...Robert Skidelsky.
I was watching Fareed Zakaria GPS this weekend and there was a discussion of economics with Harvard Professor Niall Ferguson and Robert Skidelsky.
You pretty much know what you're going to get with Mr. Ferguson. I was poised, notebook at-the-ready for some pure conservative BS. Here is the first quote I took note of:
For years, there's been a consensus in Washington: Republicans are against increasing taxes and Democrats are in favor of spending public money and the net result is that the United States always runs a deficit, it's a structural deficit; it's nothing to do with the recession.
Alas, the facts can be cruel to conservatives. I would direct you to www.presidentialdebt.org to familiarize yourself the actual data on the federal spending of the past 35 years. It's not the most user-friendly chart I've ever seen but I'm sure the learned readers of Furriners will make sense of it. A key number is the -2% in YOY column of the last year of the Clinton administration. That's the surplus! So, don't give this "structural deficit" nonsense.
Anyway, the second quote from Mr. Ferguson that I took down that I was ready to call bullshit on is this:
NF: But why is it that small and medium sized businesses in the United States today are not hiring? Why is it that they're not expanding? Why is it, therefore, that unemployment is stubbornly high? It's because they see the tax-hikes coming that are implied by this fiscal policy.
It turned out I don't have to call BS because Robert Skidelsky did it for me:
RS: It's not the case that the reason businesses are not borrowing is because they are expecting tax increases down the line. They're not borrowing because they don't see the demand in the economy for the products they might be producing.
And therein lies the argument for additional stimulus.
and RS or furriners ... why is there little or no demand for goods and services? Might the fact that unemployment is near 10% and projected by the current administration to remain above 9% for the rest of this year and into a large part of next year be a large contributing factor. What makes the stimulus advocates think that stimulus money would be spent on goods and services and not be used to pay down debt?
ReplyDeleteWhy don't you admit it ..... this administration doesn't have a clue on how to create or promote job growth in any meaningful way. Their actions certainly don't live up to their rhetoric or creative statistics!!
As a small business owner, I have to disagree. The administration wants to spend more money on stimulus, which would put people to work, but all the crazy teabaggers say they don't want to spend. Well look, lowering my corporate taxes would not get me to hire a single new employee. I only have so much work, and until there is more demand, you could give me huge tax breaks, but it won't get me to make a change in my hiring practices.
ReplyDeleteUntil congress and the everyone else gets it in their heads that the only way to help get people back to work is by spending money, and not by lowering taxes, we will be stuck with these high unemployment numbers. People need to wake up to the fact that tax reductions to corps like mine will only help me get richer, but not help people get employed.
Derek Anderson fan says...
ReplyDeleteIt is true there is a self-reinforcing cycle: rising unemployment leads to less demand which leads to more unemployment. That is what deficit spending (fiscal stimulus) is designed to break. In typical recession, it might be enough to lower interest rates and have modest additional measures (be they tax cuts or additional spending)... this is not an ordinary recession.
As for the possibility of just using money to pay down debt. I think you're making a mistake in thinking that stimulus is stimulus is stimulus (so to speak). Yes, if you just send out checks (a la GWB in 2008) or give across-the-board tax cuts, there will be some that will be saved or used to pay down debt (which we agree is not stimulative but isn't necessarily a horrible thing for families underwater on their mortgages and/or strapped with long-term credit card debt) but that is not my argument. Analysis shows the most stimulative action is from extending unemployment insurance benefits (money into the hands of people who will spend it), aid to state govts (preventing the layoffs of teachers, public safety officials, etc), and infrastructure spending. (as well as spending measures that have nothing to do with tax cuts or business incentives, etc.) Anyway, if I may speak for Lord Robert Skidelsky, which I can only assume he would be perfectly fine with - I mean we're colleagues as esteemeed members of the liberal media - that is what might be the crux of his argument.
To Bryce I would say tax cuts and targeted tax incentives are designed to create opportunities for entrepreneurs, I assume like yourself, to consider using the savings to expand their business or to invest in other business opportunities that would create jobs. If you would opt to pocket the money and “make yourself richer” then I suppose that would be your choice. I would like to believe that some other small business owners who have not lost the entrepreneurial spirit that they once had and that saw them take out loans and mortgage their future with a hope make a living and better life for themselves, would see an opportunity to better themselves to a greater extent and expand their business or start new businesses.
ReplyDeleteWith respect to your “crazy teabagger” comment, I take as being extremely denigrating and offensive. I’m sure that there are some crazies in the fringes of the Tea Party movement, but I would suggest that the majority of this “crazy movement” are in fact hard working, concerned citizens who are unhappy with the direction our out of control and out of touch Congress is taking this country.
Need for more stimulus you say ….. the CBO puts the cost of the first stimulus bill at $862B and according to “Don’t Mess With Joe” Biden this has resulted in jobs created or saved of up to 3.6M by year’s end. That’s $240K per job Bryce. Does that work for you??
Mr. A, what is your solution? You seem to have a number of feelings and beliefs, unfortunately operating on a gut feeling is better suited for gambling than serious policy.
ReplyDeleteAs a small business owner we have found ways to increase profits and cut costs void of tax cuts. Business taxes have. Already been cut to half that of Reagan and further cuts only serve to create a false perception that it helps small business. Like the Bush tax cuts Obusiness tax cuts help the wealthy not the little guy. As you suggested to Bryce we have taken our profits and bought new equipment. Unfortunately we have no work for these machines because what little business is available is being aggressively bid on by the companies already making these products. We would have to essentially start s new business to expand any further. Your belief does not match my reality.
As for your assertion about stimulus spending per job it completely contradicts your belief in tax cuts. Having more money to invest in new equipment is beneficial fir a businesses long term out look however you assume job creation only has a one year pay off. Your view is very simplistic. Imagine the domino affect of having done nothing. 10% unemployment is child's play in comparison to unemployment with no stimulus. Might I recommend some Paul Krugman as an easy read for understanding the stimulus.
Derek Anderson fan says...
ReplyDeleteI think #5 has a point. If we spend $10m on a bridge and it employs 50 people... yes, the math says it is $200,000 per job... but we also have a bridge!
Nobel Prize, please!?!?!
Derek Anderson fan makes a good point about having a bridge after the $10M was spent .... even if it could have been done for $2.5M we still would have the bridge. Unfortunately only 3% of the stimulus money was spent on creditable infrastructure projects which would have been a good way to spend the money. What do we have to show for the "jobs saved" that clutter up the statistics and cannot be proved or disproved in any way shape or form. What do we have to show for the 225K-250K temporary jobs for census workers that were counted in the number of jobs created? A census, I guess, huh!?
ReplyDeletein reply to Anonymous:
ReplyDeleteThe stimulus also purchases things, such as all the roadwork that is occurring around here at least, so yeas, it seems like $240k per job is excessive, but I now have new roads, for that cost as well. This improvements to infrastructure are a gain for the future, with having reduced costs on future budgets. You seem to assume that we are giving the money away to keep those people in a job, and not that we are purchasing something in return. When you buy a car, you are not paying just for the employees, but for the whole product, same as with the stimulus spending. Just as Derek Anderson fan said.
Sorry you are offended by my "crazy comment" but being insane is doing the same thing over and over, and expecting different results. The tea party wants to lower taxes, but we have seen that each time we lower taxes, revenue goes down, and does not catch back up to its previous slope. They seem to expect that next time taxes are lowered, that will be different. With that thinking, they are insane, or "crazy". Just look at Jon Kyl, saying that tax cuts don't have to be funded, indicating that they fund themselves. There is no historical basis for this statement, but he makes it anyway.
As for your first statement, I agree about expansion, but right now I'm not at full capacity for my business, and according to NFIB, most small and medium business's are not at full capacity, so expansion is pointless. As for starting a new business, or looking into different opportunities, this economy is not exactly the time to take risks like that. There may be some success stories, but as a business man, I would be better served at streamlining my current business, and making sure that it will survive past these tough times, than taking on new challenges that could leave the running business at risk.
Derek Anderson fan says...
ReplyDelete#7: I think I know the point you're trying to make about saying my sweet bridge that costs us $10m could have been built for $2.5m. I would say that as long as my bridge project was put up for bid, I don't know why the market forces still would not have kept it reasonably cost effective (I don't know... maybe that is naive if the winning bidder is allowed to bill the govt for cost overruns or what not)?
And I agree with your point about not spending enough of the stimulus on infrastructure... but that is where you get into the area covered in posts ripping on Dylan Ratigan. The mix was perhaps the best they could get through the congress... remember they needed to get a few Republican votes to get that though the Senate. And isn't a majority of the stimulus tax cuts (for both inviduals and businesses) - which is something that you and most Republicans actually support?
And don't tell me you're blaming Obama for the census!?!?! That is required by the Constitution!
What I hope to get from the census is one less congressional district in Minnesota (bye Michelle Bachmann! Have fun saying crazy things to your family!)
I believe something like 300 billion of the stimulus already went to tax cuts so that could be s big reason that only 3% has been spent on credible infrastructure projects. Additionally much of the stimulus money has not been spent yet so that 3% could be quite misleading.
ReplyDeleteI can tell you the cash for clunkers program allowed my company to add employees. As this blog has mentioned before government spending has a much better return than tax cuts.
I appreciate the concern about how the government spends money especially the embarrassing no bid contracts given to Haliburton during the previous administration, which made Acorn like Mother Theresa. But please don't be so naive as to believe that businesses have the publication best interest in mind and only charge the minimum necessary to make modest profit. After all who do you think buys off the government officials to get those no bid contracts anyway? Stimulus and corruption two separate topics.
Derek Anderson fan says...
ReplyDeleteWho the heck said anything about having "the publication (sic) best interest in mind"? I think that #7 made a comment regarding market forces affecting project costing. Surely you see the effect of market forces on pricing everyday? That is why you pay $3.99 for a bag of tube socks... or, at least, I do. (You, as a big business owner, probably pay like $8/pair... la-di-da, Mr. Buffett!)
Anyway, my bridge is worth $10m, easy. I could get $11m for it in Japan.