Paul Krugman: Scholar or political hack?

[Ziggurat]

Originally Posted by Skeptic Ginger

So people who don't buy your arguments are lying?

No, SG. You're lying about what my argument is. You have twice now claimed that I'm arguing that your case rests on one example. I have explicitly refuted that claim twice, and you cannot point to anything I actually wrote to back up your claim. Whether or not you believe my argument, you don't get to substitute your strawman for it. That is the lie, not the lack of agreement.

You really don't get basic logic. You keep stumbling on the most basic points.

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You can believe your argument does not have those false underlying premises, but that doesn't change the fact it does have those underlying false premises.

No, it doesn't. Only your straw man does. But your straw man doesn't resemble my argument. I've already pointed out why.

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Yes, more stimulus, it's not a difficult concept.

The difficulty of a concept is not the same thing as the accuracy of that concept.

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It helped in '09 but it's not been enough and there have been problems getting the money actually spent.

And will that problem get easier or harder if you try to spend more?

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I agree that spending aspect needs to be addressed but simply throwing up your hands and saying it can't be done isn't an answer, just as putting more money in the hands of the rich isn't an answer.

Indeed, just putting more money in the hands of the rich isn't the answer.

But that's exactly what the stimulus did.

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I'm not surprised you'd be repeating a thought stopping talking point. Clearly investing in alternative energy is a good idea.

On what basis? On the basis of economic stimulus? Not a chance in hell. You can try to justify it on other grounds if you want, but the economics aren't favorable at all.

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Tell me, did I see you complaining about the 12 billion in cash that literally disappeared in Iraq?

Did you see me advocating that? In fact, did you ever see me advocating anything to do with Iraq on the basis of economic benefits? No, you did not. Logic fail again.

[Skeptic Ginger]

So, cutting to the substance in your thread, we could compare the Solyndra failure with the GM success. Got anything else?

I didn't ask if you advocated for the wasteful Iraq cronyism, I asked if you condemned it at the time?

[Ziggurat]

Originally Posted by Skeptic Ginger

So, cutting to the substance in your thread, we could compare the Solyndra failure with the GM success. Got anything else?

GM's success? Well, they're still afloat, if that's what you mean. Throw enough money at any company and that will be true. But the fact that they're still afloat doesn't mean that the bailout was a success.
http://money.cnn.com/2012/02/16/news...lout/index.htm
As of February, we were still $25 billion short. That article claims GM stock price would need to double for taxpayers to recoup their losses, but the stock price has actually declined since February.

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I didn't ask if you advocated for the wasteful Iraq cronyism, I asked if you condemned it at the time?

Why is that even relevant?

Solyndra is one of the direct results of a policy YOU are arguing for, on economic grounds. It was economic stimulus targeted at exactly the sector you think should be targeted. The same cannot be said about Iraq and me: not only did I never advocate for this particular program (I don't even remember what I knew about it at the time), nothing about my Iraq war position was predicated on economic benefits. The comparison has no relevance to our discussion here. It's an attempt at a tu quoque, and a poor one at that.

[stevea]

I'm a little surprised no one has mentioned Harvard economist Greg Mankiw. He avoids much of the political polarization associated with Krugman or eve the less ideologial spin of Sowell, whom I rather like, and he's positioned as a Keynesian with skepticism.

Originally Posted by Skeptic Ginger

It was interesting that in academia there is a divide among the most prestigious economics departments. I don't recall the whole list Krugman cited but U of Chicago vs UC Berkeley were on opposite sides of the isle.

Are we talking about the freshwater/saltwater schools ? Krugman made around of TV interviews in May and said essentially the same on all. It's his now tired refain that we need much more stimulus now, and that the massive debt accumulation is not a problem for entirely hand-wavey reasons. In his CNN interview, when specifically asked his explanation was that a nation like the US w/ sovereign currency can tolerate much higher debt loads (translation: we will inflate away the debt as well as your savings in the future).

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I believe, as I think Krugman was saying, that political ideology is particularly prevalent and distorts the conclusions regarding the evidence in the science of economics. You don't see the same thing, for example, in the science of medicine or astronomy. Krugman challenged anyone to provide the evidence that austerity was the way out of a recession.

If that is what Krugman actually said (which interview GS?) then it's a silly strawman; no one rational has ever suggested that austerity addressed recession. This is however typical of much of Krugman's mis-characterizations of dissenting ideas; it avoids having to answer the hard questions.

It is thought by many that tax cuts are far more stimulative than government spending and avoids the sort of inefficient market issues we see with GM or Solyndra. It is also believed by more than a few that the massive debt causes long-term decline in growth. Keynes' quip about "long run ... dead" doesn't answer that concern if you interest include future decades or generations.

As for evidence base theories - Keynesian-ism is certainly not the poster child for the scientific method. Keynes developed his theories ad hoc and as a result several decades of effort went into revision, retrenchment, rationalization, ex post facto collection of correlate data to support it; resulting in several flavors of neo-Keynesianism that we today call 'Keynesianism'. This is quite different from the early Chicago School, or some even currently at MIT where empirical data was drove the macroE hypotheses.

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At the same time there are dozens of historical examples that government spending when the problem is lack of demand as it is now does indeed result in an economic turnaround.

Then naming a dozen should be easy for you.

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In addition and as a separate note, Krugman said the Republics were totally dishonest in that if Romney is elected they will spend like Bush did and simply let the deficit grow with their 'no tax increases on the rich' ideological folly.

"Republics" ? Grow up!

I seriously doubt Krugman actually presented the ideas as you state them. I have no party affiliation and don't particularly care for Romney, however even a politically biased journalist like Krugman is unlikely to try to resurrect tired "Romney=Bush=evil=liar" trope. Tell me in which interview did he say this ? Even Krugman recognizes taxing the rich doesn't solve a deficit problem; it's a political side-show topic which is why he has carefully avoided making any such statements in the past. I think you heard what you wanted to hear - not what was said.

----

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Yes, more stimulus, it's not a difficult concept. It helped in '09 but it's not been enough and there have been problems getting the money actually spent. I agree that spending aspect needs to be addressed but simply throwing up your hands and saying it can't be done isn't an answer, just as putting more money in the hands of the rich isn't an answer.

Why isn't it the answer ?

A little light reading from Mankiw,
http://www.economics.harvard.edu/fac...Too%20Easy.pdf

The main points are these. The neo-Keynesian supporters believe that government spending results in a GDP multiplier around 1.4x or alternatively the current Whitehouse pegged the multiplier for the stimulus at 1.57 (however we expect that is politico-optimism). However some Keynesian schoolers studying that empirical data SGinger sometimes praises believe that tax-decreases have a multiplier around 3x !. So if the govenment spends a dollar it increases the GDP by an addiional 57 cents beyond the direct spending. If the Keynesian researchers are right - then if the govenment reduces tax by the same $1, it results in an additional $2 of GDP growth.

Who are these renegade empirico-Keynesians who belive tax cuts are better than stimulus ? None other than Christina D. Romer and her husband David Romer, econo-profs at UC Berkeley. Christina was of course the former Chair of the Obama admin Council of Economic Advisers. (fwiw Mankiw was best-man at their wedding).

So the looming questions you neo-Keynesians MUST answer are these -

Why are you choosing the less effective "least bang for the buck" method of addressing the recessions; why stimulate for a 40-57 cent/$ gain rather than tax less for a $2/$1 gain ? I think there is, at issue, the socialist agenda of making everyone dependent on government, and a socialist predilection toward central planning.

Do we really want to increase GDP by creating useless product ? Keynes wrote that setting bottles of pound notes into disused coal mines would immediately cure unemployment and increase GDP. Following this idea the Obama-ites placed wads of dollar bills into any half-baked green-energy plan. I am not solely blaming Obama - The grain-ethanol expenditures were equally incompetent. Keynes was not delivering a prescription but a joke, but it does point up the gross inefficiency of government vs private spending. We can end unemployment by hiring everyone to stay home and watch TV, this does improve nominal GDP, but it doesn't mean there isn't any useful product increase.

HOW WILL IT ALL END? The Great-Depression/WW2 events were primarily a US phenomena, and it resulted in a massive increase in government size. Is that really what we want ? What is the LT impact of all this debt accumulation ? Can it any in any way other than inflation ?


The other bit that Keynesians ignore is the work of Robert Lucas, Jr. (Nobel economist) on rational expectation. Yes the Fed, as Krugman said on CNN, can manage interest rates very to keep debt payment low, so long as their is demand for those bonds. The market for those bonds evaporates when there is rational expectation that they will not be repaid at a premium to cost. Recently the Fed has been purchasing ~60% of bonds issued
http://www.moneynews.com/Headline/fe...3/28/id/434106
this has the impact of keeping market supply low, prices high and interest rates low; however it seems unsustainable. Once there is a market consensus that these bonds are worth less than the price, the Fed will be unable to prop up the price. I think we are about one good sneeze away from disaster. Of course the problem is greatly exacerbated by deficits whether they come from inefficient gov't stimlus or tax cuts. At least in the case of tax cuts we expect growth to be dictated by economic individual need at efficient market prices; rather than centrally planned spending on boondoggles.

==

No, the rational expectation today is that US bankruptcy law is a meaningless protection to investors of companies like GM or big banks. The security of the asset will not be based on law but on ad-hoc plans of the Whitehouse (Bush and/or Obama). The expectation is that if you are a more prudent manager of companies- like Ford or Toyota or JPMorgan - that you will be punished by the government giving your competition a bailout. The expectation is that certain favored political money-bundlers will have their pie-in-the-sky green energy investments well funded regardless of the economic potential. The expectation is that government will stimulate with a QE#n, whenever the econ slow enough or political enough to matter. It seems there is no consensus expectation about what tax rates will be next year, what the federal budget will be, or what onerous rules and regulations will be imposed.

All of these expectations and manufactured uncertainty have real and negative consequences the economy, productivity and investment.

With ~3.3% inflation people still invest in 10yr bonds yielding 1.6% before tax; what does that say about investor risk tolerance ? They'd rather lose 2+% of value than take a chance with these highly uncertain and rapidly changing federal policies creating turmoil in private markets. Private markets can't grow with that sort of fear on the air.

[Skeptic Ginger]

Quite a bit to reply to Stevea. I'll try a chip at a time.

Krugman never said debt didn't matter. He said it does. But now is not the time to address it because stalling the recovery is worse than debt. He said one addresses the debt a little down the road.

As for the divide, some economists make the argument it is a structural problem. (People will have to look it up, the explanation is longer than I want to spend the time on.) Krugman presented a convincing case structure was not the problem. I suspect there is some structural issues with a transition to the global economy, but the facts support the case we still manufacture plenty in the US, but just with workers who are more productive, i.e. less of them.

But the rewards haven't gone to the more productive workers, instead the rewards have gone to greedier and greedier owners. That might fit with some people's ideology, but it shuts down demand.

I'll have to read your link before commenting further but tell me just how the super rich stimulate demand? Whereas giving money to the middle class means that money will be spent and recycled through the economy.

[Kaosium]

Hrm, here's something Krugman ought to re-read:

Originally Posted by FDR Inaugural Speech 3/4/33

(...)

So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.
(...)

Krugman needs to read that speech again, thinking about it laterally and not literally. It's no wonder he (seems to) take the price of gold as a personal affront, at some level he must realize it's a (sustained and dedicated!) vote of absolutely no confidence in the wares he's been hawking.

[Skeptic Ginger]

Originally Posted by Kaosium

Hrm, here's something Krugman ought to re-read:



Krugman needs to read that speech again, thinking about it laterally and not literally. It's no wonder he (seems to) take the price of gold as a personal affront, at some level he must realize it's a (sustained and dedicated!) vote of absolutely no confidence in the wares he's been hawking.

I don't believe I am interpreting that speech the way you are. I would guess that Krugman, like myself, condemns the lack of regulation and lack of prosecution of the massive bank fraud (that occurred in the private sector, mind you).

That is a separate issue from the government spending (increasing demand) to stimulate the economy which has an oversupply at the moment because demand is suppressed due to unemployment and low wages. The debt the government would incur needs to be addressed once the economy recovers. Government debt is not what is causing the recession, personal/private debt is, and that is private debt among the 99%. The supposed "job creators", the 1%, apparently have all kinds of excess cash in their coffers.

[Ziggurat]

Originally Posted by Skeptic Ginger

I don't believe I am interpreting that speech the way you are. I would guess that Krugman, like myself, condemns the lack of regulation and lack of prosecution of the massive bank fraud (that occurred in the private sector, mind you).

I haven't seen the film, but I just read through their study guide PDF. And I'm struck by the fact that nowhere in that study guide are Freddie Mac or Fannie Mae discussed. In fact, the only mention of either is the note that Rahm Emanuel was on the board of Freddie Mac, but that's it - one wouldn't even know from this study guide what Freddie Mac even was. That's not a good sign, considering how central these two GSE's were to the entire mortgage market.

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That is a separate issue from the government spending (increasing demand) to stimulate the economy which has an oversupply at the moment because demand is suppressed due to unemployment and low wages. The debt the government would incur needs to be addressed once the economy recovers. Government debt is not what is causing the recession, personal/private debt is, and that is private debt among the 99%. The supposed "job creators", the 1%, apparently have all kinds of excess cash in their coffers.

If they've got all this cash in their coffers, why aren't they spending more of it? Their demand is also suppressed. You had the facts, but you couldn't piece them together. So why is their demand suppressed?

[Skeptic Ginger]

Who are you referring to as "they" and "their" in your last paragraph, Zig? Are you asking why the rich are not spending? Are you asking why the demand is down for goods the rich could produce?

[Ziggurat]

Originally Posted by Skeptic Ginger

Who are you referring to as "they" and "their" in your last paragraph, Zig? Are you asking why the rich are not spending? Are you asking why the demand is down for goods the rich could produce?

Yes, I'm asking why the rich are not spending. And no, I'm asking for why demand is down for the goods the rich could demand. They've got all this cash. Why aren't they spending it? Why are they sitting on it instead?

[Skeptic Ginger]

Originally Posted by Ziggurat

Yes, I'm asking why the rich are not spending. And no, I'm asking for why demand is down for the goods the rich could demand. They've got all this cash. Why aren't they spending it? Why are they sitting on it instead?

I can't believe you're asking this. The rich are holding their cash. The poor can't afford to hold their cash. They're sitting on it because they have more than they need to spend.

Is equity on paper in stocks and bonds doing anything to stimulate the economy? Is gold under your mattress doing anything to stimulate the economy?

If 1% of the population owns 3-4 vehicles per capita, how many vehicles is that? If 99% of the population owns 1 car each, how many cars need be manufactured for that? How much money recirculates through the economy to maintain those vehicles?

Where do you get the idea that wealth concentrated in very few hands does anything to move an economic recovery to the positive?

[Ziggurat]

Originally Posted by Skeptic Ginger

I can't believe you're asking this. The rich are holding their cash. The poor can't afford to hold their cash. They're sitting on it because they have more than they need to spend.

I can't believe you don't know the difference between cash and wealth. Cash is a bad investment. So why are the rich holding lots of cash?

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Is equity on paper in stocks and bonds doing anything to stimulate the economy?

You said cash, SG. Stocks and bonds aren't cash.

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If 1% of the population owns 3-4 vehicles per capita, how many vehicles is that?

Cars aren't what rich people spend most of their money on. They spend much more of it on capital investments. But they aren't doing that. Why?

You can't even figure out the right questions to ask. You're hung up on your own class warfare rhetoric.

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Where do you get the idea that wealth concentrated in very few hands does anything to move an economic recovery to the positive?

Where do you get the idea that this is what I'm suggesting? I'm suggesting exactly the opposite: that the flow of money, not its concentration, is what will get the economy moving. You bemoan that concentration, yet never once have you pondered why it's not flowing, or what might make it flow again.

[Roger Ramjets]

Originally Posted by stevea

translation: we will inflate away the debt as well as your savings in the future.

You know what your 'savings' will be worth if the economy collapses? Zip. This idea that you should be able to salt your money away forever without it losing any of its value is silly. Everything else erodes over time, so why should money be any different?

People need to keep working to produce food etc., no matter what the state of the economy. If they stop working then everybody gets poorer, and eventually they all starve to death - even if they have bank vaults full of money! Government debt is caused by borrowing money from the people instead of taxing them. In the end it works out the same, but most people prefer inflation to taxes. Some people argue that there is a third alternative - weaker government. But the logical conclusion of that policy is anarchy (which is not sustainable).

The true value of your 'savings' is only what you can get for it when you go to use it. If the economy crashes then there won't be anything worth spending it on. A viable economy means your money is worth more, even with inflation. So don't complain that keeping the economy running is 'eroding' your savings, when the alternatives are worse.

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no one rational has ever suggested that austerity addressed recession. This is however typical of much of Krugman's mis-characterizations of dissenting ideas; it avoids having to answer the hard questions.

Funny, I though 'Austerity' was exactly what Europe used to address the recession (yet the much reviled US 'stimulus' policy seems to be working better). If what the dissenters who insist on 'answering the hard questions' are calling for isn't austerity, what is it?

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It is thought by many that tax cuts are far more stimulative than government spending and avoids the sort of inefficient market issues we see with GM or Solyndra. It is also believed by more than a few that the massive debt causes long-term decline in growth.

It is thought by many that an omnipotent god rules the universe and grants personal wishes. So perhaps we should just pray for the economy to improve? Just because many think it, doesn't mean it's true.

General Motors (and associated industries) are in a much better position with government support. Nobody else had the ability to stop them going under, and the knock-on effects of GM failing would have been disastrous. I bet that in the long run it will prove to be a positive.

Solyndra is just only company out of many that the government invested in. Whilst its demise due to Chinese competition was unforeseen, it is quite normal to have a high failure rate when developing new technologies. Usually it would only be private investors losing out, but in this depressed economy private investors were too scared to take the risk. Anybody who points to Solyndra as an example of government inefficiency without showing that private investors would not done have the same if the economy wasn't so bad, is just showing their bias.

[Skeptic Ginger]

Originally Posted by Ziggurat

I can't believe you don't know the difference between cash and wealth. Cash is a bad investment. So why are the rich holding lots of cash?

You said cash, SG. Stocks and bonds aren't cash.

Cars aren't what rich people spend most of their money on. They spend much more of it on capital investments. But they aren't doing that. Why?

You can't even figure out the right questions to ask. You're hung up on your own class warfare rhetoric.

Where do you get the idea that this is what I'm suggesting? I'm suggesting exactly the opposite: that the flow of money, not its concentration, is what will get the economy moving. You bemoan that concentration, yet never once have you pondered why it's not flowing, or what might make it flow again.

What is this, some attempt at bait and switch. Could you stick to the issue?

The economy lacks demand. It's a simple free market fact. If the little people can't spend because they are strapped for cash, the government can remedy the situation by spending on things that pay the little people.

You don't seem to be nearly as upset about government spending on things that pay the rich, like oil company subsidies and wasting billions on useless war efforts. But the idea the government can stimulate the economy by spending on teacher, fire and police salaries, rebuilding bridges and highways, subsidizing education, and providing a safety net for the poor seems to get your hackles up in a nanosecond.


How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

[theprestige]

Originally Posted by Skeptic Ginger

How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

[KoihimeNakamura]

Originally Posted by theprestige

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

Does it matter?

[Skeptic Ginger]

Originally Posted by theprestige

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

And yet the absurd premise, I don't know, continues.

Originally Posted by theprestige

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

They aren't buying because the 1% has already bought all they can possibly use.

I don't get why you and Zig can't understand a single individual can only consume so much.

The economy cannot be sustained by 1% of the population buying everything they want to buy. We need the 99% earning enough they have sufficient purchasing power to sustain the economy.

It's free market basics 101.

[Ziggurat]

Originally Posted by Skeptic Ginger

What is this, some attempt at bait and switch. Could you stick to the issue?

I am. You continue to fail to grasp the facts, even when you state them yourself.

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The economy lacks demand. It's a simple free market fact.

Yes. The poor and middle class are spending less because they have less. But by your own admission, the rich don't have less. And yet, they are ALSO spending less. Why? You are apparently actively determined to avoid this question.

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You don't seem to be nearly as upset about government spending on things that pay the rich, like oil company subsidies and wasting billions on useless war efforts.

Not true. I'm quite upset by wasteful government spending that favors the rich. That's why I opposed the bailout, and why I opposed the stimulus. Because that's what it actually did: funnel a lot of money to the well-connected.

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But the idea the government can stimulate the economy by spending on teacher, fire and police salaries, rebuilding bridges and highways, subsidizing education, and providing a safety net for the poor seems to get your hackles up in a nanosecond.

Strawman much? Oh, and almost none of the stimulus went to infrastructure. In addition, the stimulus money wasn't spent according to need (as you're trying to apply), but largely according to political power, and wastefully at that.

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How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

But why? They've always had cash, but they didn't hoard it before. Why are they doing so now? Your refusal to even think about this question is baffling.

[Ziggurat]

Originally Posted by Skeptic Ginger

I don't get why you and Zig can't understand a single individual can only consume so much.

If that consumption is personal, yes. But that's not how most of the rich spend most of their money. They tend to spend their money on things which are not personal consumption, but which are still consumption. For example, if a rich person builds a factory, a lot of stuff gets consumed in the process. And unlike consumer spending, that consumption provides direct future benefits.

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It's free market basics 101.

Yes it is. And yet, you continue to fail to grasp it, because you refuse to even consider the question in any depth beyond your tired class warfare cliches.

[Kestrel]

Originally Posted by Ziggurat

If that consumption is personal, yes. But that's not how most of the rich spend most of their money. They tend to spend their money on things which are not personal consumption, but which are still consumption. For example, if a rich person builds a factory, a lot of stuff gets consumed in the process. And unlike consumer spending, that consumption provides direct future benefits.

Rich people tend to park their money in Wall Street hedge funds that provide few if any economic benefits to the rest of society. Some funnel their money into offshore bank accounts to avoid taxes. Or invest it in politicians who return the favor in the form of special tax breaks that only apply to rich people.

The economy is sluggish right now because consumer demand is low. Consumer demand is down because too many people are out of work and too many homeowners have mortgages that are underwater.

[Skeptic Ginger]

Zig, I didn't avoid the question, you are reading past my answer. Try again:

The poor don't spend because they have no money.
The rich DO SPEND. You are claiming they have money and don't spend.
I am saying they have money and do spend but because there are too few of them, their spending, no matter how lavish, is not enough to stimulate the economy.

If the rich would shift more of their EXCESS money that is sitting idle back into circulation the economy would grow again.

[Kestrel]

Originally Posted by Ziggurat

Yes it is. And yet, you continue to fail to grasp it, because you refuse to even consider the question in any depth beyond your tired class warfare cliches.

Spoken like a true believer in the magic of utopian free markets. The solution is always to lower taxes, cut regulations and let the Wall Street boys party just like they did in 2008.

[Ziggurat]

Originally Posted by Skeptic Ginger

Zig, I didn't avoid the question, you are reading past my answer. Try again:

The poor don't spend because they have no money.
The rich DO SPEND. You are claiming they have money and don't spend.

They are spending less. Their demand has dropped. You continue to refuse to address this.

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I am saying they have money and do spend but because [b]there are too few of them, their spending, no matter how lavish, is not enough to stimulate the economy.

That can only be true if they don't control much money. But that shoots your own class warfare rhetoric in the foot: if they don't control much money, they they don't matter.

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If the rich would shift more of their EXCESS money that is sitting idle back into circulation the economy would grow again.

Quite so. But they aren't doing that. Why not? Again, you refuse to even think about why.

[Ziggurat]

Originally Posted by Kestrel

Spoken like a true believer in the magic of utopian free markets. The solution is always to lower taxes, cut regulations and let the Wall Street boys party just like they did in 2008.

Straw man much? Funny how the only response you can offer is one which doesn't address anything I said, but only things I didn't say.

[Kestrel]

Originally Posted by Ziggurat

They are spending less. Their demand has dropped. You continue to refuse to address this.

She has addressed it, but you simply responded with insults. You can't seem to grasp the idea that the middle class have a key role to play in a modern economy.

Over the last few decades, the benefits of increased productivity have mostly gone to those at the top of the economic ladder. The rich have been waging class warfare during this time while pretending to be the victims. Asking us to take pity on the billionaires while ignoring the middle class and the poor.

[Skeptic Ginger]

Originally Posted by Ziggurat

They are spending less. Their demand has dropped. You continue to refuse to address this....

...Quite so. But they aren't doing that. Why not? Again, you refuse to even think about why.

We can't discuss the issues until you get past this false claim. I am addressing it, you just want me to accept your underlying premises and I don't.

Are you claiming the rich are buying fewer yachts? That's ludicrous.

Knowing your political positions in past discussions, I'm guessing your claim is, they are not buying more widget factories.

What is stopping them from building more widgets?

I'm guessing you believe it is any and everything the government has done that makes building widgets unprofitable.

I believe there is no demand for widgets because the 1% has squeezed the 99% so much the 99% no longer has enough cash to buy widgets.

Originally Posted by Ziggurat

That can only be true if they [the rich] don't control much money. But that shoots your own class warfare rhetoric in the foot: if they don't control much money, they they don't matter.

There are two things to address here.

You seem to be sticking to the false logic of:

If A is caused by B then A is ONLY caused by B.

The poor don't spend because they don't have cash.
The rich don't spend [on widget factories] because there is no demand for widgets.

There is more than one cause of B. The 1% and 99% have different reasons for not spending, not the same reason.



The second thing that needs to be addressed is you falling for the "class warfare" campaign slogan. Please, surely you can think about and discuss this issue without relying on discussion stopping slogans? The Progressive left does not "hate the rich" and we aren't aiming for any kind of communist egalitarian society.

There is too much wealth at the very top. If this were all 'created wealth' as your side claims, then people at the bottom should have incomes similar to past decades. Instead, the bottom has lost purchasing power, and, accrued wealth at the bottom is quickly disappearing.

If this top heavy wealth distribution were occurring in a healthy economy no one would care. But it isn't.

[Ziggurat]

Originally Posted by Skeptic Ginger

We can't discuss the issues until you get past this false claim. I am addressing it, you just want me to accept your underlying premises and I don't.

But you have. You have conceded that the rich have lots of money, and they aren't spending it. The question is why, and you won't even touch that question. Instead we get nonsense like this:

Quote:

Are you claiming the rich are buying fewer yachts? That's ludicrous.

Yes, it's ridiculous. And it is precisely and explicitly NOT what I'm talking about. I've already told you.

Quote:

Knowing your political positions in past discussions, I'm guessing your claim is, they are not buying more widget factories.

As an example, yes. Do you have an answer?

Quote:

I'm guessing you believe it is any and everything the government has done that makes building widgets unprofitable.

And have you considered whether or not that might play a role? Because it sure doesn't seem like it.

Quote:

I believe there is no demand for widgets because the 1% has squeezed the 99% so much the 99% no longer has enough cash to buy widgets.

But that's not actually true. Demand has decreased, but it hasn't vanished. And much of the investment that the rich could be doing isn't to increase capacity but to increase efficiency, which would help even with static demand.

Quote:

There are two things to address here.

You seem to be sticking to the false logic of:

If A is caused by B then A is ONLY caused by B.

Not at all. In fact, that's your logic: because you think decreased consumer demand is decreasing capital investment, you have decided that government policy is irrelevant.

Quote:

The poor don't spend because they don't have cash.
The rich don't spend [on widget factories] because there is no demand for widgets.

Case in point: you've got a single cause, and so you don't consider anything else.

Quote:

There is more than one cause of B.

Really? And yet, you can only focus on one cause.

Quote:

The 1% and 99% have different reasons for not spending, not the same reason.

But evidently, it's still only one reason for each. You are doing exactly what you accuse me of doing.

Quote:

The second thing that needs to be addressed is you falling for the "class warfare" campaign slogan. Please, surely you can think about and discuss this issue without relying on discussion stopping slogans?

Slogans like the 1% and the 99%? Again, irony, mixed with hypocrisy. You do something, then turn around and accuse me of doing it.

Quote:

The Progressive left does not "hate the rich" and we aren't aiming for any kind of communist egalitarian society.

Of course not. All you need is a scape goat.

Quote:

There is too much wealth at the very top.

No. There is too little wealth at the bottom. The difference is important.

Quote:

If this were all 'created wealth' as your side claims

ALL wealth is created. That's not a claim, that's a fact.

Quote:

If this top heavy wealth distribution were occurring in a healthy economy no one would care. But it isn't.

Quite so: the wealth at the top isn't actually the problem, it's merely a target for resentment and envy in hard times.

[Ziggurat]

Originally Posted by Kestrel

She has addressed it

Not really. Neither have you.

Quote:

but you simply responded with insults.

It's an insult to say that someone won't address the issue? Your bar is set rather low. So low, in fact, that you've tripped over it yourself:

Quote:

You can't seem to grasp the idea that the middle class have a key role to play in a modern economy.

Over the last few decades, the benefits of increased productivity have mostly gone to those at the top of the economic ladder. The rich have been waging class warfare during this time while pretending to be the victims. Asking us to take pity on the billionaires while ignoring the middle class and the poor.

I'm not asking anyone to take pity on the rich. That's not my point at all. But if you want the rich to start spending money, then asking why they aren't is a rather obvious place to start. And why would I even want the rich to start spending money? Do I want that for their sake? Well, no: they're doing fine holding onto that money. I want them to start spending money precisely because other people will benefit when they do. So this idea that I'm looking for pity for the rich and ignoring everyone else is complete bull ****. But you don't care: you're not looking for solutions, you're looking for blame.

[Kestrel]

Originally Posted by Skeptic Ginger

The second thing that needs to be addressed is you falling for the "class warfare" campaign slogan. Please, surely you can think about and discuss this issue without relying on discussion stopping slogans? The Progressive left does not "hate the rich" and we aren't aiming for any kind of communist egalitarian society.

We are looking for sensible regulation to curb the behavior that created the 2008 financial meltdown. I don't hate rich people as a class but the Wall Street investment bankers deeply deserve our scorn and hatred. They did more damage to the economy of our nation and the world than the terrorists did in 2001.

[Skeptic Ginger]

Originally Posted by Ziggurat

But you have. You have conceded that the rich have lots of money, and they aren't spending it. The question is why, and you won't even touch that question.

What is wrong with you, Zig? Why do you keep saying I haven't touched on why the rich aren't spending after two posts addressing nothing but why the rich aren't spending?

(BTW, The nonsense you referred to was me clarifying your issue by saying the rich buying yachts WAS NOT YOUR ISSUE in case it was.)

Originally Posted by Ziggurat

Do you have an answer? ...

...Demand has decreased, but it hasn't vanished. And much of the investment that the rich could be doing isn't to increase capacity but to increase efficiency, which would help even with static demand.

Yes, THERE IS NO DEMAND FOR WIDGETS, or not enough demand if you prefer. As for improving efficiency, there is plenty of evidence they are indeed doing that. The country is actually still manufacturing the same amount as years past. But that production comes with less labor. The rich took all the profits from that increased production and the workers were not rewarded for their increased production.

Originally Posted by Ziggurat

And have you considered whether or not that might play a role? Because it sure doesn't seem like it.

So not agreeing with you is the same as not considering your position? Can we get past this tripe, please?

The government plays a role. The question is, how much and how much helps or hurts the market? No one has claimed the issues are black and white except maybe you insisting on the government is all black.

Originally Posted by Ziggurat

..you think decreased consumer demand is decreasing capital investment, you have decided that government policy is irrelevant.

The second half is untrue, stop imagining that a different view of the equation means I've left anything out altogether.

As for the first half, well d'uh. That is how it works, you know. Either you invest because you anticipate demand or because there is demand.

I've not claimed there is no investment or no demand.

Originally Posted by Ziggurat

..Case in point: you've got a single cause, and so you don't consider anything else.

I do believe that is called projection. It certainly isn't my position.

Originally Posted by Ziggurat

..ALL wealth is created. That's not a claim, that's a fact.

Notice the straw man?

Your straw version of my claim: ALL wealth is NOT created.
My actual claim: "If this were all 'created wealth' as your side claims..." THIS, as in THIS INCREASED wealth at the top.

Either existing wealth moved to the top or new wealth was added to the top. A number of right wingers in this forum, including you IIRC, claim the rich merely has added wealth, not redistributed existing wealth. But if that were true then the poor would have enough and the rich would have more. But the poor don't have enough while the rich do have more.

Originally Posted by Ziggurat

..Quite so: the wealth at the top isn't actually the problem, it's merely a target for resentment and envy in hard times.

So say the sloganeers. Look over here, don't look at the real problem. Yes, I refer to the 99% and the 1% as shortcut nouns in order to have a discussion. But "class warfare", "scape goat" and "resentment" are straw men, not causes or shortcut nouns in a discussion.

[ServiceSoon]

Originally Posted by Skeptic Ginger

...I am saying they have money and do spend but because there are too few of them, their spending, no matter how lavish, is not enough to stimulate the economy.

If the rich would shift more of their EXCESS money that is sitting idle back into circulation the economy would grow again.

If the rich do in fact have excess money that they are not spending, which we all agree is negatively impacting society as a whole because they are not spending it, should they feel guilty and what role if any should the government intervene in our free constitutional democracy where we respect and balance the rights of all?

As a bonus question, if you would be so kind, how do you know that there are too few of the rich, in their spending, to stimulate the economy? I might disagree with that statement considering that they pay the majority of taxes; wouldn't this mean that they have more to spend?

I firmly believe that any increase in taxes should come from increasing the capital gains tax to more closely resemble the tax rates of those who earn their money in wages. The result of doing this is that they will take their money and invest it elsewhere where the rates are less. To combat this I'd simply take a look at emerging nations and choose a rate that is slightly less.

[Kestrel]

Originally Posted by ServiceSoon

If the rich do in fact have excess money that they are not spending, which we all agree is negatively impacting society as a whole because they are not spending it, should they feel guilty and what role if any should the government intervene in our free constitutional democracy where we respect and balance the rights of all?

I think you missed the point. The rich have plenty of money, they have spent all they care to spend. When was the last time you forgot how many houses you own? Giving them yet another tax break will not help generate demand, it will only increase the debt. Large corporations are also swimming in cash. They are not investing right now because there isn't enough demand.

[Skeptic Ginger]

Originally Posted by ServiceSoon

If the rich do in fact have excess money that they are not spending, which we all agree is negatively impacting society as a whole because they are not spending it, should they feel guilty and what role if any should the government intervene in our free constitutional democracy where we respect and balance the rights of all?

This is based on the narrative that somehow the rich are being asked to contribute more than their fair share to the community needs. I don't believe that is true.

That same narrative falsely depicts the poor as lazy and wanting a handout. In reality the vast majority of the poor are working poor. They can't make it on minimum wages. Unemployment is not 60+% which the narrative that the rich are being asked to support everyone else would suggest. Unemployment is in the range of 8%. The majority of the poor are working poor.

The small amount of government spending that goes toward food stamps and welfare is insignificant. The real government redistribution problem is all the spending that does not benefit the majority. There were billions, maybe even a trillion dollars wasted in Iraq. And I mean seriously wasted, not just spent on bombs that accomplished nothing. Private contractors a la Cheney/Rumsfeld/Wolfowitz New Deal took the money and ran leaving half finished projects and shoddy work in their wake. Subsidizing oil companies, and much of the farm subsidies are insane.

Then there is Social Security and Medicare. The idea was to provide income and medical care for the elderly so we didn't have people dying in the street because they could no longer work. Rich people don't need these benefits. It's a simple fix to raise the amount of income that is taxed or decrease benefits for the wealthy.

When the right wing complains that the poor aren't paying any taxes because they don't earn enough to pay income tax, the narrative ignores the fact the working poor are all still paying FICA taxes. They are paying their share.

To be honest in this debate, one needs to first properly define the issues. This is all about what everyone's share of the community expenses should be and what should the community expenses cover. Trying to re-frame the discussion as communist style redistribution of the wealth is an emotional gimmick meant to make people think that somehow lazy poor people just want handouts from those hard working rich who don't really owe a bigger share of the community expenses than they are paying.


People in higher income brackets are not paying their fare share, people in lower income brackets are paying more than their fair share. The rich benefit proportionately more from corporate welfare than the poor benefit from welfare for the poor.

Originally Posted by ServiceSoon

As a bonus question, if you would be so kind, how do you know that there are too few of the rich, in their spending, to stimulate the economy? I might disagree with that statement considering that they pay the majority of taxes; wouldn't this mean that they have more to spend?

If you want to disagree that the 1% could simply stimulate the economy by their personal consumption you need to cite some evidence. If you want to claim there is somehow a demand for goods but the rich are holding back investing, you need more evidence than just ideology.

There is evidence the rich are holding wealth and not investing it in production of goods or services.
There is evidence demand for goods and services are low.

Originally Posted by ServiceSoon

I firmly believe that any increase in taxes should come from increasing the capital gains tax to more closely resemble the tax rates of those who earn their money in wages. The result of doing this is that they will take their money and invest it elsewhere where the rates are less. To combat this I'd simply take a look at emerging nations and choose a rate that is slightly less.

I wouldn't argue with increasing capital gains tax. I see no reason why that should be the only taxes increased.

[daenku32]

Originally Posted by ServiceSoon

If the rich do in fact have excess money that they are not spending, which we all agree is negatively impacting society as a whole because they are not spending it, should they feel guilty and what role if any should the government intervene in our free constitutional democracy where we respect and balance the rights of all?

As a bonus question, if you would be so kind, how do you know that there are too few of the rich, in their spending, to stimulate the economy? I might disagree with that statement considering that they pay the majority of taxes; wouldn't this mean that they have more to spend?

I firmly believe that any increase in taxes should come from increasing the capital gains tax to more closely resemble the tax rates of those who earn their money in wages. The result of doing this is that they will take their money and invest it elsewhere where the rates are less. To combat this I'd simply take a look at emerging nations and choose a rate that is slightly less.

Keynesian Economics aren't unconstitutional, if that's what you are suggesting.

[Skeptic Ginger]

Originally Posted by Kestrel

I think you missed the point. The rich have plenty of money, they have spent all they care to spend. When was the last time you forgot how many houses you own? Giving them yet another tax break will not help generate demand, it will only increase the debt. Large corporations are also swimming in cash. They are not investing right now because there isn't enough demand.

Exactly.

[balrog666]

Originally Posted by Kestrel

She has addressed it, but you simply responded with insults. You can't seem to grasp the idea that the middle class have a key role to play in a modern economy.

Oooooh, please define "middle class" for us ignorant rubes.

Originally Posted by Kestrel

Over the last few decades, the benefits of increased productivity have mostly gone to those at the top of the economic ladder.

You mean those who paid for it?

Originally Posted by Kestrel

The rich have been waging class warfare during this time while pretending to be the victims. Asking us to take pity on the billionaires while ignoring the middle class and the poor.

Screw the poor, they already make more from the welfare state than any "middle class" bumpkins would ever want to devote their lives to ...

[ServiceSoon]

Originally Posted by Kestrel

I think you missed the point. The rich have plenty of money, they have spent all they care to spend. When was the last time you forgot how many houses you own? Giving them yet another tax break will not help generate demand, it will only increase the debt. Large corporations are also swimming in cash. They are not investing right now because there isn't enough demand.

Nowhere in my paragraphs did I advocate to giving the rich a tax decrease.

Doesn't the supply/demand model suffer from the chicken or egg dilemma? Specifically, the conundrum is that the unemployed don't have a job so they have no money, which means they can't trigger demand, but nobody is going to hire somebody to sell a product that nobody can afford to buy. So when somebody says there is a demand issue, why couldn’t I just as easily say the opposite?

[Skeptic Ginger]

Originally Posted by ServiceSoon

.... Doesn't the supply/demand model suffer from the chicken or egg dilemma? Specifically, the conundrum is that the unemployed don't have a job so they have no money, which means they can't trigger demand, but nobody is going to hire somebody to sell a product that nobody can afford to buy. So when somebody says there is a demand issue, why couldn’t I just as easily say the opposite?

I think the chicken and egg you are referring to is, now what? That is where the case for government spending to stimulate the economy comes in. Only the government has the resources to get the stalled supply and demand cycle started back up again which is Krugman's position.

[Skeptic Ginger]

Originally Posted by balrog666

... Screw the poor, they already make more from the welfare state than any "middle class" bumpkins would ever want to devote their lives to ...

What is your evidence for this belief about the poor and/or the welfare state?

[ServiceSoon]

Thank you for the reply.

Originally Posted by Skeptic Ginger

That same narrative falsely depicts the poor as lazy and wanting a handout. In reality the vast majority of the poor are working poor. They can't make it on minimum wages. Unemployment is not 60+% which the narrative that the rich are being asked to support everyone else would suggest. Unemployment is in the range of 8%. The majority of the poor are working poor.

I've never seen nor heard it discussed that unemployment is 60% in this narrative. Furthermore, I engaged in this discussion to determine how to lower the unemployment rate and get the economy moving, not to chastise anybody based on their class.

Originally Posted by Skeptic Ginger

When the right wing complains that the poor aren't paying any taxes because they don't earn enough to pay income tax, the narrative ignores the fact the working poor are all still paying FICA taxes. They are paying their share.

This is based on the narrative that somehow the rich are being asked to contribute more than their fair share to the community needs. I don't believe that is true.

To be honest in this debate, one needs to first properly define the issues. This is all about what everyone's share of the community expenses should be and what should the community expenses cover. Trying to re-frame the discussion as communist style redistribution of the wealth is an emotional gimmick meant to make people think that somehow lazy poor people just want handouts from those hard working rich who don't really owe a bigger share of the community expenses than they are paying.

People in higher income brackets are not paying their fare share, people in lower income brackets are paying more than their fair share. The rich benefit proportionately more from corporate welfare than the poor benefit from welfare for the poor.

I can't resist, how do you determine what fair share is?

Originally Posted by Skeptic Ginger

If you want to disagree that the 1% could simply stimulate the economy by their personal consumption you need to cite some evidence. If you want to claim there is somehow a demand for goods but the rich are holding back investing, you need more evidence than just ideology.

I don't think that the top 1% could do it, but maybe the top 5% could. Here is some math. The GDP was 15 trillion last year of which 70% was from consumption. Let's assume that everybody consumes the same amount as last year, but we want a 5% increase in GDP. Let's see if it's feasible for those top 5%'ers to do it on their own. I want to know how much each one of would have to spend to increase the amount of consumption by 5%. There are around 140 million people who filed federal tax forms last year. 5% of that is 7 million. Each one of those people would have to spend $75,000. That's half of what they make per year!

Of course I have to run the same scenario for the top 50% excluding the help of the top 5%. I choose the top 50% because the bottom 50% don't pay federal income taxes so it is logical that they don't have any additional disposable income. Each one of those people would have to spend $8,333. That's one quarter of what they make per year.

My conclusion, it's gonna take the help of everybody to increase our consumption by 5% next year.

Originally Posted by Skeptic Ginger

There is evidence the rich are holding wealth and not investing it in production of goods or services.
There is evidence demand for goods and services are low.

Do you agree that if the rich had the ability to increase their wealth they would do so? The reason the wealthy are not spending their money is because demand is low. Again, this appears to be a chicken or egg riddle to me.