Growth comes from savings. Bernie Sanders’ proposals would likely decrease savings. His plan would hamper economic growth. His plan can not “inject resources” into the economy as claimed above. His plan allocates resources that already exist. Where did he get the resources? From his hat? Is he going to mine Mars? The question is whether the government can allocate existing resources better than us. I say no.
That being said, even if I were predisposed to believe consumption causes growth, i would simply point out that Sanders is a protectionist. Any benefits that could be gained from allocating resources to government activities would be minuscule compared to the impoverishment of millions overseas and lowered living standards domestically when he disrupts the division of labor and precipitates a trade war.
What are the consequences of NOT pouring money into the system?
Sure, it can always be done better, and it should be done better. However, bridges that collapse and highways that are overcrowded and electric transmission lines that can’t deliver sufficient power and potholes on the road and gas lines that leak cost money too. We can’t allow the perfect to be the enemy of the good.
The premise of the op seems a bit akin to finding the one scientist who disbelieves in climate change.
But the point of democratic socialism is not to provide economic stimulus. It is to have government provide the services that the free market either does poorly, with extreme inequity, or not at all.
And such can be done to varying degrees without harming economic growth. In fact the argument can be made that reducing extreme inequity may foster overall economic growth over time.
Actually, that is the point of government. Law and order, national defence, sanitation, pollution regulation etc. (a class of goods known as public goods) are all services that, as you note, the free market does poorly, or not at all, and we need a non market solution there.
Democratic socialism goes beyond that. I will let someone more familiar with the idea define it, but the point of it is not to provide services the free market can’t.
If extreme inequity was the only one you meant, that’s the only one you should have written. It’s also not very clear to me what you mean by extreme inequity. The free market provides Ferraris with extreme inequity. Democratic socialist governments don’t go around providing those do they? So your sentence is incorrect. And this isn’t a pedantic meaningless nitpick. I would genuinely like to know what services people think government should provide and why.
It probably would lead to growth or something that looks a lot like it. The question is, what does growth mean in an age of catastrophic resource depletion, and can we survive it?
Friedman says the discouraged workers as a whole have not aged enough to be completely unemployable. Maybe that’s optimistic, but it’s not inane.
The main thing keeping us from getting back on the pre-2008 trend is that that trend was mostly bubbles. In reality, some of the “economic growth” we have now is unsustainable and based in destruction of natural resources of which our material culture & our economy are merely derivative.
That said, I can see four main possibilities:[ol]
[li]The CBO’s pre-2008 projections for economic growth were biophysically impossible empty promises, and nothing will get our economy to that point, but subsidized education & healthcare probably won’t hurt anything. [/li][li]The CBO’s pre-2008 projections for economic growth were vaguely related to reality, and thus give us a rough ceiling for what Bernie’s plan can do.[/li][li]Bernie’s plan isn’t actually stimulative enough to reach the ceiling, but will add a more modest amount of growth.[/li][li]Bernie’s plan will overstimulate consumption of overtaxed resources, hastening the end of the world as man has ever known it.[/li][/ol]
As a social democrat, I think Bernie’s plan is worth a shot. As a Malthusian conservationist, I think we should abandon this silly democracy stuff and start euthanizing the excess population for the sake of a richer & more sustainable society. Which side I take kind of depends on my mood, and whether I’ve just been reading about the problems of naturalists in the present régime.
I don’t really know what Romer & Goolsbee’s problem with it is, but if it’s that they think, “we should abandon this silly democracy stuff and start euthanizing the excess population,” I’d be surprised. :dubious:
One of the cheerleaders of securitized adjustable rate mortgages, balloon payments and all, was, notoriously, Austan Goolsbee, who somehow got hired as an economic advisor to Obama. He is now using his reputation from that undeserved job to more effectively sneer at Jerry Friedman, as one of the pack of four saying, “Nuh-uh! Couldn’t happen!” And it’s all ridiculous anyway; as the probable reality is that Sanders’s plan would be stimulative, more stimulative than (like Hillary and the Third Way crowd) continuing to push investment in our present economy with a glut of investment (or should I say a yuuuuuge ratio of investment to consumption). It’s just not likely to be that stimulative.
I’m going to have to disagree here. The actual deadweight loss is in educational development abandoned by students who can’t afford to pay inflated tuition rates. Educating scientists and historians, who require extensive education but who do not “make the big money” once they graduate, is creating value.
On the medical care side, the real issue that Sanders isn’t talking about (and needs to) is supply. We could train 2x as many physicians as we do, and that would help a lot, whatever system of health insurance we have. But that requires politicians to recognize that the cap on Medicare-salaried medical residents instated in the 1990’s was recklessly low.
I thought I read 77% somewhere, but that may have been including payroll taxes, and I’m going to be a bad Doper and not hunt it down right this minute.
Still, pretty similar to JFK’s top rate. I don’t know how the brackets compare in purchasing power terms. Sorry, maybe I’ll look it up tomorrow.
About the times we did: As Jamie Galbraith pointed out in his letter to the Supercilious Four (PDF):
[QUOTE=James K. Galbraith]
Matthew Yglesias makes an important point about your letter:
“It’s noteworthy that the former CEA chairs criticizing Friedman didn’t bother to run
through a detailed explanation of their problems with the paper. To them, the 5.3 percent
figure was simply absurd on its face, and it was good enough for them to say so, relying
on their authority to generate media coverage.”
So, let’s first ask whether an economic growth rate, as projected, of 5.3 percent per year is, as you
claim, “grandiose.” There are not many ambitious experiments in economic policy with which to
compare it, so let’s go back to the Reagan years. What was the actual average real growth rate in 1983,
1984, and 1985, following the enactment of the Reagan tax cuts in 1981? Just under 5.4 percent. That’s
a point of history, like it or not.
[/QUOTE]
At the risk of disagreeing with Galbraith, who knows a lot more about it than I do; I believe it is an uncontroversial point of history that the economy grew explosively then because the Fed, having intentionally plunged the USA into a brutal recession, had finally let up on interest rates. The tax cuts probably added a smidge to it.
When an economy has been below full capacity, and recovers, somehow, that economy will have a few years of boom growth. We’ve been in a relatively depressed state for seven years. Ten years of boom growth is not entirely out of the question.
Now, iirc, Larry Summers seems to think we’re in secular stagnation, and growth isn’t coming back. I’m not well-educated enough to understand what exactly he means by that; but even if he’s right, subsidized university might overcome it.
Denmark has a lot of policies, though. Maybe they have a lower GDP for other reasons. Denmark is a flat little sea country, relatively densely populated, without much in the way of mining capacity. Also, if I remember right, you can’t buy Pepto-Bismol in stores in Denmark! I don’t think Sanders is going to copy that policy!
You are wrong. We’ve tried it your way (which was also Reagan’s way, the Clintons’ way, the ‘Third Way’) for thirty-odd years. We got bubbles and unsustainable consumer debt.
It does! Again, not really a controversial claim except to rightish politicians and pretentious media slobs.
Oh, please. How much free trade is he going to dial back? As big a deal as TPP was, it could be expected to add less economic capacity to the USA than just the first two years of Bernienomics. We are way into the level of diminishing returns on free trade agreements. That’s not a Sandersnista protectionist talking, that’s Paul Krugman, who got the [del]Nobel[/del] Swedish Banker’s Prize that we pretend is a Nobel for his work on trade.
I am gonna skip the paragraphs of you bloviating ignorantly about how economists bloviate ignorantly, not to mention you accusing them of not considering things they actually considered. :rolleyes:
No. You are trying to bait & switch “before” and “after.” Right now, there is low workforce participation, low compensation in the lower three quintiles of households. That means low demand, in that the populace lacks money with which to purchase goods and services. The idea is that the state can hire the populace to do things the market isn’t. Some of those things are things only the state really does anyway (like paying medical resident salaries, repairing viaducts, or building low-tuition universities in a bid to increase the mean skill level of the populace). Some is stuff the private sector might do, if there were more demand, but the state is more likely to get done at this point (some utilities maintenance, some blue sky research, etc.). When workforce participation is as low as it is, increasing demand for labor (ideally) increases the workforce and thus consumer demand! And this won’t happen all at once, which is why we’re talking about years of ~4% growth (~5% with population growth) instead of one year of 20%+ growth.
Now who’s incoherent?
I’m skipping the philosophical noodling about the virtues of post-secondary education and its relevance to economic performance. Suffice to say, you are not entirely wrong, but your biases show through in that you don’t notice that it’s a jobs program for those who transmit to the next generation some more obscure parts of our culture: the professors. I think it’s better the state pay them than sucker the students into doing so.
Well, Britain’s economy is depressed, hence the rise of Corbyn, not to mention Simon Wren-Lewis talking about the virtues of helicopter money on his blog.
This was a fun discussion. When I talk to real economists, I feel like a seven-year-old. You lot remind me that I know more than the average bloke.
My way is inflationist monetary policy and implicit bailout guarantees? Nope. That’s the way of the central planners like Reagan, Clinton, and Sanders.
In any case, how would a period of unsustainable consumer debt be a period in which I had my way of encouraging growth by not hampering savings? A bizarre claim.
I
Just name calling here.
How much would he want to? A lot. How much could he? Not much, considering he lost. The real protectionist threat now is Trump.
