# 2011: Economic growth to hit 3-4%! **URL:** \ **Category:** Great Debates\ **Created:** [December 30, 2010, 11:38pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890 "2010-12-30T23:38:19Z")\ **Posts on this page:** 20\ **Page:** 6
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 3, 2011, 10:13pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/101 "2011-01-03T22:13:52Z")
> [@HRoark43](#): > > FYI the stock market is already back up to 11,000. Those who sold out when it hit 6000 (or so) were fools. Just saying. Agree. So, that old Obama is doing a good job after all, is he? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 3, 2011, 10:25pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/102 "2011-01-03T22:25:37Z")
> [@Sam\_Stone](#): > > Real demand is a dependent variable of real production. They are the yin-yang of the economic contract. You can’t ignore one and attempt to fix the economy by manipulating the other. Real production is also a dependent variable of capacity, with changes in real production even more so. If there is spare capacity, both in terms of machines and the ability of workers to work longer hours, there is unlikely to be an increase for need for capacity and thus more hiring or the need for more investment without a substantial increase in demand. > [@](#): > > Note that Apple is having no trouble selling all the iPads it can make. That’s because its business activity happens to align with the desires of the population. Also notice that despite all kinds of ‘stimulus’ of real estate, there’s still a huge glut of housing and prices are still falling. That’s because people don’t want as many houses as already exist. There’s a mismatch between production and consumption, and you can’t fix that by propping up consumption. A single successful product says nothing. There are winners and losers in all economic conditions. The increase in spending during this holiday season seems to indicate that American companies are making what people want to buy - once confidence is back. Yes there is an oversupply of housing right now, thanks to Republican mismanagement and artificial demand pumped up by the investment banks push for higher yielding mortgage products. However there are also a large number of people pushed out of the housing market right now. If they have jobs again, the housing will recover in many (but not all) markets. I think Florida and Nevada are screwed for a while yet. Interestingly, Nevada, with no income tax, has always been held as a shining beacon of how to run a state economy. Perhaps a few too many people rushed in? > [@](#): > > What they seem to forget is that even Keynes specified this as a remedy only under very unique circumstances - not as the main mechanism for maintaining a healthy economy. Exactly who is calling for stimulus to last forever? > [@](#): > > A healthy economy requires many things - a good business environment, low friction between economic transactions, information availability, free trade, property rights, all kinds of things. Sometimes an economy can have demand depressed by recession or fear, and it might be a reasonable course to stimulate demand through government action. Other times the economy may suffer from barriers to trade or production, and the correct answer is to lower barriers to trade and production. Gee, we had all those things from 2000 - 2008. Sometimes it is hard to distinguish between a good business environment and letting business play with dynamite. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 3, 2011, 10:32pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/103 "2011-01-03T22:32:11Z")
> [@Voyager](#): > > Though the mortgage deduction does inflate housing prices, it has been constant for a long time. It was in effect when I bought my Bay Area home in a relatively depressed market in 1996. Greenspan’s action in holding interest rates unnaturally low, in part to mitigate the poor results of the Bush tax cut, did have a big effect on the housing bubble. Though geography counts, the worst hit places were not the Bay Area and other limited stock markets, but Las Vega and Florida, both of which had plenty of room for new housing stock, which led to a much bigger oversupply than here. > But, given that low interest rates had a bad effect, are you proposing they be raised today? (You seem to be implying that, but I’m probably wrong.) The Fed at the moment has plenty of room to raise them if the supposed inflation actually happens, or when the recovery is self-sustaining. It is also the time to raise taxes and to start working on reducing the deficit. I don’t think interest rates should be raised immediately, no. The economy is too fragile. But that’s one of the problems with stimulus and expansionary monetary policy - it’s very hard to unwind the problems they create. Thus you wind up driving your economy off a cliff because you can never find a good time to tighten up and accept lower growth and allow necessary corrections to happen. That big deficit requires high growth rates to pay off, so when exactly are you supposed to put the brakes on? It’s entirely possible that the real correction should have happened after the tech bubble burst in 1991, but instead of allowing a sharp recession and a recovery, the Bush Administration basically tried Keynesian solutions - tax cuts, spending increases, and a loose monetary policy. The result is a seven years of anemic growth and anemic job creation, the formation of a new bubble due to these policies, followed by an even bigger correction as reality once again tries to assert itself. And then governments respond with even looser monetary policy and bigger stimulus in an attempt to keep the whole rickety infrastructure moving ahead. The problem is much worse now, because the U.S. has racked up so much debt that it’s losing the ability to raise interest rates without blowing up debt servicing costs, and because it’s run out of monetary bullets AND fiscal stimulus bullets. If the economy takes another downturn into a double-dip recession for whatever reason, it could get very bad. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 3, 2011, 10:59pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/104 "2011-01-03T22:59:00Z")
> [@Voyager](#): > > Real production is also a dependent variable of capacity, with changes in real production even more so. If there is spare capacity, both in terms of machines and the ability of workers to work longer hours, there is unlikely to be an increase for need for capacity and thus more hiring or the need for more investment without a substantial increase in demand. Here’s the crux of the disconnect - you talk about ‘capacity’ as if it’s one thing - an economy has a ‘capacity’, and it has ‘demand’, and you need to shore up demand if you have excess capacity, or shrink your capacity. And indeed, that’s what Keynesianism is all about - manipulating aggregate measures, primarily by boosting demand during a recession when there is an oversupply of goods. But thinking in aggregates like this misses the point to a certain degree. There isn’t one ‘capacity’. There are MANY capacities. There isn’t just one ‘demand’. There’s demand for many different things. If you live in a town that makes only screwdrivers and you need a hammer, would you say that you have a demand problem or a supply problem? The answer is that it’s a nonsensical way to frame the issue. If you give me $1000 so I can buy 500 screwdrivers, I’m still not buying them. I need a damned hammer. If you give the screwdriver manufacturers tax breaks or bailouts to keep them going, it won’t matter. They’re still making useless items. When an economy gets out of whack to the point where producers are making things no one wants, demand goes down and savings go up. The proper answer to that problem is to allow the producers to go out of business. Yes, I understand the problem that this puts more people out of work which can depress demand even further. But ultimately, your economy is not going to be healthy until you allow capital to move where it wants to go and stop bailing out failed ventures or over-supplied industries. > [@](#): > > A single successful product says nothing. There are winners and losers in all economic conditions. The increase in spending during this holiday season seems to indicate that American companies are making what people want to buy - once confidence is back. That might be true in terms of small consumer goods. I don’t think it’s necessarily true in terms of durable goods and real estate, or that business investment is being directed at what people want as opposed to where the government is trying to get it to go. > [@](#): > > Yes there is an oversupply of housing right now, thanks to Republican mismanagement and artificial demand pumped up by the investment banks push for higher yielding mortgage products. Oh, you just had to get a partisan shot in there. Just how did ‘Republican mismanagement’ cause the housing bubble? The Fed is independent, and Greenspan was chair of the fed during the Clinton administration as well. Fannie and Freddie were championed more by Democrats than by Republicans. Paul Krugman was totally in favor of Greenspan’s loose monetary policy, and in fact didn’t think Greenspan went far enough. So how is this the Republican’s fault? > [@](#): > > However there are also a large number of people pushed out of the housing market right now. If they have jobs again, the housing will recover in many (but not all) markets. Perhaps it would be recovering faster if the government had not propped up prices through stimulus, home buyer’s tax credits, and other manipulations. > [@](#): > > I think Florida and Nevada are screwed for a while yet. Interestingly, Nevada, with no income tax, has always been held as a shining beacon of how to run a state economy. Perhaps a few too many people rushed in? Could be. There was a nationwide real-estate bubble, and Nevada was an attractive place to build. Low taxes and low regulations do not guarantee a perfect economy. > [@](#): > > Exactly who is calling for stimulus to last forever? Paul Krugman is certainly very angry that the government isn’t engaging in another round of large stimulus, despite the fact that the recession ended several quarters ago. The White House budgets are assuming growth levels that suggest there will be no significant belt tightening any time soon. But I’m not talking about another stimulus. I’m talking about the ANTI stimulus - you know, the one the government is supposed to apply during the good times, to pay of the stimulus that was needed during the recession? I’m talking about Bernanke’s plan to unwind all the extra capital he’s injected into the economy over two rounds of ‘quantitative easing’. I’m talking about raising interest rates for the specific purpose of shrinking the money supply and preventing inflation once the economy really does start roaring. Getting the 70’s stagflation under control required double-digit interest rates and a forced recession. Do you think leaders today will have the stomach for that? Do you think the public will have an appetite for high interest and low growth for five years to correct for all the monetary expansion that’s gone on? > [@](#): > > Gee, we had all those things from 2000 - 2008. Sometimes it is hard to distinguish between a good business environment and letting business play with dynamite. Sometimes it’s hard to distinguish between a good business environment and a sick economy being propped up by constant government interventions. ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 3, 2011, 11:48pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/105 "2011-01-03T23:48:09Z")
> [@Voyager](#): > > What 9/11 financial crisis? There was a fairly mild recession. 9/11 was temporary - it clearly did not change any market fundamentals. Neither did Enron, as has already been mentioned. > Also mentioned is how slow job growth was during the recovery. I think it is fair to say that this is because the tax cuts were slanted so heavily towards the rich, and were ineffective in increasing consumption and thus job growth. > Also, given that the tax cuts have been in effect for so long, how come the average American has seen very little income growth during this time? Perhaps you’d rather be like China which has seen a lot of growth? The downside is you’ll have to go back to a billion people (or whatever that translates to in proportion to the US population) being horribly poor. The fact is we’re a mature economy, slow growth for the working class is inescapable. Tax cuts will save what growth is possible in this economy. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 4, 2011, 3:53am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/106 "2011-01-04T03:53:17Z")
> [@HRoark43](#): > > The fact is we’re a mature economy, slow growth for the working class is inescapable. The second follows from the first how? ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 4, 2011, 7:06am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/107 "2011-01-04T07:06:35Z")
> [@Sam\_Stone](#): > > Here’s the crux of the disconnect - you talk about ‘capacity’ as if it’s one thing - an economy has a ‘capacity’, and it has ‘demand’, and you need to shore up demand if you have excess capacity, or shrink your capacity. And indeed, that’s what Keynesianism is all about - manipulating aggregate measures, primarily by boosting demand during a recession when there is an oversupply of goods. > > But thinking in aggregates like this misses the point to a certain degree. There isn’t one ‘capacity’. There are MANY capacities. There isn’t just one ‘demand’. There’s demand for many different things. I thought that this went without saying. All the big economic concepts we talk about are made up of small decisions. Unemployment isn’t one thing either. No matter what we do to improve it, some segments will lag. Shrinking capacity can be expensive. Certainly you don’t want to write off physical plant, when you may need it again. After the tech bubble companies wrote off billions of dollars of product in inventory and in the pipeline. This time inventory was much better controlled. The only way of reducing capacity now is to get rid of people, which is what happened. > [@](#): > > If you live in a town that makes only screwdrivers and you need a hammer, would you say that you have a demand problem or a supply problem? The answer is that it’s a nonsensical way to frame the issue. If you give me $1000 so I can buy 500 screwdrivers, I’m still not buying them. I need a damned hammer. If you give the screwdriver manufacturers tax breaks or bailouts to keep them going, it won’t matter. They’re still making useless items. Lack of demand has been pretty broad based. Can you think of a change in the economy’s product mix that suddenly made people stop buying? Or could it be a mixture of confidence and cash? Clothing did much better this year, and I haven’t read anything to indicate that this is the result of some major fashion trend. Do you have any real data to indicate retailers forgot and relearned what the public wants? It is somewhat fair to say this of car companies. > [@](#): > > When an economy gets out of whack to the point where producers are making things no one wants, demand goes down and savings go up. The proper answer to that problem is to allow the producers to go out of business. Yes, I understand the problem that this puts more people out of work which can depress demand even further. But ultimately, your economy is not going to be healthy until you allow capital to move where it wants to go and stop bailing out failed ventures or over-supplied industries. I only know of two industries bailed out - auto companies, which worked pretty well, and the financial sector, which hardly fits your model. Getting money to people isn’t supporting a specific industry. In any case, are you seriously saying that a person who lost his job or who has a job but has a mortgage that is eating up his income is not buying things because of product selection? > [@](#): > > That might be true in terms of small consumer goods. I don’t think it’s necessarily true in terms of durable goods and real estate, or that business investment is being directed at what people want as opposed to where the government is trying to get it to go. I’ve totally missed the government directing business investment. There have been calls for banks to free up credit, but I haven’t heard them want the banks to invest in any specific industries. > [@](#): > > Oh, you just had to get a partisan shot in there. Just how did ‘Republican mismanagement’ cause the housing bubble? The Fed is independent, and Greenspan was chair of the fed during the Clinton administration as well. Fannie and Freddie were championed more by Democrats than by Republicans. Paul Krugman was totally in favor of Greenspan’s loose monetary policy, and in fact didn’t think Greenspan went far enough. So how is this the Republican’s fault? He was not in favor of Greenspan keeping it loose long after the need had gone away. Greenspan was clearly closer ideologically aligned to Bush than Clinton. Fannie and Freddie were not the root cause of the problem either. (At least you are not claiming it is making opportunity available to some poor people that was to blame, thanks for that.) > [@](#): > > Perhaps it would be recovering faster if the government had not propped up prices through stimulus, home buyer’s tax credits, and other manipulations. Home buyer tax credits got rid of a lot of inventory. Around here, average prices are rising again, not from an actual increase in prices but from the fact that the low priced foreclosed homes are getting harder to find, which raises the average selling price. In my neighborhood things have firmed up, and Krugman today says it looks like we’ve finally hit the bottom. > [@](#): > > Could be. There was a nationwide real-estate bubble, and Nevada was an attractive place to build. Low taxes and low regulations do not guarantee a perfect economy. Yes - lots of land, low taxes, little regulation may lead to speculative building. > [@](#): > > Paul Krugman is certainly very angry that the government isn’t engaging in another round of large stimulus, despite the fact that the recession ended several quarters ago. The White House budgets are assuming growth levels that suggest there will be no significant belt tightening any time soon. He is calling for more stimulus because the package that was passed wasn’t big enough to really do the job - which is what he said at the time. He isn’t saying stimulus forever. And while the recession is officially over, the growth of the economy is not big enough to replace the lost jobs anytime soon. > [@](#): > > But I’m not talking about another stimulus. I’m talking about the ANTI stimulus - you know, the one the government is supposed to apply during the good times, to pay of the stimulus that was needed during the recession? I’m talking about Bernanke’s plan to unwind all the extra capital he’s injected into the economy over two rounds of ‘quantitative easing’. I’m talking about raising interest rates for the specific purpose of shrinking the money supply and preventing inflation once the economy really does start roaring. All absolutely necessary when the time comes. Tax increases also to help pay off the debt incurred. > [@](#): > > Getting the 70’s stagflation under control required double-digit interest rates and a forced recession. Do you think leaders today will have the stomach for that? Do you think the public will have an appetite for high interest and low growth for five years to correct for all the monetary expansion that’s gone on? We’ve got so much room that we won’t need to go to double digit interest rates to tame inflation. > [@](#): > > Sometimes it’s hard to distinguish between a good business environment and a sick economy being propped up by constant government interventions. Or a sick economy propped up not by government intervention but by government ignoring unsustainable financial practices. ---
**Author:** ![HRoark43](https://avatars.discourse-cdn.com/v4/letter/h/bc8723/32.png) [@HRoark43](https://boards.straightdope.com/u/HRoark43)\ **Post date:** [January 4, 2011, 9:01am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/108 "2011-01-04T09:01:48Z")
> [@BrainGlutton](#): > > The second follows from the first how? Easy. If you have a country with a billion poor people and a rapidly growing middle class (that’s China, mind you), you have a rapidly growing market for consumer electronics, homes and cars. America’s middle class is not growing as fast as China’s. Demand for stuff is not exploding like it is in China. Slower growth in the U.S. is the only outcome from this. ---
**Author:** ![MrDibble](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/mrdibble/32/114_2.png) [@MrDibble](https://boards.straightdope.com/u/MrDibble)\ **Post date:** [January 4, 2011, 9:19am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/109 "2011-01-04T09:19:55Z")
> [@HRoark43](#): > > In South Africa they have cars that use flame throwers to deter theft. No, they don’t. ---
**Author:** ![Sam\_Stone](https://avatars.discourse-cdn.com/v4/letter/s/ecccb3/32.png) [@Sam\_Stone](https://boards.straightdope.com/u/Sam_Stone)\ **Post date:** [January 4, 2011, 9:35am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/110 "2011-01-04T09:35:59Z")
But they do have sharks with laser beams mounted on them. ---
**Author:** ![running\_coach](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/running_coach/32/15836_2.png) [@running\_coach](https://boards.straightdope.com/u/running_coach)\ **Post date:** [January 4, 2011, 9:53am UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/111 "2011-01-04T09:53:50Z")
> [@HRoark43](#): > > In South Africa they have cars that use flame throwers to deter theft. > [@MrDibble](#): > > No, they don’t. Actually, he might be right on this. [CNN](http://www.cnn.com/WORLD/africa/9812/11/flame.thrower.car/) [BBC](http://news.bbc.co.uk/2/hi/africa/232777.stm) Both from 1998 [Snopes](http://www.snopes.com/horrors/robbery/carjack.asp)(about carjacking in general in SA.) > [@](#): > > In 1999, it’s possible to get your car equipped with the latest in personal security weapons — a driver-operated flamethrower called The Blaster. I’ve searched around and haven’t found anything that says different. It’s mentioned on several security/alarm sites. Even checked The Onion. ---
**Author:** ![Meatros](https://avatars.discourse-cdn.com/v4/letter/m/b4bc9f/32.png) [@Meatros](https://boards.straightdope.com/u/Meatros)\ **Post date:** [January 4, 2011, 1:02pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/112 "2011-01-04T13:02:36Z")
> [@Voyager](#): > > Agree. So, that old Obama is doing a good job after all, is he? Nonsense, this was a result of the Bush Tax Cuts… _ **COUGH** _ _ **COUGH** _ _ **GURGLE** _ Woah, the b.s. nearly came up and out that time… ---
**Author:** ![Markxxx](https://avatars.discourse-cdn.com/v4/letter/m/5daacb/32.png) [@Markxxx](https://boards.straightdope.com/u/Markxxx)\ **Post date:** [January 4, 2011, 3:29pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/113 "2011-01-04T15:29:03Z")
> [@The\_Hamster\_King](#): > > No. Employers hire more when \*demand \*increases. If you cut taxes without increasing demand, then employers will just pocket the windfall. Why would you hire new people if there’s no work for them to do? That would be stupid… I agree with this. Part of this has to do with the expansion in the 90s. I recall back then, work was everywhere. I worked at a hotel as an overnight manager. We were paying $14/hr in 1996. I STILL coudn’t get anyone to work for me. People didn’t want the job. They didn’t want to work overnights. In 2003 our admins in sales offices were starting at 16/hr. Now these same jobs are paying minimum wage of $8.25 in Illinois. AND you’re not getting 40 hours a week and you’re not getting benefits. This was the problem. You had to pay a lot more, at least in the hotel industry, to get people. You also got a lot of deadwood. This recession has cut out a lot of the deadwood. In the last hotel I worked in 9-11 cut a huge amount of the deadwood and the rest was cut by this recession. So businesses are now operating with minimal staff working part time hours because workers are everywhere. In the 90s the American workplace had to hire people at wages that were probably too high for the job. In my examples admins should’ve been making $10 or $11/hr, but they had to pay a lot more to get anyone. So when the hard times hit, you had people in $16/hr jobs that were being overpaid suddenly and they got cut. Even when they find work it’s not going to be at the same rate. To compare unemployment you have to look at exact rates and hours. A $10/hr job at 40 hours is not the same as a newly created $9/hr job at 36 hours, though a lot of statistics show it as being so. Even an salaried manager working 50 hr/week for $50,000 is not the same as a newly hired manager working 60 hr/week for $50,000. Finally you have to understand, 15% of all high wage earners purchase about 40% of all high priced ticket items. (Over $1,000) This means you can’t even rely on sales figures as the people who are buying large ticket items, which drive the economy, were never really hit by the recession. Indeed most people I know that kept their job and salary were only “inconvenienced” by this recession. It’s the ones that lost their jobs that got hit very hard. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 4, 2011, 4:24pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/114 "2011-01-04T16:24:57Z")
> [@HRoark43](#): > > Easy. If you have a country with a billion poor people and a rapidly growing middle class (that’s China, mind you), you have a rapidly growing market for consumer electronics, homes and cars. America’s middle class is not growing as fast as China’s. Demand for stuff is not exploding like it is in China. Slower growth in the U.S. is the only outcome from this. It does not follow that, “The fact is we’re a mature economy, slow growth for the working class is inescapable.” What is a “mature economy”? There is an objective scientific definition for a mature **forest,** but not for a national economy. Economies are driven by, among other things, technological change, which is unpredictable and changes the game in unpredictable ways. One might have called America a “mature economy” at any time in our past when growth seemed to have slowed for the moment. In any case, “growth for the working class” would be, “the working class getting nearer to a middle-class standard of living.” There’s still quite a ways to go **there!** Look around you. Which means there is **demand.** Which demand would **explode** into consumer spending if the means of the working class were increased – just as it has many times in the past, regardless of **why** their means were increased. The real differences between now and more fortunate times past are: (1) Demand for **exported** American goods has declined, because now we have competition from so many more manufacturing countries. (2) Exporting “American goods,” even when you can do it, no longer benefits Americans the way it once did, because so many of the actual manufacturing jobs have been outsourced to the Third World. ---
**Author:** ![BrainGlutton](https://avatars.discourse-cdn.com/v4/letter/b/82dd89/32.png) [@BrainGlutton](https://boards.straightdope.com/u/BrainGlutton)\ **Post date:** [January 4, 2011, 4:27pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/115 "2011-01-04T16:27:49Z")
> [@runner pat](#): > > Actually, he might be right on this. > [CNN](http://www.cnn.com/WORLD/africa/9812/11/flame.thrower.car/) > [BBC](http://news.bbc.co.uk/2/hi/africa/232777.stm) > Both from 1998 > [Snopes](http://www.snopes.com/horrors/robbery/carjack.asp)(about carjacking in general in SA.) > I’ve searched around and haven’t found anything that says different. > It’s mentioned on several security/alarm sites. > Even checked The Onion. Can we buy those here?! 🙂 ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 4, 2011, 5:20pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/116 "2011-01-04T17:20:02Z")
> [@Sam\_Stone](#): > > h growth rates to pay off, so when exactly are you supposed to put the brakes on? > > It’s entirely possible that the real correction should have happened after the tech bubble burst in 1991, but instead of allowing a sharp recession and a recovery, the Bush Administration basically tried Keynesian solutions - tax cuts, spending increases, and a loose monetary policy. The result is a seven years of anemic growth and anemic job creation, the formation of a new bubble due to these policies, followed by an even bigger correction as reality once again tries to assert itself. And then governments respond with even looser monetary policy and bigger stimulus in an attempt to keep the whole rickety infrastructure moving ahead. > > The problem is much worse now, because the U.S. has racked up so much debt that it’s losing the ability to raise interest rates without blowing up debt servicing costs, and because it’s run out of monetary bullets AND fiscal stimulus bullets. If the economy takes another downturn into a double-dip recession for whatever reason, it could get very bad. You mean 2001, right? Can’t blame Bush the Elder for this one. I doubt Bush was operating from a Keynseian perspective, since his financial policy was clearly not chosen to be most effective from that point of view. It is a bit unfair to claim all deficit spending is Keynesian - that would make Reagan the biggest Keynseian ever. Based on the claims at the time, the tax cuts were supposed to generate additional revenue, not additional deficits. The unfunded wars and the unfunded Medicare mandate had effects also. And I quite agree that part of our problem now is that increasing deficits during times of relative prosperity limits our freedom of movement today. ---
**Author:** ![Really\_Not\_All\_That\_Bright](https://avatars.discourse-cdn.com/v4/letter/r/e8c25b/32.png) [@Really\_Not\_All\_That\_Bright](https://boards.straightdope.com/u/Really_Not_All_That_Bright)\ **Post date:** [January 4, 2011, 5:28pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/117 "2011-01-04T17:28:59Z")
> [@HRoark43](#): > > In addition, extended unemployment benefits mean higher unemployment insurance premium (think: taxes) on employers… which will only serve to slow down hiring. > > I propose they not only stop the extensions but also establish a rollback in unemployment insurance rates to spur hiring; plus put an immediate freeze on new welfare recipients. Unemployment _extensions_ are funded by the US Treasury, not by unemployment insurance premiums. Considering that state unemployment insurance coffers are extremely low right now, cutting premiums is about the worst imaginable idea. Honestly, almost everything you propose is guaranteed to produce the opposite effects from the ones you suggest. I mean, really… cutting taxes to reduce the deficit? A third grader can see the problem with that line of thinking. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [January 4, 2011, 5:54pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/118 "2011-01-04T17:54:41Z")
> [@Really\_Not\_All\_That\_Bright](#): > > Honestly, almost everything you propose is guaranteed to produce the opposite effects from the ones you suggest. I mean, really… cutting taxes to reduce the deficit? A third grader can see the problem with that line of thinking. Paraphrasing Groucho in his stint as a politician. around 2001-2002. “A third grade child can see the problem with that. Run out and get me a third grade child, the guy in the White House now can’t.” ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [January 4, 2011, 6:07pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/119 "2011-01-04T18:07:26Z")
> [@HRoark43](#): > > The middle class isn’t being impoverished. They’re moving up into the ranks of the rich; at least they were until this recession, after which they will resume their upward climb. The US median wage fell over the course of the 2000s, the first time in history that it has done that. And it hasn’t moved much since 1980. Meanwhile the top 1% have more than doubled their share of the national income since 1980. And why did Bush have the worst job creation record of any modern President after cutting taxes to their lowest level? Where are all the jobs these tax cuts are supposed to create? ---
**Author:** ![Dick\_Dastardly](https://avatars.discourse-cdn.com/v4/letter/d/c4cdca/32.png) [@Dick\_Dastardly](https://boards.straightdope.com/u/Dick_Dastardly)\ **Post date:** [January 4, 2011, 6:10pm UTC](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890/120 "2011-01-04T18:10:05Z")
> [@Sam\_Stone](#): > > Counting a huge deficit as an implied tax is not exactly a stretch. When you’re running deficits of close to 11% of GDP, it matters. But even on a direct comparison basis, had the Bush tax cuts been allowed to expire Canada would have had lower taxes overall than the U.S. this year. Now we’re still slightly higher. But we were _much_ higher in the past, and our economy suffered. Yet some of you still think that higher taxes are the path to prosperity. > > Wow, what a lame analysis. I guess that was to be expected from an outfit calling itself “New Deal 2.0”. Not exactly an unbiased source, eh? > > So they claim that the Canadian economy got better not because of tax and spending cuts, but because of NAFTA and the tech bubble. There are several problems with that: one is that the tech bubble never affected us as much as it did you, and the other is that Canada’s economic performance continued to be strong compared to other nations after the tech bubble collapsed, and in fact is still strong today, even after exports with the U.S. have collapsed due to the U.S. economy cratering. > > Can you imagine where Canada would be today if we had started this recession with a 10% of GDP deficit and a 90% of GDP debt? We’d be a basket case. Instead, we entered the recession with budget surpluses and a debt closer to 30% of GDP, and we’re better off for it. > > We also spent about half as much on stimulus as you did as a percentage of GDP, and that doesn’t seem to have hurt us either. And because we didn’t run our debt through the ceiling to ‘stimulate’ the economy, we’re going to be running surpluses again within 3-4 years, so while you’re starting another round of debates over raising taxes to get your monstrous debt under control, we’ll be debating another round of tax cuts. Yes of course. Adding on deficits until you get the number you want to make your case and then claiming that there’s nothing wrong with doing that is exactly the sort of thing we’ve come to expect from you. And with your history of endless dissembling and parroting of right wing think tank nonsense and presenting it as fact then yes, I’m going to go with what actual credentialled economists say about the Canadian economy versus your claims. [Previous page](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890.md?page=5) [Next page](https://boards.straightdope.com/t/2011-economic-growth-to-hit-3-4/565890.md?page=7)