I saw this article in another thread. A quote:
Do any other Republican causes have $380+ million to blow to defend their interests? Seems to me if we propose legislation to threaten enough of them, we could shake out billions for our information and entertainment industries (not to mention the, ahem, public sector). What if we proposed to cut the military budget by half; and phase in mandatory electric cars, for examples?
What is the word for this? And even though it is bad: comments?
What is this, some sort of tongue-in-cheek Swiftian proposal? Or just another half-clever way to take a swipe at Republicans?
In case you were serious, I should point out that not even Keynesians believe you can stimulate the economy by forcing private industry to divert money away from productive ends and spend it on lobbying. A Keynesian stimulus only works if it’s money borrowed by government and injected into the economy. The health care industry’s money is already in the economy. The money they are spending fighting legislation will ultimately be paid for by people buying insurance policies.
Anyway, as a Swiftian proposal it misses the mark. Because if you really want to raise the big bucks, you need to threaten to hurt the unions.
In just pure political contributions, here is the top 200 list. You’ll notice that the top 20 places or so are heavily weighted towards unions, Indian bands, and ‘progressive’ PACs like ActBlue. The NEA is at the top, running away with the prize by a wide margin. And that only includes direct political contributions, which makes up a small percentage of their political spending (note that the first health-care provider doesn’t appear until way, way down the list).
According to This study, on average, the biggest unions in the country spend roughly 10% of all the dues they collect on lobbying activities and campaign donations. The SEIU alone spent about $60 million dollars on Obama’s election.
So if you want to get a lot of lobbying money into the economy, threaten the big unions, and threaten to shut down the Indian casinos. The health care lobbyists are pikers in comparison.
Not quite. First, borrowing is generally stimulative whether it’s private or by government. Second, you contradict yourself, first “diverting money away from productive ends” and later (“money [spent lobbying] will ultimately be paid for by people buying insurance policies”) tacking it on. So third, although OP was obviously striving for humor, unproductive activity can be stimulative.
A famous example of this was the Valdez oil spill which increased U.S. GDP and employment.
You do hint, correctly, that productive spending is better than non-productive spending. This is why rationalists are baffled that GOP thinks highly of ammunition for Iraq, but frowns on Obama’s domestic infrastructure repair. And why rationalists are baffled that GOP, who brag in another thread about their sense of community, don’t see health care and education as being particularly productive spending.
Interesting link you provide; better would be one with the relevant totals. The SEIU (Union) ranks #5 on your cited list, but represents no less than 2.2 million people. By comparison, Altria Group ranked #23 with only 10,400 employees.
By the way, your phrase “not even Keynesians” suggests that the phrase “We are all Keynesians now” (attributed to Milton Friedman and/or Richard Nixon) is no longer operative.
Are you a “fiscal conservative”, Sam Stone? If so, perhaps you (or any “fiscal conservative” reading this) can clarify the term for me by answering some true/false questions:
(1) Reagan’s deficit spending was better for America than Clinton’s budget balancing.
(2) Obama’s debt-increasing stimulus was bad for the economy.
(3) Cutting spending is generally good, but if there’s still a deficit after all cutting, taxes should be raised to balance the budget.
(I don’t intend these to be “loaded” questions. I honestly want to know what Dopers self-described as “fiscal conservatives” believe.)
False. (Clinton didn’t balance the budget. Newt Gingrich and the Republicans who took over Congress balanced the budget. Clinton’s first act upon becoming President was an attempt to increase the deficit.)
Also false, because badly phrased. It implies that Obama has stopped increasing the debt, which he certainly has not. You are correct that Obama increased the deficit by $787 billion over and above the TARP package that Bush and the Democrats passed, but Obama has now proposed a budget spending more than any other President in history, and with a deficit much higher than any other in history - $1.56 trillion, IIRC.
Also false. When no further cuts are possible, that is the point at which significant advances are possible in reducing the deficit.
The traditional advice on how to balance the federal budget is illustrative.
[ul][li]Make two lists of all the items in the federal budget.[/li][li]On one list, put all the places where budget cuts are not really possible. The spending items on that list need to be maintained, because of the effects that cuts would have on those receiving the benefit of the spending.[]On the other list, put everything else. This is the list of non-essential spending, where cuts would be possible - waste, fraud, corruption, inefficiency, pork - all that kind of thing.[]Now crumple up the second list and throw it away. The government doesn’t spend enough on those items to make any signficant difference. All your cuts will have to come off the first list.[/ul][/li]
Regards,
Shodan
“Stupid”.
Having a little trouble reading between the lines of your manifesto against our current system. Is that you clamoring for changes in the way big money influences our government? Campaign finance reform perhaps?
This is not right at all, particularly in context with this misleading notion of the Valdez spill. GDP always increases after disaster. There is no comfort in that. Your explanation is nothing more than a restatement of the broken window fallacy. Repeat after me: “Destruction is bad.” (Sorry, I forgot who actually said that.)
Additionally, money borrowed has to paid – unless you think it’s ok default on debt, destroy consumer confidence in your currency and markets and overall depress the general welfare of your country. In the meantime, paying back debt will lead to an increase in interest rates and adding a hurdle to growth as consumer dollars shift to savings accounts, making it tougher for businesses to borrow money. It will be interesting if the fed can navigate itself to raising interest rates to stave off inflation, but not so high as to crush growth. I think such activities are akin to timing the market, and if you have ever done any armchair investing, then you know it’s a difficult prospect.
To the OP: So what are you proposing, that liberal leaning industries pool money together to against GOP causes? The word for that is politics. I’m fine with that. I’m not sure what they could go after, though…raising taxes on businesses, churches?
You obviously misread everything I wrote; don’t know if it was “willful.” If I’d imagined someone might think I was endorsing the Valdez oil spill, I’d have connected the dots more thoroughly.
Your comment about repaying borrowings is also curious. Government borrowing in a recession is a substitute for the “normal” borrowing that business is not doing. And Republicans with their “supply side” theories are happy to claim future tax revenue from their tax-cut stimuli; I guess the same courtesy is not extended to Democrat stimulus. I hope it’s not rude to suggest that your comments sound like those of a very naive “fiscal conservative.” (My questions elicited one response so far, consisting of three very evasive answers.)
This is statement about government borrowing is beyond wrong. It’s not the same as business borrowing.
When businesses borrow money (whether bank loans or issuing corporate bonds), they have to convince investors (banks, pension funds managers, mutual fund managers, etc) that they will repay the money. The investors cannot conscript tomorrow’s children to pay interest on a loan the business failed to pay back.
Government borrowing doesn’t have the same hurdles. The government can borrow billions on the weakest of justifications and dump the payment obligations on citizens, including subsequent citizens who weren’t even alive to approve of it.
If Ford Motors borrows $1 billion from banks and can’t pay it back, the bank must eat the loss. The bank can’t go after Ford employees’ children and garnish their wages to fulfill the loan. You make bad loans, you lose money. Taking losses on poor loans is the feedback loop for business lending.
There is no feedback loop for bad government borrowing. Actually, the feedback loop is currency devaluation, high import prices, and lower standards of living. However, the time interval between cause-effect of reckless government borrowing and lower standard of living are far enough apart that the average citizen can’t connect the dots.
Government borrowing is not a substitute for business borrowing. It would only be a substitute if the buyers of government bonds (treasury bills) were willing to forgive the debt in cases of bad government spending – and who’s going to do that? Certainly not your grandmother that bought a bunch of USA Savings Bonds, or the pension fund that bought a portfolio of bonds, or China central banker who bought some for his foreign reserves.
Frédéric Bastiat. 
Unless I’m giving you too much credit, you were trying to say that all spending is stimulative, and somehow criticizing the use of GDP as a measuring stick – and, that is what I was responding to. I just wanted to make it clear to other readers that destruction is bad, even if it does raise the GDP. Increases to GDP via this method does have serious consequences, but I’m sure you already knew that.
No my comments are those of college degree in economics. Ruminator already said most of what I was going to say. I’ll add: Government borrowing can also come from inflating the currency, or in the classic case: printing more money. While I don’t endorse the popularly known “supply side” theory (and there is only one theory traditionally taught, btw), I do recognize the place for government spending and wealth redistribution. Seeing as how economic indicators are pointing to recovery, is there really a need for even more increased government borrowing? Borrowing with no actual communicated theory of how how it will be paid back. But, I can guess: increased taxes.
Well, some Americans would be stimulated if they saw Palin being hosed…
Let’s step back and examine the rationale for a Keynesian stimulus and a ‘multiplier effect’. The idea is that when times get tough, people tend to save their money and not spend it. This causes a drop in demand, which causes productive assets to stop being productive (i.e. factories shut down). So the notion is that the government can replace the demand through borrowing money and injecting it back into the economy. That’s what Keynesian ‘pump priming’ is all about.
Now, if your health insurance company is already operating at full capacity, spending all the money its business model says it should spend, and charging what the market will bear for insurance, and the government suddenly dumps a huge risk on it (“We might force you to change your business model in a way that will eat your profits!”), and therefore they are forced to spend more money than they wanted to in an attempt to mitigate their risk, you aren’t stimulating anything. Sure, more money is going to PR flacks and politicians and advertising agencies, bu that money is coming from somewhere else - maybe they’re cutting services to pay for it, or laying off employees, or raising premiums (which causes the health care consumer to divert his or her own funds).
Assuming that the health insurance industry is competitive and reasonably run (big ifs, I’ll grant you), then this forced diversion of funds will make the enterprise less efficient, and ultimately hurt the economy. If there is a very short term stimulus because the firm has to work its employees harder or borrow money to pay for its lobbying campaign, it will certainly not have any kind of positive multiplier because the money is crowding out other investment. So once the money has run full cycle (i.e. the loan is paid back), you’ll find that the net result is worse than if the government hadn’t forced the diversion in the first place.
You need to understand that GDP doesn’t measure everything. If you raze a city to the ground, you will get an increase in GDP because everyone is working like crazy to rebuild. Would you suggest that razing cities to the ground is good for the economy? What’s missing from the formulation is the capital destruction that took place when the city was destroyed.
A simple example: Let’s say I’ve got a nice house, and I’m working part-time to build a second home. Now someone comes along and destroys my house. Now I have to work full-time to recover my asset. So GDP goes up. But by the time I’ve rebuilt the house, what does my personal economy look like? I have a house again. Had it not been destroyed and I continued to work part time, I’d still have the house, AND half a house I built in my part-time work. In this case, destroying my home raised annual GDP output from that point forward, but ultimately left the economy poorer.
This is the essence of the broken windows fallacy. The only way Keynesian spending can possibly overcome this is if there are so many assets lying idle, and the money circulates enough times, that the overall growth in GDP overwhelms the capital-destroying effect of wrecking my home. Theoretically, this is possible, but it would require exactly the right circumstances.
This is a glib and superficial analysis of the type that ‘rationalists’ like to make. I can easily give you a ‘rationalist’ response to both of these assertions. For example:
spending money on ammunition in Iraq is a good investment, because a peaceful, democratic Iraq helps stabilize the region and reduce the influence of radical islam. This eventually cause more stable energy prices, reduces the risk of an economy-wrecking WMD attack, increases trade, and ultimately paves the way for a more peaceful middle east that will require a smaller U.S. military footprint, saving money in the long run.
Spending money on a domestic infrastructure could easily lead to over-building, which in return leads to long-term maintenance costs. In the meantime, the forced infrastructure stimulus is likely to be timed to land after the recession is over, which means the useless infrastructure will crowd out investment in other things.
I’m not saying that these arguments are unambiguously true - just that your opponents are smarter than you give them credit for and likely have better arguments than the simplistic caricatures you offered.
Again, this is a case of you not understanding your opponents arguments. They would argue that federal spending of this sort crowds out local structures that do the same thing, and ultimately destroys community. For example, before there was a widespread social safety net, personal welfare was provided for through extended families (i.e. grandparents moved back in with their children), parents saved more for the education of their children, which gave them more control and a vested interest in making sure their kids worked hard and got good value, etc. And the children relied more on their parents, which meant they had to accept more parental control and oversight. These forces bind families together.
Charity received from a relative, friend, or neighbor instills a sense of obligation and reciprocal behavior, which binds communities together. Charity given by a faceless bureaucrat instills a sense of entitlement and breeds resentment and class warfare.
So what? The fact remains that Democrats may work for the benefit of this special interest, even when it conflicts with the general welfare. That’s a bad thing. Have a look at California and New York, where the public unions are running their respective states into the ground.
It was never operative. It was a political statement made to justify big government spending. Or are you suggesting that the words of Richard M. Nixon represent revealed truths?
Again with the simplistic arguments. I don’t have time for these right now, but I’ll be happy to attack them later if you want me to.
To be fair, if you order that list by Federal-level contributions instead of total, while ActBlue is still tops, the next several are all banks and finance types.
The unions (starting with Electrical Workers at 7th) are still higher than the first recognizable medical lobby (blue cross, at 15th).
Were you proposing finance reform? Because it basically seemed like a proposal to try and extort money from industries you find politically undesirable by proposing absurd legislation.
Well, the Valdez spill was certainly famous but can you point me to cite that describes how it increased employment and US GDP? Because on the surface it seems to be a classic case of the Broken Window Fallacy. Sure it may have put a lot of clean-up crews and lawyers and so on to work. But how does that compare to production lost through the loss of service of the Exxon Valdez, the lost fuel, damage to the Alaska fishing industry and whatever else I’m not thinking of.
I’m not sure what a Swiftian proposal is, so probably not. It is part joke, part swipe, part serious. If ‘big money’ is to attempt to dominate the government, what can be done? Government lobbying seems like a rare instance of a thing that can squeeze cash out of a pubbie. Deserves a second look, no?
I’m glad you pointed that out. However, if at some point the pubbies run out of money with which to lobby, then we can finally push through the legislation to halve the military budget and impose mandatory electric cars on America. Imagine how that would stimulate the economy!!!
From a ‘pure bucks’ perspective, maybe. But I’m pro-union, so I wouldn’t do that. And anyway, unions are in fact a positive force, though I’m sure you can present examples of bad union behavior/effects.
Yah, but I have an agenda, and it isn’t ‘max dollars possible’. I am not a pubbie you see.
It is a big part of why he won. But your ‘ordinary Joe’ types are generally pro-union too, so having a candidate stand next to a union for the photograph ends up appealing to voters. Unless it is a pubbie standing next to the union, in which case the pubbie breaks out in boils of revulsion and spoils the photo.
I can tell we aren’t going to be on the same side in this. But that’s okay! No I am not going to threaten the big unions, that is ridiculous. Indian casinos? Can’t say I know enough about them either way, though I am inclined to throw the Natives a bone any chance I get, seeing as how they are generally the victims of American genocide.
Well… I admit it is bad in the op. But I was considering proposing a volume of threatening legislation that would ultimately bankrupt the Republican opposition of certain things (if this is even possible), at which point meaningful changes could be made. Like going after the military budget with an axe. Then a scalpel.
Thanks for showing up 
I will probably end up on the other side of some issues with you too, though I’ll wager for different reasons than with Sam Stone.
I’m not proposing extorting anyone. The pubbies don’t have to spend so much on lobbying. For instance, they could spend it on green energy technology instead. By halving the military budget and diverting some of the difference. We’ll raise taxes on lobbying income too.
They’d probably rather go Straight to the Wall. We should be willing to listen, and incorporate some of thier ideas. That one, for instance.