The (US) economy: What should be done?

Great Debates
61

[QUOTE=BobLibDem]
Well I didn’t say let’s go nuts with pork. With some prudent oversight by the states, an infrastructure program can be an overall economic stimulus. If our goods can move faster and less expensively around the nation, it makes the US more competitive in the world marketplace. If some congestion can be addressed, you’d see a dip in carbon emissions. Done the right way, an infrastructure program can do a world of good for the economy and the environment.
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Hell, we certainly do need it. Roads and bridges have needed an upgrade for a long time and putting a ton of people to work, even on the Canadian-American-Mexican sperhighway still puts people to work. Hell, let’s get rail lines extended and mass transit out there. We can start rolling the power grid over and come up with interesting ideas.
Nah. Makes too much sense. It worked last time, but that was cheating. That was the Great Depression. This is nothing remotely close to that.

62

The Mediocre Depression?

63

[QUOTE=Absolute Jackass]
You know, a rather crazy thought crossed my mind a couple of days ago…

Obama is such an orator! He inspires people. He doesn’t offer “something for nothing”. Reminds me of JFK.

Ron Paul is the “reformer”. He has many years of of experience on “the hill”, yet he is still a non-conformist.

I would like to see them combine forces as Pres and VP. Like I said, it’s crazy, but they’re not that far separated in ideology, are they?
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Now, that would be interesting!

64

[QUOTE=Absolute Jackass]
…Ron Paul is.. a non-conformist…?
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Carrot Top is annoying. Ru Paul is effeminate. The Black Death was kind of a drag.

65

[QUOTE=Least Original User Name Ever]
Hell, we certainly do need it. Roads and bridges have needed an upgrade for a long time and putting a ton of people to work, even on the Canadian-American-Mexican sperhighway still puts people to work. Hell, let’s get rail lines extended and mass transit out there. We can start rolling the power grid over and come up with interesting ideas.

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What evidence do you have that the roads need upgrading, or that mass transit needs to be extended to various areas. Do you have data showing that the current roads are so congested that they are hindering productivity?

What do you think stimulates an economy? There are two ways to do it - one is to just borrow a bunch of money and spend it. That certainly keeps the shop’s doors open for a few more days and lets everyone throw a big party. But if that money is not spent on creating new ways to build wealth, all you wind up with once it’s gone is a headache and a bigger VISA bill.

Governments are lousy at knowing where infrastructure is needed. Wouldn’t you know it, when government tries to figure out where the money needs to be spent, it’s always a happy coincidence that the most pressing needs are found in the most powerful Senator’s home states.

Also, this is a very strange ‘recession’ in that there is currently almost full employement. Lack of employees is actually a brake on growth in many places right now. What isn’t needed is a public jobs program. You wouldn’t even be able to find the skilled workers for it.

What John Mace said. What the economy needs most of all is a signal from government that it will keep inflation in check, and let the economy run its course. If you want a short-term stimulus, probably the best way to do it is to simply cut a cheque to every American - a one-time deal, so that this doesn’t turn into yet another entitlement system or mandate. Inject a bunch of cash into the economy.

The risk you take is that you’ll be injecting it at the wrong time, or that the added debt you incur will further devalue the dollar.

Do not bail out the mortgage owners or mortgage payers. That’s like fixing someone’s crack problem by giving them a little more money for crack. If the government sends the message that risky loans are essentially insured because the government will bail out the ones that go bad, the mortgage industry will price that into their plans and the problem will come right back once the money becomes available again. You absolutely need the industry to feel the pain from this, and people across the nation to see the pain caused by this, to help prevent it in the future.

But building large public works is probably counter-productive. It takes too long to ramp up to act as any kind of short-term stimulus, and in the longer term it simply diverts resources and people from where they otherwise would have been - which the market had already decided was the most efficient place for them to be.

Don’t meddle.

66

Definitely tax cut. Recession, tax cut. Depression? Tax cut. Needless, expensive war? Better believe that’s a tax cut. Typhus, beri-beri, ED? Tax cut, tax cut, tax cut.

67

[QUOTE=Renob]
And you seem to be under the impression that you know something about Friedman’s work.

I think you give Friedman too much credit. His ideas were important but there are many other economists and political theorists who supported the general move towards less government involvement in the economy.
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No, I don’t give him too much credit. Friedman’s ideology is what influenced contemporary economists. His fundamental ideas dominate current economic policy. The man is a deity to the fundamental capitalists. Friedman’s ideas and those of his protégés influenced the economic policies of the last four presidents, including Bill Clinton, not to mention Alan Greenspan, who advised Bill Clinton, and Ben Bernanke.

Obviously, Friedman could not push through all of his radical ideas in the U.S. He left this task to his disciples and future presidents. President Bush has done a great job starving all of our government regulatory agencies into ineffectual relics, privatizing the war, and taking the hands off approach in the unrestrained free market with the exception of corporate subsidies and helping a few cronies.

Well, China and Russia have embraced capitalism but there has yet to be democracy.

[QUOTE=Renob]
This illustrates what I view as a major flaw of liberal thinking – “he gave us hope, he meant well, so let’s ignore whether or not his policies actually did anything.” Yes, he gave people hope. So what? If his policies prolonged the Depression (as it seems likely they did – here’s a decent summary of some of the evidence), then the fact that he gave people hope is worthless. Results, not intentions, are the key to evaluating public policy. He may have meant well, but if his actions prolonged the crisis that hurt so many Americans, he deserves nothing but condemnation.
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Roosevelt did what he had to do to actually provide relief to homeless, desperate, starving people. I guess he could have let them starve with no dignity while the market self corrected. Most historians agree that Roosevelt was a great president. The conservative, fundamental capitalists can try to rewrite history to paint the ineffectual Hoover as a great man and Roosevelt as less deserving of his rightful place in history as an exceptional leader. It doesn’t change the facts.

It is time for a revolution.

68

[QUOTE=vison]
Fix it how? People borrowed money they can’t pay back. Should the government - meaning, You the Taxpayer - bail them out? Why? What about all the people who did things the right way and saved a downpayment and then bought a house they could afford?

Why should the taxpayers bail out the idiots in the banking industry who lent money to people who couldn’t pay it back, loans based on some misty-eyed notion of future equity or increased income? Those idiots should be prosecuted.
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It seems the banks have found money from foreign investment funds. I guess our treasury is bone dry. I don’t think it is prudent to let the banking institutions collapse. I haven’t read anyone advocate tax payers bail out the victims of the sub prime debacle. Maybe the large bonus checks received by the CEOs of the now defunct mortgage lenders could help off set some of the human misery created by these unscrupulous, deceitful, and greedy lenders.

[QUOTE=vison]
The proverbial chickens are coming home to roost. It’s true that the war in Iraq is an expensive little mistake, but the problem goes deeper than that: the USA and its citizens have been outspending income for decades. The personal saving rate is now a minus figure.

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I agree. American’s need to go on a financial diet, but don’t forget, consumer spending is what has kept this economy afloat. The true test comes when people stop spending.

69

[QUOTE=Hentor the Barbarian]
Yes, setting aside things like GDP and employment, only a few economic indicators suggest the New Deal was effective.

(I’m no economist, but as I understand it, it is still a minority opinion that the New Deal was not effective. Generally expressing this viewpoint are conservatives, who have to do so while arguing amidst the smoke and rubble around their feet that gee, we should cut taxes and leave things up to the market.)
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It is a minority view, but a perfectly legitimate one.

From the wiki article on the New Deal:

70

[QUOTE=Renob]
Frankly, this is a good thing. If people made bad ecnomic choices, they should pay the consequences. Yes, people took bad loans, companies made bad loans, and a lot of people failed to manage their financial lives. Let them pay the consequences without trying to have government “fix” it. Perhaps then people and companies will be more prudent with their money in the future.
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Let’s see if you say the same thing when your 401k loses 20% of it’s value. Unfortunately the problem isn’t just confined to greedy speculators, people who overextendend themselves and their lenders.

Banks are les inclined to lend money out so that means fewer business loans which means businesses can’t expand and create more jobs.

71

Your banker is very big on personal responsibility. Whenever they send their lobbyists to press for higher penalties for bouncing a check, for instance, they emphasize the issue of personal responsibility. They know that truly adult, responsible people make the effort to ensure that their bank account is sufficiently responsible to ensure that no such immature occurance will ever occur, or that they are wise enough to maintain an account of such robust responsibility that their banker can overlook any minor infractions.

Compare this to the irresponsible spendthrifts who squander their money whimsically on food and rent, and overdraw their account. Your banker must shoulder the burden of providing tough love and smacking you with a penalty wildly out of proportion to the actual infraction. (This is generally done by computer, your banker’s shriveled but tender heart cannot withstand too much direct involvement…)

Yes, major financial insititutions are comprised of fallible humans, who understand the stern duties of their responsibilities. But they also recognize that hey! shit happens! Nobody could have foreseen the housing market’s turmoil! Well, maybe a few wild-eyed Chicken Littles were running about screaming “The Bubble is bursting! The Bubble is bursting!”, but who listens to such talk when the sweet, sweet flow of money is strong?

72

And besides, why listen to the chicken littles when you know that even if the bubble bursts, the government will just bail you out anyway? It’s win-win!

73

Aww, have a heart, Sam. Imagine all those financial industry guys standing forlornly by the freeway entrance, in thread bare three piece suits, holding up desperate pleas “Will Compound Interest for Food!”

74

[QUOTE=Sam Stone]
And besides, why listen to the chicken littles when you know that even if the bubble bursts, the government will just bail you out anyway? It’s win-win!
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Sam! Welcome back! You know, I’ve been waiting for months for another one of your “I told you so - Bush is good for the economy because last month was good” threads.

Where you been?

75

[QUOTE=Renob]
If there was a “conservative economic strategy” during the Bush Administration I’d like to see it. Just because the Republicans were in charge does not mean they implemented anything close to the economic ideas of free market economists. What I think the Bush presidency coupled with the GOP Congress proves is that once anyone – conservative or liberal – gets his hands on the public till, it’s almost impossible to resist the temptation to divvy it up for projects you and your friends want.

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Clearly no one is going to implement any academic’s policies totally - left or right. However the basic philosophy is to cut regulations (done, but not totally, since that would be impractical), cut taxes, and cut spending - though supposedly revenue growth would account for the tax increase. The spending cuts clearly didn’t happen, and the growth in revenue came nowhere clear to making up the deficit. My point is that it is easy to say a tax cut will be offset by a spending cut, but it isn’t going to happen unless they are linked.

I encourage everyone to read this link, since it shows how far conservatives have to reach to say things are fine. First of all, no one I’ve read says there has been a big decrease in real wages, just stagnation while those of the top 10% have gone up greatly. So he starts with a strawman. Second, he says that average weekly wages may have stagnated because of the increase in part time work. Maybe, I don’t know how they are calculated, but he doesn’t consider how many of those with part time work would prefer full time work. Many of my daughters friends, out of school, would love full time work but get just enough hours so they don’t qualify for benefits. Then he says that because people goof off at work, the wages should be increased to account for time actually worked. He obviously never heard of 3 martini lunches, and doesn’t seem to count all the out of work work done these days. When my father came home he was done, when I come home I check email, and often work on papers.

Finally he trots out the old argument about how we have so much better stuff. We’ve had a thread on that. But finally he says that average house sizes have increased, so we must be better off, and ironically:

We sure know the answer to that one now, don’t we?

But keep it up guys. If conservatives keep telling the American people that they had better feel better off because that’s what the twisted numbers say, they are going to get their asses kicked good in November. Which is dandy with me.

76

[QUOTE=Absolute Jackass]

I would like to see them combine forces as Pres and VP. Like I said, it’s crazy, but they’re not that far separated in ideology, are they?
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They both want to get out of Iraq. Besides that …

77

[QUOTE=Sam Stone]
What evidence do you have that the roads need upgrading, or that mass transit needs to be extended to various areas. Do you have data showing that the current roads are so congested that they are hindering productivity?

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I’m sure you’re fine up there in the Great White North, but we’re not so hot in California.

From here.

I’d fall into the San Jose pool, and I wish I only spent 53 hours a year sitting in traffic. I look at traffic.com before going home, and the average delay is at least 30 minutes a day. There is an equal amount in the morning.

I don’t think infrastructure improvements will help immediately, but please get real.

78

As far as infrastructure goes, has the Minneapolis bridge collapse been forgotten already?

79

[QUOTE=Maeglin]
To be perfectly fair, how consumers treated they money in their pocket is what brought us down this recessionary road to begin with.

I don’t mean to speak from authority, but I am kind of close to these events. I am a financial statistician in a fortune 100 consumer finance company. Our competitors are taking multi-billion dollar writeoffs and are laying off tens of thousands of skilled workers. My company’s stock has fallen 30%, our own delinquencies and writeoffs have skyrocketed, and consumer credit as we know it is in a real state of flux. The “richest 1%” are losing billions hand over foot, and the banking industry is holding out its cup in Saudi Arabia. My company alone just stuck a billion dollars on its balance sheet, and the street punished us accordingly.

Yet there are people here who think this is overblown? Gee whiz. I crunch these numbers every day. Not only aren’t they overblown, they are only the beginning.

After how much millions of private citizens have utterly failed to manage their financial lives, it is hard for me to believe that the government could do worse.
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What position of authority? It’ the consumer finance and banking instituitions that had an equal hand in this - the consumers didn’t have “money in their pockets” as you suggest - its been the financial/banking institutios that have either been originating consumer loans without any due diligence or under lax lending policies that has led to this. And I KNOW, b/c I audit you guys. Sell the loan, find a creative way to package the schedduled payments and sell them to foreign investors and hedge funds (making money off both sides of the transactions), and claim that you’re the victim of an irresponsible consumer. The only problem is most of the financial institutions were doing ZERO due diligence on the these loans (most of themmortages, or home equity backed loans).

The bottem lines is there should have been more regulation on Wall Street so that you schmucks could not have enabled this mess.

80

[QUOTE=jayjay]
As far as infrastructure goes, has the Minneapolis bridge collapse been forgotten already?
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That actually was due to a design flaw, not to maintenance. In fact, if the work trucks on the bridge had caused the collapse (I don’t know the latest) infrastructure improvements could have been the cause. But there are lots of better examples.