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  1. #21
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    Re: How would you fix America's economy?

    Quote Originally Posted by sylouette View Post
    In other words....funding more union work? When you say shovel-ready projects, are you referring to construction such as highways, sewer and water, etc? I agree, partially, if that's the case.

    There are hundreds of thousands of union workers out of work....most, if not all, (at least in Illinois) have been collecting thousands and thousands of dollars of unemployment for over a year.

    My ex-husband is one of them. He is a union worker that has been collecting unemployment since the beginning of 2007 and because of the lack of funds available for his line of work, he can't get any work doing what he's trained to do and nothing offers that same kind of pay....and nobody wants to hire him because of their concern that as soon as the union kicks back up, he'll leave.
    Shovel-ready projects refer to infrastructural development, such as fixing roads, bridges and highways, building subways and expanding public transit and repairing utilities. So, yes, it does refer to employing the unemployed using government funds. The theory behind these one-time projects is that the salaries paid and supplies purchased to complete them will stimulate the economy such that when the projects are completed, the economy is in full force and can absorb the temporary workers.

    Quote Originally Posted by sylouette
    Sounds good....but where is the funding going to come from? Your solution is incredibly vague.
    The US is great at borrowing and printing money. There is plenty of liquid cash in your country, but investor and consumer confidence is down; nobody is confident enough to deplete his reserves by spending or investing. Further, the banks have become ultra-hesitant since the subprime mortgage crisis; the credit crunch means that banks aren't giving loans to investors and consumers. Government bonds are just about the only investment people are willing to make, so government should absorb cash and spend it.

    Quote Originally Posted by syl
    Didn't your first paragraph just suggest that the government "fund...infrastructural development"?
    Infrastructural development isn't the same as offering bailouts to failing industry. We're talking about one-time projects to help the unemployed and spend money while accomplishing something that will help our cities and towns over the long term. Bailouts are essentially throwing money to a company that has proven itself to be a drain.

    Quote Originally Posted by syl
    This is not where our problems lie. This development could take quite a long time....but how does that help the hundreds of thousands of blue-collar workers out of work?
    I think that this is where your problems lie, in the long term. America will never be able to compete with south-Asian countries for millions of front-line and manufacturing jobs; the cost differential is too great. So how will America retain its prosperity? The US needs to start building a knowledge economy, an economy based on innovation and education. As long as workers are being retrained and we shift focus to our education system, white-collar jobs will fill in as blue-collar ones leave.
    [CENTER]-=] Starcreator [=-

  2. #22
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    Re: How would you fix America's economy?

    I think that this is where your problems lie, in the long term. America will never be able to compete with south-Asian countries for millions of front-line and manufacturing jobs; the cost differential is too great. So how will America retain its prosperity? The US needs to start building a knowledge economy, an economy based on innovation and education. As long as workers are being retrained and we shift focus to our education system, white-collar jobs will fill in as blue-collar ones leave.
    this plan has already been presented from presidents of the past and obama himself, IN order for it to work people need to be motivated to learn, so there fore[i agree with you but just to further it] at least 17 percent of tax should go to all public schools, the tax should be national, and it wouldnt raise, or fall,
    If you agree send a message to me saying yes, gotta go be back later.

  3. #23
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    Re: How would you fix America's economy?

    As President.... I'd definitely invite a few interns into the Oval Office to discuss the problem.

    There are several goals the government needs to meet.
    1. Reduce spending - I'd eliminate all budgets which contain non-mandatory federal spending. In other words, reduce the federal govt to its essential operations of defending the country and regulating interstate commerce.


    2. Increase money circulation in the economy. Reduce the individual federal tax burden by 50% for ALL federal taxpayers, and 25% for all corporations. Make these cuts permanent and propose a constitutional amendment that guarantees Congress creates a balanced budget according to the standards of the CBO.

    3. Add jobs to the economy and build our infrastructure - Create private-public partnerships to develop inter-state infrastructure projects where the govt would give corporations additional tax credits for national projects and the costs would be split by corporations and states. The federal govt would act more as a coordinator of various projects leaving details to private and state interests. This takes the power out of Congress and removes some of the political interest in doling out useless projects to sparsely populated areas.

    4. Fix the root cause of the current mess THE FEDERAL GOVERNMENT - Propose a constitutional amendment to change the 14th amendment to eliminate the current anchor baby laws. Also, attempt to repeal parts of the 17th amendment which provides direct voting for Senators so that Senators are chosen by state legislators instead (as they used to be). This would restore some of the aspects of federalism we have lost and would reduce the power and influence of the federal govt.

    For the most part, the federal government cannot do much good, but it can do a great deal of harm. For the most part, the federal government should just get out of the way and look to grease the economy by taking less and offering less. For example, is this really a good time to go hard-core on the auto companies in imposing environmental standards which will
    1. Reduce auto company profits
    2. Make cars more expensive for consumers.

    This is what happens when we encourage stupid government hacks to influence economic policy. The people in government are not the best and brightest among us. Raise your hand if you think Pelosi and Reid are intelligent and thoughtful individuals. Trick question. No one should have raised their hands. These people are morons. The less power they have to influence.... well... anything, the better. As President, my primary goal will be to reduce the influence of government.
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

  4. #24
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    Re: How would you fix America's economy?

    If there is problems with the market, and investors are the problem, then may I suggest that the market becomes a global market? If the whole market was open the whole day, without closing, then investors would not rush to sell before the end of the day, meaning that they would hang onto their stocks instead of selling them, as they wouldn;t sell the right away, and there wouldn't be the end of day losses that businesses encounter. If they wanted to make a profit they would hang onto them for a longer time so as to maximise profits, profits that they would only make if they hung onto their shares for a longer time and sold them at a profit. They aren't selling them at a profit now because they want to sell them for as good a price as possible before the day ends, but without ending the day they will not have a limit or a time to sell by.

    What will this do? If they are in a hurry to sell before the end of the day, to minimise losses then they would not have that hanging over them and would wait for alonger time. If the markets close and they want to sleep soundly with the news that they aren't hanging onto shares that are devaluing, and everyone else was also waiting not for a set time to have their shares sold because they want to get out while they can, seeing as there is no limit to the waiting game, they might just hang onto them, and definately would do that for a longer time at least.

    Or, they might sell them sooner thereby making the market spiral even faster, but I am betting that anyone that waits till close to sell their shares would wait even longer, maybe even sleeping between the sellings.

    I claim that if the market is not closed overnight that things will improve.
    !! Servant of Gaia !!

  5. #25
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    Re: How would you fix America's economy?

    I say we let the "invisible hand" of the free market guide us all to utopia, where the free market makes everything rosy and all our problems will disappear forever. Yes people, the great invisible hand will fix your economy, because clearly greed unbridled by pesky things like democratic accountability is good for everyone.

    I cant even believe you people believe your own rhetoric, its like you live in a philosophical metal box of your own making. Why even bother with debate, conservatives wont change their mind until God himself tells them they are wrong. Even then I am skeptical...


    "The invisible hand" loves you all...
    HINT: This is a trick question

  6. #26
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    Re: How would you fix America's economy?

    Quote Originally Posted by Mithran View Post
    I say we let the "invisible hand" of the free market guide us all to utopia, where the free market makes everything rosy and all our problems will disappear forever. Yes people, the great invisible hand will fix your economy, because clearly greed unbridled by pesky things like democratic accountability is good for everyone.

    I cant even believe you people believe your own rhetoric, its like you live in a philosophical metal box of your own making. Why even bother with debate, conservatives wont change their mind until God himself tells them they are wrong. Even then I am skeptical...

    "The invisible hand" loves you all...
    Do you have a solution other than to denigrate the economic principles that created the wonderful prosperity that we all benefit from?

    Remember, both regulation and deregulation can have either beneficial or detrimental effects depending on the specifics. Free-market doesn't mean economic anarchy. Of course there is need for some common-sense regulation. The sub-prime mortgage crisis can be traced to bad regulation, specifically government regulation that induced giving loans to high-risk borrowers and also the mark-to-market accounting rules.

    A successful free-market system can and should exist with neccessary regulation. It is only when business is overregulated that government becomes an issue.

    Now, on to the recession. I'd like first of all to know where you think the money from this "stimulus" bill comes from. Uncle Sam doesn't crap money. We borrow it. It comes out of the economy. Does it make any sense that taking money out of your left pocket and putting it into your right pocket results in a net gain? Of course not.

    Economist after economist have agreed that FDR's New Deal spending actually prolonged the Depression. As of 1940 the unemployment rate was still over 14%. It was only WWII that pulled us out.

    Infrastructure spending is also not likely to have any meaningful effect. The CBO estimates that only 7% of the proposed infrastructure spending will reach the economy by this fall and only 64% will reach the economy by the end of 2011. And the jobs created will likely pull workers from current industries, not from the pool of the unemployed.

    If we're going to run up a deficit to stimulate the economy, history dictates that a deficit-funded tax cut is the best way. It worked in 1964, 1981, 1997 and 2003.

    Rebate checks don't work. When Bush tried them the first time, 3/4 of the money was used to pay down debt, not to buy a car or a television, etc. The best way to stimulate the economy is to reduce the aversion to risk that leads people to stock away their savings in government bonds. Eliminating the capital gains tax for the next few years would encourage investment.

    It's easy to stand back and demonize successful capitalists as "greedy", but greed plays a beneficial role in our economy. Bill Gates has more money than anyone could ever spend, but he's also created trillions of dollars of wealth that's been beneficial to millions of people. He's given billions to charity. The computer age that people like Gates and Steve Jobs created has enabled scientists to do miraculous things.

    Long live the Capitalist Pigs!!!

  7. #27
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    Re: How would you fix America's economy?

    Quote Originally Posted by Mithran View Post
    I say we let the "invisible hand" of the free market guide us all to utopia, where the free market makes everything rosy and all our problems will disappear forever. Yes people, the great invisible hand will fix your economy, because clearly greed unbridled by pesky things like democratic accountability is good for everyone.

    I cant even believe you people believe your own rhetoric, its like you live in a philosophical metal box of your own making. Why even bother with debate, conservatives wont change their mind until God himself tells them they are wrong. Even then I am skeptical...


    "The invisible hand" loves you all...
    Just wondering, who actually proposed an unfettered free market with no government oversight? The "invisible hand" is a concept not an entity. As a concept, it is based on sound reasoning. As a concept, over-time, it tends to prove true. I suppose you prefer the sweat-stained, money-grubbing, political hand, eh? Why let the free market exist at all so long as politicians know best. I shouldn't even get to keep my paycheck. It should go directly to government where it can be redistributed by those much smarter and wiser than me.. amirite?
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

  8. #28
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    Re: How would you fix America's economy?

    Quote Originally Posted by Ibelsd View Post
    Just wondering, who actually proposed an unfettered free market with no government oversight? The "invisible hand" is a concept not an entity. As a concept, it is based on sound reasoning. As a concept, over-time, it tends to prove true. I suppose you prefer the sweat-stained, money-grubbing, political hand, eh? Why let the free market exist at all so long as politicians know best. I shouldn't even get to keep my paycheck. It should go directly to government where it can be redistributed by those much smarter and wiser than me.. amirite?
    Ya but you have to admit that you and CDS (to a lesser extent) and Squatch pretty much argue for "more free market" no matter what the actual proposition is unless its pure anarchy that is being proposed. At least that's the way it seems. Given any issue your answer seems to be. "More free market, less govenrment" What is the line at which that stops for you? Unless it's visible all we see is what Mithran was mocking; an unrestrained belief that markets cure all ills.

    Keep in mind that free market systems do not offer a smooth ride. They can naturally have dramatic up and down cycles of adjustment and correction. Over the long run they should work out, but in the short run they may be disastrous for millions of people, possibly to the point of starvation etc... Thats great if you are a historian looking at the growth of a nation, but as a citizen, 4 years of utter economic disaster is pretty much intolerable. In a representative government the people won't stand for dramatic downturns in the cycle. It just isn't a realistic option to let all the banks just fall on their asses and slowly build them back up from scorched earth. It might give rise to some cool new financial entity, but in the mean time there would be a massive political head hunt for all those that didn't step in to stop it.

    Its ironic that the type of security that really killed many of these banks was supposed to be a kind of insurance, an instrument designed to smooth out the ups and downs. Instead it was used as a means of gambling and ended up exaggerating a downturn in a dramatic way. Way to go market forces!

    I'm a free market guy. I think that should be the baseline of any system. But I also think you can't just let it run free. You have to add on some safety features and smooth out some of the rough edges. If you don't you end up with things like socialist uprisings that pitch the whole thing in the garbage and set you back a 100 years or so with its moronic arrogance. You have to manage the backlash or human nature will screw it all up.

  9. #29
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    Re: How would you fix America's economy?

    Quote Originally Posted by cds69
    Rebate checks don't work. When Bush tried them the first time, 3/4 of the money was used to pay down debt, not to buy a car or a television, etc.
    But think about it.....people were able to pay down debt which would free up other money that could be used on these type of things...wouldn't you agree?
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  10. #30
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    Re: How would you fix America's economy?

    Quote Originally Posted by sylouette View Post
    But think about it.....people were able to pay down debt which would free up other money that could be used on these type of things...wouldn't you agree?
    Not really. Here's why:

    Status quo:

    Citizen X is carrying a $100 debt.

    Government adds $100 to the deficit (which they must borrow) in order to send Citizen X a "stimulus" check.

    Result: No money has been "freed up". The debt that the Citizen X now doesn't carry is now carried by the Government. There is no net gain for the economy.

    That's why "stimulus" spending is a pipe dream. Any money pumped INTO the economy must first be confiscated/taxed/borrowed FROM the economy.

  11. #31
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    Re: How would you fix America's economy?

    Quote Originally Posted by cds69 View Post
    That's why "stimulus" spending is a pipe dream. Any money pumped INTO the economy must first be confiscated/taxed/borrowed FROM the economy.
    Except most of that money the government is spending isn't being taxed, indeed taxes are being lowered while spending increases. The result is a net increase in money in the economy. That could spark inflation but its very unlikely at a time of stagnation. The trick is you have to then later either pay back that money or carry a debt balance you pay interest on. So it is really a wealth transfer from the past to the present. The justification is that if it works and stimulates growth the overall economy will be generating more total output and can pay back the deficit and then some.

    (Not really arguing against CDS here, just ranting)
    Does it work? Some thing it will, some don't. In theory it can. We never seem to actually pay back though, just keep rolling it up and paying the interest. You can sustain that so long as you sustain growth, but.... what about when you don't?

    But ultimately, the American electorate really wants to be stimulated at the moment. Time for the Obama magic fingers.

  12. #32
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    Re: How would you fix America's economy?

    Quote Originally Posted by Sigfried View Post
    Ya but you have to admit that you and CDS (to a lesser extent) and Squatch pretty much argue for "more free market" no matter what the actual proposition is unless its pure anarchy that is being proposed. At least that's the way it seems. Given any issue your answer seems to be. "More free market, less govenrment" What is the line at which that stops for you? Unless it's visible all we see is what Mithran was mocking; an unrestrained belief that markets cure all ills.
    The line at which free markets should be saddled with regulation is one of common sense. It is one that balances the obligations that corporations have to their stockholders on one side and their consumer base on the other.

    Keep in mind that free market systems do not offer a smooth ride. They can naturally have dramatic up and down cycles of adjustment and correction. Over the long run they should work out, but in the short run they may be disastrous for millions of people, possibly to the point of starvation etc...
    A little melodramatic are we? Our government and our communites have in place a safety net that works very well. If someone starves in the United States, it's not because there wasn't help available at a moment's notice.

    And yes, free markets are cyclical in nature. There will be adjustments. However the Keynesian efforts of FDR after the stock market of 1929 actually aggravated the effects of the depression. As of 1940 our unemployment rate was still over 14%.

    Thats great if you are a historian looking at the growth of a nation, but as a citizen, 4 years of utter economic disaster is pretty much intolerable. In a representative government the people won't stand for dramatic downturns in the cycle. It just isn't a realistic option to let all the banks just fall on their asses and slowly build them back up from scorched earth. It might give rise to some cool new financial entity, but in the mean time there would be a massive political head hunt for all those that didn't step in to stop it.
    We are nowhere near "utter economic disaster. In the 1980's thousands of banks failed. We've had only a few. There's quite a bit of belt-tightening going on, but lets get real.

    And it's time we DID have a political head hunt for those who failed. Bush tried to warn congress, but Barney Frank and others in congress (yes, both Dem and Repub) failed to act.

    Its ironic that the type of security that really killed many of these banks was supposed to be a kind of insurance, an instrument designed to smooth out the ups and downs. Instead it was used as a means of gambling and ended up exaggerating a downturn in a dramatic way. Way to go market forces!
    You mean the REGULATION that required them to loan money to high-risk buyers? Or the REGULATION that allowed for mark-to-market accounting principles.

    I'm a free market guy. I think that should be the baseline of any system. But I also think you can't just let it run free. You have to add on some safety features and smooth out some of the rough edges. If you don't you end up with things like socialist uprisings that pitch the whole thing in the garbage and set you back a 100 years or so with its moronic arrogance. You have to manage the backlash or human nature will screw it all up.
    I agree. Government oversight, of one kind or another is needed. But our government isn't known for common-sense guidelines. Here's an example:

    We all like clean drinking water right? Of course. Well in the 1990's there was a town in Alaska that, like most towns, had a sewage treatment plant. The sewage, before treatment and release, was cleaner than most towns treated drinking water because there was so much natural running water that made it into the system and diluted the sewage.

    The EPA had enacted new rules about treatment of sewage. But instead of saying that treated water must contain no more than X number of polutant particles per billion, they required that the plant REMOVE X PERCENT of whatever polutants were present before treatment. Well, their pre-treated water was so clean that the technology didn't exist to remove X% of the polutants. They petitioned the EPA to make an exception. The EPA refused.

    Know what the solution was? The town had to actually hire local fishing operations to dump fish guts into the pre-treated water in order to create polutants from which they were able to remove the required amount. Result: In order to follow Federal Regulations the city had to incur the expense of ADDED POLUTANTS which made the water that was finally released to it's residents four times as poluted as it could have been.

    That's our government at work. THOSE are the guys you want to trust to "fix" our economy.

  13. #33
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    Re: How would you fix America's economy?

    Quote Originally Posted by cds69 View Post
    The line at which free markets should be saddled with regulation is one of common sense. It is one that balances the obligations that corporations have to their stockholders on one side and their consumer base on the other.
    "Common sense" can mean a lot of things to a lot of people. There is no book of common sense. Generally good sense seems anything but common. Its easy for you to say that but making it actually happen is a whole different kettle of fish. I want to know what you think the appropriate % of GDP should be dedicated to government spending and the range of authority of regulation. "common sense" is something of a cop out in this context.

    A little melodramatic are we? Our government and our communites have in place a safety net that works very well. If someone starves in the United States, it's not because there wasn't help available at a moment's notice.
    I'm an actor at hear.
    I agree, but we didn't used to have a safety net like we do now. Thats the whole New deal at work. The poor have it easy these days by comparison. Take away all the safety net and well, you will have starvation and the like eventually. But lets move on, I want to know how much safety net you think is wise.

    And yes, free markets are cyclical in nature. There will be adjustments. However the Keynesian efforts of FDR after the stock market of 1929 actually aggravated the effects of the depression. As of 1940 our unemployment rate was still over 14%.
    Did you read something about that recently? Ive seen you state that a few times. I'm fairly sure that is a heavily disputed point. The "common sense" consensus is that the New Deal programs helped us lift out of the depression. I've no doubt some disagree but you state it like a commonly held fact when it's merely educated opinion. We both know such things can't be deductively proven.

    We are nowhere near "utter economic disaster. In the 1980's thousands of banks failed. We've had only a few. There's quite a bit of belt-tightening going on, but lets get real.
    I did't claim anything about the current downturn, which I might add was heavily padded by existing federal supports and regulations as well as by our social welfare systems. Its an example of a downturn in a semi-managed economy, not a downturn in a purely free market one.

    And it's time we DID have a political head hunt for those who failed. Bush tried to warn congress, but Barney Frank and others in congress (yes, both Dem and Repub) failed to act.
    Lol You probably know what I have to say here so lets just skip that debate. Its tired and fruitless.

    You mean the REGULATION that required them to loan money to high-risk buyers? Or the REGULATION that allowed for mark-to-market accounting principles.
    In the old thread on this it was shown that hardly any of the loans that went bad were forced by the regulations at the HUD. I'm not sure what you are refering to in mark-to-market, but the think that really killed the banks were the credit default swaps which were made completely unregulated.
    http://en.wikipedia.org/wiki/Credit_default_swap
    "Credit default swaps are by far the most widely traded credit derivative product.[15] DTCC, which maintains a database holding around 90% of all credit derivative transactions, held $29.2 trillion of outstanding CDS trades as of 26th December 2008."

    http://www.newsweek.com/id/161199/page/2
    "For example, Lehman Brothers had itself made more than $700 billion worth of swaps, and many of them were backed by AIG. And when mortgage-backed securities started going bad, AIG had to make good on billions of dollars of credit default swaps. Soon it became clear it wasn't going to be able to cover its losses. And since AIG's stock was one of the components of the Dow Jones industrial average, the plunge in its share price pulled down the entire average, contributing to the panic."

    "The reason the federal government stepped in and bailed out AIG was that the insurer was something of a last backstop in the CDS market. While banks and hedge funds were playing both sides of the CDS business—buying and trading them and thus offsetting whatever losses they took—AIG was simply providing the swaps and holding onto them. Had it been allowed to default, everyone who'd bought a CDS contract from the company would have suffered huge losses in the value of the insurance contracts they hadpurchased, causing them their own credit problems."

    Basically companies bough insurance out on the success of other companies. So you could buy insurance against Lehman Brothers failing. Not only could you insure it once, you could insure it a million times over and you could do it without any regulation as to how much debt to capital ratio you maintained because it was all unregulated and unreported. Want to bet a million bucks on AIG and only have 1 in the bank... no problem. Ya... until AIG goes int he toilet at which point you owe 50 million dollars and have 1 to pay it with.

    Listen to this Podcast episode, great interviews about the whole thing explained very clearly.
    http://www.thisamericanlife.org/Radi...spx?sched=1263

    I agree. Government oversight, of one kind or another is needed. But our government isn't known for common-sense guidelines. Here's an example:
    Yes I know. Government can be bone headed. No surprise there. But what about all the geniouses who sank trillions in uncovered default swaps? Or how about the responsible folks at Enron. Ever read dilbert? The private sector is just as good at screwing the pooch as uncle Sam is. I can even tell you why....

    People. No matter where you go people are in charge and people do dumb ass things sometimes. You can have smart government and stupid government and you can have smart business and stupid business. Businesses go out of business, stupid politicians get voted out of office. I'll at least agree that the businesses go down faster and more certainly, but they can also make a much bigger mess doing so.

  14. #34
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    Re: How would you fix America's economy?

    Quote Originally Posted by Ibelsd View Post
    As President.... I'd definitely invite a few interns into the Oval Office to discuss the problem.

    There are several goals the government needs to meet.
    1. Reduce spending - I'd eliminate all budgets which contain non-mandatory federal spending. In other words, reduce the federal govt to its essential operations of defending the country and regulating interstate commerce.
    Yes, let's cut jobs and aggregate demand, further increasing unemployment. That's clearly going to help the economy. Tax cuts aren't useful if investor and consumer confidence is down and money isn't being spent. Times of economic downturn create disincentives to spend money, as deflation is lowering prices and premonitions of hard times ahead compel people to save.

    You seem to be making these arguments on the basis of your long-term ideological motives rather than by analyzing the best means of counteracting economic downturn. Cutting government expenses will only accentuate the plummet of your economy. The government should be spending lots, as fast as possible.


    _________________________________ Post Merged _________________________________


    Quote Originally Posted by cds69 View Post
    Now, on to the recession. I'd like first of all to know where you think the money from this "stimulus" bill comes from. Uncle Sam doesn't crap money. We borrow it. It comes out of the economy. Does it make any sense that taking money out of your left pocket and putting it into your right pocket results in a net gain? Of course not.
    Except your left pocket is not using that money to generate demand and your right pocket is! Do you not understand the premise behind Keynesian spending? My apologies for sounding frustrated, but a simple run-through of a Wikipedia article on Keynesian economics would help both of us in this discussion. People are saving excessively, since prices are declining and they foresee hard times. The banks aren't willing to lend it to anyone, for the same reasons, and (in the case of this recession) because of the credit crunch and new conservative lending standards. Government needs to pull that money from the people and spend it, in addition to printing new money and spending it, in order to augment aggregate demand - the primary driver of the economy.

    Quote Originally Posted by cds69
    Economist after economist have agreed that FDR's New Deal spending actually prolonged the Depression. As of 1940 the unemployment rate was still over 14%. It was only WWII that pulled us out.
    Yes, and do you want to know why? Because WWII constitutes one of the most significant rounds of massive government borrowing and spending of money. Most economists agree that the New Deal didn't salvage the economy, but that was because it wasn't sufficient, not because it didn't move America in the right direction. It still left America better off than if we had slashed taxes and put money back into the hands of people that weren't spending it.

    Quote Originally Posted by cds69
    Infrastructure spending is also not likely to have any meaningful effect. The CBO estimates that only 7% of the proposed infrastructure spending will reach the economy by this fall and only 64% will reach the economy by the end of 2011. And the jobs created will likely pull workers from current industries, not from the pool of the unemployed.
    Money is money. Every penny creates demand. What basis is there for your assertion that it won't pull workers from the pool of the unemployed?

    Quote Originally Posted by cds69
    It's easy to stand back and demonize successful capitalists as "greedy", but greed plays a beneficial role in our economy. Bill Gates has more money than anyone could ever spend, but he's also created trillions of dollars of wealth that's been beneficial to millions of people. He's given billions to charity. The computer age that people like Gates and Steve Jobs created has enabled scientists to do miraculous things.

    Long live the Capitalist Pigs!!!
    Nobody should be decrying capitalism. The problem here is that natural market cycles are volatile and occasionally plummet downward. We could wait for unemployment to reach a level where labour is dirt cheap, prices are at rock bottom and millions are suffering, at which time investor confidence will be restored. Or, we could pull reserves from individuals and banks via government bonds and artificially create confidence.

    Quote Originally Posted by cds69
    That's why "stimulus" spending is a pipe dream. Any money pumped INTO the economy must first be confiscated/taxed/borrowed FROM the economy.
    Putting idle cash from the bank accounts of the people to work creating jobs seems to defeat your premise entirely.

    Quote Originally Posted by cds69
    And yes, free markets are cyclical in nature. There will be adjustments. However the Keynesian efforts of FDR after the stock market of 1929 actually aggravated the effects of the depression. As of 1940 our unemployment rate was still over 14%.
    Please. In terms of GDP, gross investment and consumer purchases, the New Deal drove economic recovery. It simply didn't provoke it to the same extent that WWII did. Also, I'm curious: What do you think WWII was if not Keynesian spending?

    Quote Originally Posted by cds69
    You mean the REGULATION that required them to loan money to high-risk buyers? Or the REGULATION that allowed for mark-to-market accounting principles.
    What about the broken free market incentive structures that rewarded investment bankers for repackaging large volumes of mortgage backed securities under high credit ratings, irrespective of their underlying worth? What about the banks' irresponsible, volume based performance objectives that led to rate cuts and zero-percent-down purchases? It is manifestly absurd to state that the real estate bubble - a massive phenomenon that took place nation-wide, incorporating millions of homes - was caused by government programs to encourage home ownership that governed homes numbering in the thousands, at most.

    Quote Originally Posted by cds69
    I agree. Government oversight, of one kind or another is needed. But our government isn't known for common-sense guidelines. Here's an example:

    We all like clean drinking water right? Of course. Well in the 1990's there was a town in Alaska that, like most towns, had a sewage treatment plant. The sewage, before treatment and release, was cleaner than most towns treated drinking water because there was so much natural running water that made it into the system and diluted the sewage.

    The EPA had enacted new rules about treatment of sewage. But instead of saying that treated water must contain no more than X number of polutant particles per billion, they required that the plant REMOVE X PERCENT of whatever polutants were present before treatment. Well, their pre-treated water was so clean that the technology didn't exist to remove X% of the polutants. They petitioned the EPA to make an exception. The EPA refused.

    Know what the solution was? The town had to actually hire local fishing operations to dump fish guts into the pre-treated water in order to create polutants from which they were able to remove the required amount. Result: In order to follow Federal Regulations the city had to incur the expense of ADDED POLUTANTS which made the water that was finally released to it's residents four times as poluted as it could have been.

    That's our government at work. THOSE are the guys you want to trust to "fix" our economy.
    Government isn't a homogenous entity that shares a common identity from jurisdiction to jurisdiction. Some legislators are good and some are bad. The point is that there are some roles, like stimulating demand, that only government can perform because of its guaranteed AAA credit rating and the fact that it is driven by social benefit and not by profit motive.
    Last edited by starcreator; January 28th, 2009 at 10:47 PM. Reason: Automerged Doublepost
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    Re: How would you fix America's economy?

    Quote Originally Posted by Sigfried View Post
    Ya but you have to admit that you and CDS (to a lesser extent) and Squatch pretty much argue for "more free market" no matter what the actual proposition is unless its pure anarchy that is being proposed. At least that's the way it seems. Given any issue your answer seems to be. "More free market, less govenrment" What is the line at which that stops for you? Unless it's visible all we see is what Mithran was mocking; an unrestrained belief that markets cure all ills.
    I am arguing more free market and less govt intervention based on the current system. Here's the nutshell for me. The government is the police, the overseers of the economy. Imagine if the police owned wal-mart. Imagine if the police favored Best Buy over other electronic stores and gave them protection, and likely extorting the competitition. This is how the current government is operating. Look what the government did to the banking industry. They ignored problems because they had a vested interest in ignoring them. They aren't protecting the public from fraud and manipulation. They are trying to curry favors and get their friends wealthy.

    Quote Originally Posted by Sigfried View Post
    Keep in mind that free market systems do not offer a smooth ride. They can naturally have dramatic up and down cycles of adjustment and correction. Over the long run they should work out, but in the short run they may be disastrous for millions of people, possibly to the point of starvation etc... Thats great if you are a historian looking at the growth of a nation, but as a citizen, 4 years of utter economic disaster is pretty much intolerable. In a representative government the people won't stand for dramatic downturns in the cycle. It just isn't a realistic option to let all the banks just fall on their asses and slowly build them back up from scorched earth. It might give rise to some cool new financial entity, but in the mean time there would be a massive political head hunt for all those that didn't step in to stop it.
    I would never claim the free market is without ups and downs. Yet, for the govt intervention, has the market been any more stable? Rather, instead of constant natural corrections we get these rapid corrections and over-corrections which many economists consider worse than the original problem. For example, had the govt not tried to social engineer the housing market, would it have crashed as badly?

    Quote Originally Posted by Sigfried View Post
    Its ironic that the type of security that really killed many of these banks was supposed to be a kind of insurance, an instrument designed to smooth out the ups and downs. Instead it was used as a means of gambling and ended up exaggerating a downturn in a dramatic way. Way to go market forces!
    I disagree with this analysis. The banking industry was hurt when it was allowed to operate with minimal risk, not for the benefit of general security, but to benefit politicians and in the interests of social engineering. The Carter administration got the ball rolling and Clinton took it to another level. Republicans were too incompetent and corrupt to end it when they had the chance.

    Quote Originally Posted by Sigfried View Post
    I'm a free market guy. I think that should be the baseline of any system. But I also think you can't just let it run free. You have to add on some safety features and smooth out some of the rough edges. If you don't you end up with things like socialist uprisings that pitch the whole thing in the garbage and set you back a 100 years or so with its moronic arrogance. You have to manage the backlash or human nature will screw it all up.
    There are two major logical flaws with this statement.
    1. If you are a "free market" guy, then you should be aghast at the current corruption of the free market by Bush, Obama, and Congress. I am not sensing this from you. Rather, you seem all too willing to accept the decline of free market principles.
    2. Government is run by humans. The idea that our human governors will solve the flaws of human nature is absurd on its face. What protects society from the masses is the systems that humans, in desperate times, put into place. Successful systems are beyond a single individual or group. This is why the U.S. has been successful. We don't have a guy like Chavez trying to rewrite the Constitution. We aren't run by the ideas of a dictator. We are nation of laws. When we abandon the system for the sake of expediency, we fall to the whim of raw human nature - which you have noted screws things up.


    _________________________________ Post Merged _________________________________


    Quote Originally Posted by starcreator View Post
    Yes, let's cut jobs and aggregate demand, further increasing unemployment. That's clearly going to help the economy. Tax cuts aren't useful if investor and consumer confidence is down and money isn't being spent. Times of economic downturn create disincentives to spend money, as deflation is lowering prices and premonitions of hard times ahead compel people to save.
    And when has massive govt spending solved economic recessions? Allowing individuals to keep (and spend) more money is the quickest means of resurrecting a down economy. Why is this better than govt spending? Because economic recovery and economic expansion is a product of the private sector investing and producing. Government production occurs at a loss. It doesn't produce new things. It doesn't create new job markets. Its like the difference between paying for groceries with credit and paying for a home with credit. One is an investment and pays for itself. The other, in the long run, takes away future earnings. For instance, in the current stimulus package passed by Congress is some large sum to re-sod the lawn. When that lawn has been re-sod, what's been created. Those jobs are gone. Money is gone. On the other hand, giving that money to taxpayers may allow them to use that same money for investments with long-term gains and that will provide new jobs.
    Last edited by Ibelsd; January 28th, 2009 at 11:09 PM. Reason: Automerged Doublepost
    The U.S. is currently enduring a zombie apocalypse. However, in a strange twist, the zombie's are starving.

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    Re: How would you fix America's economy?

    Quote Originally Posted by starcreator View Post
    Except your left pocket is not using that money to generate demand and your right pocket is! Do you not understand the premise behind Keynesian spending? My apologies for sounding frustrated, but a simple run-through of a Wikipedia article on Keynesian economics would help both of us in this discussion. People are saving excessively, since prices are declining and they foresee hard times. The banks aren't willing to lend it to anyone, for the same reasons, and (in the case of this recession) because of the credit crunch and new conservative lending standards. Government needs to pull that money from the people and spend it, in addition to printing new money and spending it, in order to augment aggregate demand - the primary driver of the economy.
    First of all, while I'm no economist, I'm versed in the basics of Keynesian economic theory. And I'll readily admit that Keynesian style government spending can and will have a stimulating effect on the economy. My argument is that the stimulation achieved is weak and short-lived. A study of fiscal-policy shocks by Andrew Montford (Univ. of London) and Harald Uhlig (Humboldt University, Germany) showed that the most effective form of fiscal-policy shock are sweeping tax cuts.

    http://sfb649.wiwi.hu-berlin.de/pape...DP2005-039.pdf

    Yes, and do you want to know why? Because WWII constitutes one of the most significant rounds of massive government borrowing and spending of money. Most economists agree that the New Deal didn't salvage the economy, but that was because it wasn't sufficient, not because it didn't move America in the right direction. It still left America better off than if we had slashed taxes and put money back into the hands of people that weren't spending it.
    Support of retract that America was left "better off" than it would have been with tax cuts. Robert Barro, Harvard economist, disagrees. He looked at World War II spending and found that:

    Quote Originally Posted by Robert Barro, Harvard Ecomonist
    "wartime production siphoned off resources from other economic uses — there was a dampener, rather than a multiplier."
    Money is money. Every penny creates demand. What basis is there for your assertion that it won't pull workers from the pool of the unemployed?
    I'll side with Gary Becker - University of Chicago economist and Nobel Laureate on this one. Here's what he said:

    Quote Originally Posted by Gary Becker, University of Chicago Economist and Nobel Laureate
    with unemployment at 7% to 8% of the labor force, it is impossible to target effective spending programs that primarily utilize unemployed workers, or underemployed capital. Spending on infrastructure, and especially on health, energy, and education, will mainly attract employed persons from other activities to the activities stimulated by the government spending. The net job creation from these and related spending is likely to be rather small. In addition, if the private activities crowded out are more valuable than the activities hastily stimulated by this plan, the value of the increase in employment and GDP could be very small, even negative.
    Nobody should be decrying capitalism. The problem here is that natural market cycles are volatile and occasionally plummet downward. We could wait for unemployment to reach a level where labour is dirt cheap, prices are at rock bottom and millions are suffering, at which time investor confidence will be restored. Or, we could pull reserves from individuals and banks via government bonds and artificially create confidence.

    Putting idle cash from the bank accounts of the people to work creating jobs seems to defeat your premise entirely.

    Please. In terms of GDP, gross investment and consumer purchases, the New Deal drove economic recovery. It simply didn't provoke it to the same extent that WWII did. Also, I'm curious: What do you think WWII was if not Keynesian spending?
    World War II spending definitely WAS Keynesian in nature, although it arose out of necessity rather than planned fiscal policy. My point is this: In the last 100 years there have been 10 periods of recession for the US. The average lifespan of a recession is 1-2 years. The only one that was met with massive Keynesian style spending lasted TEN YEARS.

    So if the question is "Can Keynesian economics rescue us from a recession, the answer is yes, but it will take four or five times the time it would take to recover by other means.

    What about the broken free market incentive structures that rewarded investment bankers for repackaging large volumes of mortgage backed securities under high credit ratings, irrespective of their underlying worth?
    What about it? I'm all for regulation when it serves to protect both investor and consumer. So let's do away with the mark-to-market rules that allowed these companies to swell their portfolio by using inflated values driven by the bubble that everyone knew eventually had to break.

    What about the banks' irresponsible, volume based performance objectives that led to rate cuts and zero-percent-down purchases? It is manifestly absurd to state that the real estate bubble - a massive phenomenon that took place nation-wide, incorporating millions of homes - was caused by government programs to encourage home ownership that governed homes numbering in the thousands, at most.
    Let's be honest, these programs didn't just "encourage home ownership", they armtwisted lenders into loaning to risky borrowers. Is there responsibility to be laid at the feet of some who were simply greedy? Sure. But remember, Freddie and Fannie had their hand in close to a majority of the mortgages in the US. And even the bad loans that were done outiside of Freddie and Fannie were subject to the business landscape of the mortage industry. All of these companies looked to Freddie and Fannie to follow their lead and this is what happened.

    Government isn't a homogenous entity that shares a common identity from jurisdiction to jurisdiction. Some legislators are good and some are bad. The point is that there are some roles, like stimulating demand, that only government can perform because of its guaranteed AAA credit rating and the fact that it is driven by social benefit and not by profit motive.
    I'm not talking about whether legislators are good or bad. I'm talking about how government RUNS. Forgive me for not wanting to buy into the stimulus plan when the subtitle reads "Brought to you by the people who gave your the DMV, EPA, IRS, HUD and FEMA.

  17. #37
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    Re: How would you fix America's economy?

    Quote Originally Posted by Wolf Myth
    This inquiry is aimed especially at the Obama haters (although not exclusively) who feel his economic policies are bad for the nation.

    Pretend you have just been elected President. What policies would you implement to get the economy back on track? What kind of solutions would you offer to help America?
    "Don't just do something. Stand there!"

    I'd get the government out of peoples' way. Lower income taxes--raising EITCs for people who already pay no taxes aren't "tax cuts". Lower capital gains taxes. Lower the entry bar for new businesses, so far as regulations go.

    Let the people keep their money and spend or save it as they think best.

    Quote Originally Posted by starcreator
    Government isn't a homogenous entity that shares a common identity from jurisdiction to jurisdiction. Some legislators are good and some are bad. The point is that there are some roles, like stimulating demand, that only government can perform because of its guaranteed AAA credit rating and the fact that it is driven by social benefit and not by profit motive.
    So we follow the Japanese model in their Lost Decade?

    Any demand created by government spending is offset by the demand destroyed by government taxing.

    Economist Bill Shughart puts it this way:

    The truth is: It is not government's function to create jobs. Putting people to work is easy, as demonstrated by Franklin D. Roosevelt's Depression-era Works Progress Administration (WPA), more accurately known as "WPA: We Piddle Around." The bigger challenge is to create wealth. Toyota failed to foresee the economic events that caused its expansion plans to unravel.

    Keep this in mind when Congress and the White House are selecting economic stimulus projects to fund this year.

    If highly successful private firms like Toyota - with their extraordinary market research and years of savvy and experience - sometimes embark on projects that turn sour, how can we expect politicians, most of whom have no such business know-how, to pick winners?

    There is a difference, however. Companies usually risk their own money. In Washington, the politicians will be risking ours.
    Milton Friedman talked about four different kinds of spending: Spending your money on yourself, spending your money on someone else, spending someone else's money on yourself, and spending someone else's money on someone else. It is extremely generous, although though questionably warranted, to presume that the government is driven only by perceived social benefit and not at all by profit motive; if you're right, then we should trust the government even less with stimulating the economy.
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    Re: How would you fix America's economy?

    Quote Originally Posted by Wolf Myth View Post
    This inquiry is aimed especially at the Obama haters (although not exclusively) who feel his economic policies are bad for the nation.

    Pretend you have just been elected President. What policies would you implement to get the economy back on track? What kind of solutions would you offer to help America?
    Very simple, reduce the marginal tax rate. Give a 1 year corporate tax break then reinstate it at 10 percent. Use stimulus funding to run the government and give a 6 month tax holiday.
    Finally, while this bought time I would work to pass a national consumption tax.
    "Suffering lies not with inequality, but with dependence." -Voltaire
    "Fallacies do not cease to be fallacies because they become fashions.” -G.K. Chesterton
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    Re: How would you fix America's economy?

    Eliminate the Federal Reserve, Let the banking sector fail.

    Impose strict regulations upon banking and make it illegal for a central bank to exist in America ever.

    Fund education and infrastructure building. Has anyone stepped in a high school in Texas or Indiana? It should be a crime to allow that sub standard quality of education to exist.

    Tax breaks, extend unemployment benefits.

    Invest into green energies and eliminate the ban on nuclear power.

    Eliminate the IRS. Legalize hemp and marijuana for industrial and recreational use.

    Enforce stricter regulations on pharmaceuticals and insurance companies.

    Eliminate tax breaks for corporations shipping jobs overseas.

    Give tax incentives for creation of American Jobs

    Trim and redesign Amtrak or get rid of it.

    Raise social security age.

    Eliminate the ban on online gambling.

    Increase the number of Federal college assistance programs.

    Yeah lets give corporations tax breaks. Most of them evade taxes quite well to begin with. Why don't we give the people tax holidays and give the people bigger tax incentives and lower those for corporation and enforce stricter policies upon them.

 

 
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