Then why wasn’t there a crash in the years between 1955 and 1968, when taxes were lower? Why wasn’t there a crash in 1983 to 1987, when taxes were lower? And why WAS there a recession in 2000, when tax revenues were at an all-time high?
As for ‘Bush’s wars’ causing a crash, that’s beyond ludicrous - especially if you believe that military spending in WWII helped the U.S. out of the depression.
Stolen? As in, all money is Government’s except the part you keep, either legitimately or due to theft? :rolleyes:
Do *liberals *even believe this stuff anymore? I know you’ve been pitted a million times, but does anyone here think that that’s the case? Or just a poor choice of words?
Hardly, it’s just one that the Right doesn’t like to pretend is possible. Taxes Bad. Plutocracy Good. But the simple fact is that we live in a consumer driven economy, and all the time those consumers have less and less money because it’s all being sucked into the top few percent of the economic elite. And you can’t sustain a healthy national economy on the desires of a few percent of its population. The oh-so-wonderful “job creators” aren’t going to hire anyone until demand for what their corporations make goes up, and demand is becoming progressively more depressed because the rich have most of the money in the country.
Raise taxes on the rich, put it in the pockets of the normal people. Even better, hire them for all those infrastructure repairs and other problems that the republicans have avoided doing anything about because Government Is Bad unless it is used to hurt and oppress people.
I’m no economist, but ISTM that him being right about all these things is really one thing. The economy is not doing well. As an outgrowth of that there was little inflation and low interest rates.
Since it’s all the same thing, and a lot of other people have predicted that the economy wouldn’t do well, and for other reasons, I don’t think you can make a strong case that anything Krugman said has been vindicated.
Because they weren’t lower. You have your history wrong. The top marginal tax rate from 1954-1963 was 91%. It then went down to 77% in 1964, then to 70% in 1965, then back up to 75% in 1968. The top marginal rate is currently 35%. Where did you get “taxes were lower” from?
We ARE the government, firstly, and secondly, no not ALL money is public money, just the money that was stolen from us.
First of all the paper was written before she joined the Obama administration. It was posted as an NBER working paper in 2007. So the question remains: do you think Romer is too stupid to understand the implications of her own paper?
The reason it doesn’t have any implications for Keynesian stimlulus is:
a) Keynesians don’t advocate tax increases during a recession. They advocate greater spending perhaps combined with tax cuts.
b) You seem to believe that the papers is major new evidence for the negative impact of long-term deficits on growth. That is false. There are a lot of direct ways of testing for the impact of deficits and a lot of empirical work has been done on that subject for decades. RR doesn’t add significantly to that literature because that’s not what the paper is about. All they find is that tax increases to reduce deficits don’t harm the economy. I can’t think of any Keynesian who would disagree with that.
It’s easier to be accurate in your predictions when you can remember creatively…
http://dailycaller.com/2011/07/12/krugman-i-didnt-mean-that-stimulus/
Yes but those other people have also kept warning about inflation and rising interest rates which haven’t materialized. This suggests that whatever economic model they have in mind doesn’t actually match the facts.
I don’t actually see much of a contradiction but what does that have to do with my point? Krugman argued strongly that the stimulus was too small way back when it was being debated. This is not something he made up later on.
We were talking about tax revenue, not marginal rates. If you want to talk marginal rates, how come the economy in the 1990’s was so strong when marginal rates were less than half of what they were in the 1950’s and near all-time lows?
Look, not a single respectable economist I know of - on the left or right - thinks that the crash of 2007 was caused by low marginal rates. You’re out on your own on this one.
You’re wrong about that. ‘Those other people’ warned about rising interest rates and inflation IF the economy recovered. In other words, “If you goose the economy with very loose monetary policy and fiscal stimulus, you’ll either get no effect, of if the economy does start heating up all that liquidity injected into it will cause inflation, which will then choke off the recovery.”
The administration predicted a ‘V’ shaped recovery with rapid, strong growth. Opponents were merely pointing out that creating such an expansion with printed money was very likely to cause a rise in inflation and interest rates.
By the way, the people on ‘my’ side have been saying all along that a ‘V’ shaped recovery was a fantasy. Obama’s economists were wrong about that, too. Two years ago I got lambasted on this board for being a ‘liar’ because I said that the Administration’s predictions for growth were out of whack, and that as a result deficits would stay over a trillion dollars in the medium term, while the administration predicted they’d fall to something like 700 billion by this year and 500 billion next year.
Anyway, since there’s been no recovery, you wouldn’t expect inflation. Nonetheless, inflation in the U.S. is creeping up, even while the economy appears to be sliding back into a double-dip recession. Last June, core inflation was 1.05%. This June, it was 3.56%. BLS Data Here. Given that the economy is actually slowing down, that’s a rather worrisome thing, don’t you agree? It’s not good if inflation is greater than GDP growth.
But all that money - the 2 trillion sitting in corporate bank accounts, plus the trillion and a half the fed injected into the money supply - is still out there. If velocity picks up, then inflation is sure to follow unless the fed manages to unwind all that money out of the system without causing other bad things to happen.
I would like an answer to this as well. The few Keynesians I know personally also opposed Bush’s wars, largely for economic reasons. But it seems to me that military spending is one of the best forms of Keynesian stimulus, since it employs many Americans directly and buys many American products (since they have “buy American” rules that don’t apply to other consumers). It’s harder to imagine a better kind of stimulus except perhaps for (some) infrastructure spending.
Of course the wars have many other side effects, but I am looking for an answer in pure economic terms.
I might agree with many here that the cost of Bush’s wars contributed to debt, and therefore slowed economic growth in the long term. I’ve never believed that the stimulative effect of military spending could overcome the anti-stimulative effect of the taxes needed to pay for it - or the borrowing, although borrowing the money might delay the impact on the economy for a few years.
But believing that ultimately military spending might be a net negative for the economy is not the same as declaring that it caused a crash of the economy, which is a ludicrous claim I’ve never heard any reputable economist make - and certainly not one who believes in Keynesian stimulus.
Not, it’s a poor method of stimulating spending. It puts the great majority of the money into a very narrow segment of the economy. The same amount of money getting into the hands of the general public means that they’ll use it to buy a great variety of things, not just military supplies and equipment.
The military employs millions of people, many of whom are on the lower end of the pay spectrum and thus drive basic spending–food, consumables, etc. It also purchases a great deal of manufactured goods, which also largely employs Americans on the low end of the pay spectrum (Boeing, etc.). And military equipment, despite being a large portion of the US economy by itself, is hardly the only thing the military spends money on. They also spend money on construction, food, and so on.
I don’t understand how this translates to a narrow segment. Can you name a spending target which maps to a larger segment?
Well, pretty much civilian jobs in general. You spend money on the military most of it isn’t going to the soldiers, it’s going to buy extremely expensive machinery and supplies that is manufactured by a specialized segment of the economy. It’s like the argument that tax cuts on the rich help the economy by increasing the sale of luxury goods; most people aren’t involved in luxury goods any more than they are involved in the military. And on top of that soldiers aren’t economically productive.
If the money mostly goes into the pockets of ordinary citizens instead of weapons manufacturers, then most of that money will go into buying the immense number and varieties of things the general population wants & needs - not the much narrower needs of the miltary. More people buying more things across a wide variety of industries means a lot more demand across all those industries, which tends to translate to jobs across all those industries. And of course if you get that money into their pockets by something like an infrastructure repair program, then that in itself creates jobs and contributes more to the economy more than paying soldiers to sit around or blow things up.
I understand your claim, but it’s unconvincing based on the numbers I see. Yachtbuilders, for instance, are a narrow segment of the economy, and yachts are a small percentage of what rich people spend their money on. But military equipment is not, and that’s hardly the only segment the money goes to. Further, the manufacturing of specialized equipment overlaps that of non-specialized equipment. Military aircraft are built by essentially the same people as commercial aircraft; the same is basically true of Navy and commercial ships. Aerospace and shipbuilding themselves are supplied by large segments of the economy, and are bound by rules that require a large percentage of components come from the US.
Over 20% of the budget goes directly to military personnel. Several percent go to construction-related activities. Over 40% goes to “operations and maintenance” which I don’t have a breakdown for, but must also largely go to things such as food, fuel, building supplies, and so on.
From a Keynesian perspective, it seems that the most relevant question is “what percentage of the stimulus ends up overseas, or ‘under the mattress’?” Very much unlike tax cuts for the rich, military spending has a largely immediate effect, and you can easily show that a fairly low percentage disappears into non-stimulating areas.
Even if one could show that military spending employs fewer people per dollar than other targets, surely there is some advantage in the fact that it is far more direct than other areas, and also that Congress can influence the budget.
Economists think that military spending has a smaller
Multiplier than spending on domestic infrastructure
And what a lovely communion dress you are wearing, so innocent and demure.
Are you not appealing to authority but simply not lowering yourself to specify? Because, just as you say, your cites will be scoffed upon and batted aside, so, really, why should you? Why not simply assert their authority as your own, and let it be. But it doesn’t become any less an appeal to authority simply because you would prefer they remain anonymous.
Perhaps the day will come when you are so much better than the rest of us girls out on the street, perhaps then you can look down your nose at me. I, who am no better than I should be. Perhaps that day will come. Today isn’t it.