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A Further Perspective

Fatal Flaws of Keynesian Economics

By on 7.22.11 @ 6:08AM

The stimulus has failed, and John Maynard Keynes is to blame.

It’s now clear that the federal government’s massive stimulus spending has not achieved its objectives. Why hasn’t it? It’s important that we have answers to that question.

The stimulus was premised on the economic model known as Keynesianism: the intellectual legacy of the late English economist John Maynard Keynes. Keynesianism doesn’t work, never has worked, and never will work. Without a clear understanding of why Keynesianism cannot work we will be forever doomed to pursuing the impossible.

There’s no real mystery about why Keynesianism fails. There are numerous reasons why and they’ve been known for decades. Keynesians have an unrealistic and unsupportable view of how the economy works and how people make decisions.

Short-Run Focus

Keynesian policy advocates focus primarily on the short run — with no regard for the future implications of current events — and they assume that all economic decision-makers do the same. Consider the following quote by John Maynard Keynes: “But the long run is a misleading guide to current affairs. In the long run we are all dead. Economists set themselves too easy, too useless a task if in tempestuous seasons they can only tell us that when the storm is long past the ocean will be flat again.”

After passage of the stimulus package, Lawrence Summers, Obama’s chief economic advisor at the time, often said that the spending should be “timely, targeted, and temporary.” Although those sound like desirable objectives, they illustrate the Keynesian focus on the short term. Sure it would be convenient if you could just spend a bunch of money and make the economy get well, but it’s not that simple.

The implication of a Keynesian perspective is that you can hit the economy a few times with a cattle prod and get society back to full employment. Remember that so-called “cash-for-clunkers” program? Maybe it accelerated some new car sales by a month or two, but it had no lasting impact.

The “Chicago School” is the primary source of serious research and analysis related to the Keynesian model. Two Chicago School conclusions, in particular, make it clear where Keynesian policies run aground. The two theories are the “permanent income hypothesis” and the theory of “rational expectations.”

The “permanent income hypothesis” was how Milton Friedman termed the findings of his research on the spending behavior of consumers. The MIT Dictionary of Economics defines the permanent income hypothesis as “The hypothesis that the consumption of the individual (or household) depends on his (or its) permanent income. Permanent income may be thought of as the income an individual expects to derive from his work and holdings of wealth during his lifetime.”

Whether consumers and investors focus mostly on the short run or the long run is basically an “empirical question.” A convincing theoretical case can be made either way. To find out which focus actually conforms closer to reality, you have to gather evidence.

Not Evidence-Based

Much of the difference between the two schools of thought can be explained by differences in their methodologies. Keynes was not known for his research or empirical efforts. Keynesianism is definitely not an evidence-based model of how the economy works. So far as I know, Keynes did no empirical studies. Friedman was a far more diligent researcher and data collector than was Keynes. Friedman fit the theory to the data, rather than vice versa.

The Keynesian disregard for evidence is reflected in their advocacy for more stimulus spending even in the face of the obvious failure of the what’s already been spent. At a minimum, we are due an explanation of why it hasn’t worked. (Don’t expect that to be forthcoming, however).

Failure to Consider Incentives

Another of the Chicago School’s broadsides against Keynesianism is the theory of “rational expectations.” It’s a theory for which the 1995 Nobel Prize for Economics was awarded to Robert Lucas of the University of Chicago. As economic theories go, it is relatively straightforward. It essentially states that “individuals use all the available and relevant information when taking a view about the future.” (MIT Dictionary of Modern Economics) The rational expectations hypothesis is the simple assertion that individuals take into account their best guesses about the future when they make decisions. That seemingly simple concept has profound implications.

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About the Author

Ron Ross Ph.D. is an economist who lives in Arcata, California. He is the author of The Unbeatable Market. Reach him at rossecon@gmail.com.

Letter to the Editor View all comments (156) |

POST American| 7.22.11 @ 6:43AM

----Keynes, afterall, was just a front man for
Fabian monopoly banksterism, much like
Karl Marks.

Meanwhile the ultra rich, TAX FREE foundations
that spawn and enable this corrupting, usury
justifying nonsense ---NOW comprise our shadow
(ie actual) government, and represent the ONLY
organization planning the future.

---And EUGENISTS one and all -to a man.

Kevin Dunn| 7.22.11 @ 10:27AM

Go away, you idiot. You are just spoiling a good magazine. Get yourself to a madhouse.

DaveS| 7.22.11 @ 6:51AM

Put just economics policy questions on the board and ask Geithner, Bernacke and Obama: 'are you smarter than a fifth grader?'

Government is the problem. And don't worry about default - the banks that took taxpayer largesse would have the temerity to stick it to the taxpayers again by raising interest rates? I rather doubt it.

companion| 9.13.12 @ 10:35PM

Government is only as strong as the oligarchy will let it. In the US...if we are not an oligarchy country...we soon will. And as we know already that when a government quits running a democratic country and the oligarchs totally takes over the weak and powerless are doomed to live a third world life and the middle class vanish.

Timothy L. Pennell| 7.22.11 @ 7:01AM

Keynes, himself, came to the conclusion that, HIS OWN THEORY didn't work. As far as I know, Keynes wasn't a Marxist, or a Communist, or Socialist, or a member of the American Democrat Party. But, I'm repeating myself.
This bunch of effeminate elites. These Ivy League "Thinkers". They think that the only problem that Keynes faced, was that HE WASN'T THEM.
This new breed of "The Best and The Brightest", think that THEY have all the answers. They've never HAD A JOB, never RUN A BUSINESS, never had to MAKE A PAYROLL or come up with the Money for EMPLOYEE BENEFITS. They've never done a HARD DAY'S WORK, in their lives. They just have all the answers.
That even KEYNES, himself, acknowledged that you can't SPEND your way out of these situations, means NOTHING to these American ALPHAS. (Remember. They use Darwin's Theory Of Evolution, to validate their belief that THERE IS NO GOD. Even though DARWIN, himself, said that HE BELIEVED IN GOD, and that his conclusions did NOTHING to undermine people's beliefs in a CREATOR.)
They have surmised that, KEYNES just didn't spend ENOUGH. And, as you can see by President Ivy League Affirmative Action's only trick, if allowed, he will SPEND us in to the THIRD WORLD.
These people believe what they want to believe.
The FACTS?
Who needs the FACTS, when you've got a Majority in the Senate, of FELLOW TRAVELERS?
Who needs the TRUTH, when you've got a Compliant MEDIA, willing to ATTACK or DEFEND, depending on your needs?
Who needs The Law, when you can have a Bought and Paid For, Federal Judge?
And, who needs the Constitution, when with just ONE MORE LIBERAL, you can just MAKE IT UP as you go along? Slipping WHATEVER YOU WANT, in there, right between the Right to an Abortion, and the Separation of Church and State? In fact, if you look closely? You can almost see the Right of the Federal Government, to FORCE everyone in the Country to PURCHASE whatever they tell you to.
Can you see it?
It's in there.
Mark My Words.

dingir| 4.16.12 @ 12:48PM

Da fuq did I just read?

companion| 9.13.12 @ 10:51PM

As far as I'm concerned there's [no] real evidence of god's existence other than the bible or any bible. The bible was written by men and many see the bible as contradictory. I'm an x-christian and was scared into believing the bible at an early age. Now that I have grown up and became an inquisitive thinker of the bible....something just doesn't add up. I suggest [not] to be inquistive or your fate may end up like mine....an atheist.

Clint| 7.22.11 @ 7:02AM

Austrian School Economics vs. Keynesian Crap.

"Austrian economist Friedrich Hayek criticized Keynesian economic policies for what he called their fundamentally collectivist approach, arguing that such theories encourage centralized planning, which leads to malinvestment of capital, which is the cause of business cycles.
Hayek claimed that what starts as temporary governmental fixes usually become permanent and expanding government programs, which stifle the private sector and civil society."

The Tea Party Rebellion Escalates.

Carpe Diem.

Edward Hara| 7.22.11 @ 11:35AM

Von Mises Austrian fables and Keynesian fairy tales both wind up with the same end -- the little guy gets it in the end and winds up a serf to the people with the money. Perhaps the only thing about Von Mises' ideas that might be better is that corporatists and the monied tend to produce a few more jobs in their lust for global domination.

For a nicely done article on the failure of Von Mises you can go to:

http://distributistreview.com/.....-baptized/

TrueBlue| 7.22.11 @ 2:44PM

If you look at the theory, and remove government intrusion, it works rather well. The problem is that government IS involved, and there is NO current working system that accounts for its influence on the markets. To get Hayek's system to work the government needs to GTFO, but they won't because career politicians have turned the government into a business that makes THEM money, and to hell with the rest of us.

Roy| 7.25.11 @ 5:55AM

TrueBlue, you are correct. The left just do not see it. The economy in the U.S. - as in a good many other countries - do not seem to recognise the degree of government involvement, ill and sweating for so many years before breaking out in an obvious fever. An involvement that has been discrete, across the board, and too intertwined to be quickly seen and remedied. It would take more than the two trillion dollars or so that has been thrown haphazardly at the problem. It would take a devaluation of at least 50% before seeing any improvement. But it will be impossible for any improvement without a kick-start for American industry, a kick-start for American self sufficiency, and a reappraisal of all government spending.

Clint| 7.22.11 @ 4:19PM

Duuuuuhhhhh ! Little Distributionist Bullcrapper PropagandaBoy, Eddie.

Now The Rest Of The Story.

Read: The American Catholic.
Thomas Woods and His Critics, The Austrian vs. Distributist Debate Among Catholics.

http://the-american-catholic.c.....catholics/

The tea Party Rebellion Escalates.

Dominus vobiscum, Asshat.

Clint| 7.22.11 @ 4:34PM

Then, Eddie The Distributist,

Read: The Road to Serfdom by the Austrian School Economist Friedrich von Hayek .

The Tea Party Rebellion Escalates.

Do Your Homework.

HoneyBadger| 7.25.11 @ 12:07AM

The problem with keynesianism is that is oblivious to the role of capital formation. It postulates that investment and production is driven by consumption, which is in fact ass backwards.

Bill Hussein O'Stalin| 7.22.11 @ 7:39AM

Ironically, the citizens of the USA can observe a perfect example of government failure at work and it is in the early stages of failure. It's call Obamacare. Before Obamacare passed the economy was staging a weak recovery, creating 65,000 jobs per month.

Since Obamacare passed job creation has dropped to 6,500 jobs per month. As the article points out correlation is not causation:
http://www.heritage.org/Resear.....are-Passed
Private-sector job creation initially recovered from the recession at a normal rate, leading to predictions last year of a “Recovery Summer.” Since April 2010, however, net private-sector job creation has stalled. Within two months of the passage of Obamacare, the job market stopped improving. This suggests that businesses are not exaggerating when they tell pollsters that the new health care law is holding back hiring. The law significantly raises business costs and creates considerable uncertainty about the future. To encourage hiring, Congress should repeal Obamacare.
Initially Solid Job Growth
The economy is recovering at an unusually slow pace. Typically, employment grows strongly after a severe recession.[1] In the year and a half following the last comparable recession (1981–1982), the unemployment rate fell by 3.3 percentage points.[2]
Initially the economy appeared on track for a steady recovery. In August 2009, the White House projected the unemployment rate would fall to 8 percent by the end of 2011 and 7.5 percent by the end of 2012.[3] This would represent a recovery roughly one-third slower than after the 1981–1982 recession.[4]
Job creation data supported these forecasts. The economy went from losing 841,000 jobs in January 2009—the recession’s low point—to gaining 229,000 jobs in April 2010.[5] By the spring of 2010, the Administration confidently predicted a “Recovery Summer.”[6]
Obamacare Discourages Hiring
In March 2010, Congress passed President Obama’s health care reform legislation. The bill had appeared in serious jeopardy, and after the upset special election victory of Senator Scott Brown (R–MA), many analysts expected the bill to fail. Instead, it became law.

Brian Mc| 7.22.11 @ 8:30AM

Excellent thoughts, Bill. I heard a Senator a day, or two ago, state that the plan was the 'total' repeal of the healthcare reform. This one, simple act would be a huge, economic shot in the arm and a correction this country is in dire need-before the other major targets are brought into focus, such as the ATF? Someone please explain to me why we need a national control of alcohol, tobacco and firearms.

Ground Control| 7.22.11 @ 1:23PM

A popular bumper sticker reads: "Alcohol, Tobacco, and Firearms should be a Convenience Store, not a Government Agency." The ONLY reason for Federal control of alcohol is tax revenue, pursuant to the 21st Amendment (which did more than repeal the 18th Amendment, it authorized the Federal Government to control and regulate alcohol. Frankly, the 21st Amendment should be repealed and consequently the 18th Amendment re-repealed. But that's my opinion.) Likewise, the reason for tobacco controls is revenue.

The only reason for a "Firearms" part of ATF is to control and suppress the rights of free citizens to arm themselves for their own protection. Gun Control does not even address the issue of crime, and this is provable empirically. Gun Control is population control and nothing else. It has ALWAYS been population control. Even in ancient Rome (I know, Rome had no guns) there was a version of this. It was prohibited for Roman citizens to carry bladed weapons within the walls of the city. Of course this stopped only those who chose to obey the law, and crime and violence were rampant in the streets. A Roman citizen was not safe walking the streets of Rome without an escort, and even the escort was in danger after dark.

In answer to your question, We the People need no such national control of alcohol, tobacco, and firearms and would be better off if this Agency were abolished. It is those in government who desperately desire such an agency to bolster their own power and limit the rights and freedoms of citizens. People who worry about the crime and violence levels in their own neighborhoods have precious little time to oversee what goes on in Washington. This is by design.

TrueBlue| 7.22.11 @ 2:50PM

Got a t-shirt with that line on there. Pisses off all the liberals when I go to Seattle with it.

TrueBlue| 7.22.11 @ 2:53PM

Honestly there are quite a few agencies and Departments (EPA, Education, Transportation, ATF) that have no constitutional basis to exist at a federal level. If the states want them they can go ahead and create them at their level, and use another state as a basis, but they should NOT exist at the federal level.

JayDick| 7.22.11 @ 9:30AM

Excellent analysis and, although repealing Obamacare would do a lot to help the economy, there are other things he as done that also need to be undone. His minions have imposed a host of regulations, administratively, that suppress economic growth. Then there's the Frank - Dodd bill that imposes big obstacles and accomplishes nothing. Going back to the Bush era, Sarbanes-Oxley falls into the same category; big costs, little or no benefit. To get the really robust economic growth we need, all of these need to be undone. Then there' s the Humphrey-Hawkins Full Employment Act from the '60s that accomplishes the opposite of its name. It requires the Fed to consider the economy and unemployment in its decisions as well as inflation. This has led, in part, to the wild business cycles we have; it needs to be undone too.

There are probably dozens (hundreds?) of other things that need to be undone also. We need a Republican President and Congress to even make a dent in this list. Even then, there's no guarantee.

Appleby| 7.22.11 @ 10:00AM

Just press the Reset button and Undo Obama. Then find out who voted for him and have them all committed. Too bad life isn't that simple, eh?

The major error in Keynesian economics is the assumption that what is happening today will happen forever. As someone who bought a cell phone in 2001 that she is still using, while watching the progress from a telephone you can carry around with you to Tom Riddle's Diary (or, if you are an older person, George Orwell's fever dream: a Thing that will cause the peasants to track themselves, monitor themselves, and give the Apparatchiks total control over what they do and with whom they do it), I think it's pretty clear that nothing stays the same for five minutes, much less forever. I do not have a Binkie because I believe Mr. Weasly was right: "Never trust anything if you can't see where it keeps its brain." (And I don't buy government-issued gold coins for the same reason.)

Keynesian economics is based in the 13th century. By the 14th century it had already stopped working. But like communism and socialism, although "that trick never works", every generation says hopefully that THEY can make it work and so round we go again.

Mike D.| 7.22.11 @ 10:10AM

Thats called ignorance of history. Elitists are never wrong in their own eyes, its everybody else that failed in history not them, so why learn from it. So called intectuals have so much myopic ingnorance that ignorance fails to describe them.

Bob Grant| 7.22.11 @ 10:43AM

Bill,

I think an even simpler and current example would be the Cash For Clunkers program. It's still fresh in everyone's mind. It addresses the Parable of the Broken Window (Glazier's Fallacy), the failure of the Keynesian Multiplier Effect, and the Simple Law of Supply and Demand.

If I were to teach a High School Economics class, the Cash For Clunkers program would be a case study...for the entire semester!

Bill Hussein O'Stalin| 7.22.11 @ 11:21AM

Bob Grant: Excellent and unassailable points.

John Navratil| 7.22.11 @ 5:18PM

Bob Grant,

A little off topic, but I thought I'd share. I had a '95 Explorer with 225K miles on the odometer before the odometer quit. I though I'd try to get in on a little of the free Bubble-Up the gummint was handing out. Surprise, surprise, surprise! My car didn't qualify. The odometer didn't work ?!?!?

Still, the whole thing was a scam. The dealers weren't coming of invoice and I was offered the same deal I had before C-for-C only I had to give up my Explorer. I gave the Explorer to my niece to drive to High School.

Skippy| 7.24.11 @ 3:14PM

All the cars traded under C for C had to have been registered and insured by the person trading for a minimum of 1 year prior to trade-in.
They all had to be running and smogged as well.
Some "clunkers"!
We used to call these vehicles "used cars".

Bob Grant| 7.24.11 @ 4:35PM

Your story proves what we all intuitively - and factually - knew all along:

Unnecessarily removing half a million serviceable used cars (not clunkers as Skippy points out) all for the appearance of stimulating an industry and furthering the green cause, at the discount cost of about 4 billion dollars.

Cash for Clunkers, First Home Buyer Program, Cash for Home Appliances Program...what's next and how many more can we expect from our economic genius?

Paul Hilsenrath| 7.22.11 @ 7:42AM

Keynes focused on the short run because, in the circumstances of his period, the problem was considered a short run phenomena. He believed in the strength of the capitalist system to take care of the long run.

One of the things that liberal economic thinkers and conservative pundits don’t seem to recall was the Keynesian notion of “animal spirits” , which Obama and his cohorts have disregarded to their and our peril. If there is no incentive ( or in the case of the Obama economic policy of actively curtailing incentives) there is no risk taking and accordingly diminished economic activity. Precisely where we are today.

Keynes was no dope, and I think he would be mortified at what people call Keynesian economics today.

Best regards.

Paul Hilsenrath

Have you considered| 7.22.11 @ 10:02AM

Paul, good post. I am not an economist, but as an accountant in the real world, I can add this.

Firstly, lets sever the publicly traded (NYSE) from small private business. The incentives are different in many regards. I have seen both, and I will tell you that publicly traded companies Do seem to focus on short term, quarter by quarter results, and they will do creative bookkeeping to facilitate good numbers...like Enron. And the SEC sleeps as the WorldComs flourish.

In the small private sector, where the capital is often provided by a person who has his nest egg, and often his mortgaged house, and personal guarantees on the line, his thoughts are drawn to the long(er) term. If smart, he considers stability in both economy and law as a pre-condition to investment. Basic risk management.

Heretofore, the US was considered the most stable country on the planet. The threats of invasion, insurrection, or other upheavals were considered slight. When you look at the Italian oil company who can not access or protect their assets in Libya, you can see the plain difference in these risks.

Anyway, here in the US, you can not now manage with confidence, the long term risks to your capital. The EPA may just put you out of business or push the price of electricity so high you can't operate, or the unions may come in and organize pushing your cost of goods over your budget, or laws passed like Obamacare and Dodd/Frank, or the often articulated threat of ever increasing taxes, which will erode your budgeted profit margin, which must be maintained if the rent is to be paid, and on and on.

Our founders chained the federal government down with a limited set of Enumerated Powers to prevent the instability we have today. They spoke clearly of limiting the conditions that cause instability.

Leaving the bounds of the Constitution is the single largest cause of all of this turmoil we are experiencing.

It is that simple.

Paul Hilsenrath| 7.22.11 @ 12:24PM

As it happens I have been a Chartered Accountant an d Certified Public Accountant for more than thirty years. My undergrad was in Economics at McGill University. Most of our profs were from Cambridge.

We knew a lot about Keynes.

Best regards.

Paul Hilsenrath

wodiej| 7.22.11 @ 7:53AM

Keynesian economics goes against the "you can't get something for nothing" principle. All the professors, economists and other so called experts can't change it. It's simple, it's sound and it's true.

Clint| 7.22.11 @ 8:08AM

Ya may wanna read Henry Hazlitt's: The Failure of the New Economics (1959), a detailed, chapter-by-chapter critique of John Maynard Keynes's highly influential General Theory of Employment, Interest, and Money, about which he paraphrased a quote attributed to Samuel Johnson, that he was "unable to find in it a single doctrine that is both true and original. What is original in the book is not true; and what is true is not original."

George S| 7.22.11 @ 8:26AM

Actually, the fatal flaw is that government spends money where it benefits government, i.e., capital is moved where there is a political return. Since the capital is confiscated to begin with, government has no incentive to be efficient as it can always compel more capital by threat of imprisonment. The free market, on the other hand, moves capital where it is efficient, tempered by the threat of risk -- it cannot compel capital formation, it can only gain or lose it.

But let's not dump too much on the good Lord Keynes. The crux of his theory is that capital in motion encourages economic activity, which is somewhat true. Tax cuts, for example, is a true pump primer -- it puts money that should have gone to government into the economy. The big difference is that the people spend it and not the government.

But to really nail it down, economic growth cannot happen unless the needs and wants of people are met. Every day, different people wake up with different needs; as long as the market is free to cater to those needs, the economy grows. Money changing hands is the RESULT of that economic growth, not the cause.

Brian Mc| 7.22.11 @ 8:32AM

It's not "our" money...just ask Hillary.

JayDick| 7.22.11 @ 9:36AM

Excellent explanation of why government spending does not help the economy. One little nit-pick; tax cuts help the economy short term, but reduced/restrained government spending is more important in the long run, for the reasons you note.

fmm| 7.22.11 @ 11:07AM

For an expanded thesis on this read Thomas Sowell's "Basic Economics". He covers it all magnificently. I have sent copies to all my family members.

Jack London| 7.22.11 @ 12:38PM

'Tax cuts, for example, is a true pump primer -- it puts money that should have gone to government into the economy.'

But that's not true, George. If I give you a tax cut there is no guarantee you will spend it to generate any economic activity - you could bank it in an offshore tax haven, as many do. If I give hard-pressed people government stimulus money they will spend it immediately, generating a multiple per dollar given in economic activity.

George S| 7.22.11 @ 2:24PM

But what is your definition of "hard pressed"? Since you (government) are making the decision, it will mean giving that money to people who will give you something in return -- namely, a vote. You then would not care what they do with that money, nor would you care if the taxpayer could afford to pay (what if he winds up "hard pressed" after taxation -- retake the money from the first person?).

What is the problem with banking money saved by lowered taxes? That is capital formation -- the bank has now more money to lend, for example, for things such as factory machinery, payroll and start up, construction loans (etc) all of which help create jobs which creates goods and services people want, causing economic expansion. Government, on the other hand, would give that money to the "hard pressed", but more likely give it where it generates votes -- public sector pension shoring, hiring more government employees, light rail subsidies, solar panel subsidies, global warming grants, ACORN get-out-the-vote ground troops, things of that sort. Since people do not wake up every morning with a burning need for those things, that capital is wasted when taxes are confiscated to "pay" for those things. Instead, the free market it now denied that capital -- capital which could have gone to efficient use (by seeking investments that maximizes return) and creating jobs and millionaires in the process. That, my friend, is what liberals loathe -- creating wealth (and the attendant wealthy) because a wealthy, prosperous people do not need a 3.5 trillion dollar a year consuming federal behemoth of a government.

Bob in Western NY| 7.22.11 @ 8:34AM

I'm sorry, but your essay didn't have sufficient detail to convince that Keynesian economics don't work. If it were me, I'd have come at it from the concept of the Keynesian multiplier being always less than 1 instead of the majical 1.5. And, I would have demonstrated how Keynesian actually incentivises "non-work" which means that, even with money flowing, no goods and services are produced - therefore we are more impoverished. One only has to see that the "stimilus" has left us with 9.2% unemployment, and a 1.8% economic recovery, while each job it created cost $ 278,000. In short, we lost more jobs to create fewer jobs and managed to create government corruption to get there.

Bill Hussein O'Stalin| 7.22.11 @ 9:55AM

You can both be right.

Mimi| 7.22.11 @ 8:39AM

What this country needs now is a MIRACLE !
The miracle is this:
Obama requests his health-care legislation go
on HOLD..To study , re-evaluate and with a bi-
partisan approach come up with a simpler,
streamlined, and NON-GOV. takeover type
more in line with american values.
Also
Bring the budget back to 2006 with GDP of 19%
His choice is watching it disappear in 2013!
Risking a fiscal catastrophe with his disasterous
present legacy made even worse.
I'm not holding my breath but sometimes.....we see circumstances change quickly...but before this change can come, MISTAKES MUST BE ADMITTED TO by this President and the Democrats....I don't think they have any other CHOICE....What is...IS!!!

Mimi| 7.22.11 @ 9:02AM

We need to have CONFIDENCE that the United States of America will surely rectify this PROBLEM...It will come from PRESENT political players or happen when they are REPLACED. It will be their choice.
The Republican bill passed will go to the Senate on amending the Constitution....We will learn soon who is for us and who against...also WHO needs to be replaced!!! A recent POLL is very favorable to passing. WHO represents the People
will surely vote for this....Those who have no intention to do the right thing will need to be defeated!

Drunken Sailor| 7.22.11 @ 9:00AM

Fantastic article explaining the shortcoming in simple to understand details (for our trolls, not that I expect them to listen).

Grzmlyk| 7.22.11 @ 9:05AM

Donning my liberal thinking cap, I think I've identified the solution.

We have to eliminate "voluntary exchanges." This is for the common good, you understand. What right do "millionaires and billionaires," to use Obama's favorite phrase, have to engage in voluntary exchange when the victims of their zero-sum oppression, the poor, are deprived of the same voluntary exchange?

In today's evil America, the poor have to take whatever cell phone the government gives them, they have to live in whatever spacious home the cheap taxpayer has provided, they have to buy faux leather furniture and air condition those homes only to 62 degrees, they have to do all their shoplifting and the local Wal-mart, they have buy whatever booze is the cheapest, they have to go to the abortion clinic that's in their district, they have to drive a car that can't be properly pimped out, they have to have as many children as the government determines will provide them with enough welfare such that they can afford their cigarettes AND meth along with two trips to Vegas per year - with enough walkin' around money to earn them respect - and on and on.

If this isn't evidence of Rich People's greed, I'd like to know what is. Since it is government's job to change human nature, it is up to our courageous State to to eliminate that greed.

Since it's obvious that conservatives, Republicans, libertarians and Christian heterosexuals are incorrigibly greedy, there is only one way to dispense social justice: Outlaw voluntary exchange and create a bureaucracy - a modest one, of course, with no more than a million bureaucrats staffing it (at a starting salary for each of, say, $750,000 a year) - to decide what each and every American needs, and what each and every American should have. That is the only way to make this greedy country fair.

Under such a system, our enlightened bureaucrats, making decisions based on politics instead of economics, will be able to prevent Americans from making voluntary decisions that don't contribute to the common good.

The other fallacy in this article is the part that says, "In and of themselves, higher taxes retard economic growth because of their impact on incentives."

What Republican hogwash! Everybody knows that ALL wealth created in this country is, first and foremost, the government's to BEGIN WITH. Government creates wealth, dummy! If you earn $100,000 by the sweat of your brow, and you are forced by beneficent government to give me half of that because I am an American too (and don't judge me because I sit on my couch and eat bon-bons all day - in MY morality, that is hard work) the government has given us both $50k! It's win-win!

Any money the government allows us to keep is thanks to the generosity of Barack Hussein Obama, peace be upon him.

Remember: As the great Paul Krugman, the human garden gnome, once said, Keynesianism works - we just haven't done enough of it yet.

I shouldn't be surprised by such hateful misinformation as is peddled in this article. I world write more on this topic, but I'm almost positive today is one of my kids' birfdays, and I have some serious shoplifting to do.

Appleby| 7.22.11 @ 10:07AM

"Outlaw voluntary exchange and create a bureaucracy - a modest one, of course, with no more than a million bureaucrats staffing it (at a starting salary for each of, say, $750,000 a year) - to decide what each and every American needs, and what each and every American should have. That is the only way to make this greedy country fair."

When I was a law-and-order twentysomething, I wrote a series of novels in which I created a world like that. Try as I would to make the people in it stick to it, they insisted on evading every one of my edicts! (I quickly found out that if you want to write about real people, you have to let them act like real people even if it's not the way you want them to act.) Reading these things 40 years on, it's obvious that those who obey my edicts and go after those that don't are fascists. It's an enlightening experience to go back 40 years and see yourself as others saw you -- and be thankful that you have realized that trick doesn't work.

Maybe I should send these to Obama, and someone could read them to him.

Grzmlyk| 7.22.11 @ 10:47AM

I'm intrigued - what was the nature of these novels?

It sounds like, in your youth, you believed that rigid egalitarianism is an ideal way to organize society. My former best friend, a guy I grew up with, recently switched from moderate conservative to de facto Marxist; facing the gnawing emptiness of encroaching mortality and enamored of the blank slate that Obama served up to affluent whites, he made the opposite "realization" you did.

Not only did it ruin our friendship, but I wonder how anyone can attain middle age and willfully ignore all of the lessons of experience to latch onto a fictive, puerile - and ultimately decadent - fantasy. So many people do this.

I read a couple of days back on this site about the death of liberalism - would that it were so. Liberalism will never die; on the contrary, its nihilism has already won; the golden goose that was America has been sufficiently suffocated.

For some reason, like Icarus flying too close to the sun, human beings believe we can alter human nature, and that it is morally superior to view humanity as a collection of faceless groups rather than as the multi-variegated individuals they are.

And then we organize an elaborate mythos in order to rationalize this fiction.

I often think liberalism's inherent contradiction can be summed up thus: "If only we could round up all the evil conservatives in the world who think violence solves problems and then kill them all, we would finally have peace on earth."

People will not toil day in and day out for the betterment only of others unless they are forced to do so at the point of a gun. Period. That's why totalitarianism, intimidation and, ultimately, murder are the sine qua non of any socialist state.

Yes, charity exists, of course - empathy and sympathy are significant parts of the human psyche. But even those who are happy to pay "a little more in taxes if that means poor people will get free health care," as my erstwhile friend put it - and a more intellectually bankrupt thought never existed - are purchasing something with that money that makes them feel good. Altruism may deliver benefits to our fellow man, but its value redounds equally to our own self-worth.

Most liberals - and I know a lot - are only too eager to make grandiloquent statements about their own pristine sense of social justice - of course they can spend other people's money with abandon. But when it comes to their own lives, every single one of them gives the lie to the Utopia they claim is just around the corner. We are all capitalists when it comes to our own lives.

That is the realization that continues to elude liberals - and will do so until mankind has blown himself off the face of the earth.

Brian Mc| 7.22.11 @ 1:36PM

Absolutely profound...the revelations you have metamorphosed so fluently and fluidly have given me gratification and hope, Grzmlyk...that though the depressing realities you provacatively pointed out breath as we speak, if enough of us have the mindset you have so eloquently formed into words-and the wherewithal to evince it convincingly in the coming months-this Republic might still avoid the gallow's poll of economic and social reality.

Grzmlyk| 7.22.11 @ 3:04PM

Wow, Brian Mc - all I can say is thank you.

You've made my day.

Brian Mc| 7.22.11 @ 3:16PM

No...Thank You! With more posts like these (amongst us) to study and refer to when weighing in on the coming 'arguments' against the growing socialistic mindset, we all give each other a fighting chance to save this Republic...!
Again, I say, "Thank YOU!".

skip| 7.22.11 @ 6:47PM

The Ten 'Cannots'

William J. H. Boetcker (1873 - 1962)

* * *

You cannot bring about prosperity by discouraging thrift.

You cannot strengthen the weak by weakening the strong.

You cannot help the poor man by destroying the rich.

You cannot further the brotherhood of man by inciting class hatred.

You cannot build character and courage by taking away man's initiative and independence.

You cannot help small men by tearing down big men.

You cannot lift the wage earner by pulling down the wage payer.

You cannot keep out of trouble by spending more than your income.

You cannot establish security on borrowed money.

You cannot help men permanently by doing for them what they will not do for themselves.

* * *

Appleby| 7.22.11 @ 3:43PM

They are a series of four science fiction novels (dystopian, I believe the New Wave 80s name for them would be) -- based on some kind of revolution (de facto by the time I started my narrative) in which the world was controlled by six major corporations; important people lived in guarded compounds but had forgotten why, and everyone else lived in cities. Among my other edicts, I required licenses to have children -- which meant that there were a lot of illegal children hidden away here and there, and all of them turned out to be psychotic in one way or another; and I required the posting of a very high bond as a condition of getting a license, the money to be used to pay for the child's basic needs. The people created a black market in Baby Bonds and the money was squandered. And so on.

Rule No. 1 in Understanding Humanity 101 is that any law man can make, man can and will evade.

Or as God said in "Green Pastures" ....

Even being God ain't no bed of roses.

LarryK| 7.22.11 @ 9:12AM

Fatal Flaw - IT DOESN'T WORK!

DONE!

Tommix| 7.22.11 @ 9:30AM

Politicians don't need theoretical reasons to throw money around like drunken sailors.

Remember Hoover and Roosevelt were shoveling money out to stimulate the economy long before the General Theory was published in 1936.

The General Theory came out about the same time Roosevelt raised taxes on the rich and blew up the economy. He came close to doubling unemploytment in the middle of the Depression.

Drunken Sailor| 7.22.11 @ 10:39AM

At least Drunken Sailors have a excuse and only spend their own money.

Tommix| 7.22.11 @ 1:14PM

Sorry "Drunken Sailor" didn't mean to demean you by comparing you to a politician.

Drunken sailors have many redeeming qualities especially when sober again that politicians wholly lack.

Drunken Sailor| 7.22.11 @ 3:13PM

Just yanking your chain. Drunken Sailors sober up, crooked, self serving politicians rarely do.

Handy| 7.22.11 @ 10:17AM

Excellent Grz.

Mike D.| 7.22.11 @ 10:47AM

Why the constant analysis of a fatally flawed economic concept? Its akin to a person jumping off a 200 foot cliff and then having lengthy experiments, dissertations, panel discussions on air resistance, terminal velocity, pull of gravity, mass in motion to rationalize what happens everytime someone falls off a 200 foot cliff and then somehow if we could just tweek those constants, then somehow, that person is going to land and thrive when he hits the bottom. This clown of an economist and his concepts should have had dirt shoveled on them decades ago and yet here we are fighting brain dead politicians applying the same stupidity over and over again and expecting it to somehow succeed this time. Now, that is insanity. Lord help us from those who have it all figured out.

Grzmlyk| 7.22.11 @ 12:09PM

Well, Mike D, I'd say that Keynes requires constant analysis because liberalism never dies.

And Keynes is to liberal rationales what sunlight is to photosynthesis.

The chief flaw in human nature is that we think we can expunge the flaws from ourselves - one would think that the advent of the guiding principles of religion across all cultures and peoples at the dawn of civilization had proven to us that we cannot - and so we had better organize ourselves accordingly.

But your average post-modern liberal, of course, has risen above the tawdry need for organizing principles of morality; his very existence is the unctious affirmation of pristine goodness.

And that's the most persistent problem: Libs think they have already attained an otherworldy moral superiority that obviates the need for religion - never realizing that liberalism is itself the worship of a false god.

And it is the false consciousness that descends from this uber-concept that creates such fertile ground for the opportunists, crooks and malcontents as well as the True Believers.

Mike D.| 7.22.11 @ 1:43PM

I don't disagree with any of your points AT ALL. They truly believe thay have ascended onto another plane above the uninformed masses. They bristle at having to adhere even remotely to a constitution they believe was written by a group of such morally inferior, witless hayseeds and 18th century dolts as the founding fathers. The constitution is the kryptonite they always fear the most.

michael| 7.22.11 @ 10:44AM

This article explains nothing.

ford| 7.22.11 @ 11:15AM

If you are arguing that "practical men of today are the slaves of some defunct economist of several decades ago.', give Keynes some credit.

Mike D.| 7.22.11 @ 11:28AM

Its simple, very simple. Intectualloids and practical realists look at history in two very different ways. Intellectualists look at failed historical concepts as simply as the wrong people tried it. We are infinately smarter so therefore it will work this time. Realists look at failed historical concepts as learning experiences and in order to achieve different results we try something different. Doing the same thing over and over has gotten us where? And doing the same thing over and over is called? We are truly living in an age of insanity and it will be the undoing of us all.

Grzmlyk| 7.22.11 @ 12:19PM

Great point, Mike D:

I would just add that the intellectual makes the mistake of confusing theory with empirical reality. The academic egghead becomes so enamored of the latest elaborate sandcastle-in-air he has painstakingly constructed - in a vacuum -that he convinces himself that this phantasm is weight-bearing structure.

It is no such thing; intellectualism is a form of narcissism, a closed feedback loop that diverges from reality "ab ovo" - and then presents such a pretty picture for the intellectual that it's reality that invariably gets the boot.

The difference between intellectualism and reality is the difference between a real sea-faring vessel and a ship in a bottle.

Mike D.| 7.22.11 @ 12:33PM

Totally agree. Narcissism is an ego driven concept where a person marries reality and his self constructed version of reality and constructs the Twilight Zone in his head where all things are possible because HE thinks it is. Problem is Rod Serling never shows up and the show never ends after 30 minutes!

Grzmlyk| 7.22.11 @ 1:35PM

Yes, it's hubris, plain and simple - that is, when it's relatively ingenuous. The useful idiots certainly provide the raw materials, but it's the crooks who profit from the fools' credulity.

The Twilight Zone - great show. I just watched one of the best episodes - "It's a Good Life," about the six-year old kid (Billy Mumy) who has god-like abilities and who has destroyed the world except for a few adults in his small town.

They all cower before him hoping to stay in his good graces and try to keep thinking lovely thoughts about him because he is telepathic - and those who displease him are summarily "wished into the cornfield" of non-existence.

It reminded me a lot of the current attitude toward Obama. The difference is, he only has power because we gave it to him - and keep giving it to him.

Even as he wishes America into the cornfield.

Mike D.| 7.22.11 @ 2:46PM

Ironically, most of the episodes are centered around the positives and negatives of human nature. Some of them are profound and way ahead of their time. Serling was a genius, he had a talent for dissecting the human condition.

Doctor Right| 7.22.11 @ 11:31AM

The fatal flaw in Keynesian economics?

It doesn't work.

Mike D.| 7.22.11 @ 11:38AM

Bingo, end of dicussion.

companion| 9.14.12 @ 12:10AM

Either does laissez faire economics. Whoops...I'm only half-right. It works for about hmmm 2% of the wealthiest population in America. Their accumulated wealth since Reagan proves it. If you don't have an offshore account...you're in the 98% that more than likely got screwed.

Edward Hara| 7.22.11 @ 11:37AM

SOMETHING THAT NO ONE WANTS TO HEAR

I will no doubt catch a lot of grief from what I am about to say. People will go about writing me off as a crank, or worse. But in the great venue of life, I have my right to express my opinion just as much as the next man.

We are not going to solve the debt problem and this country is headed down the tubes.

The Lord God does not take kindly to nor tolerate the worship of idols in His presence. Observe the false god Dagon placed in front of the Ark of the Covenant. (1 Sam. 5: 1-4). Observe that the next morning, the false god lies in the dust where all such characters belong. And note what the dumb Philistines do. They place it back on its pedestal. Next morning, they find it not only in the dust, but cut into pieces. Then the message got through to their thick, idol-worshiping skulls. To have an idol in the presence of the Lord (for the Lord Himself was present in the Ark in a special way) is a grave insult to His majesty and glory.

Our Lord will forgive much from those who know little, but to those who have been given much, much is expected. Therefore, since our country claims to have been founded as a “Christian nation,” there is a great expectation that we would behave as such. And certainly on this list of behaviors should be the refusal of those who bear the name of Christ to have idols in their life. That is certainly bad enough, but the sin of idolatry is fourfold when it is promoted and endorsed by those in the government who are supposed to rule in God’s stead. (Rom. 13: 1-5). With the great number of churches in our country, with access to the Bible and the freedom to read its sacred pages, there is simply no excuse for the idol worship in which this country is engaged.

Idol worship? What are you talking about, Ed?

The worship of things. Things which have taken the place of God in our lives and which are promoted by the government as being a “good” when they are in fact, quite evil. When I survey what is happening in this country, I can only believe that God is tearing down the idols in our land, and will not suffer them to survive unless they are returned to their rightful place.

The first of these idols is money.

When we base the election of our politicians not on whether they will immediately make war upon Roe v. Wade and end the holocaust of the unborn, but rather upon promises to make us richer by improving our economy, lowering our taxes, and providing us with a stimulated economy and jobs, we are worshiping money as an idol. The issue of abortion, the outright murder of the unborn in the name of personal freedom, should be the top priority on the list of any “Christian Nation.” Instead, it is hardly mentioned anymore during the election cycle. It has become unimportant to us as a people. Ho hum. Another day, another 4,000 slaughtered children. Now let’s get busy and elect someone who will turn around this sour economy. That’s what really matters!

The overarching theme of this nation is the making of money. Our lives revolve around getting it, getting more of it, and protecting it when we get it. In our so called “Christian Nation,” a recent survey found that Evangelicals give just over 4% of their income to their assemblies. And Catholics? Those who belong to the true Church?

They give less than 1%!!

Which says to me that money is more important to them than obedience to the Sacred Scriptures which calls for the giving of the tithe to run God’s Kingdom here on earth.

Our airwaves are filled with commercials huckstering us to buy gold to make money, to invest in stocks to make money, and to horde that money so as to make certain a future which our Lord has told us is uncertain at best, then we have lost touch with the teachings of the Church and are committing the sin of idolatry. Something other than God has become our source of happiness, our protection in life, and that which we live for. Let us look at the written record from those who came before us:

St. Ambose (De Nabuthe, c.12, n.53, cited in Populorum Progressio of Paul VI): “You are not making a gift of your possessions to poor persons. You are handing over to them what is theirs. For what has been given in common for the use of all, you have arrogated to yourself. The world is given to all, and not only to the rich.”
St. John Chrysostom (Hom. in Lazaro 2,5, cited in CCC 2446): “Not to enable the poor to share in our goods is to steal from them and deprive them of life. The goods we possess are not ours, but theirs.”
St. Gregory the Great (Regula Pastoralis 3,21, cited in CCC 2446): “When we attend to the needs of those in want, we give them what is theirs, not ours. More than performing works of mercy, we are paying a debt of justice.”
The Decretals (Dist. XLVII, cited in ST II-II, q.66, a.3, obj 2): “It is no less a crime to take from him that has, than to refuse to succor the needy when you can and are well off.”
St. Ambrose (cited in ST II-II, q.66, a.6): “It is the hungry man’s bread that you withhold, the naked man’s cloak that you store away, the money that you bury in the earth is the price of the poor man’s ransom and freedom.”
From the Catena Aurea
St. Gregory the Great: “For if everyone receiving what is sufficient for his own necessity would leave what remains to the needy, there would be no rich or poor.”
St. Basil: “Are not thou then a robber, for counting as thine own what thou hast receivest to distribute? It is the bread of the famished which thou receivest, the garment of the naked which thou hoardest in they chest, the shoe of the barefooted which rots in they possessions, the money of the pennyless which thou hast buried in the earth. Wherefore then dost thou injure so many to whom thou mightiest be a benefactor.”

St. Bede: “He then who wishes to be rich toward God, will not lay up treasures for himself, but distribute his possessions to the poor.”
From the Magisterium
First, note that St. Gregory the Great spoke with the authority of the ordinary Magisterium, so his quotations above should be reviewed. Also, consider that the first quotation from St. Ambrose was taken from an encyclical letter by Paul VI.
Leo XII (encyclical letter Rerum Novarum, 1891): Every person has by nature the right to possess property as his or her own […] But if the question be asked: How must one’s possessions be used?, the Church replies without hesitation in the words of St. Thomas Aquinas:

‘One should not consider one’s material possessions as one’s own, but as common to all, so as to share them without hesitation when other are in need.’ […] True, no one is commanded to distribute to others that which is required for one’s own needs and those of one’s household; nor even to give away what is reasonably required to keep up becomingly one’s condition in life. […] But when what necessity demands has been supplied and one’s standing fairly provided for, it becomes a duty to give to the needy out of what remains over.”

Do you see the common theme here? The world and its goods are a gift, not just to a privileged 1% of the world, but to all mankind. Every man should own his own property and have that property bring in his daily bread for him and his family. Yet to suggest this to any of the right wing radio pundits of this country would be to invite one’s self to be called a Communist, as Glenn Beck said about the saintly Dorothy Day.

I challenge Mr. Beck and anyone else to tell me why it is right that a man has to live in a $70 million dollar mansion, have a yacht in the canal outside that house, and drive the newest of cars when 10 blocks away, an elderly woman lives in squalor, no family to care for her, and worries if she will be able to buy the medicine she needs. You can see this in West Palm Beach, block after block. 10 blocks from stores selling $1,500 dollar shoes are children who have no shoes.

The high priest of this idolatry, Rush Limbaugh, was heard one day to clarify this attitude on his show, stating that the purpose of life is the acquisition of things and the bettering of one’s life. That credo should be printed on every dollar bill that comes by the billions out of the treasury and into our pockets. It is truly what life in America has turned into. It is the Capitalist dream.

For money, justice is perverted and the rich buy their way out of their crimes. Lawyers do not seek to find the truth, but seek to find a way to defend their rich clients and score a big payday.

For money, pharmaceutical corporations manufacture questionable drugs that have killed scores of people. They also work to distort the facts about natural and holistic cures which would wreck their profit margins if known about.

For money, bribes abound in Washington DC like fleas on a sick old dog. Imagining that your senator or congressman has your best interests at heart is a fool’s exercise.

For money, pornographers are allowed to wreck lives and destroy the moral fabric of this country.

For money, abortionists kill the innocent unborn every day, demanding cash for their grisly work so that they can hide their income from the government.

But lest you think that I am only going to excoriate the money worshipers on the right, the leftists are every bit as bad. You see, once the shiftless and lazy crowd realized they could pick my pockets legitimately, with the full faith and support of the government goons behind them, they lined up outside the halls of government and went on a sustained whine until they got what they wanted – life of luxury with no need to work or be responsible. You think I’m kidding? A recent survey of welfare credit cards being used in California turned up misuse of these funds that is staggering. As a working man, I can’t afford vacations. I worked 18 hard years and never took a traveling vacation from my house because I couldn’t afford it. Yet the debit cards given to welfare recipients in this country are routinely used for trips to Hawaii, Las Vegas, in liquor stores, and to buy electronics. Liberals cannot imagine that the government shouldn’t just hand out money hand over fist to anyone with a sad story and a line of bullshit a mile long. My next door neighbor’s daughter has four sons from four different fathers!!! And guess who is paying for them!! This is nothing more than STEALING at the behest of the government, and it makes me damn mad!!

I could list many more evils being done in this country for the idolatrous love of money. We are a people who are afraid to live life as Christ told us to. We do not wish to do the things that our Lord commanded us to do because we have come to expect our money to make us comfortable in every way imaginable. The evangelical counsels of poverty, chastity, and obedience are old fashioned. No one is listening to them anymore.

So when I hear the current debates, sharp disagreements, and rhetoric being spewed out regarding the current financial meltdown, I can only laugh. The idol worshipers are watching their monetary Dagon be thrown to the floor, and they don’t like it one little bit. Not trusting in the God Who can be trusted with all our needs, they run in fear to their elected representatives and scream at them “Fix this!! Fix it now!! How dare you let our money wind up in this situation?” Monetary Dagon lies on his face, and his worshipers scream for him to be resurrected again and again.

How could it not wind up like this? For you see, every idol we worship will do to us what Baal did to his followers in 1Kings 18: 26 - 28. The followers of Baal always wind up slashing themselves with self made knives. The alcoholic dies of cirrhosis. The homosexually impure get AIDS or some other terrible disease. Political ideologies like Socialism, Nazism, Communism , and Communism extract a dreadful toll from those who bow before their crooked ideals. Whatever idol we worship, whatever we choose to replace God will turn on us with a vengeance, demanding our very life’s blood at the altar of such idol worship.

Our money has turned on us precisely because instead of using it to feed and clothe ourselves and then to bless the poor and the needy, we have made a god out of it. It was never meant to be a god, only a means to bless ourselves and others. False gods always turn on their worshipers. Just because we are Americans does not grant us an exception from that rule. I believe we are watching the end of an empire, and precisely because the empire, like Rome of old, has been worshiping false gods for way too long. God grants mercy for us to turn from idols to Him. But there comes a time when the patience of God is exhausted. He destroys the idols that offend him and the people who have steadfastly refused to turn from them to the true and living God.

I believe that time has come. Now.

Mike D.| 7.22.11 @ 11:45AM

As Alexander the great supposedly said about the Persians. "Fat, corrupt and begging for destruction" If the shoe fits wear it. I doubt if a bigger collection of dysfunctional human beings ever existed in history in one place in one building in one city called Washington D.C. and we have ourselves as a nation to thank for it. People collectively voting for their own destruction and that is how its going to end.

Grzmlyk| 7.22.11 @ 12:33PM

I completely agree, Mike D.

Of course, competing with the large collection of dysfunctional human being in Washington is the collection of narcissists, sociopaths, fools and crooks that populate Hollywood and the mainstream media.

We are indeed voting our own destruction.

Appleby| 7.22.11 @ 3:26PM

The Prophet Amos said it even before that.

If you don't have a classical education or are under 40, read Carl Sandburg's "Four Preludes on Playthings of the Wind" --

http://www.anapsid.org/carlsandburg.html

I apologize on Mr. Sandburg's behalf for it being longer than 140 characters, but it is profound.

OhioGuy| 7.23.11 @ 12:14PM

Edward---I don't necessarily disagree with your assessment of the current state of our culture, but you make the same mistake that many Christians do: confusing idol worship with other sins.

The Scriptures are pretty clear and pretty distinct. Idol worship is just that: idol worship, worshiping false gods and graven images. Coveting possessions is coveting, or avarice or greed, or other of the deadly sins, but it is not idol worship.

We certainly have idol worship in our current culture. We have wiccans and other pagans, we have Satanists, we have assorted goofy and false and dangerous religions, which are the abominations in the Eyes of God that you referenced.

But God and His Son also dealt with greed and money often and they didn't refer to obsessions over money and possessions as "idol worship." I can recall no instances in either Old or New Testament where unnatural desire for possessions was confused with idol worship. The Father, Son and their Prophets called sins by their proper names, and so should we.

Just a pet peeve of mine...

Edward Hara| 7.22.11 @ 11:41AM

The following paragraph was omitted from the above article:

But lest you think that I am only going to excoriate the money worshipers on the right, the leftists are every bit as bad. You see, once the shiftless and lazy crowd realized they could pick my pockets legitimately, with the full faith and support of the government goons behind them, they lined up outside the halls of government and went on a sustained whine until they got what they wanted – life of luxury with no need to work or be responsible. You think I’m kidding? A recent survey of welfare credit cards being used in California turned up misuse of these funds that is staggering. As a working man, I can’t afford vacations. I worked 18 hard years and never took a traveling vacation from my house because I couldn’t afford it. Yet the debit cards given to welfare recipients in this country are routinely used for trips to Hawaii, Las Vegas, in liquor stores, and to buy electronics. Liberals cannot imagine that the government shouldn’t just hand out money hand over fist to anyone with a sad story and a line of bullshit a mile long. My next door neighbor’s daughter has four sons from four different fathers!!! And guess who is paying for them!! This is nothing more than STEALING at the behest of the government, and it makes me damn mad!!

I apologize for the error.

Grzmlyk| 7.22.11 @ 1:19PM

But Ed: If the government doesn't steal money from you and give it to Purple Guy, how is Purple Guy going to be able to afford the Internet service that enables him to troll this site and disgorge Paul Krugman's diseased thoughts on why it's good for the government to steal money from you and give it to Purple Guy?

Next I suppose you'll be telling me Purple Guy doesn't have a right to a 50-inch plasma TV or an X Box or that nice air-conditioned home or a sweet ride. It's right there in the Constitution, dude.

Sheesh. You know what your problem is? You're greedy. Where do you get the cajones to imply that Purple Guy doesn't have a right to what you've earned from the sweat of your brow?

As Bill Clinton said many times, "Hey, babe, if you're about to get raped, you might as well lie back and enjoy it."

InLineFour| 7.22.11 @ 3:52PM

Griz, you remind me of another double-standard example: Former Texas gubernatorial candidate Clayton Williams shot his mouth off in front of reporters with a similar quip, "Bad weather is like rape - if it's inevitable, you might as well lie back and enjoy it.", and it cost him the election.

John II| 7.22.11 @ 1:56PM

But Eddie--you didn't leave it out. Apparently you forgot you'd already said it--perhaps because it's not an "article"; it's a jeremiad.

Anyhow, you're quite right about idol-worship being at the heart of all sin: that's why the injunction against idols is numero-uno among the Ten Commandments.

But money (more precisely, the love of money) isn't the only idol. Self-worship and an inflated sense of one's own righteousness are two other candidates. In fact, every era seems to have its preferred model, and the American (Catholic) novelist Walker Percy made a pretty good case for the proposition that the idol of choice in our own era is the ego. In your jeremiad against idol-worship, you left out the most obvious illustration: our current president and his media lapdogs.

You also were rather too selective in your quotations. A full reading of Leo XIII's Rerum novarum, for example, seems to me to render your selection from that encyclical opportunistic, if not disingenuous. And if you read the two sequels to that great social encyclical (Pius XI's Quadragessimo anno and John Paul II's Centessimus annus), you may perhaps achieve greater balance. Or perhaps not.

And now back to "The Passion of the Christ" (2004), proof that even a self-regarding idol-worshiping crank such as Mel Gibson can get it right with the greatest story ever told.

Edward Hara| 7.25.11 @ 11:59PM

The end point of my rant is simply this: when something is as important to a person as money is to both the very rich and the very poor, you are going to see them fight like crazy to hold their "turf" and insure that they get what they want.

This appears to be the battle going on in Congress right now. The uber-rich do not wish to give up another dollar of the scads of money they have, and the uber -poor do not wish to relinquish any of the wonderful perks they get out of the taxpayer's pockets.

They will let this country go down in flames rather than give an inch. All because they trust in the dollar more than God.

Purpleguy| 7.22.11 @ 11:56AM

So, for a short-term recession, even one this deep, the answer is a long-term solution? BS. When the private sector pulls back spending the only spending left is the public sector to fill the void, or we all just sit back and suffer. The Stimulus package did it's job - it staved off further layoffs and downward spiral in the economy. The fact that it WASN"T BIG ENOUGH is always debatable, but with the weak recovery, that evidence is now in. Had the Bush administration not spent money like drunken sailors at the same time of giving huge tax cuts, we would be in much better shape to weather this storm. It's disingenuous to put the blame on those you handed the problem to. But who cares who's to blame - cutting taxes doesn't create jobs - it does increase spending in the economy IF the tax cuts are targeted to the middle and lower class that need the cash to spend on something. But the rich don't need a shot of cash since they can spend what they need to already. Maybe an extra vacation or something, but with the largest tax cuts still in place over the last 10 years from Bush, they didn't exactly manufacture jobs, did they? The housing bubble did create jobs and the financial bubble did create jobs, but how are those 2 doing for us? Bubbles need to be regulated which this government hasn't been doing so much lately - even Alan Greenspan admits it was a mistake not to put the brakes on. David Stockman, Ronald Reagan's Budget Director says trickle-down economics is a fantasy, doesn't work, and voodoo was as good a term for it as any.

Wayne | 7.22.11 @ 12:08PM

BS, the stimulus had no stimulus. It was a bunch of money used to pay off the contributers to Obama's election. It did nothing to fix housing. It did nothing to fix the cause which is Fannie Mae and Freddie Mac. It never produced "shovel ready" projects and Obama started overloading its results with lies about jobs create and saved. Instead as we know the Dems refused to waste a crises (of their own making).

Grzmlyk| 7.22.11 @ 12:34PM

It's a pleasure not to read you.

Jack London| 7.22.11 @ 12:42PM

Well said Purp. Most folk here don't understand basic economics at all. Even Grover Norquist has conceded that he has no objection to letting the Bush tax cuts expire.

Grzmlyk| 7.22.11 @ 12:53PM

I guess you Keynes is like economic porn for you.

No basis in reality, but prurient good fun, eh? Do you have a garden gnome in your front yard that looks just like Paul Krugman?

Grzmlyk| 7.22.11 @ 1:00PM

My, a liberal laced with mendacity. Who'd a thunk it?

Ooopsie:

From your Huffington Post:

"WASHINGTON -- Voting to end the Bush tax cuts would be considered a tax hike and a violation of a pledge to Americans for Tax Reform, organization president and Republican Party-influencer Grover Norquist wrote in a Friday New York Times op-ed.

. . . Voting to raise taxes in any way -- including by ending the Bush tax cuts for the wealthy instead of letting them expire on their own -- is a violation of the [Americans for Tax Reform's anti-tax] pledge, he wrote in The New York Times, comparing paying taxes to being mugged."

Hey, I have an idea - why don't we tax Jack London at 100% of his income??

Or are you already on the dole?

Grzmlyk| 7.22.11 @ 1:02PM

Yeah, I know - expire.

But you're not accurately representing his position.

Jack London| 7.22.11 @ 1:30PM

He's explicitly said that it is not against the Republicon tax pledge to let them expire. The problem we have - or rather you have - is that there's no way we can survive as a modern nation with continuing lower tax take both in our recent history and among other developed nations. That's why we must at least put that $4 trillion back into the economy from the Bush cuts.

Grzmlyk| 7.22.11 @ 1:47PM

You mean there's no way we can survive as a SOCIALIST nation unless we "put back" the $4 trillion.

But, hey, it's all government's money when you get down to it. You are a typical liberal: Beyond cutting defense, you think every dime going toward government spending is essential (well, except, of course, the pound of flesh they extract from Y OU) when in fact it is nothing but a criminal enterprise that serves one function: Keeping the powerful in power and allowing them to live like Sultans of Araby, buy off credulous fools like you and screw the middle class. That's right, the middle class.

Spending cuts? Spending cuts? Jack London don't need no spending cuts.

The fact is, we are continuing to spend more and more even as the dollar is being debased. I'm sure you believe that printing money is a good idea, just as you no doubt can't understand how you'd be overdrawn if you still have checks.

Ok, Jack: I've just deputized myself as an agent of The State. And we can start by you handing all of your money over to me. I will decide how much you can live on and then, if you don't displease me (a BIG "if"), I'll THINK about letting you have a little left over so you can buy steak once a month.

Jack London| 7.22.11 @ 2:11PM

You obviously don't understand that there are three key reasons we are running a huge deficit: Bush tax cuts (the biggest), Bush wars and Bush trashing the economy with the banks. You also don't know or understand that Obama is proposing major spending cuts, and I believe we have already cut 500,000 public jobs already. You clearly don't understand that we have no nation without the same kind of tax take as we've had in the past, which in any case has also been well below the OECD average.

Grzmlyk| 7.22.11 @ 2:23PM

Yada, yada, yada.

You are clearly a blind ideologue. But you regurgitate Liberal talking points very nicely. You are a well-trained little moron.

This may come as a shock to you, but most people on this site believe Bush contributed to a lot of our problems. But it wasn't the tax cuts. It was the increased spending.

but in your world, Bush's profligate spending was bad; Obam's tripling down on proflicate spending is a Keynesian orgasm, I suppose.

2008 Deficit: $500 billion
2011 deficit: $1.6 trillion and counting.

Community reinvesment act: Invented by Carter, implemented by Clinton - it caused the implosion.

Dot-com bubble: Created by the Fed under Clinton

Real Estate Bubble: Created by the Fed under Clinton and Bush.

Again, put your money where your mouth is, Jack old boy.

Pay me.

Jack London| 7.22.11 @ 3:37PM

Sorry, but I don't see the Obama administration as massively raising spending - what has been spent has been sorely needed to avert catastrophe (and TARP, I believe, has showed a net return).

Anyway - how about ending tax breaks such as on mortgages ...

Grzmlyk| 7.22.11 @ 4:24PM

You don't? Hmm. I'm sorry for your brain damage.

I'll let Pete DuPont tell it:

The average level of U.S. government spending as a percentage of GDP from the end of World War II to the present is 19.6 percent," observes the Heritage Foundation. "In the past two years that level has exploded, reaching 24.7 percent in 2009 and an estimated 25.4 in 2010. . . . Without urgent action the U.S. is on course for national bankruptcy."

This was back in 2010.

Under Obama, the debt has increased from $10.7 trillion to $14.2 trillion by February 2011.

And this is before Obamacare shatters the piggy bank.

As a typical liberal - and I'm sure you have exactly zero skin in the game, so your personal sacrifice in advocating the confiscation of other people's money is truly impressive - you think that money grows on trees.

We borrow $188 million to fund government every hour of every day of the year. You think abjuring the Bush tax cuts is going to ameliorate that?

According to the IMF - no conservative organ - government spending in the US at all levels is now at about 41% of GDP. Can you say unsustainable? What do you think happens to economic activity if you tax at 100%? People stop working if they can't keep the fruit of their labor. Of course, you wouldn't know about work.

No, you are a brave little class warrior. Too bad resentment of other people doesn't translate into intelligence; you'd be a friggin' genius instead of just another mindless, puerile, fungible cog in Paul Krugman's propaganda machine - itself simply an instrument of resentment.

I'm sure you think wealth creation is a zero-sum game, which betrays an ignorance that makes me wonder how you get dressed in the morning - or do you even bother? Surely you can go out to the mailbox to get your government check in your jammies. Or maybe your mommy brings it to you with your three-minute eggs and your Fruit Loops.

What you lazy, moral-vanity-intoxicated sons of bitches don't realize is that we are in the process of collapsing.

And when that happens - and it will be within 18 months - guess what? You are going to be forced to get off your fat ass and fend for yourself. let's see how high-minded you are once the government comes and takes everything you own from you - you know, for the common good.

You'll squeal like a stuck pig. And the sight of idiot liberals like you being forced to grovel in a Lord of the Flies America almost makes our implosion worth it.

Seriously.

skip| 7.22.11 @ 2:27PM

Obama simply will not allow the half of Americans who pay 2.89% of income taxes to bear the burden of the other half of Americans who are paying 97.11% of the income taxes, and simply will not allow the bottom 95% of income tax payers who pay less than the top 1% to bear the burden of the top 1% of income tax payers who pay more than the bottom 95%, these being the income tax distributions four years after Bush cut taxes, the cut taxes that resulted in the largest four year tax revenue increase in U.S. history.

John Navratil| 7.22.11 @ 5:24PM

Jack London,

Last time I checked, the public sector had grown by 200,000 jobs. It was the only sector that had.

skip| 7.23.11 @ 2:45PM

Two or three weeks back 'the adult in the room, aka, the great compromiser', boasted his policies had created 2 million jobs in the private sector over the preceeding 15 months, and repeated this daily for a week or so.

To keep up with the growth of the U.S. population, 150,000 new jobs must be created each month in order for the unemployment rate to remain the same.

150,000 multiplied by 15 months equals 2,250,000 new jobs that must be created in order for the unemployment rate to remain unchanged.

'The adult in the room, aka, the great compromiser', was repeatedly bragging about his policies, citing that they increased joblessness by a quarter of a million jobs.

I would like to know if anyone pointed this fact out at MSNBC, CNN, ABC, CBS, NBC, FOX, Fox News, New York Times, Washington Post, Los Angeles Times, or USA Today.

Wayne | 7.22.11 @ 6:00PM

Letting them "expire" is a tax increase. Not all of us suffer from logical dyslexia.

Howard| 7.22.11 @ 12:48PM

I disagree with your premises. However, even if you were on to something, the approach taken by Obama, Reid, Pelosi, and Obey was idiotic in application. First Time Home buyers credit, cash for clunkers, energy credit, etc were foolish masturbatory devices conceived by politicians vastly disconnected from the real world. Besides, why do you liberals always seem to frame the landscape with the premise that all income created belongs to the government? It is always that position; a persons earnings are really the governments earnings. Who the hell are you, you little snot nosed ass to insist on what amount people are entitled to keep?

Ground Control| 7.22.11 @ 1:42PM

He is a Democrat.

Ground Control| 7.22.11 @ 1:41PM

The trolls have arrived.

George S| 7.22.11 @ 3:31PM

You are simply an economic illiterate to believe that economic activity is a result of spending. When you get hungry do you buy food or a set of tires? When you have a leaky pipe do you hire a plumber or a DJ? Sounds silly but it illustrates the point that you buy what YOU NEED and those needs change every day. If you spent your money without rhyme or reason, then food producers, tire manufacturers, plumbers and DJ's wouldn't know when you'd need their services and could not allocate capital efficiently in anticipation. But government can simply compel that capital and spend it without rhyme or reason. If you're really sharp you can read between the lines and see why government stimulus is no substitute for a free person's spending on his needs and wants.

Al Adab| 7.22.11 @ 12:00PM

We have known at least since Nixon, "we are all Keynesians now" and wage and price controls that the economic model Keynes postulated is flawed. No sane (and I use the word advisedly) President or administration would follow that model any longer. That the nation is still debating the issue serves to demonstrate how blind to our own history we have become. Nothing must interfer with The Faith of central planning.

Wayne | 7.22.11 @ 12:04PM

AGW is really just another version of Keynsian voodoo economics. It turns carbon into some kind of negative commodity that now can be traded and inflated.

Curtis Rasmussen| 7.22.11 @ 3:28PM

I think that the market for carbon credits collapsed. The wealthier, more developed nations saw it as a massive wealth redistribution tool and said 'No, thank you.'

Wayne | 7.22.11 @ 6:01PM

Thank you India and China.

Howard| 7.22.11 @ 12:41PM

I find this to be a good primer on Keynes and Friedman. Paul Krugman the poster child for uber liberalism has called for a significantly larger stimulus. My suggestion based on that premise is that we should run a $5 Trillion deficit and use all of the money to pay for early retirement for unionized teachers. The average 32 year old teacher can receive a $2 million lump sum to stimulate the economy. A good liberal proposal I say!

Ground Control| 7.22.11 @ 1:39PM

It should be noted that government economic policy can not be expained solely by the fantasy of Keynesian economics. Politics plays a role just as large. It is less for Keynesian policy that bloated government departments and agencies exist, and far more for the politics of vote buying. Government employees from department heads and managers down to clerical staff and even custodial staff, all know where their paycheck comes from: the Democrat Party. And they vote accordingly. Larger departments mean more votes. And for welfare subsidy departments, additional Democrat Party clients are manufactured through the subsidy programs themselves, as millions of Democrat voters receive welfare checks, food stampts, Section 8 housing vouchers, ad infinitum, ad nauseum. Essentially, the modern Democrat Party, from FDR on, has manufactured a system of incentives (even Keynesians know really how the world works) designed to influence people to vote for Democrats, and they have done it with taxpayer money. Even ancient Romans used their own money or borrowed money for such things. The modern Democrat uses only other people's money.

If, say, the Department of Energy were reduced in size and scope to just a few people researching energy production and seeking ways to increase it, if their only deliverable was information, not cold hard cash, its budget would be correspondingly reduced, its voluminous staff let go, and its gargantuan buildings vacated. The net POLITICAL result would be the loss of countless Democrat votes, whose incentive to vote for Democrats just evaporated. Somehow, I just don't see this happening.

Ground Control| 7.22.11 @ 1:57PM

Apparently, the trolls are incapable of understanding the simple concept of incentives and rewards. This is fundamental human behavior. All President Bozo and the Democrats have offered are more taxes, and more spending which requires even more taxes. The only incentive this provides is an incentive to hoard one’s money and to NOT invest and create jobs and wealth. What benefit is it to create wealth only to have it confiscated by government? Unlike “Purpleguy” and “Jack London”, people are generally not stupid and clearly understand this deliberate disincentive to investment, production, and job creation. Why should I work my butt off to build a business, create jobs and make a profit, only to have that profit confiscated by the government? Sane people do not invest in such an environment, so the trolls like “Purpleguy” and “Jack London” can whine on endlessly about “paying a fair share” and “government stimulus” and “jobs saved” and it really means nothing at all. The true results of their votes and their stupid ideas is plain for all to see in the unemployment rate and the miserable state of the economy. This was all created by government and government is certainly no solution.

Jack London| 7.22.11 @ 3:23PM

How do you explain the fact that our corporations are already sitting on massive cash mountains and not using the cash to create jobs? Why do they need more cash? How do you explain away the fact that a dollar of stimulus money generates a return in the economy but a tax cut doesn't?

Curtis Rasmussen| 7.22.11 @ 3:37PM

Jack London/Purpleguy sock puppet,

Where are the stimulus returns? Paying government employees to collect the taxes, to debate the dispensation of those taxes, and to pay themselves lavishly at the public expense means that the return on any taxpayer funded government program will be less than 100%. there is not positive return, just a sucking sound from the drain on our economy.

Corporations are sitting on their cash because of the uncertainty in the Obama economy. Just ask Steve Wynn. Only a fool would spend their cash reserves now only to have Obama bankrupt it with confiscatory taxes later.

Ground Control| 7.22.11 @ 3:52PM

Item #1. Taxes, which are already too high and are threatened to go higher. Regulatory environment that is unpredictable. The list could go on, but the bottom line is government.

Item #2. This is a false statement. It is so false in fact that it goes beyond mere ignorance and crosses into stupidity.

You really know nothing at all. Get a job.

Jack London| 7.22.11 @ 4:18PM

Check out Moody's - not a left wing outfit.

http://www.bobcesca.com/images.....axcuts.jpg

As the blog poster who hosted the Moody's chart notes:

FACT: Every dollar spent on unemployment benefits creates $1.61 in economic growth.

FACT: Every dollar spent on the Bush tax cuts only creates $.32 in economic growth — that’s a 68 cent loss on investment.

Curtis Rasmussen| 7.22.11 @ 4:59PM

Taxes are not investments, clown.

Al Adab| 7.22.11 @ 7:46PM

As you note. A tax cut is not an expense it is rather an example of allowing a person- the taxpayer- to retain their property, that which is rightfully theirs.

Curtis Rasmussen| 7.23.11 @ 12:23PM

And if the government ever did get involved in for-profit enterprises, they could set the rules so that only they could survive and thrive, and they would have an 'endless' supply of our money to keep it going. Communism at its best.

This is the inherent danger of Obamacare. this legislation in itself will decimate the best healthcare industry in the world, but wait until they legislate in the public option, direct competition to for-profit enterprises, to destroy the tattered remains.

Thom| 7.22.11 @ 5:10PM

Funny thing Jack when I look at real GDP figures for 2008, 2009 and 2010 the actual drop in GDP in 2009 and slight bump in 2010 reflects less than what the drop in productive income would be from moving from say a nominal 5% unemployment rate to 10% and assuming the average output of each employee was say $50,000 a year. A 5% drop in GDP would have been about 650 billion and the actual down and up is less than that one year to the next.

By your assumption spending an average of 1.5 Trillion a year for three years and using your 1.6 times money multiplier would have resulted in a 2.4 trillion dollar movement in GDP each year for three years running. I think $278,000 dollars per job created or saved speaks to the problem with your understanding of how money moves through the economy in productive ways.

Ground Control| 7.22.11 @ 5:13PM

These are not facts. They are fantasy. Grow up.

Aces and Eights| 7.22.11 @ 5:42PM

Let's face it jerk, you're a thief. And a damned thief at that. You and your Democrat heroes take the hard earned money from people who work so they can give to people to whom it does not belong. And they do it for the most base of reasons, self and ego. There is no charity or generosity in the Democrat Party. Only self interest and ego. These Democrats only exist to
promote themselves. They eagerly harm others so they themselves can live the good life on the backs of others. Democrat jackasses buy votes with taxpayers' money so they themselves can look important and live a life many could not otherwise afford. You people stink.

skip| 7.22.11 @ 5:59PM

Equus Asinus Enthalpy London

Is there any way we can get everybody on unemployment?

If we are all on unemployment every $1.00 will be worth $1.61, and wealth will increase 61% just like that.

If we can figure out how everyone can be unemployed not just once each, but twice each, every $1.00 will be worth another $0.61, so each dollar will be worth $2.22, right?

Or am I figuring that wrong, and it will be another $1.61 for being unemployed a second time, so it will be $3.22 for every dollar?

What business and/or economic experience do you have?

What business and/or economic education do you have?

Explain how Moody's Analytics arrived at that $1.61 fact for us conservatives.

As dumb as we conservatives all (obviously) are, none of us are against every dollar being worth an extra 61 cents. Each. Especially if we don't ever have to work anymore.

C'mon. We're not THAT stupid.

Please enlighten us. And provide those qualifications of yours so we can use it to bolster our case when we spread the good news to others.

Thom| 7.22.11 @ 6:16PM

Skip,
I was introduced to this 1.5 money multiplier spending theory back in the early 1970s when we were doubling down on stupid under Nixon with another run at the failed polices of Keynesian economics. If it could have every worked under any circumstances the Soviet Union, Communist China, Cuba and North Korea would have had the highest per capita incomes/GDPs on the planet bare none….. right?

It is a self-evident truth that government spending does not produce “wealth” and it is wealth generation that forms the basis of our economic activity. When you threaten wealth you naturally get less real productive economic activity.

John II| 7.22.11 @ 7:09PM

Interesting choice of a nom de internet: Jack London. A crank socialist wannabe propertied grandee: of troubled background, troubled life, and troubled death. A screwy template in the Americano psyche: the very archetype of today's impotent lefty narcissist.

And now back to "Call of the Wild"--the superior 1935 Darryl F. Zanuck version, and one of the few instances in motion picture history in which the flick is indisputably better than the book.

Indiana Alex| 7.22.11 @ 11:42PM

Wow, I guess if you really believe this nonsense - taking money from one place and moving it to another will generate more than 1.5X return, perhaps we should move everyone to the unemployment rolls and watch the economy boom.

I have a hard time believing that anyone can buy that nonsense.

Reductions or increases in tax rates are dynamic. People change behavior based on them. If you don't agree just watch the drop in earned income the day after the Bush tax cuts expire and the Obamacare increases take effect.

Changing behavior to avoid taxes means a pretty big drop in productivity. There will be a lot of deferred income. My company already established a plan to defer income and get an anuity based on the deferred.

Imagine that, people not wanting to pay a marginal rate of around 60%?

Oh, and the incentives in Obamacare are at many levels to not make an additional dollar or the non-indexed subsidies will be lost. There's a case where many people will be walking into their bosses office saying "please don't give me a raise".

Of course this sort of dynamic is too confusing to the liberal mind. They prefer one word answers to complex problems like "speculators" or "Halliburton".

Morons.

George S| 7.22.11 @ 4:27PM

Jack: How do you explain the fact that you have money in your bank account but you are not hiring people to dig a hole in your yard and then hire other people to fill that hole? Now imagine if the anger of the state were turned on you because of that -- Jack is sabotaging the economy by not hiring people, let the show trial begin.

Corporation are not sitting on cash. Every dollar of asset has one dollar of liability (apart from owner's equity). That's because corporations are a group of people who share in its value (hence the term "share" to describe stocks). That cash is equally divided up among the investors and they all have an equal share of the total liability -- the same value as that cash. All that cash is the result of liabilities -- the cost of money, debt service, equipment cost, future bond and interest payments, rent, taxes, research and development outlays, etc. If you ran a business (like Obama successfully has) you would see why that is a vaporous question.

To answer your last question... if the stimulus worked we would have the same economy as we had when Reagan, Bush, Clinton and W. Bush were in office. Not one of those presidents enacted a stimulus, but three out of four enacted tax cuts.

The Liberal Song Remains the Same:

Things that always worked in the past
Will never work again, so...
Move on, Move on
Yet things that always failed in the past
Will work this time.
Right on, Right on

simon templar| 7.24.11 @ 6:37PM

Because Obamy has created such uncertainty and the threat of new and gigantic tax increases, regulation, and interference in the markets they are clamming up and saving this cash rather than expansion and investment activities to pay for future tax and regulation cost. A dollar of stimulus is a dollar of money from the private sector that is taxed (taken from) by the government and spent (zero sum game). It (govt) does not create wealth, business activity does. That is one less dollar for use in the private sector and more future debt and drag on the economy. You do not understand this because you never took a macro or mico ecomomic course or any business classes. This is not poetry or a political subject but rather a science. This is what your liberal mind can not seem to grasp.

DaveS| 7.22.11 @ 2:25PM

The current approach is 'Kenya-sian' economics. That doesn't do the trick, either.

gary siebel| 7.22.11 @ 2:59PM

Economic theories are ALL trash. Not one of them is worth the paper upon which they are printed.
Milt had one of his theoretical examples tested DIRECTLY, and his theory failed miserably, but all the same he skated off into Teflon heaven, just like the guy whose bad economic policies, and deficits, laid the foundation for the current fiasco -- Ronnie the airhead Ray gun, of course. His "solution" to inflation was all smoke and mirrors -- just take the price of a new house out of the CPI and watch inflation "disappear," because that was the single biggest chunk of the inflationary rise (remember, house-flipping launched in Reagan's Cali) . But lo and behold, years later, instead of a rising CPI that would have raised real estate interest rates tied to it and thereby cooled the housing market, housing prices were not connected to anything at all, and "POP" went the balloon Reagan first started expanding.

There is no more useless class of so-called "science," than economic theories.

George S| 7.22.11 @ 5:21PM

You make absolutely no sense. If housing prices were tied to the CPI then they would have been much much higher during the Carter years. They were not. Also, the price of real estate followed the rate of inflation like a train on rails for decades (including the 70's and 80's) prior to the late 90's. Then, starting in 2000 they outpaced inflation 7 to 1, dropping back to the normal during the bust of 2008 (which is why the money paid for a house in 2004-2005 will never be recovered until the rate of inflation takes it back up -- figure another 20 years). But of course, the government's affordable housing policies of the mid 90's -- coupled by a loose money Fed in 2000 -- had nothing to do with it. Just a coincidence, nothing to see, move along. It was all Reagan's fault.

Thom| 7.22.11 @ 5:38PM

Several neighbors on my block “cashed” out that inflated equity in their homes during that time via home equity loans and can speak directly to why they won’t be able to sell their homes for at least another decade or more……I will pay mine off in 5 years or less on the other hand.

simon templar| 7.24.11 @ 6:42PM

No, there not trash. Theories have been proposed by all kinds of hacks including good old Karl Marx who knew nothingof economics, never ran a business, and was a bum most of his life. Go to a business school and take some classes and you will find out exactly how business works within a capitalistic economy.

Thom| 7.22.11 @ 3:07PM

Without regard to all the various economic models and theories, people be they individuals or collectives (business) make rational self-interest economic decisions with “their” money based on two common sense rationales. First, what are my expectations for future economic activity (positive or negative) and second what are my expectations of reward for extraordinary risk taking beyond what is “necessary”.

The moment government starts borrowing money to subsidize an economic downturn people with an ounce of common sense know that future economic activity is going to go negative for some period of time. They then act accordingly to preserve their ability to weather the storm. They also know that someone is going to have to pay for all this borrowing and that feeds a negative outlook for the second part. Pile on top of this that same government promising to reward risk taking with having even more of the fruits of your labor stolen to feed this process and this down turn becomes a self-fulfilling prophecy as people remove their income producing wealth from risk and incomes naturally drop even more….. An ounce of common sense is worth 12 degrees from Harvard.

The fatal flaw of Keynesian thinking is that the economy is a “pump” and needs to be “primed” via government spending to offset the above. The economy is not a “pump” and does not need to be “primed”. That which makes the economy work is the wide scale belief that there is reward for work and risk taking and everything the government does under Keynesian thinking stands in the way of this. Business and individuals in total are setting on tons of unproductive “cash” because the government is a vulture waiting to feed off the productive use of that and the reflective response to this by people with “their” money is to park their wealth and wait the beast out in hopes it will starve to death. Even a dumb arse Democrat CEO out in Nevada understands why the economy will not respond to fairy tale promises like giving 15 million more people “free” healthcare, another 15 million on top of that subsidized healthcare and reducing the cost of healthcare for all families of four $2500.00 a year….and then wanting to rob the upper 3% of taxpayers which includes every major business in the country of more of the fruits of their labor and all this will not put a damper on economic activity. Dah…..

You can’t find an ounce of common sense in King Obama’s Royal Court of Jesters. I’m not sure you can find an ounce in all of Washington DC either. Complexity worship is the one true religion of what should be known as the Harvard Dumb Ass class.

mdbrock| 7.22.11 @ 3:24PM

But why do you keep calling him a Keynesian since he showed his Hawaiian birth certificate?

John Navratil| 7.22.11 @ 6:13PM

mdbrock,

Right! He a polykeynesian!

DerekV| 7.22.11 @ 5:47PM

Too often it seems to me we assume that spending, economic activity, is in and off itself is a good thing. It is not! Whether Government or personal it's only good if it buys something wanted at a reasonable price.

This is a problem with measuring national wealth and productivity by GDP. I could pay on man $10 to dig a hole and another $10 to fill it in. That's $20 towards GDP but nothing is achieved and an afternoon is wasted.

We need to focus instead on the creation of value. Only agriculture, mining, manufacturing and transportation activities create new value. Everything else is a transfer from one person to another with no net gain. Not that there is anything wrong with that between freely consenting persons.

The problem with the stimulus concept is that in a free society the people will know that there has been a Government stimulus, and they will know that they are going to have to pay for it sooner or later, either through taxation, reduced benefits, that they have paid for, or inflation.

Throwing money out of helicopters would only work as a stimulus to spending if the people below did not know that money was being thrown out of helicopters. And then it would only stimulate spending that’s unnecessary and ultimately destructive of the need to create value.

Thom| 7.22.11 @ 5:57PM

Precisely, $278,000 of spending for each job saved or created……..

Wayne | 7.22.11 @ 6:02PM

By the way, if a job is for a 10 year project, Obamanomics counts it as 10 jobs.

Thom| 7.22.11 @ 6:21PM

Even if you A.S.S.U.M.E that the jobs saved or created were covered over the entirity of 2009 and 2010 where most of the pork was applied that's about 2.5 times the average annual salary and most of the jobs lost are on the low end of the ecomony not the middle or high end. If you include govenment jobs then the entire figure is bogus because as a class they have been sheltered from the effects of this recession for the most part.

Wayne | 7.22.11 @ 6:03PM

Good news! Boehner broke of talks with the POTUS. I have been saying it was a waste of time. He will talk with the Senate. After all the House already passed a bill, so the intransigence is with Reid.

skip| 7.22.11 @ 7:11PM

The fecal dithering idiot liar in chief whined in a press conference the republicans refuse to compromise, before stating in the next sentence he wasn't at the press conference to point any fingers at anyone.

skip| 7.23.11 @ 10:18PM

Oops, my bad.

Saw the replay, and the dithering idiot fecal liar in chief petulantly whined unpresidentially in that press conference that the republicans refuse to compromise and refuse a last second 400 billion tax increase, before stating in the same sentence he wasn't at the press conference to point any fingers at anyone.

Nice| 7.22.11 @ 10:06PM

Only a fool would spend their cash reserves now only to have Obama bankrupt it with confiscatory taxes later.
wonderful
http://www.summer-products.com

Indiana Alex| 7.22.11 @ 11:45PM

Since this Administration has decided to make up new economic statistics (jobs saved?) in attempt to hide the fact that these policies have once again failed, I think we should begin tracking JOBS DESTROYED.

We'll start with Steve Wynn and then start asking all of the other CEOs how many jobs would they have added if these morons in the White House actually had a clue.

POST American| 7.23.11 @ 12:05AM

"Understand there's NO reason
why ANY country should be borrowing
money from anyone --EVER. Absolutely
NO REASON ---esp. a country like America."
-ALAN WATT
(essential online coverage)

-----ANY QUESTIONS?

ABSOLUTELY

LMADster | 7.23.11 @ 10:14AM

Reaseling #1—Priming the Pump: The most common rationale put forth for the interminable incurring of national debt is the Keynesian economic theory called “priming the pump.” John Maynard Keynes, a Depression-era economist, believed that the government should borrow and spend in order to stimulate consumer demand. Increased demand would then stimulate supply; suppliers would create jobs, raise incomes, and stimulate even more demand and so keep the economy growing.

Keynes believed such stimulus should be the exception and not the rule it has become today and that economic stimulus should only be injected during economic contractions, not economic expansions.

The ruling elite knows better. They believe that constant borrowing at a modest rate equal to the economic growth rate keeps the heart of the economy permanently primed and pumping. This belief is so strong it has become an article of faith among the “command economy” crowd. In fact, the European Monetary Union of 17 European social democratic economies has a standard 3 percent budget deficit entitlement/limit written right into its charter; Greece apparently didn’t get the memo.

OK. Fine. Borrowing primes the pump. Got it. But based on our current $14 trillion debt and the European deficit standard of 3 percent, it appears that our pump is pert-near primed for the next 25 years. Include the $100 trillion in unfunded Social Security and Medicare liabilities and we are primed well into the next century. Said another way: we already have 100 years worth of Keynesian economic stimulation built into today’s economy and yet we still have over 8 percent unemployment and scant economic growth.

Rea•sel \ˈrē-zəl\ verb To weasel out of or evade an obligation, duty, or the like with feint reasoning or by constructing a false, but ostensibly logical justification to obfuscate the weasel’s true motives. noun One who reasels.

From Page 126 of “LET'S MAKE A DEAL: A HAIL MARY PASS TO GET AMERICA OFF THE BENCH AND BACK IN THE GAME”

Healthcare-for-All? It’s in there. Balanced budget? It’s in there. Carbon tax? It’s in there. Rational taxation? Amnesty? Border Security? Limited government? Social Security and Medicare solvency? It’s all in there; it’s all paid for and it’s all optimized.

Blog: letsmakeadeal-thebook.com/

Facebook: facebook.com/pages/Lets-Make-A-Deal-The-Book/143298165732386

Twitter: twitter.com/#!/lmadster

Amazon: amazon.com/Lets-Make-Deal-Jon-Mitchell/dp/0982975716

B&N.com: barnesandnoble.com/w/lets-make-a-deal-jon-mitchell/1031386165

Or just Google "LMADster"

POST American| 7.23.11 @ 10:20AM

-------------------BOTTOM LINE-----------------------

"The power to tax is the power to destroy."
-John Marshall

Likewise the power to generate FAKE debt ad infinitum
at the service of psychopathic, GOD mocking -----USURY.

No more time for BS.

OPEN YOUR EYES!

John II| 7.23.11 @ 8:28PM

Nine'll get you twenty that the Professor has never read John Marshall, but he and his acolytes sure as hell know the message.

"Leftism" is just another word for the love of power, and a certain uncanny instinct for doing precisely what is necessary to amass it.

And now back to "Hamlet": the 1948 version by Laurence Olivier, which seems to highlight the theme of power instinctively aggrandized. I have often thought of the Professor's constant trashing of the hapless Bush as something more sinister than bad manners and ill-breeding. He is like King Claudius forever reliving the moment of dripping poison into the ear of his sleeping predecessor, a better man.

Oldefarte| 7.24.11 @ 10:48AM

The Keynsian theory applied by this administration mistermed stimulus governmental spending was solely/exclusively directed at maintaining state/local governmental employment. Why? Simple, because same are all represented by LABOR UNIONS. When the private sector economy and employment was tanking [because their falling sales revenues demanded employee layoffs by their companies], correspondingly public sector employment represented by government exclusively was maintained and even increased thanks to this administration's spending of taxpayers' forced taxiation funds upon their favor labor union constituents. In effect, it was THEFT and/or FRAUD, and this administration should be legally accountable for same [but will not since political corruption demands that the Justice Dept pay homage/lip service to its master within the WH and therefore no charges will be crought by Sir Eric]. It's amazing that the US Justice Dept can initiate its investigation through the FBI on News Corporation/Murdock for the bogus spying charges upon citizens and alternatively bury their eyes, ears and noses in the ground when its own political corruption is involved. The one/only hope for this country rest with the November 2012 elections [that is if we demonstrate our combined intelligence and wake up for our stupidity exhibited on 11/4/08]!!!!!

Long Ben| 7.25.11 @ 1:18AM

Yes and Amen to the last sentence indeed

Stand Redmond| 7.25.11 @ 2:03AM

"Keynesians and their liberal followers apparently think individuals are short-sighted and simple-minded."

That sums it up right there. According to liberals we are all programmable robots that will blindly follow their formulae and theories. WRONG.

Australian| 7.25.11 @ 8:28AM

"It's now clear that the federal government's massive stimulus spending has not achieved its objectives."
Not only is that true. It is also true that Israel, a country which in this recent crisis did not follow Keynes, had a much milder crisis and much better rcovery. For political reasons the Knesset did not allow the Government to spend beyond its means doring the crisis. Fiscal policy was not expansionary. The two main responses to the crisis were that the central bank cut official interest rates and the currency fell. That worked much better than Obamanomics or Keynesian stimulus worked.
Israel's example is only the most recent example of national economies which have prospered by ignoring the instructions of the Keynesians. There have been many before. The contrast between failure and sucess should be brought to the attention of every politician in Washington.

occupy fucking walstreet| 1.27.12 @ 9:26PM

This article neglects to take into account the fact that Keynesian economics boost the economy for a short period of time which then leads to a longer time of GDP growth. The goal of Keynesian economics isn't that the big "costly" government is running our country into bankruptcy its getting us out of bankruptcy. Beccause of the multi-trillion dollar, unnecessary, war that Bush got us in the Economy was doing poorly before Obama even took office. The Conservative, right-wing, economic policy has failed us for 8 years in a row. Obama is only trying to get us back on track by stimulating the economy back to its full employment. The ideal keynesian government, stimulates the economy then gets out, and thats it. Its not big and costly. If you consider the historical examples the classic, conservative economic approach, just does not work. During the great depression, Herbert Hoover's policy were that with a small government with little spending the economy would fix itself. When FDR took office in 1932 and started his stimulus plan the GDP and employment rates of our country skyrocketed. How is that not undeniable evidence that the conservative classical economic policies do not work and we need to follow the Keynesian approach to stimulate our Economy back to full employment?

companion| 9.13.12 @ 11:58PM

Laissez faire aka voodoo economics, reaganomics, trinkle down economics and supply side economics does works.....but only for a small portion of the population [the well-off]. The supply siders ran the debt up after Reagan took office and took the advice of just two economist he thought was right over many economists who disagreed with supply-side economics.

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