That’s a reasonable take. Inflation is due to both temporary supply chain issues and an increase in the money supply. The question is how much of it is one thing vs the other. I don’t think we have the answer yet. Economists have missed every inflation prediction they’ve made for the past two years, along with missing every jobs report and every GDP forecast. We are in uncharted territory here, and prudence should reign. Passing the largest new spending bill in history is not my idea of prudence.
Take the idiotic train plans. They will have to poach people from other industries where they are needed, to plan and build,the things. Steel and concrete and copper are rising rapidly in price, and a nationwide train expansion will use gobs of it, driving up prices for everyone else. Construction is also energy intensive at a time when energy supplies are strained and we are trying to cut CO2… Most of the money will go to highly paid people, not the poor. Much of the engineering will come from other countries. The printed money to pay for it will be paid by the poor and middle class through inflation.
And in 20 years when the trains are running, they will have at best three times the per-passenger energy consumption than the electric cars we are all supposed to be driving by then.
I don’t have to. Keynes didn’t put up exact numbers and red lines and say “this is exactly when you stop spending and start paying off debt”. PhD Economists who love Keynes still disagree all the time on exactly how to interpret Keynsian principles with regards to real world indicators. Economics isn’t exactly a perfectly understood field.
I mock this crap because it’s the same shit that always comes up when Democrats are in office. It turned out to be bullshit under Bill Clinton; it was bullshit under Obama; and chances are it will still be bullshit under Biden.
I’m not worried about the economists’ forecasts that turn out to be somewhat inaccurate; I’m worried about the people who just vanish off the economic radar, the people who stop looking for jobs, the people who end out on the street or bounce around from temporary home to temporary home. The growth data often don’t capture the important part of the economy. The last major recession in 2007-09 was a good example: the GDP data suggested that we started recovering in 2009 but it took a decade for wages to recover and many households - in the millions, probably - never recovered financially. And then you throw this pandemic into the mix and it just knocked many of those who did recover right back down again.
Is there any scenario in which Keynes woild say, “Hey there are 8 million unfilled job positions. Businesses are dying because they can’t find workers. Supply chains are failing to keep up with demand, and inflation is rising. What we need right now is massive government spending with printed money”?
Really? Can you back that up with a cite? Because it’s hard to imagine Keynes suggesting massive borrowing and spending when the economy is already running hot, and when restrictions ease will run even hotter,
The economy isn’t that hot. There are tons of people not spending a lot of money, because of COVID.
But also, this spending will stimulate tons of economic activity. Imagine all the moms and dads who will be able to start businesses, or work a second job, etc., if their child care is taken care of. Imagine all the young people who will feel free to move to another city to work if they know their elderly parents’ care needs are taken care of. Etc. This kind of liberal/progressive spending will stimulate tons of economic activity.
The economy isn’t hot because of supply problems. And those supply problems are coming at a time when demand is being artificially constrained. What do you think is going to happen when restrictions ease and all that money starts getting spent? There’s already a giant ‘stimulus’ on the way, as soon as the economy opens back up fully and all that saved money starts moving. It might be prudent to wait and see what happens.
Imagine what’s going to happen to the price of child care when all that money flows into an industry that’s already stretched to the breaking point by COVID. Imagine how hard it will be to start a business when you can’t find employees, can’t get product, and everything you do to start up your business costs more every day.
Imagine how hard it will be to find business startup capital once we start taking the money from the rich, who are the people who fund most of it. Imagine how much harder it will get when the people who would lend you money know that more of it will be taxed if your business succeeds? Imagine all those small construction businesses that won’t start because the government is pushing all that infrastructure money to huge unionized corporations?
Imagine all the young people living in tents because asset inflation and higher mortgage rates have driven housing prices up even more. Imagine how less secure they will be when their parents can’t afford to help them because inflation is eating their savings and new inheritance taxes take a bunch of what’s left when they die.
You start by assuming that all progressive plans work exactly as you want them to, with no unintended consequences or side effects. Then you prove it’s the right way to go by building scenarios on your rosy assumptions.
Suffice it to say that I think you are exactly wrong on all of these points. It’s like student loans. They were going to make it easy for everyone to go to college. Those of us who believe in classical economics said that they are going to drive up college prices and create all kinds of perverse incentives, and that’s exactly what happened.
There are no free lunches. You can’t create wealth through legislation - you can only re-distribute it, while lowering economic efficiency and creating bad incentives that lead to larger problems down the road. Taxing the supply side to give money to the demand side while there are supply shortfalls and current demand can’t be met is pure foolishness.
The conservatives have been wrong on the economy, demonstrably, for decades. The progressives and liberals have been right. I prefer to go with the policies that have been proven to work (i.e. universal health care, support for workers, financial regulations, etc.) around the world than the failed conservative policies that have hurt poor and working people everywhere they’re tried.
Neither of them have been right because the economy is complex, and simple sound-bite solutions do not have the effect you think they will. Central planning does not work well, whether attempted by Republicans or Democrats.
I agree, but this isn’t central planning. Public firefighting and police helps society and the economy. So would health care, child care, and many other services. Not all services, but some. I want to see those policies in place – the status quo isn’t good for millions of poor and working Americans.
Is this really what you want to discuss in this thread? The basics of the philosophy differences between liberals and conservatives on the economy? That seems like a very tired topic.
You and I would probably both agree that not only the US but many (most) Western economies are addicted to cheap debt, and that’s a problem. But there’s a way out, and that’s accepting the idea that maybe we don’t need rapid growth as much as stability.
One step on the way out, I think, is to increase wages so that people who are in the labor force can earn enough money to afford a basic lifestyle such that as long as they don’t overspend, they’re not in danger of being put out on the street.
The other, perhaps more important step on the way out is to find ways to tax the wealthy and the bigger corporations and to redistribute that not just in the form of cash transfer payments but also to reinvest in concrete and social infrastructure.
We need to raise capital gains and inheritance taxes, particularly the former as low cap gains taxation is what partly makes speculation and pump-and-dump asset practices attractive to “investors”. Cheap debt is the other factor. I’d like to see us move away from retirement strategies that are based on investing in paper assets and more to an economy that is based on simply having cash in accounts and real property.
As far as addressing climate change goes, there is a very obvious place to start: nationalize the fossil fuels industry, seize their assets and boot the executives out on the street. The private energy industry’s behavior has been criminal when viewed in terms of climate – and, for that matter, just in terms of behaving responsibly. The government should just take them over and use the revenue to advance energy efficiency and reduction of carbon output while keeping prices level (or on a gradual rise).
I do understand that the government would likely become addicted to that revenue and struggle to work toward reducing it, but the fossil fuel industry is already addicted to the revenue and they are still actively working to increase it, so there really is no advantage to not nationalizing the industry.
I have been complaining about maintaining artificially low interest rates since the fed started doing it more than a decade ago, while the Democrats in the US and the Liberals in Canada were running around saying it’s a great time to borrow and spend, because money is so cheap. I pointed out that this is the same logic people use to buy 0-interest furniture they can’t afford. The problem is that the low interest rates are bound to go up eventually, and when they do all that spending will come back to bite them.
Take this 4.7 trillion dollars the Democrats want to spend. Everyone here is for it - do you even know what’s in it? How many people do?
As a reminder of what you’ll be giving up: At an historically normal 3% interest rate, that’s $141 billion dollars per year in interest, forever. That’s the equivalent of an entire Department of Education the U.S. will have to pay for every year in debt servicing costs. And if you wanted to pay it back over, say 20 years, you can add another $230 billion per year. That’s $1000 per person, or more like $2500 per year per taxpayer, for 20 years, to get out from under that. On top of all their other taxes.
So what’s in the bill that’s worth making people pay that much money?
As formmaintaining zero growth, that’s notmgoing to happen. Or it shouldn’t, anyway. Population grows, things wear out, and you need growth to maintain standards of living.
Do you know what the median estimate for the cost of global warming in 2100 if we do nothing? About 10% of global GDP. Why is that so scary compared to your zero-growth idea that would cost an order of magnitude more than that?
My plan is to remove the profit motive and the need for profitability, to use the revenue drawn from the sale of product to develop viable alternatives to it. To gradually nudge the country away from carbon-generating energy sources (gradually, but as quickly as possible). Straightforward, and maybe not even hugely difficult to accomplish.
Yes. Austrian/Chicago-School market solutions are simple and elegant – and for the energy industry, wholly unsuitable. This has been clearly demonstrated.
You keep saying this but I don’t see what this has to do with any proposed legislation…
Schools and daycares keep having COVID outbreaks, causing moms &etc. to take days off work. Even in theory no amount of money-throwing is going to change that.
eta: Two daycares and one after school care program in my area have closed due to a lack of staffing and I don’t think a direct subsidy to parents will help with that. At least, I’m not making the connection.
That’s true. The first priority for the economy is to end the pandemic. I’m not sure what more can be done – the vaccine mandates are working, but it’s probably not legal to mandate it for the entire population. But Democratic control may be time-limited, and thus I’m glad they’re trying to get broader priorities done even during the pandemic.