Keynesian Folly: Government Spending Vs. Job Creation

[pghquest]

Originally Posted by ovcatto

1) When the Stimulus bill was passed into law, Feb 19th, 2009,

That's correct, when was the money allocated?

Much of it after we exited the recession

Originally Posted by ovcatto

2) By time we exited out of the recession, very little of the stimulus bill had been spent.

Which is it, number #1 or #2?

They decided how much of the sitmulus bill was going to tax cuts, spending, food stamps, first, then they spent it.. The statement is correct, we exited the recession, THEN most of the spending began.

Originally Posted by ovcatto

3) We're always being told by liberals that employement is a lagging indicator, which pretty much means that the jobs pretty much would have turned around, shortly after leaving a recession.

First of all, ECONOMIST regardless of school, or political persuasion will argue the same point. As your the second part of that statement... you make no sense, or at least you make no cogent argument.

The fact that its difficult for you to comprehend that the end of a recession comes due to a growth in GDP, which results in increased employment, which again, took place PRIOR to the stimulus spending, isnt something I'd run around bragging about. The statement makes A LOT of sense and anyone with basic knowledge of a business cycle understands that increased GDP comes as a result in increased demands and sales, which results in increased employment.. Again, PRIOR to the stimulus spending, this took place.

Originally Posted by ovcatto

Economist do argue that employment lags as behind all other sectors, I don't give a time table of how long that lag period might be.

So you admit that employment lags behind all sectors, and the groth of the GDP which lead us out of the recession, increased demands for products, which increased employees, would validate your "lagging indicator" argument, but then this discredits any argument that it was the stimulus that turned things around and to credit for jobs. Remember again, that the recession ENDED, before the stimulus spending began, so by your own admission, jobs would lag behind the end of the recession on its own, without the stimulus..

Originally Posted by ovcatto

Secondly, as I stated before, are liberals the only one's that can read a graph???

GDP



Employment

Which is my point GDP grows, employment lags right behind, and again, the GDP grew BEFORE the stimulus bill spending took place.

Originally Posted by ovcatto

4) When the stimulus bill was passed, the chart shows about 133,000K employees, but currently, it shows about 131,000K jobs, meaning we spent a trillion dollars, and LOTS millions of jobs..

What's LOTS millions and what graph are you referring to?

Up until now, there was only one graph posted on the thread, and its a mis-key, should have been LOST.. We LOST millions of jobs, and spent a trillion dollars. Remember, employment is a lagging indicator, so the end of the recession, which took place before the sitmulus bill was spent, would have resulted in a growth of employees all on its own..

Originally Posted by ovcatto

On this point I would agree, because like Roosevelt, Obama was a very reluctant student of Keynes but unlike Roosevelt, Obama still hasn't learned the errors of his reluctance as Keynesians economist loudly predicted.

The Democrats passed the stimulus bil, they receive all of the credit/fault for its failures. This evidence shows the kenyesian accounting simply doesnt work. The job reversal took place due to the end of the recession, it would have taken place even without the federal government spending, its a business cycle. While I'm not going to sit here and proclaim the "spending" did nothing to the growth in GDP, because that would be wrong, this growth took place far after the growth in jobs began to materalize. The continuing growth in the GDP after the stimulus plan kicked in is artificial. For example, construction projects that were slated to take place in 2012, took place in 2010, this simply means that 2010 jobs were available, but 2012 we would need to reduce the amount of jobs because those projects are already completed. The net job growth = 0..

[JazzyTallGuy]

Originally Posted by Frank DeForrest

Wow look at those jobs go!
I'm sure White House Witch Doctor Krugman has a perfectly backwards explanation for such a dismal outcome.

Supply side folly: Corporate profits vs. Middle Class Income growth.

All the supply siders and Reaganomics fans had everything their way during a the Bush 43 administraton and looks where it got us?


http://en.wikipedia.org/wiki/Supply-side economics

Current supply-side economics is primarily concerned with economic growth in general, and does not hold that decreasing taxes increases government revenue. It is true that many early proponents argued that the size of the economic growth would be significant enough that the increased government revenue from a faster growing economy would be sufficient to compensate completely for the short-term costs of a tax cut, and that tax cuts could, in fact, cause overall revenue to increase.[2] A 2003 piece on page A4 of the Wall Street Journal commented on a Congressional Budget Office report which concluded that taxes cannot be reduced without losing revenue, and declared the debate "ended". [3]

The central issue at stake is the point of diminishing returns on liquidity in the investment sector: Is there a point where additional money is "pushing on a string"? To the supply-side economist, reallocation away from consumption to private investment, and most especially from public investment to private investment, will always yield superior economic results. In standard monetarist and Keynesian theory, however, there will be a point where increases in asset prices will produce no new supply. A point where investment demand outruns potential investment supply, and produce instead asset inflation, or in common terms a bubble. The existence of this point, and where it is should it exist, is the essential question of the efficacy of supply-side economics.

The Congressional Budget Office (CBO) has estimated that extending the Bush tax cuts of 2001-2003 beyond their 2010 expiration would increase deficits by $1.8 trillion dollars over the following decade.[42] The CBO also completed a study in 2005 analyzing a hypothetical 10% income tax cut and concluded that under various scenarios there would be minimal offsets to the loss of revenue. In other words, deficits would increase by nearly the same amount as the tax cut in the first five years, with limited feedback revenue thereafter.[43]

In 2003, the Wall Street Journal declared the debate over supply-side economics to have ended "with a whimper" after extensive modeling performed by the Congressional Budget Office (CBO) failed to support the most extreme claims of supply-side policies.[3] It was also suggested that Dan Crippen may have lost his chance at reappointment as head of the CBO for failing to support supply-side inspired dynamic scoring.

Before President Bush signed the 2003 tax cuts, the progressive, nonpartisan Economic Policy Institute (EPI) released a statement signed by ten Nobel prize laureates entitled "Economists' statement opposing the Bush tax cuts", which states that:“
Passing these tax cuts will worsen the long-term budget outlook, adding to the nation’s projected chronic deficits. This fiscal deterioration will reduce the capacity of the government to finance Social Security and Medicare benefits as well as investments in schools, health, infrastructure, and basic research. Moreover, the proposed tax cuts will generate further inequalities in after-tax income.[48]

[I Drink Water]

Originally Posted by ovcatto

Well he sure as hell didn't listen to the "left."


Economist's View: "Stimulus Too Small"

Stimulus Expert Zandi: Package Falls Short - Real Time Economics - WSJ

Economists Who Make the Third Stimulus Honor Roll | Interactive Press Releases

Sorry, but your hero was not strong-armed by the radical right. If he was, then he is not much of a hero.

However, this is a common theme among liberals. They look to blame others.

[sacredgrooves]

Originally Posted by JazzyTallGuy

Supply side folly: Corporate profits vs. Middle Class Income growth.

All the supply siders and Reaganomics fans had everything their way during a the Bush 43 administraton and looks where it got us?

This is the way I see it:
5% unemployment and a record stock market prior to the democrats taking over in 2006 is what it got us. When the drums starting beating on the left about the "terrible Bush economy" during the 2004 election cycle, it began eroding consumer confidence. If you say something enough, many people will believe it and act accordingly. It was a self fulfilling prophecy in the name of winning elections. That, coupled with millions of people buying houses they could not afford, is what got us to where we are today. We could of survived the political fodder if our general population had a better control on their own greed in regards to phantom profits in the housing market. Our government is mainly reactionary. Multitudes of irresponsible borrowers is what started the meltdown, the politicians just made it worse. That goes for both sides of the aisle. Two sides of the same coin.

[ovcatto]

Originally Posted by pghquest

Much of it after we exited the recession

Yes, after TARP, Stimulus I (2008) and before the American Recovery and Reinvestment Act or as some refer to it, Stimulus II

They decided how much of the sitmulus bill was going to tax cuts, spending, food stamps, first, then they spent it..

Ok, its late and you are tired. So tomorrow perhaps you can compose that sentence in a way that makes some sort of sense.

The statement is correct, we exited the recession, THEN most of the spending began.

Yes if you consider the $545 billion as being most of the money.

The fact that its difficult for you to comprehend that the end of a recession comes due to a growth in GDP,

Difficult to comprehend? I believe that you are referring to a graph that I posted that clearly indicates that the recession ended mid-2009.

which results in increased employment, which again, took place PRIOR to the stimulus spending,

Again this must be the result of too little sleep, it happens to me from time to time as well because CLEARLY employment didn't hit bottom until 2010 more than six months after GDP hits its lowest point. So how you come up with the growth in GDP when EVERYONE recognizes that this began as a jobless recovery is just beyond me, especially considering that you reposted the very graphs that would make that abundantly clear to Ray Charles and I might point out that Mr. Charles is not only blind, but dead as well. The upward trend in employment DID NOT begin until the first part of 2010!

The first of the $107.1 billion allocated for FYI 2009 began being paid out during the summer of 2009. Unemployment would continue to grow until it reached a peak of 10.1 in October of 2009. Only from that point does unemployment begin to lessen during a period in which ARRA funds reached the peak of $236 billion. During 2010 there were two peaks in the unemployment rate April of 2010 and November 2011 followed by a steep drop that lasted until, what, March of 2011, in $107.1 billion of the ARRA began being paid out during the summer of 2009. FYI 2009, rising to a peak of $236.4 billon in early 2010.

So you admit that employment lags behind all sectors,

Why do you act so surprised, a 5th grade Econ 100 student would tell you the same thing.

and the groth of the GDP which lead us out of the recession, increased demands for products, which increased employees,

Theoretically, but you have to look at in what sector resulted in the growth in GDP, which include far more than consumer spending, so was it the growth in investment, government expenditures, where? We also know that the lag in the rate of reemployment is a result of companies eking out greater productivity of the employees that companies retained, the replace replacement in labor by the investment in capital as those companies have yet to reach full productive capacity. AND, you have to take into account that fact, as we have seen, the growth in imported products which instead of growing domestic employment has instead seen the growth in foreign employment and production. I believe this week it was reported that China recorded a record export surplus. (More on that tomorrow).

Remember again, that the recession ENDED, before the stimulus spending began

Only if you pretend that the ARRA was the only money that the government injected into the economy, which as you should know, wasn't.

Which is my point GDP grows, employment lags right behind, and again, the GDP grew BEFORE the stimulus bill spending took place.

Of course none of that takes into account how long and how severe your are willing to for the lag to be? If you wanted to sit around with 10 - 12 - 20% rates of unemployment then of course your argument is absolutely correct. See the Long Depression of 1873 that lasted for five and one half years.

As for your, failure of Keynesian economics, as I pointed out both Keynesian and "non-Keynesian" economist pointed out that a mere $545 billion dollar stimulus was not nearly enough to rapidly turn around an economy that was hemorrhaging teens of trillions of dollars. And, I might point out that Obama is learning the lesson that Roosevelt learned in 1937, abandon Keynes before the recovery of the economy at your own peril. To believe you would be the same as a patient given antibiotics and told to take them for a week who then stops taking after two days and then turns around and says, see, antibiotics don't work. Sort of a self fulfilling prophecy, one would think.

Having subscribe to the thread I will return to in on tomorrow, for certain.