warming is happening? All you need is common sense to tell you that's a lie! What do those stupid scientists know?

Now economics is a much softer "science" than climatology, it's true. But it's not like economists are dumber than your average television pundit. They're smart, and they base their opinions on data. And when the data change, their opinions change.

Republicans, on the other hand? Different data, same opinion. Economy booming? Tax cuts! Gas prices rising? Tax cuts! Economy tanking? Tax cuts! Two wars? Tax cuts!

Another article by Krugman, called Bad Faith Economics:
As the debate over President Obama’s economic stimulus plan gets under way, one thing is certain: many of the plan’s opponents aren’t arguing in good faith. Conservatives really, really don’t want to see a second New Deal, and they certainly don’t want to see government activism vindicated. So they are reaching for any stick they can find with which to beat proposals for increased government spending.

Some of these arguments are obvious cheap shots. John Boehner, the House minority leader, has already made headlines with one such shot: looking at an $825 billion plan to rebuild infrastructure, sustain essential services and more, he derided a minor provision that would expand Medicaid family-planning services — and called it a plan to “spend hundreds of millions of dollars on contraceptives.”

But the obvious cheap shots don’t pose as much danger to the Obama administration’s efforts to get a plan through as arguments and assertions that are equally fraudulent but can seem superficially plausible to those who don’t know their way around economic concepts and numbers. So as a public service, let me try to debunk some of the major antistimulus arguments that have already surfaced. Any time you hear someone reciting one of these arguments, write him or her off as a dishonest flack.

...

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

The point is that nobody really believes that a dollar of tax cuts is always better than a dollar of public spending. Meanwhile, it’s clear that when it comes to economic stimulus, public spending provides much more bang for the buck than tax cuts — and therefore costs less per job created (see the previous fraudulent argument) — because a large fraction of any tax cut will simply be saved.

This suggests that public spending rather than tax cuts should be the core of any stimulus plan. But rather than accept that implication, conservatives take refuge in a nonsensical argument against public spending in general.

Obama preemptively compromised with the Republicans by providing huge tax cuts as part of the stimulus package. In return, he got nothing. ZERO Republican votes in the House. Let's hope he stops pretending that the Republicans are acting in good faith or have any good ideas at all sooner rather than later. There's no sense in weakening the stimulus, and therefore the economy, to appease a bunch of know-nothing dogmatists with no actual power.

I've leave you with a quote from the genius just voted RNC Chairman:
You and I know that in the history of mankind and womankind, government—federal, state or local—has never created one job. It’s destroyed a lot of them.

Clearly a rational man well-versed in economics and history.

15 comments:

Comrade Kevin said...

I think in certain areas bipartisan compromise is possible. In some areas, as you have noted well, both sides are so firmly entrenched against each other that compromise simply isn't an option.

Anonymous said...

This is a clash of Keynesian vs. Classical economics and has been going on for decades.

Holy Hyrax said...

>Democrats control the White House, the Senate, and the House, but the great "liberal" media has had twice as many Republicans as Democrats on t.v. discussing the stimulus package.

Annnnnnnnd this mean what? That many of the media outlets are not slanted on the left all of a sudden?

Ezzie said...

LOL. Krugman is STILL an idiot, no matter what prize he won.

Also, seriously? Why do you think people don't want another "New Deal"? Ever look at what happened after the first one, until WWII kicked into high gear?

Scott said...

Uh, WWII was bad for the economy, not good. Blowing things up is never good for creating things. But you are right, Krugman is a fool. It's gonna be a long time before recovery comes.

Jewish Atheist said...

HH:

Annnnnnnnd this mean what? That many of the media outlets are not slanted on the left all of a sudden?

No, it's been this way for years.


Ezzie:

LOL. Krugman is STILL an idiot, no matter what prize he won.

Every time I mention him, you say something like that, but I never hear any reason. Do you have one?

Anonymous said...

The Congressional Budget Office says the stimulus plan is harmful long term.....

http://www.washingtontimes.com/news/2009/feb/04/cbo-obama-stimulus-harmful-over-long-haul/

It isn't like the Republicans just act like that to hinder the democrats.

random said...

First of all, good to have you back JA. This place has been quiet for a while and I was starting to worry slightly...

Secondly - "Nobel-winning actual economist Paul Krugman" - please. We had this out a while back - the Sveriges Riksbank prize is *not* a Nobel prize. It's an attempt to cash in on the prestige of the actual Nobels by adopting a similar sounding name. I thought you guys were supposed to be the reality based community? Oh, and Krugman's prize was for work he did in the 70's on international trade patterns, he has not had an original thought in about 30 years and his specialisation has little direct relevance to domestic stimulus policy anyway.

"he derided a minor provision that would expand Medicaid family-planning services — and called it a plan to “spend hundreds of millions of dollars on contraceptives.” "

$300 million (the cost of the programme in question) *is* "hundreds of millions of dollars" by any reasonable definition of the term. And this is an example of the key problem with the bill - while expanding medicare may or may not be a worthwhile goal in it's own right, it's got sweet FA to do with the economic stimulus, it should be debated separately and on it's own merits.

If Obama had drafted a tightly focussed stimulus package and sent it to congress and dared them to pass it unamended, then the Republicans would probably have found it very difficult indeed to oppose it. Instead, he basically left the drafting to Pelosi and Reid who did what they always do and loaded it so full of pork that it virtually oinks (I'm sure the 2010 census will benefit from having an extra $1bn, but I find it harder to see how that will stimulate the economy, likewise the $150m to the Smithsonian) and then dare the Republicans to vote the whole thing down.

In such circumstances the Republicans virtually had an obligation to vote against the mess. It should be noted too that (a) 11 Democrats also voted against the bill, making opposition to it more bipartisan than the support; and (b) there are enough Democrats around so that the bill could be passed without any Republican input whatsoever, the only reason the Dems are trying even as hard as they are to get the Republicans on board is to share the blame if this thing fails - they will certainly have no intention of sharing the credit if it succeeds. If you want to blame anybody, blame Pelosi and Reid and Obama (the first two for drafting this mess, the last one for failing to rein them in).

Jewish Atheist said...

Anon:

I'm not saying that all the Republicans are just being spiteful. It's more that they believe in tax cuts like it's a religion.

Random:

First of all, good to have you back JA. This place has been quiet for a while and I was starting to worry slightly...

Thanks. :-) And you can always email.

Secondly - "Nobel-winning actual economist Paul Krugman" - please. We had this out a while back - the Sveriges Riksbank prize is *not* a Nobel prize.

Don't be pedantic. Everybody calls it the Nobel.

$300 million (the cost of the programme in question) *is* "hundreds of millions of dollars" by any reasonable definition of the term.

I don't think Krugman was denying that, just calling out how Republicans are pretending that contraceptives are a significant part of the bill.

And this is an example of the key problem with the bill - while expanding medicare may or may not be a worthwhile goal in it's own right, it's got sweet FA to do with the economic stimulus, it should be debated separately and on it's own merits.

That'd be nice, but it's not how laws get passed.

If Obama had drafted a tightly focussed stimulus package and sent it to congress and dared them to pass it unamended, then the Republicans would probably have found it very difficult indeed to oppose it.

What does "tightly focussed" mean? The money has to be spent -- and whatever they chose to spend it on would be ridiculed by Republicans. Unless they used it only for weapons and tax cuts, I guess.

Instead, he basically left the drafting to Pelosi and Reid who did what they always do and loaded it so full of pork that it virtually oinks

"Pork" isn't necessarily bad in a stimulus bill.

there are enough Democrats around so that the bill could be passed without any Republican input whatsoever, the only reason the Dems are trying even as hard as they are to get the Republicans on board is to share the blame if this thing fails

I think that's one reason, but I think Obama is seriously trying to reunite the country. I think he may be naive in thinking the Republicans have any interest in playing nice, but maybe he thinks he has to at least try. As I said, the preemptive compromise with tax cuts was probably a big mistake.

Holy Hyrax said...

>"Pork" isn't necessarily bad in a stimulus bill.

Maybe this is worthy enough of a post in itself.

Jewish Atheist said...

Maybe this is worthy enough of a post in itself.

It's pretty simple. The point of the stimulus is to spend money now to create jobs. Many "pork" projects would do just that.

Scott said...

"Creating jobs" should not be the goal. We can have the State print lots of money to pay people to dig holes in the desert but this would not really solve any problems or create any wealth. The goal *should* be wealth creation. Unfortunately, wealth creation is exactly what the State can't do. They can only steal wealth from a productive member of society and give it to a non-productive person. This process may benefit a small portion of society that the State prefers, but it in no way benefits the economy as a whole. In terms of wealth creation it is the equivalent of taking a bucket of water out of the deep end of the pool and pouring it in the shallow end. Not a good way to increase the water level as a whole. And ultimately detrimental to the entire economy because it transfers capital from production to waste.

There's not going to be any stimulation from all this spending. Debt has never created wealth, indeed excessive spending is *exactly* one of the root causes of out current situation. Does Krugman propose we ought to dig our way out of this hole?

Well he got some award so I guess that makes him right.

Jewish Atheist said...

Scott:

1) The big problem now is a lack of liquidity, not a lack of wealth. Government spending and increased private spending as a result of job creation would solve that problem. It's true that we need to pay down the debt, but we can do that after the crisis is resolved. We should have been doing it during the Bush years, for instance.

2) Government can and does create wealth. Infrastructure creates wealth, for example. Scientific research creates wealth. Education creates wealth. Security allows wealth to be created. Etc. This counterfactual idea that government is always the problem is more a religious belief than a reflection of reality.

Holy Hyrax said...

>It's pretty simple. The point of the stimulus is to spend money now to create jobs. Many "pork" projects would do just that.

classic

Orthoprax said...

We all know the problem with the economy is entirely in the confidence department. It's a psychology issue not an infrastructure issue. Throwing money at it is as useful as prescribing antibiotics for a hypochondriac. It might work but giving 'em a placebo would work just as well.

Let's have the government spend a small fraction of that trillion dollars on just the most public and obvious places that could represent a flowering of the economy and I'd bet we'd see the public confidence in the system returning in due time.

In any event, I'm a student carrying huge loans. The more money the government prints the more inflation rises the less my debts are worth - so it's actually in my interest that bills like this get passed. But I still don't think this package will show economic returns of more than the smallest fractions of what it's laying out. Hundreds of billions of dollars are without doubt going to be flushed down the toilet.