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You can't spend your way out of a recession

You can't spend your way out of a recession

  • Total voters
    70
phattonez said:
Germany was a boom economy that would have succumbed to a bust had it had enough time to run its course. China will be the same way. The US during WWII did not have a growing economy. Sure, you may see GDP growing and economic indicators being great for the period, but it sucked to live through that. People were dying and goods were rationed. I wouldn't exactly point out war as a good example of how to grow your economy.
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It wasn't during the war that mattered, it was the aftermath that made America a world power. We had factories geared up for war-time production, staffed with experienced workers who could easily be translated over to civilian goods. We had companies who were used to making the absolute best-quality merchandise for the war effort, which made us a world-leader in many technologies and consumer goods. Unlike most of Europe, we didn't have to rebuild, which gave us a leg-up on the competition. We took it and ran with it for years before we eventually squandered that superiority.

The only way to do it again is to have a massive, world-encompassing, publically supported war. Bush tried to do it. He failed.
 
Cephus said:
I don't think necessarily "we" speculated ourselves into it. Clinton deregulated the financial sector and let the crooks run the show. It isn't like nobody saw this coming, I posted about it regularly a decade ago or so, but people get greedy and when it looks like someone is giving something away for nothing, they buy into it no matter how shady it looks. Lots of people in the financial sector made lots of money and are now living the good life on a beach somewhere. The bottom had to fall out because it was utterly unsustainable. You can't be giving things to people who demonstrably can't afford it, just because they want it.



The problem is, the American people don't want to resolve the problem, they just want to go back to the way it was before the bottom fell out and the politicians know that actually trying to solve the problem would get them thrown out of office. Bush knew it, Obama knows it. The American people don't want financial stability, they want to go back to being able to buy things they don't need and can't afford with money they don't have. Americans have lived in a financial fantasy land for a long, long time, anyone who suggests we need to live within our means is going to get the boot.
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Not to put too fine a brush on things...but given that boldened line from your comment...how is that WE didnt speculate ourselves into it?

The fix is pretty much right along the lines you are talking about...we need to tighten up the belts...take our beatings like a man (we earned em), and then dust ourselves off and stand up again. And we do that by NOT being saddled by an out of control federal government and ridiculous debt spending.
 
Kandahar said:
Swell. And I won't ASSUME that you're a teabagging, buck-tooth redneck who molests your underage sister. :mrgreen:



Your assessment of the people who advocate for such ideas is completely irrelevant to whether or not they are good policy.
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Thats a correct assumption... :)

Oh...I think it is ABSOLUTELY CRITICAL to examine who endorses what ideas. People with a proven track record of failure shouldnt be given control of the economy. That includes the crippled and dependent pets that the democrats pander to and BOTH major political parties. None of them deserve reelection. They are ALL complicit in this 13-15 trillion dollar federal debt.
 
Kandahar said:
By "short-term deficit," I was referring to the components of the deficit that are necessary to address the recession. Those aren't really so worrisome, because they're short-term problems. The "long-term deficit" - the expenses that we'll incur every single year (e.g. entitlement spending) is much more worrisome, and we need to take action to get that spending under control.
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What makes you think there is a difference? hell we are just as well off giving away free money and services as we are giving away money in a stimulus plan that doesnt create revenue producing jobs. Giving money to states to pay state employees is a greater waste than just buying everyone in the country a new car. Hell at least then you would have something to show for it.
 
Cephus said:
It wasn't during the war that mattered, it was the aftermath that made America a world power. We had factories geared up for war-time production, staffed with experienced workers who could easily be translated over to civilian goods. We had companies who were used to making the absolute best-quality merchandise for the war effort, which made us a world-leader in many technologies and consumer goods. Unlike most of Europe, we didn't have to rebuild, which gave us a leg-up on the competition. We took it and ran with it for years before we eventually squandered that superiority.

The only way to do it again is to have a massive, world-encompassing, publically supported war. Bush tried to do it. He failed.
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That's basically why we emerged victorious. We didn't have to rebuild. We were already a world economic power before then, but WWII solidified us as the economic power. Still though, it's not a good plan to get us economic strength. We waste time that we could spend increasing production instead being used for destruction.
 
VanceMack said:
Created or saved 2 million jobs. Created or SAVED 2 million jobs. Created or ...SAVED...2 million jobs.

No new job creation. temporarily avoided layoffs with creating a change in the failed tax and spend policies of local, state and federal governments. Shovel ready projects for businesses with people already employed.

No new job creation. Governments now deeper in debt. Another trillion or two dumped into the national debt.

Private sector creates economic growth...NOT the federal government.
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So you also agree with Goobieman's position that government funding cannot create jobs?

Tell me, what effect did spending trillions on defense during Reagan's years have upon the defense industry?

If you think that the government cannot create jobs by spending, you must think that the defense industry did not expand, did not increase salaries, did not increase demand for raw materials and did not fund research which employed thousands.

This forum is an excellent piece of evidence that America's public schools have utterly failed.
 
Cephus said:
That's mostly because China had the surplus to do exactly that. They had savings. The U.S. didn't. That's the problem.
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Which doesn't address my point. Spending by itself can create temporary and in some cases permanent growth. The fools here arguing otherwise have chosen to ignore historical examples proving they are wrong. While deficit spending financed by debt can and has proven to be dangerous when idiots are the helm, it does not change the basic fact that government spending has been historically proven to be capable of ending recessions and increasing demand.
 
Goobieman said:
This is a reading comprehension failure on your part -- I said no such thing.

-You- can run away now.
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Except that is exactly what you claimed.

Let's examine your words: "If you mean government spending, then no. All this does is run up debt, leading to bigger problems down the road."

You STATED government spending cannot end a recession. Except in my examples, government spending did just that. You stated that government spending only leads to more debt, not economic growth. Therefore, I ask you to defend your argument in the presence of historical examples. And watch, you run away from defending your argument. Typical.

Frankly speaking, phattonez is decades past you in understanding economics and he doesn't disagree with me.
 
phattonez said:
Germany was a boom economy that would have succumbed to a bust had it had enough time to run its course. China will be the same way. The US during WWII did not have a growing economy. Sure, you may see GDP growing and economic indicators being great for the period, but it sucked to live through that. People were dying and goods were rationed. I wouldn't exactly point out war as a good example of how to grow your economy.
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The US in WWII saw actual employment growth. Tell me how that's still a recession.

As for the other two, you are merely discussing after maths, which I don't disagree with. China is going to have a real problem with valuation if it doesn't slam on the breaks.

I'm still waiting for some of the economic illiterates here to argue in the face of historical examples that government spending cannot be used to get out of a recession. Notice that both Vance and Goobieman won't even touch the examples.
 
Dav said:
What kind of government spending, specifically, do you think can end a recession?
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Personally, I think infrastructure spending would be the best way.

You get the benefit of creating jobs and you're creating/improving things for society to use in the future.

This would have been a great time to improve our bridges, our energy infrastructure (we lose a LOT of energy through inefficiencies in the system), and to create new infrastructures that improve travel and mobility in major cities, their suburbs, and connecting cities.

Just a thought.

Edited to add: Spending on technological research would be good too.
 
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obvious Child said:
The US in WWII saw actual employment growth. Tell me how that's still a recession.
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If you have a government that only allows jobs that produce war goods and the government pays for all those jobs you'll have full employment but your economy will blow.

I'm still waiting for some of the economic illiterates here to argue in the face of historical examples that government spending cannot be used to get out of a recession. Notice that both Vance and Goobieman won't even touch the examples.
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I can't speak for them. They haven't delved into the economics of it enough.
 
obvious Child said:
So you also agree with Goobieman's position that government funding cannot create jobs?
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It can, but what's the value of a job unless it's producing wealth?
 
obvious Child said:
So you also agree with Goobieman's position that government funding cannot create jobs?

Tell me, what effect did spending trillions on defense during Reagan's years have upon the defense industry?

If you think that the government cannot create jobs by spending, you must think that the defense industry did not expand, did not increase salaries, did not increase demand for raw materials and did not fund research which employed thousands.

This forum is an excellent piece of evidence that America's public schools have utterly failed.
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But the defense industry is dependant on Government, because you and I do not buy aircraft carriers, or satellites, or war planes, they have no real demand for their product.

The defence industry did not increase in size because they built container ships for commerce, they didn't get bigger because they produced planes for private air travel.

The defence industry cannot produce jobs, without first taking your money in taxes and then the money being funnelled to them via the government.

The USSR also produced jobs, but obviously you cannot see the difference in job creation steming from the private sector, responding to the needs of the market and job creation that only survives so long as the citizen is taxed.
 
obvious Child said:
Okay genius, tell me, you are stating that government spending for WWII had no impact upon the economy. Furthermore, you are also stating that the rebirth of the German economy prior to WWII was not based on government spending. Furthermore, you are explicitly arguing that China's emergence from its recession had nothing to do with the large stimulus China's government passed.

You can run away now.
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The German economy was not the rosy picture under Hitler. Centralised planning led to rationing, due to most of the economy being dedicated towards the military.

What kind of person suggests that economy has recovered when individuals must use ration coupons?
 
Goldenboy219 said:
And you can back this up? Using a theory from an economic school of thought that cannot even explain how businesses emerge/function within the economy?

Good luck! You are going to need it! If you can achieve this, they will call it the mises/toney institute....
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And yet the Chicago School has one of several competing theories that explain why people form companies or businesses.

If someone generates a theory on subject A, their inability to develop or the lack of interest in developing a theory on subject B, does not invalidate the theory behind subject A.

You normally invalidate argument A, via debate, analysis, logic, deduction, etc.

Yes, the Chicago School has tried to develop theories for just about every subject and area of economics. Good for them, man kind benefits from this endeavor. But the Austrians School of lack of 'covering the field' does not automatically repudiate or tarnish their theories.
 
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Australianlibertarian said:
And yet the Chicago School has one of several theories that explain why people form companies or businesses.
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The Chicago school is very much so neoclassical.

If someone generates a theory on subject A, their inability to develop or the lack of interest in developing a theory on subject B, does not invalidate the theory behind subject A.
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To make sound analysis about an economy denominated by firms, one must draw from the necessary theory.

Yes, the Chicago School has tried to develop theories for just about every subject and area of economics. Good for them, man kind benefits from this endeavor. But the Austrians School of lack of 'covering the field' does not automatically repudiate or tarnish their theories.
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See above.
 
Goldenboy219 said:
The Chicago school is very much so neoclassical.



To make sound analysis about an economy denominated by firms, one must draw from the necessary theory.



See above.
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Err no, now you are conflating subject.

One is how companies are formed, the other as to how corporate or business dominated economy will perform. They are two different questions.

The second question which is what you are getting at relates to statistical aggregates. Granted you may argue that the development of a firm theory may provide clues as to how companies influence economies. But you know as well as I know, that empirical studies are complex, multi-facitated, and take into account many factors.

The Chicago Schools empirical studies particularly in marco modelling, and their 'rational actor' like models at the mirco, do not invalidate Austrian School theories straight off the bat. Sure, it may make the Chicago School theories more persuasive. But in itself, it does not give monetarist-consequentialist libertarians cart blanch right to blow the Austrian School straight out of the water.

Lastly, managerialist theorists or stake-holder theorists have differing views on why companies form, and what are the advantages disadvantages of the company. And ultimately this would inform their macro-view of how economies perform. Consequently you have other Schools that share your methodology, but yet they may come to quite different conclusions. Such diversity in economic opinion does not repudiate the Austrian School, or show that they are inept, far from it.
 
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obvious Child said:
So you also agree with Goobieman's position that government funding cannot create jobs?

Tell me, what effect did spending trillions on defense during Reagan's years have upon the defense industry?

If you think that the government cannot create jobs by spending, you must think that the defense industry did not expand, did not increase salaries, did not increase demand for raw materials and did not fund research which employed thousands.

This forum is an excellent piece of evidence that America's public schools have utterly failed.
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Didnt you answer your own question? Reagan built up a military that had been in disarray. Defense spending went to contractors...not government employees. It required that the contractor PRODUCE an item or items. The contractor had to build things the government wanted. Increase PRODUCT (not service), increase in employers, increase in employees. In that sense the government was the customer.

But that isnt what is being done with the stimulus money. MOST of it is going to 'save' government jobs. MOST of those jobs are at risk because the governments have mismanaged their budgets and tax base.

All you have to do is look at your average liberal democrat voter to see that the public school system has dramatically failed. Democrat politicians have worked hard since the 60s creating a dependent class of crippled pets.
 
obvious Child said:
So you also agree with Goobieman's position that government funding cannot create jobs?

Tell me, what effect did spending trillions on defense during Reagan's years have upon the defense industry?

If you think that the government cannot create jobs by spending, you must think that the defense industry did not expand, did not increase salaries, did not increase demand for raw materials and did not fund research which employed thousands.

This forum is an excellent piece of evidence that America's public schools have utterly failed.
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You might want to look into the history of the country...find out what has truly built our economy. It isnt government spending...it is INDUSTRY.

We no longer have amn industrial base for our economy. We have a service base.

The key trigger for the latest economic downturn was the housing market. New homes were being built in record numbers (construction is about the only remaining solid industry we have). Now...there ARE some problems there...namely...the costs of homes were vastly inflated...like the labor unions, we prioced ourselves out of the housing market. ALso...admiot it or dont, but I wouldl guess fully 35 to 45% of construction workers in MOST markets are either illegal undocumented immigrants, and a lot of them arent paid appropriately or taxed appropriately.

And on that note...with approximately 20 to 30 million illegal immigrants here funneling their pay and resources back to their families, how much of our economy is being siphoned out of our job and consuymer market?
 
Australianlibertarian said:
Err no, now you are conflating subject.
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That was the point.

One is how companies are formed, the other as to how corporate or business dominated economy will perform. They are two different questions.
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Yes. For one to believe they can prescribe macro policy when the existence of firms is not even within their "framework" seems.... I don't know... iffy:twocents:

The second question which is what you are getting at relates to statistical aggregates. Granted you may argue that the development of a firm theory may provide clues as to how companies influence economies. But you know as well as I know, that empirical studies are complex, multi-facilitated, and take into account many factors.
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My harp stems from another thread where Tony is claiming that lowing spending and taxes will always (100%) shorten recessions. The claim is based on the premise, "business have more money with less taxes and therefore will produce more" is overly simplistic. To argue to that extent without taking into consideration microeconomic firm organization and production theory is truly reaching. To then apply it to the macro economy misses the forest for the trees.

The Chicago Schools empirical studies particularly in marco modelling, and their 'rational actor' like models at the mirco, do not invalidate Austrian School theories straight off the bat. Sure, it may make the Chicago School theories more persuasive. But in itself, it does not give monetarist-consequentialist libertarians cart blanch right to blow the Austrian School straight out of the water.
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Again, that was not my intention. If anything i am challenging him in the hope that he will branch out his "studies" in an attempt to be more well rounded. For one to state that they reject empiricism and then use empirically tested and confirmed theories when it supports ones argument calls for questioning.

Lastly, managerialist theorists or stake-holder theorists have differing views on why companies form, and what are the advantages disadvantages of the company. And ultimately this would inform their macro-view of how economies perform. Consequently you have other Schools that share your methodology, but yet they may come to quite different conclusions. Such diversity in economic opinion does not repudiate the Austrian School, or show that they are inept, far from it.
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See above.
 
obvious Child said:
Except that is exactly what you claimed.
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And thus, further evidence of a inability to comprehend what you read.

The statement was made not in the global context, but in that of the current situation, the frame of reference in which the question was asked. Thus, any reference to FDR, etc, is meaningless as the situations are not comparable.

Now, why dont you consider that for the moment, and re-consider your response.
 
Goldenboy219 said:
Yes. For one to believe they can prescribe macro policy when the existence of firms is not even within their "framework" seems.... I don't know... iffy:twocents:
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You're not even backing this up. You always throw it about but I've explained to you why companies come into existence.

My harp stems from another thread where Tony is claiming that lowing spending and taxes will always (100%) shorten recessions. The claim is based on the premise, "business have more money with less taxes and therefore will produce more" is overly simplistic. To argue to that extent without taking into consideration microeconomic firm organization and production theory is truly reaching. To then apply it to the macro economy misses the forest for the trees.
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Only the companies that are getting subsidized will get less money because of a tax cut.

Again, that was not my intention. If anything i am challenging him in the hope that he will branch out his "studies" in an attempt to be more well rounded. For one to state that they reject empiricism and then use empirically tested and confirmed theories when it supports ones argument calls for questioning.
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What am I using that requires empiricism?
 
spending creates confidence so that others will spend;)
 
phattonez said:
If you have a government that only allows jobs that produce war goods and the government pays for all those jobs you'll have full employment but your economy will blow.
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Perhaps, but better then having no jobs and no goods. Also remember that the build up of wealth from rationing but high employment caused an explosion in consumer demand when the war ended.

I can't speak for them. They haven't delved into the economics of it enough.
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Correction. They haven't delved into economics period.

Note, I don't disagree with you on the long term potential pitfalls.
 
What kind of spending?
 
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