The American Spectator

Scott D| 12.25.08 @ 1:50AM

"It makes me wonder if any of the planners or commentators are good at arithmetic."

YES they are actually, it's called "PAYBACK ARITHMETIC!"

The intellectual elites are way smarter than us SHAME ON YOU for questioning their calculations.

Bob| 12.25.08 @ 8:56AM

RSM, are you so simplistic as to believe this kind of analysis? It's like looking out of your front door, seeing how flat everything looks and believing the world is "still" flat.

The calculation is far more complex than this as any decent economist will tell you. First of all, these are longer term projects that require multiple years to complete. In fact, the Obama recommendation is to spend this stimulus over 2 years, not one. It is not unreasonable to assume that these jobs might last 5-7 years. That changes the arithmetic, doesn't it? Secondly, there is no evidence that people in the "natural demographic flow" would get jobs in a recessionary environment. Lastly, the stimulus could have a multiplier effect on the economy. That is, people will begin spending again because they have "hope". Since consumption is 2/3rds of our economy, this can make a big difference. Lastly, you didn't take into account that people with jobs pay taxes and there will be a commensurate increase in governmental revenues.

Will it work? I don't think that anyone knows for sure. But we need to judge whether not doing anything will be worse.

O'Neill says that commentators are not good at arithmetic. I wonder if you are part of that crowd?

Deborah| 12.26.08 @ 3:08PM

Mr. McCain is correct -- it won't work. Read economist Thomas Sowell on Obama's FDR redux ideas here: http://article.nationalreview.com/?q=MTk2NTljNGZiNWVmZmM2ZjE4NzFkZWM5N2YwNjQ0MGM=. It wasn't the 1929 crash that deepened the Depression and made it "Great" -- it was policies from Hoover, but especially from FDR that drove unemployment through the roof.

Even Keynes himself wrote to FDR to warn him that reform before recovery was flirting with disaster. You can read about that from John Stossel here: http://www.realclearpolitics.com/articles/2008/12/arrogant_conceit.html.

Whether one is good at math or not -- all one has to do is read a little history to see that "It Won't Work." Amen

This is just another

Bob| 12.26.08 @ 3:42PM

Deborah, did you even read Sowell's article? He talked about the Smoot-Hawley tariffs as an example of governmental intervention. We already know from Obama's economics team that they've studied the Great Depression and they will not enact either the Smoot-Hawley tariffs and will delay any tax increases -- the other thing that FDR did to hurt the economy. A stimulus program may cost a lot, but cannot hurt the economy. We have the advantage today of having experts in the Obama administration on the depression. Bernanke is an expert in the depression. What the Obama administration is doing will work -- that's not the question. The real question is whether it will be worth the expenditure.

Jeremiah| 12.26.08 @ 8:37PM

Calm down, Bob, it's OK! We know Hussein will fix our economy, because you believe it. He won't feel you pain, though, but he sure will heal it.

Deborah| 12.27.08 @ 5:34AM

Yes, Bob, I read it. Did you read past "Smoot-Hawley" to what else Sowell said? "Moreover, the unemployment rate rose to even higher levels under both Presidents Herbert Hoover and Franklin D. Roosevelt, both of whom intervened in the economy on an unprecedented scale.

"The rise in unemployment after the stock market crash of 1929 was a blip on the screen compared to the soaring unemployment rates reached later, after a series of government interventions.

"For nearly three consecutive years, beginning in February 1932, the unemployment rate never fell below 20 percent for any month before January 1935, when it fell to 19.3 percent, according to the Vedder and Gallaway statistics.

"In other words, the evidence suggests that it was not the 'problem' of the financial crisis in 1929 that caused massive unemployment but politicians’ attempted 'solutions.' Is that the history that we seem to be ready to repeat?"

He's saying that these wonderful make-work projects to create "green jobs" (what a joke!) will do nothing to help. Experimentation in the economy, acting like they know what they're doing when they don't -- is going to be the same problem for this country today that it was when FDR nearly destroyed it in the 1930's. WWII is what got us out of the depression. FDR just kept it going for power reasons, the same reasons Obama wants to take advantage of a crisis.

Did you read John Stossel? John Maynard Keynes warned FDR. The letter appeared in the NY Times during the first year of FDR's first term, but his arrogance and desire for power made him do what he wanted -- fiddle with the economy, give us crap like the Ponzi scheme known as Social Security, kept unemployment in double digits for make-work projects, so he could look magnanimous for the "people" he kept poor on purpose.

Keep drinking the Kool Aid, Bob, you'll be bankrupt before you know it.

Bob| 12.27.08 @ 7:19AM

Deborah, I suggest you take a couple of courses in economics. There are also some good books put out by economists on the great depression. Unemployment always follows as a result of a recessionary or depressionary environment -- it does not precede it. A few months ago, we learned that we were in a recession since December 2007. Unemployment didn't really shoot up until recently. The lag is due to businesses adjusting for poor sales results. You don't adjust when your sales are high. In a severe recession, the effects escalate over time as contagion spreads. In this case, the housing market gets worse as more people go into foreclosure and housing values decline in an accelerating manner. According to some of the housing experts, we have another bubble to break as the variable mortgages come due over this next 12-24 months.

In the 1930's, given slower communications, everything lasted longer than it does today. There were two big mistakes made -- the Smoot-Hawley tariffs and raising taxes which made the situation worse.

The simplistic assumption that it became worse solely because of government intervention is naive. It became worse because that is the natural course of a depression and because mistakes were made. There are a number of smart people in the Obama administration who have studied the depression and know a lot more than you, me, or Sowell on the issue. It would be hard to believe they will make the same mistakes.

Deborah, being simplistic on something as complex as economics is a problem that you and others seem to have in this sound byte world. Here is the letter that Keynes sent to FDR. I suggest you read it:

http://newdeal.feri.org/misc/keynes2.htm

It basically says that FDR's mistakes were twofold, putting in social programs too quickly and trying to balance the budget when the economy needed stimulus. Keynes recognized and supported the need for those programs but thought that kind of growth in government was too much in that environment. Secondly, FDR did not like deficit spending and wanted a balanced budget by raising taxes and tariffs. Keynes told him that in a depression, that was the wrong move.

So, Deborah, when you quote someone else, go to the source and check out the real information. It is not me who is drinking the KoolAid, but you.

Furthermore, Obama seems to have learned from this episode in that he is holding off on the tax increases for those making more than $250K per year and he seems to be taking a slower course in healthcare reform, but that remains to be seen. Interestingly enough, from an economics point of view, pulling us out of Iraq too quickly will curtail spending and could have a slightly negative effect.

Deborah, please take some courses in economics if you are really interested.

Deborah| 12.27.08 @ 3:53PM

Bob --

Although you are arrogant and offensive and apparently smarter than Thomas Sowell, his basic point isn't complicated and neither is mine. When government continues to interfere in the economy it creates more problems generally than it solves. Government intervention got us in to this predicament with Carter/Clinton Community Reinvestment Act creation and expansion respectively. Regardless of their intentions (basically good, but stupid), they didn't understand economics only politics. That's what government does best -- politics, not economics.

I hope you're right and that Obama's smart team knows what they're doing. The problem is that politics always gets in the way of good intentions and usually you and I and the rest of the country end up paying for it.

That's Sowell's basic point and Stossel's basic point and my basic point. It doesn't take an economist to know that politicians are about power, getting it and retaining it. Doing what's right is secondary. Now, you can argue with that, but that's my opinion. So please stop being condescending.

I like my Kool Aid and apparently you like yours, so let's just leave it at that.

Jeremiah| 12.27.08 @ 8:38PM

Someone who talks so rudely to a Lady is not a Republican and doesn't belong here. Hey Bob, do us a favor: just keep celebrating the Obamessiah's victory somewhere else. And tell Deborah you're sorry and it won't happen again.

Bob| 12.28.08 @ 7:53AM

Deborah, Deborah... Sowell is not being an economist, he's being a politician. He wants to write columns and make money. He does it by oversimplification and targeting people who will drink the KoolAid. Economics is not that simple. I wish it were.

By the way, it was not only Carter and Clinton that wanted people to own homes and look the other way, it was all presidents including Reagan and Bush. Bush2 especially talked about home ownership and supported easy lending standards. This is not a Democrat/Republican thing.

Regarding economics and politics -- they can never be separated and it is naive to think they can. You will always have segments of society trying to get an upper hand. What better way to do this than through money.

Stossel is an entertainer and I expect him to dumb down the arguments to get ratings. I'll bet that if you get Sowell off of the blogs and sit down to have a real economics discussion, you'd get a different take on the issue. Things would not be so black and white.

Deborah| 12.28.08 @ 8:17AM

Grey is such a much better color than black or white because a liberal says it's true in a condescending, sniffing, "I'm so much smarter than you" way.

Holier than thou attitudes are what makes liberals so insufferable. No more responses to trolls.

Bob| 12.28.08 @ 9:13AM

Deborah -- please.... I am not a liberal, I am a libertarian leaning, non-social conservative, fiscal conservative who believes in limited government, a strong military, and individual responsibility. And yes, I am condescending against postings and responses that portend the dumbing down of our electorate.

I can think of nothing more condescending than posting simplistic concepts to an audience that doesn't know any better. Sowell was just trying to "make points" with his conservative audience. That is far different than having a serious economic discussion.