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Thread: U.S. threatens to rescind stimulus money over wage cuts

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    If the bottom receives paychecks, that's more money they can spend/save. The more money in their pockets, or in their banks, the more products they can spend on. This essentially raises aggregate demand, and increases in production and sales in the long run (this is the part where it benefits the "top"; after the "bottom" has gotten their benefit). Therefore it's bottom-to-top.
    Dear Leader is telling California, in effect, to leave wages intact and shed jobs, which takes more paychecks away from more people, requiring more unemployment benefits be paid by California. Even by your reasoning, as the spending-as-stimulus plan is failing to preserve paychecks, it cannot qualify as "bottom up".

    Further, unless and until the spending-as-stimulus plan has specific employment targets (which it does not), there is no guarantee that companies will hire in proportion to the monies spent on "stimulus". There is not one single job or paycheck explicitly guaranteed anywhere in the text of the porkulus bill.

    FDR's New Deal programs (WPA and CCC) were authentic "bottom up" stimulus efforts because they put people to work directly, put money in their pockets directly, and let their spending inject demand back into the economy. Dear Leader has proposed nothing of the kind.

    President Bush's stimulus checks last year were authentic "bottom up" because they put money directly in the hands of taxpayers. Dear Leader has proposed nothing of the kind.

    In fact, one of the biggest criticisms of the porkulus bill was and remains that Republicans, using Dear Leader's own pie-in-the-sky assumptions, showed that more jobs could be saved/created through a series of tax cuts with no additional spending. As job creation/salvation efforts go, Dear Leader's non-stimulus bill is a farce.

    Also, as monstrous as the spending-as-stimulus obscenity is, it is the smallest part of the stimulative flailings Dear Leader has pursued. The greatest portion of his stimulative efforts are in the financial sector with the bailing out of AIG and Wall Street--yes, the programs were started in the Bush Administration, but Dear Leader is expanding upon and endorsing those efforts, and has co-opted them as his own. Efforts to stimulate lending and credit are not "bottom up" either, unless you're proposing Dear Leader give every American a government-backed Visa Card and encourage shopping sprees.

    Quote Originally Posted by Lightdemon View Post
    But like I said, it depends on what you think is the solution to the economic problem. If you don't think Keynesian economics is the answer, obviously you wont agree with the stimulus package.
    Keynes' approach has failed miserably everywhere it's been tried. Historical fact, Democrat delusions to the contrary notwithstanding. Government spending is not a substitute for private sector spending--and by the very nature of its sources of cash to spend, can never be a substitute for private sector spending.
    Last edited by celticlord; 05-10-09 at 01:28 PM.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by celticlord View Post
    Keynes' approach has failed miserably everywhere it's been tried. Historical fact, Democrat delusions to the contrary notwithstanding. Government spending is not a substitute for private sector spending--and by the very nature of its sources of cash to spend, can never be a substitute for private sector spending.
    Historical fact: The government increasing aggregate demand in WWII by buying military equipment and creating jobs in the Defense Industry is what pulled us out of the Great Depression.

    Historical fact: NASA one of the most expensive projects that they government has spent on, also, increased aggregate demand because it put money out into the economy.


    The thing that you have left out is the money multiplier effect. For every dollar that the government spends on, the return of that dollar is not the same. The impact of government spending is more than what is spent on the budget.

    [ame=http://en.wikipedia.org/wiki/Multiplier_effect]Spending multiplier - Wikipedia, the free encyclopedia[/ame]
    Quote Originally Posted by UtahBill View Post
    Let the public school provide the basics, you as the parent can do the fine tuning.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    Historical fact: The government increasing aggregate demand in WWII by buying military equipment and creating jobs in the Defense Industry is what pulled us out of the Great Depression.

    Historical fact: NASA one of the most expensive projects that they government has spent on, also, increased aggregate demand because it put money out into the economy.
    Historical fact: Keynes never argued war as a way to repair an economy. Further, government purchasing tanks, planes, ships, and bombs from existing companies is not "bottom up" but "top down" stimulus. Follow the money--government to Ford/GM/Boeing/etc. to worker. That's top down. Ok, taking 16 million Americans, stuffing them into uniforms, and putting rifles in their hands IS a "bottom up" sort of stimulus....but, again, neither Keynes nor FDR argued war as economic stimulus.

    Historical fact: NASA was more than just money rolled off the government printing press. It was also the largest research and development project in history, with transformational impacts on a par with those of Prince Henry the Navigator. It was also not a "bottom up" stimulus project.

    Current event fact: Dear Leader is not big on funding NASA. The 5% increase in the NASA budget for 2010 is contingent upon a review of NASA's human spaceflight plans post-2010. Senator Bill Nelson (D-Florida), chairman of the subcommittee overseeing the NASA budget, has publicly stated that Dear Leader's NASA budget proposals do not match the promises made on the campaign trail.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    The thing that you have left out is the money multiplier effect. For every dollar that the government spends on, the return of that dollar is not the same. The impact of government spending is more than what is spent on the budget.
    The thing you have left out is that the multiplier effect goes in both directions. As 1937 shows, an economy propped up by stimulus craters when stimulus is withdrawn.

    Smoot-Hawley is another good example of the multiplier going in reverse. Even though exports were 4% of the American economy at the time, the virtual shutting down of that 4% in 1930 was sufficient to put the economy into a deflationary spiral.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by celticlord View Post
    Historical fact: Keynes never argued war as a way to repair an economy. Further, government purchasing tanks, planes, ships, and bombs from existing companies is not "bottom up" but "top down" stimulus. Follow the money--government to Ford/GM/Boeing/etc. to worker. That's top down. Ok, taking 16 million Americans, stuffing them into uniforms, and putting rifles in their hands IS a "bottom up" sort of stimulus....but, again, neither Keynes nor FDR argued war as economic stimulus.
    Whether or not they argued it, doesn't mean it didn't increase aggregate demand.

    The whole point of Keynesian economics at the time was to create incentive to produce. The war was that incentive. No one had to argue it, it happened regardless.

    Historical fact: NASA was more than just money rolled off the government printing press. It was also the largest research and development project in history, with transformational impacts on a par with those of Prince Henry the Navigator. It was also not a "bottom up" stimulus project.
    And the construction of highways, improvement of infrastructure, ALSO have auxiliary benefits as well. And because of these improvements, the costs of products reduce, and again consumer spending power increases. Using NASA as an example again, increase in technology makes for more efficient ways of producing, therefore cost of products go down, which in turn increasing spending power of consumers. Benefiting the bottom.

    The thing you have left out is that the multiplier effect goes in both directions. As 1937 shows, an economy propped up by stimulus craters when stimulus is withdrawn.

    Smoot-Hawley is another good example of the multiplier going in reverse. Even though exports were 4% of the American economy at the time, the virtual shutting down of that 4% in 1930 was sufficient to put the economy into a deflationary spiral.
    I'm not going to disagree here.

    As soon as the stimulus money is taken away, or not renewed in next years budget, the companies that depend on this income will shut down. If the government decides to keep renewing this stimulus, then it'll become too alike with socialism. Which I do not wish my country to become. However, in the circumstance we are in, it is vital that companies where millions of Americans are employed be kept up. At least for the time being.

    But to say that Keynesian economics has had no success in history is just false. Whether Keynesian theory will be the solution for our economic problem is debatable, but you cannot claim that Keynesian economics has never been successful.
    Quote Originally Posted by UtahBill View Post
    Let the public school provide the basics, you as the parent can do the fine tuning.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    And the construction of highways, improvement of infrastructure, ALSO have auxiliary benefits as well. And because of these improvements, the costs of products reduce, and again consumer spending power increases. Using NASA as an example again, increase in technology makes for more efficient ways of producing, therefore cost of products go down, which in turn increasing spending power of consumers. Benefiting the bottom.
    A nice summation of trickle-down economics. Thank you for agreeing that NASA was not "bottom up". Neither is infrastructure spending, unless government agencies hire the road crews directly (e.g., FDR's Civilian Conservation Corps).

    Quote Originally Posted by Lightdemon View Post
    I'm not going to disagree here.

    As soon as the stimulus money is taken away, or not renewed in next years budget, the companies that depend on this income will shut down. If the government decides to keep renewing this stimulus, then it'll become too alike with socialism. Which I do not wish my country to become. However, in the circumstance we are in, it is vital that companies where millions of Americans are employed be kept up. At least for the time being.

    But to say that Keynesian economics has had no success in history is just false. Whether Keynesian theory will be the solution for our economic problem is debatable, but you cannot claim that Keynesian economics has never been successful.
    Alas, I can't return the favor; I am going to disagree with you.

    If the economy contracts again because the stimulus has been withdrawn, the stimulus HAS failed. The objective of stimulus is to "restart" the economic engine, to re-invigorate demand, but, as you point out, if it persists it becomes socialism; unfortunately, since the objective cannot be met without sustained stimulus--and thus socialism--the stimulus fails every time.

    Keynes' model has never succeeded anywhere. The contractions that occur when stimulus is withdrawn is the damning evidence that proves that.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by celticlord View Post
    Keynes' model has never succeeded anywhere. The contractions that occur when stimulus is withdrawn is the damning evidence that proves that.
    But you cannot objectively put the blame on the government withdrawing the stimulus. To do so is to oversimplify ignorantly.

    Fiscal and Monetary policy is not so linear, and many factors ranging from micro to macro economies, as well as international trade, will affect these policies. These confounding factors make it impossible for you to draw such a narrow conclusion.

    But I don't think there's much else to say except we disagree.
    Quote Originally Posted by UtahBill View Post
    Let the public school provide the basics, you as the parent can do the fine tuning.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    But you cannot objectively put the blame on the government withdrawing the stimulus. To do so is to oversimplify ignorantly.
    Your logic also invalidates the claim that Keynesian models are a success.

    Quote Originally Posted by Lightdemon View Post
    Fiscal and Monetary policy is not so linear, and many factors ranging from micro to macro economies, as well as international trade, will affect these policies. These confounding factors make it impossible for you to draw such a narrow conclusion.
    Only if those same factors make it impossible for you to draw such a narrow conclusion about the success of Keynesian models. Those same factors are applicable when stimulus is applied as well as when it is withdrawn.

    Quote Originally Posted by Lightdemon View Post
    But to say that Keynesian economics has had no success in history is just false. Whether Keynesian theory will be the solution for our economic problem is debatable, but you cannot claim that Keynesian economics has never been successful.
    Your logic invalidates your own position, for it denies you the basis for claiming that Keynesian economics was ever successful. By your own reasoning, making that claim is to "oversimplify ignorantly."

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by celticlord View Post
    Your logic also invalidates the claim that Keynesian models are a success.


    Only if those same factors make it impossible for you to draw such a narrow conclusion about the success of Keynesian models. Those same factors are applicable when stimulus is applied as well as when it is withdrawn.


    Your logic invalidates your own position, for it denies you the basis for claiming that Keynesian economics was ever successful. By your own reasoning, making that claim is to "oversimplify ignorantly."
    Well, yea. Like I said, there isn't much else to say except we disagree.
    Quote Originally Posted by UtahBill View Post
    Let the public school provide the basics, you as the parent can do the fine tuning.

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    Re: U.S. threatens to rescind stimulus money over wage cuts

    Quote Originally Posted by Lightdemon View Post
    Well, yea. Like I said, there isn't much else to say except we disagree.
    Indeed. You want to argue Keynesian apologetics and I prefer to argue historical fact.

    On that we definitely disagree.

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