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View Diary: Wall of Shame: Republicans Lose Intellectual Cover for Austerity/Spending-Cut Policies (87 comments)

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  •  but, as you know... (19+ / 0-)

    the science behind this is: what gives certain rich people more money?

    They'll find something else to use.

    •  i'm holding out hope (18+ / 0-)

      that the revelations of this study being debunked will perhaps lead an effort to pass stimulus (perhaps because incumbant congressmen will be pressured as well to create jobs -- and they KNOW that spending will create the jobs and the debt is NOT a problem).

      Maybe not in 2013, but maybe by 2014 we'll see something?

      You can see how R&R's study has been SERIOUSLY influential for all these right-winger neo-liberals.

      Even the "intellectual" Paul Ryan used this in his budget as the central academic justification for INSANE levels of austerity.

      This will produce waves. Right now we're distracted by the horrendous events in Boston and the ongoing threat we need to be aware of, but this is really big news and in a slower news-cycle we'd see a lot more attention.

      Deficits don't matter, jobs do.

      by aguadito on Tue Apr 16, 2013 at 11:56:50 PM PDT

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      •  Such an optimist! nt (3+ / 0-)
        Recommended by:
        elwior, Sandino, MadRuth

        "I was a big supporter of waterboarding" - Dick Cheney 2/14/10

        by Bob Love on Wed Apr 17, 2013 at 01:56:48 AM PDT

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      •  You forget (6+ / 0-)
        Recommended by:
        Hirodog, ColoTim, Nailbanger, marina, New Rule, ferg

        The debunking is based on facts.  Facts have a well known liberal bias, and therefore cannot be trusted.

        If the Republicans ever find out that Barack Obama favors respiration, we'll be a one-party system inside two minutes. - Alan Lewis

        by MadRuth on Wed Apr 17, 2013 at 04:28:48 AM PDT

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        •  retractions are on pg b-17 (7+ / 0-)

          but the original headline is on page 1, above the fold. in boldface type.

          WMD's anyone?

          Today alone we have proof that the economic underpinning of  US economic policy is total bullshit, and that the US has practiced torture in such an institutionalized way that responsibility is expressly laid at the feet of the leaders of the previous administration and the current one.

          Should be a BFD, no? Should actually preempt just about everything else, right? I mean, the US economy has provably been hijacked, and there are war criminals occupying government posts and university offices across the land.
          I'm sure the Fourth Estate will illuminate all of this for the citizenry by 6PM, so our democracy can continue to function with an informed populace.

          Last full month in which the average daily temperature did not exceed twentieth-century norms: 2/1985 - Harper's Index, 2/2013

          by kamarvt on Wed Apr 17, 2013 at 04:42:31 AM PDT

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      •  Great post (3+ / 0-)
        Recommended by:
        aguadito, ColoTim, Roger Fox

        I love your optimism....but....lets be honest with ourselves
        The way I see it, there are really only three reasons why someone wouldn't support adding GDP growth via net deficit spending (either through tax cuts or Govt spending).
        Stipulation: Everyone important is operating out of fiat paradigm...with that assumption.....
        A) They religiously believe that the debt is reaching crisis levels and that we absolutely cannot afford any more Govt spending for the sake of our children.  In this example, there is no such thing as them changing their minds because of a little statistical study snafu
        B) They would never in a million years do anything to help the economy while that black guy is the president and is eligible for some of the credit, even though they know stimulus will help.
        C) They are pretty much ambivalent either way, but they feel the popular political winds are against higher Govt deficits.
        Of these three types of congress critter mentalities...only (C) would be eligible for changing their austerity stripes in the hope of capitalizing on some political momentum that has built up in favor of stimulus.  Where this popular support will come from is anyone's guess, I too hope that it will but looking at through the above framework.....I am not optimistic

        MMT
        neweconomicperspectives.org

        "The Earth is my country and Science my religion" Christiaan Huygens

        by Auburn Parks on Wed Apr 17, 2013 at 06:36:06 AM PDT

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      •  The Debt/GDP issue is more complex than the ratio (0+ / 0-)

        Why the ratio is high is critical.

        Indicators need to be evaluated in context.  The meaning of the rate a person breaths needs to be considered in context. A person who is breathing hard because she just sprinted 400 meters is very different that the person who slowly  climbed one flight of stairs.

        Consider three very different situations causing high debt/GDP:

          1) The country has been in a war of WWII proportions, where
               the economy shifted heavily to wartime production. But
              now the war has ended.

          2) Massive spending on needed roads, schools, universities, trade schools, ports, industrial centers, low cost energy, etc.,

          3) Massive spending on military equipment and bases from
              Congress seeking jobs for member districts.  More military
              spending outside the US because its cool to be a military
              superpower.  Heavy spending on healthcare for those sure
              to die in the next 6 months of life, providing incomes for
              the poor who are able to work, to live on but no useful
              work is received in exchange. Oversized pensions to
              government workers, while paying market competitive
              wages when they were working.

        In the first case, the debt/GDP is not that bad, as the cause for it has ended and the economy can bring the ratio down through GDP growth and deficits lower than GDP growth. .

        In the second case, the debt is financing what can enable higher GDP growth if other things work out.  This expansion of investment will continue to the extent that it proves effective at enabling private sector growth and will be cut back if not productive.  The high GDP/Debt is temporary as the later resulting higher GDP growth brings the ratio down.  However this can be sustained for a long time.

        In the third case, the debt is caused by current consumption that does not enable future higher growth rates.  The spending may have a strong humanitarian component to the poor and sick, but this is still debt financing consumption.  In addition, the people receiving funding for this spending will fight hard politically to keep the funding indefinitely, as they are dependent on it. This is not sustainable because it is not matched by higher private sector GDP growth and may cause lower GDP growth by higher taxes reducing private sector investment and government crowding out capital through its higher debt.  This spending may even crowd out valuable government spending that increases private sector growth as the items in case two do.

        The most important way to protect the environment is not to have more than one child.

        by nextstep on Wed Apr 17, 2013 at 11:09:10 AM PDT

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        •  Contention re: third case (1+ / 0-)
          Recommended by:
          Auburn Parks

          the debt financing consumption that would help the sick and poor (by the way money and spending are fungible, it doesn't matter where it comes from --whether debt financed or not) -- would go where?

          It would go into businesses, who are holding tons of cash and withholding investment based on sluggish demand.

          So if we pumped out stimulus to create jobs either through spending on humanitarian things or spending on investment in roads, either way -- it will boost demand and that money won't just disappear into some sick or poor person, it funnels THROUGH those people INTO businesses, triggering business processes systems that will then spur corporations to actually invest their cash sitting on the sidelines.

          The money is out there -- banks have excess reserves and are ready to lend, but we're stagnant, we need a JOLT, and no matter where that money goes to, it will increase aggregate demand to give us the kind of reinvigoration of the economy needed.

          This isn't about crowding out, or a misallocation of funds from productive activity or unproductive -- those are all vague Austrian economic terms that aren't empirically sound.

          There's under 80% capital employment, and U-6 is over 13% in the labor market. Every single day that we don't push our dollars to the market to mobilize this capital and labor is wasting money.

          But in general you're right about debt/gdp issue being more complex, that's one of the major problems with the R&R study--it oversimplified it and tried to create a physics-style "threshold" at 90% universally. But economics isn't physics, and we don't have rules like that :)

          Deficits don't matter, jobs do.

          by aguadito on Wed Apr 17, 2013 at 11:27:19 AM PDT

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          •  "money is fungible"...man you just beat me to it. (1+ / 0-)
            Recommended by:
            aguadito

            I rather enjoy Prof Stephanie Kelton's line...."cash registers don't discriminate"
            The only added benefit of scientific or infrastructure investment over direct cash transfers is the long term return on the money.   Don't get me wrong, I completely agree that both ought to be pursued but faster internet service or basic scientific R&D have compounding benefits above and beyond the immediate stimulative jolt, even if that jolt reverberates or is multiplied by the velocity of money (as the infrastructure investment spending etc has the same multiplier effect)

            "The Earth is my country and Science my religion" Christiaan Huygens

            by Auburn Parks on Wed Apr 17, 2013 at 11:35:28 AM PDT

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            •  by the way (0+ / 0-)

              have you seen the latest velocity numbers?

              hannah posted in a different story calling attention to it

              It is the loweest velocity figures we have on record TO DATE!

              it's so obvious that we need a nice fat stimulus package, to spend on ANYTHING, to fill the labor and capital unemployment gaps.

              btw i haven't heard Stephanie Kelton's line on cash registers, but I'm a bit fan of NEP and the UMKC researchers.

              i recall seeing one of her presentations where she described unemployed individuals and unemployed capital as "leaving money on the table"--which is what inspired me to create The Lost Output Clock -- which shows the lost production we face while we ignore the unemployed and slow growth and don't address the issue!

              Deficits don't matter, jobs do.

              by aguadito on Wed Apr 17, 2013 at 12:02:35 PM PDT

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              •  that is a terrifying graph no doubt about it (1+ / 0-)
                Recommended by:
                aguadito

                It makes perfect sense though, banks (in the form of interest payments on $42+ trillion of private sector debt or 300% of GDP) are where money goes to die.  All that money spent on interest overhead would go to buying productive goods and services instead of asset price increases for the wealthy.  What a shame.

                http://www.nakedcapitalism.com/...

                "The Earth is my country and Science my religion" Christiaan Huygens

                by Auburn Parks on Wed Apr 17, 2013 at 12:35:26 PM PDT

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          •  There is however a fundamental difference (1+ / 0-)
            Recommended by:
            aguadito

            between employing people through expenditures that enable higher GDP growth and expenditures that provide the unemployed income without receiving productive work in exchange.

            The most important way to protect the environment is not to have more than one child.

            by nextstep on Wed Apr 17, 2013 at 11:38:49 AM PDT

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            •  correct (0+ / 0-)

              but how do you define productive work?

              there are people who get paid to do absolutely absurd things, like harass innocent petty drug users.

              is that "productive" work?

              i'd say it's more productive to spend $50,000 on a social worker taking care of a guy with a drug problem, than to spend $50,000 paying a guy to beat the shit out of a pot-smoker and drag him over to a prison where we pay $10,000 to lawyers and judges to process him in a legal system, rather than giving him a living wage to consume that production of businesses, who will then have more money to invest out.

              It's different for private individuals than governments..

              If you're a PERSON and you finance consumption with debt -- then you've got a different kind of problem, because you're not contributing it to an investment that will produce income for you to pay of the debt.

              If you're a GOVERNMENT then you don't care, you're not paying for consumption that disappears, you're paying for Person A to consume goods produced by Person B who receives Income and then can invest or consume the money that the state has essentially produced out of thin air on a computer.

              So while you're right, we should avoid deficit spending on unproductive activity as a general rule -- try to put that into perspective with all the truly unproductive and anti-social spending we engage in. The issue here isn't over-spending on socially beneficial programs for sick and poor, it's a misunderstanding by many of what "productive" really means.

              Deficits don't matter, jobs do.

              by aguadito on Wed Apr 17, 2013 at 11:57:48 AM PDT

              [ Parent ]

              •  I was thinking more conventionally (1+ / 0-)
                Recommended by:
                aguadito

                I would oppose stimulus programs based on massive spending on police against victimless crimes, related criminal proceedings and building prisons.  Although, in California we have seen the prison workers union (surprisingly powerful for its size) effectively push for this in years past with "three strikes laws."

                The most important way to protect the environment is not to have more than one child.

                by nextstep on Wed Apr 17, 2013 at 12:13:56 PM PDT

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    •  Wealth is the only entitlement program (7+ / 0-)

      that needs no justification.

      "I was a big supporter of waterboarding" - Dick Cheney 2/14/10

      by Bob Love on Wed Apr 17, 2013 at 01:57:45 AM PDT

      [ Parent ]

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