Can someone answer this question I found on a message board for me in regards to Stimulus? (Iraq, global warming)
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Someone explain to me how “government spending” creates wealth/jobs? If you subscribe to the “economic multiplier” canard, then why stop at $900B? Why not $9 Trillion? Then we could all be rich and retire early. It was borrowing and spending that got us into this mess. I don’t see how borrowing and spending will get us out. Governemnt doesn’t give people jobs. The private sector does. I think we would all agree that we have enough local,state, and federal jobs. Has anyone been to the Department of Motor Vehicles lately? How about a few jobs where people actually PRODUCE something?
By the same notion, if cutting taxes is good then wouldn't eliminating all taxes be best? Has anyone ever bothered to ask a contemporary Republican what the optimal tax rate is? Why stop there, instead of collecting taxes, how about printing money out of thing air and just passing it out to all the people so they can "stimulate" the economy?
1. political acceptability
2. high level of quick stimulus can cause inflation
3. likelihood of fraud in implementation increases with bigger numbers of $$$ (cf. post-war Iraq construction)
4. don't attempt everything at once; do it in phases
P.S. the Wall St Journal never met a government employee it likes.
By the same notion, if cutting taxes is good then wouldn't eliminating all taxes be best? Has anyone ever bothered to ask a contemporary Republican what the optimal tax rate is? Why stop there, instead of collecting taxes, how about printing money out of thing air and just passing it out to all the people so they can "stimulate" the economy?
Seriously, though -- that's like asking the global warming folks what the optimal climate is.
They'd have to confess they just want us all back in caves grunting and hitting women over the head with clubs. Or more likely hitting men (in prehistoric California).
Someone explain to me how “government spending” creates wealth/jobs? If you subscribe to the “economic multiplier” canard, then why stop at $900B? Why not $9 Trillion? Then we could all be rich and retire early. It was borrowing and spending that got us into this mess. I don’t see how borrowing and spending will get us out. Governemnt doesn’t give people jobs. The private sector does. I think we would all agree that we have enough local,state, and federal jobs. Has anyone been to the Department of Motor Vehicles lately? How about a few jobs where people actually PRODUCE something?
it was on there by this person Blue State Guerrilla
If Govt. Spending is going to get us out of this, why ARE they stopping at 780 Billion?
http://en.wikipedia.org/wiki/Limits_to_Growth
The purpose of The Limits to Growth was not to make specific predictions, but to explore how exponential growth interacts with finite resources. Because the size of resources is not known, only the general behavior can be explored. The authors state in a subsection titled The Purpose of the World Model[8]:
I am giving you credit for already knowing this.
If you know about the multiplier effect then you already know the answer. There is limitation to how much money can grow and part of that limitation is the availability of goods and services etc. The right amount is part of the debate but you know fully well there is a definite upper limit. economic multiplier definition
economic multiplier
Definition
Estimated number by which the amount of a capital investment (or a change in some other component of aggregate demand) is multiplied to give the total amount by which the national income is increased. This multiplier takes all direct and indirect benefits from that investment (or from the change in demand) into account. Expressed as the reciprocal of the marginal propensity to save
Proportion of a small change in disposable income that would be saved, instead of being spent on consumption. It is computed by dividing the change in savings by the change in disposable income that caused the change.
Marginal propensity to consume - Wikipedia, the free encyclopedia
The marginal propensity to consume (MPC) is an observable concept in economics that measures the increase in personal consumer spending (consumption) that occurs with an increase in disposable income (income after taxes and transfers). For example, if a household earns one extra dollar of disposable income, and the marginal propensity to consume is 0.65, then of that dollar, the household will spend 65 cents and save 35 cents.
Mathematically, the marginal propensity to consume (MPC) function is expressed as the derivative of the consumption (C) function with respect to disposable income (Y).
MPC=\frac{dC}{dY}
OR
MPC=\frac{a}{b}, where a is the change in consumption, and b is the change in disposable income that produced the consumption.
Someone explain to me how “government spending” creates wealth/jobs? If you subscribe to the “economic multiplier” canard, then why stop at $900B? Why not $9 Trillion? Then we could all be rich and retire early. It was borrowing and spending that got us into this mess.
Spending on war, yes (discretionary spending dropped during the bush years).
That, and the $1.6 Trillion bush tax cuts (without a corresponding drop in spending).
That doesn't tell the whole story (over 4 trillion in added debt during the last 8 years), but I don't have all the details despite trying to pay close attention.
Quote:
I don’t see how borrowing and spending will get us out. Governemnt doesn’t give people jobs. The private sector does. I think we would all agree that we have enough local,state, and federal jobs. Has anyone been to the Department of Motor Vehicles lately? How about a few jobs where people actually PRODUCE something?
As of 2006, there were roughly 20 million government employees (according to the following link). Number of Government Employees
it was on there by this person Blue State Guerrilla
If Govt. Spending is going to get us out of this, why ARE they stopping at 780 Billion?
I wouldn't stop at 780. But apparently there is a need to compromise (bunch of school funding was axed, among other things) to get a few republican votes for passage.
By the same notion, if cutting taxes is good then wouldn't eliminating all taxes be best? Has anyone ever bothered to ask a contemporary Republican what the optimal tax rate is? Why stop there, instead of collecting taxes, how about printing money out of thing air and just passing it out to all the people so they can "stimulate" the economy?
I've asked that to a number of different republican friends. They don't answer me directly. I get the impression that whatever the tax rate currently is, is the optimal tax rate in their opinion (change is bad, m'kay).
My friends are not economists, but they seem to think they have a firm grasp of the economy despite lacking substantial knowledge. They know about 1/10th of what I know, and I know I have a ton to learn still while they somehow think they've got all the answers.
Sorry I should have put quotes around the original question. That is not mine. That was the question on the message board. I have changed it now. I just wanted some explanation on it.
1. political acceptability
2. high level of quick stimulus can cause inflation
3. likelihood of fraud in implementation increases with bigger numbers of $$$ (cf. post-war Iraq construction)
4. don't attempt everything at once; do it in phases
P.S. the Wall St Journal never met a government employee it likes.
Two thoughts:
1. WSJ is owned by Rupert Murdoch, of Faux News shame and thus opinions in the WSJ are not fit to be trusted.
2. WSJ animosity to the Feds is generally typical of Wall Street's pigmen, whose corruption and thievery is now front and center on the world stage. I say we need to hire more Feds to police the abuses and get us back on track.
Agree with your take on the OP's question. It would be acceptable to turn that question back around to its original writer and ask 'how big should the banking bailout be?'
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