US POLITICS SPRING 2011: Let's just call off this country.

And Palestinians, don't forget them. xp

I used to read him on salon and he was annoying. One of those contrarian conservatives who says he is or was a Democrat...

ha plenty of dems hate palestinians, competition is not thin there!

So big shock, the House progressive budget did not pass today (nor did the Van Hollen Md Dem on the budget committee one) and a Tennessee Democrat wants to push that mediocre bipartisan Simpson-Bowles bill:

from the hill.com

The House also rejected three other alternative proposals. One, from Van Hollen, was defeated in a 166-259 vote. A Progressive Caucus budget was rejected in a 77-347 vote, and one from the Congressional Black Caucus was rejected 103-303.

A fifth proposal that would have implemented the recommendations of Obama's debt commission was not offered. Rep. Jim Cooper (D-Tenn.) withdrew his proposal Thursday night, indicating that a House vote against it might spoil efforts in the Senate to reach an agreement based on the recommendations of the president's fiscal commission

I'm a history and literature guy, not an economics one, so bear with me...

It's a fact that FDR's decision to suddenly lower the deficit and cut gov't spending in 1937-38 almost destroyed the economy again. Can someone explain Keynesian theory? How does "spending" take a capitalist economy out of depression?

'Suddenly' may be the key part of that, Alfred

Billy Ocean?

well at heart all economic activity is someone buying something from someone else (i get the obvious award today). everybody in a country buying everything from everyone else = GDP.

in a depression, people suddenly have become jobless and have no money, so they quit buying stuff, and the businesses that sell things see drops in sales, become less profitable, have to lay people off, and the cycle continues downward. people and business keep quitting doing anything useful because the money keeps drying up.

governments can borrow money at much cheaper rates than individuals, since governments are presumed to exist and be able to pay back that debt in the future basically forever (until they can't, i guess).

so the idea is that, since we can see a depression happening, why not have the gov't borrow a bunch of money and either directly buy goods/services from private firms to do stuff (spending) or just directly employ a bunch of people to do stuff (spending again) so that the depressionary cycle doesn't continue down forever.

another way to look at it is borrowing money from the future (debt payments going forward) to do stuff in the present that has stopped, which only governments have the ability to do on any scale.

a lot of economics, especially macroeconomics, appears to me to be a bunch of fancy rhetorical tricks designed to convince ppl to give their money away

If the economy isn't organically plugging along, according to Keynes, as lender of last resort, the govmt should artificially reflate the economy by pumping money into it. (Is that borrowing from the future? Yes, but the moral valenceof such a move should be contrasted with that of leaving the economy idle or sluggish, perhaps even endemically so.) The fiat money ppl may be scared of money that's just created but value is always about perception and you can't eat gold and commodities are notoriously fickle so to some extent what happens is that this becomes about the perceived health and future of the economy. Perhaps FDR thought that 5 years of economic fiddling and fire-side chats had fully restored ppl's confidence but not only did the Depression make a huge impact on those who lived through it (Ever met any of them?), but by '37, the world was looking a little iffy, too; Spanish Civil War, Popular Front in France, rise of Stalin in the USSR, the rise of Hitler in Germany, the Japanese were stepping up their assault on China. Add to this that the economy was artificially propped up and not really healthy enough to chug away on its own.

(ftr my last post was just a Deep Thought, not a scathing policy indictment)

if you think of the economy as a small factory town, right now we have a factory that has workers and machines sitting around doing nothing. if the city government places some orders at the factory, it'll create jobs and spending, which in turn leads to more jobs and more spending when the factory workers pay their rent, go to a restaurant etc.

this isn't just borrowing on a credit card to give money to factory workers - as long as we are below potential output, you have a lot of useful people/resources with productive capacity in that town sitting around waisting away. in this situation it's more comparable to the government making a long-term investment in a business (a very very large business) w/ future taxes as the profit.

the conservative problem with this [xps, keynsianism, or liberalism in general, lol] is that it's 'distorting' ie creates inefficiencies. whereas in contrast, the gnostic mysteries of the market ought to be let free to confirm the rightness of whatever misery anyone is suffering in the interim (sorry, showing my hand there). or that it's immoral, by creating state clients and rent-seekers (you could put the whole pentagon establishment here. or banks, now. but they mean "welfare queens").

my view is that all economies are basically 'distortions, all the way down' if you take history seriously. and clients and rent-seekers bother me less than the existence of poverty, on a moral level, but the two can go together just as easily (see: well, look out your window). we all live off each other, in the end, anyway...

err wasting away* xp

bunch of fancy rhetorical tricks designed to convince ppl to give their money away

FDR was criticized from his left by ppl like Dr. Francis Townsend, who advocated giving $200 per month in pension for each elderly person as long as they spent it by the end of the month.

It's not just the money supply that matters but also its velocity.

Then there was Huey Long.

turning Louisiana into a personal public works project.

"you go to war with the army you have" ;)

The right's concern with inefficiencies is fine, as long as they're honest which they mostly are not and their moral position, while painfully pious, has some weight, too, except that there isn't a party or industry in the US that genuinely wants a real market; they want a real market for everyone but their own interests.

[xps, keynsianism, or liberalism in general, lol]

goole, I hate to quibble but the American right tends to be quite (classical) liberal wrt economics but they mix that in with the censorious moralism of Protestantism and feel that when you fail economically, it's from some transgression and you 'need to learn your lesson' which is why, when the liberals first started treating workers' rights and health as serious issues if liberalism were going to survive the allure of socialism, the Right just saw Godless commies bent on encouraging sin.

ineffiency can also mean a lot of things - from our perspective the right isn't concerned *enough* with ineffiency

FDR was criticized from his left by ppl like Dr. Francis Townsend, who advocated giving $200 per month in pension for each elderly person as long as they spent it by the end of the month.

It's not just the money supply that matters but also its velocity.

― Periblepsis occasioned by homoeoteleuton (Michael White), Friday, April 15, 2011 5:40 PM (11 minutes ago

yeah this is kind of the whole idea behind unemployment benefits and why it's so infuriating when republicans are against them, esp in tough times

Despite the fact that we've been led by basically cultural populism since the 80's, the kind of economic populism that Long and Townsend pushed still has a place in American politics; it's just trumped by culture war politics which is why you can have a regular old guy rich elitist like Bush win elections. You can be wealthy and be popular here, but you pretty much have to appear as oafish as the 'great masses'; it's their shibboleth.

I hate to quibble but the American right tends to be quite (classical) liberal wrt economics

I'm reading Hobsbawm now, and I blinked a couple times he used "liberal economic theory" to refer to laissez faire.

yeah liberal (and its successor, neoliberal) mean something completely different in economics

Liberal in French still means this but that's because the French Right isn't particularly liberal wrt to civil rights or individual economic rights.

I think of myself as liberal in the sense of shying away from taking away ppl's indivdual rights/exerting govmt control except when there's a very compelling reason and I'm a classical left-liberal inasmuch as most of our civil rights I regard as sacrosanct. I'm quite conflicted over gun rights, maybe, but that's about it yet I think the moral basis for classic economic liberalism is as problematic as its economic backwardness.

ppl like Dr. Francis Townsend, who advocated giving $200 per month in pension for each elderly person as long as they spent it by the end of the month.

There have also been utopian socialist schemes which advocated having a 'use by' date on money (or 'labour-hour certificates' or whatever, depending on the particular society)/

I like this idea

House Dems almost pull a fast one on the Republicans, although it's a shame they don't show balls like this more often.

yeah that was awesome

steny!

I know!

bout time!

(btw Alfred which Hobsbawm are you reading?)

Age of Extremes. I worked my way through the "Ages" series.

I think that's the one I have; starts with World War I?

Yep.

the end of democracy in Michigan

RIP Benton Harbor. Not that anyone will miss you, but it's the principle of the thing.

This is unusual for Toronto. I realize that it's way on the mild end of the spectrum Stateside.

In the coffee shop this morning (fairly empty), some woman three tables over ripped out her earpiece and announced, "That's it--I can't stand listening to him." Her friend, sitting at the counter where I was seated: "Who's that?" Woman: "Ignatieff." (For anyone oblivious to Canadian politics, that would be our mushy, eggheaded John Kerry-type liberal-centrist.) Friend: "He looks like a faggot." He then amended this to say he looks like Frankenstein. Woman: "Hey, you know who's running for president? Donald Trump." After they both agreed that Trump understood money, the woman said, "I saw him on TV, and he said he's going to get rid of OPEC." This is big news: Donald Trump is going to fire OPEC if elected. Woman: "They need someone in there who understands what to do. Mr. Obama (she said it like Senator Geary says "Corleone" in Godfather II), who says he's not a Muslim..." At this point, yes, I turned my head around and gave her my most pointed look of contempt. Woman (smiling): "Never mind--you just read your paper, we'll be quiet."

They were both in their late-'50s, early-'60s. Again: one-tenth of one percent of what I'm sure I'd overhear in almost any American coffee shop. But unusual here. The last time I encountered something similar was when I spent half-an-hour arguing with a hot dog vendor in 2008. No mention of Muslims, but he was concerned that Obama was going to run a 24-hour House Party out of the White House.

Holy shit @ Benton Harbor! I might be doing some demonstratin' soon!

yeah I know we like to bitch a lot about how insane our fellow Americans are but, at least in Boston, that would not be a normal overheard conversation

ppl usually reserve political ranting like that for private parties

I probably overstated the American side of it, not wanting to come across as really naive. (And Boston's pretty liberal, right? Scott Brown notwithstanding.)

you wouldn't hear that in new york or chicago either

http://sports.espn.go.com/chicago/nba/news/story?id=6360764

wow, i missed a pretty good discussion about Keynesianism here yesterday. i tend to look at it more technocratically and less moralistically -- during a recession, private parties (businesses and individuals) are not spending (in fact, they may be saving -- which is a natural impulse during bad times). the government comes in as the spender of last resort (b/c it can access the federal fisc) and makes up the difference b/w the current depressed level of GDP during the ongoing recession and a targeted level of GDP through deficit spending. these funds can be targeted (e.g., giving money directly to private parties [unemployment benefits to laid-off workers, bailouts to ailing industries, slashing taxes to taxpayers]) or more scattershot and untargeted. the real idea is to lower the unemployment rate, which will then put idle resources to work and increase GDP on its own and this will increase tax revenues (which will in turn pay down the deficit caused by the increased amount of government spending).

FDR's mistake during the late 1930s was to listen to the deficit hawks of his time and decrease federal spending and the scope of the New Deal when the economy was still too weak to generate activity on its own. in defense of the FDR administration, Keynesianism was still in its infancy at that point (plus the New Deal was more an ad-hoc reaction to the Great Depression than an entirely coherent application of Keynesian principles -- in fact, Keynes hadn't even written his General Theory of Employment [his economic/theoretical rationale for increased government spending] until 1936, whereas the New Deal started in 1933) and it didn't have the experience and data regarding deficit spending that we have today.

as for economic populism -- that's really been dead since Reagan. 'nuff said about that.

Another point to remember about FDR: in 1932 he actually ran, somewhat incoherently, on lowering the deficit.

If the Depression hadn't deepened as 1932 waned and Hoover wasn't so damaged, I'm sure his confusing platform would have inspired more comment.

we are a cheap ass people

http://www.politicususa.com/en/u-s-ranks-dead-last-in-overall-social-spending

The United States currently ranks thirty-fourth (34th) out of the thirty-four (34) members of the OECD in regards to spending on social programs, DEAD LAST. The amount the United States spends is currently only 7.2% of our gross domestic product on programs that make up our social contract with the American people . . . Canada currently spends 26% of their GDP on social programs, yet their national debt is very small compared to the United States, it is about 50% of GDP . . . Currently Germany spends 21% of their GDP on social programs.

eh, US military spending (in some sense of "ought") ought to be counted as social spending (& anti-social spending too inasmuch as we actually use the bombs etc).

Actually, in some weird way, that's an intriguing way to look at it: how much of US military spending is spent on Americans, American companies and generally to the direct buy-local benefit of America? How many defense dollars essentially stay domestic (not counting those we, er, drop on other countries)? It's perverse, but sure, I can see defense spending as a sort of stealth domestic stimulus program.