James Buchanan, Edward Prescott, and Vernon Smith are Nobel laureates. The following ad appeared in the NYT: "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy." — PRESIDENT-ELECT BARACK OBAMA, JANUARY 9 , 2009 With all due respect Mr. President, that is not true. Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth. Burton Abrams, Univ. of Delaware Douglas Adie, Ohio University Ryan Amacher, Univ. of Texas at Arlington J.J. Arias, Georgia College & State University Howard Baetjer, Jr., Towson University Stacie Beck, Univ. of Delaware Don Bellante, Univ. of South Florida James Bennett, George Mason University Bruce Benson, Florida State University Sanjai Bhagat, Univ. of Colorado at Boulder Mark Bils, Univ. of Rochester Alberto Bisin, New York University Walter Block, Loyola University New Orleans Cecil Bohanon, Ball State University Michele Boldrin, Washington University in St. Louis Donald Booth, Chapman University Michael Bordo, Rutgers University Samuel Bostaph, Univ. of Dallas Scott Bradford, Brigham Young University Genevieve Briand, Eastern Washington University George Brower, Moravian College James Buchanan, Nobel laureate Richard Burdekin, Claremont McKenna College Henry Butler, Northwestern University William Butos, Trinity College Peter Calcagno, College of Charleston Bryan Caplan, George Mason University Art Carden, Rhodes College James Cardon, Brigham Young University Dustin Chambers, Salisbury University Emily Chamlee-Wright, Beloit College V.V. Chari, Univ. of Minnesota Barry Chiswick, Univ. of Illinois at Chicago Lawrence Cima, John Carroll University J.R. Clark, Univ. of Tennessee at Chattanooga Gian Luca Clementi, New York University R. Morris Coats, Nicholls State University John Cochran, Metropolitan State College John Cochrane, Univ. of Chicago John Cogan, Hoover Institution, Stanford University John Coleman, Duke University Boyd Collier, Tarleton State University Robert Collinge, Univ. of Texas at San Antonio Lee Coppock, Univ. of Virginia Mario Crucini, Vanderbilt University Christopher Culp, Univ. of Chicago Kirby Cundiff, Northeastern State University Antony Davies, Duquesne University John Dawson, Appalachian State University Clarence Deitsch, Ball State University Arthur Diamond, Jr., Univ. of Nebraska at Omaha John Dobra, Univ. of Nevada, Reno James Dorn, Towson University Christopher Douglas, Univ. of Michigan, Flint Floyd Duncan, Virginia Military Institute Francis Egan, Trinity College John Egger, Towson University Kenneth Elzinga, Univ. of Virginia Paul Evans, Ohio State University Eugene Fama, Univ. of Chicago W. Ken Farr, Georgia College & State University Hartmut Fischer, Univ. of San Francisco Fred Foldvary, Santa Clara University Murray Frank, Univ. of Minnesota Peter Frank, Wingate University Timothy Fuerst, Bowling Green State University B. Delworth Gardner, Brigham Young University John Garen, Univ. of Kentucky Rick Geddes, Cornell University Aaron Gellman, Northwestern University William Gerdes, Clarke College Michael Gibbs, Univ. of Chicago Stephan Gohmann, Univ. of Louisville Rodolfo Gonzalez, San Jose State University Richard Gordon, Penn State University Peter Gordon, Univ. of Southern California Ernie Goss, Creighton University Paul Gregory, Univ. of Houston Earl Grinols, Baylor University Daniel Gropper, Auburn University R.W. Hafer, Southern Illinois University, Edwardsville Arthur Hall, Univ. of Kansas Steve Hanke, Johns Hopkins Stephen Happel, Arizona State University Frank Hefner, College of Charleston Ronald Heiner, George Mason University David Henderson, Hoover Institution, Stanford University Robert Herren, North Dakota State University Gailen Hite, Columbia University Steven Horwitz, St. Lawrence University John Howe, Univ. of Missouri, Columbia Jeffrey Hummel, San Jose State University Bruce Hutchinson, Univ. of Tennessee at Chattanooga Brian Jacobsen, Wisconsin Lutheran College Jason Johnston, Univ. of Pennsylvania Boyan Jovanovic, New York University Jonathan Karpoff, Univ. of Washington Barry Keating, Univ. of Notre Dame Naveen Khanna, Michigan State University Nicholas Kiefer, Cornell University Daniel Klein, George Mason University Paul Koch, Univ. of Kansas Narayana Kocherlakota, Univ. of Minnesota Marek Kolar, Delta College Roger Koppl, Fairleigh Dickinson University Kishore Kulkarni, Metropolitan State College of Denver Deepak Lal, UCLA George Langelett, South Dakota State University James Larriviere, Spring Hill College
The only Northwesterner on that list teaches at WSU. She has the lowest rating that I've ever seen on this site. I doubt that her contract will be renewed. http://www.ratemyprofessors.com/ShowRatings.jsp?tid=1478688
They state that Keynesian policies did not lift us out of the Depression. They're absolutely right on that account.
They stated "More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s." They are wrong as can be. The truth is without the enormous construction programs such as The Civilian Conservation Corps, America would have not only collapsed but would have had no prayer of winning WWll. The massive nation-wide infrastructure built by these programs is what America grew on, the jobs provided and the skills taught through them made us the industrial giant we became, and without that America would probably be called Southern Canada right now.
http://conservativesarecommunistss.blogspot.com/2011/08/obamas-stimulus-plan-worked-republican.html The serial retailers of the Big Lie should read the careful econometric report by two independent and distinguished economists, the former Deputy Chairman of the Fed, Alan S. Blinder, professor of economics at Princeton University, and Mark Zandi, chief economist at Moody’s. Blinder and Zandi examined the effect of TARP and the stimulus using Moody’s Analytical Model of the US economy. They reported, “We find the effects on real GDP, jobs and inflation are huge and probably averted what could have been called The Great Depression 2.0.” “Without the government response, GDP in 2010 would be about 11.5 percent lower, payroll employment would be less by some 8.5 million jobs, and the nation would now be experiencing deflation.” It is a tragedy, since if we are to have more refusal to face the effects of the stimulus, as now seems likely, life is going to get a lot more miserable for millions. They attribute the larger part of this wholly benign result to have been from saving the financial system–something begun under President Bush and completed under Obama. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising real GDP by about 3.4 percent, holding the unemployment rate about one-and-a-half percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls.
John Cochrane and Gene Fama are two of the smartest people on the planet. Fama will eventually win a Nobel himself. Most scholars do one important work. Fama has done several: The Efficient Market Hypothesis, the Fama-French Three Factor Model and even his random walk thesis are all worthy of winning the Nobel Prize in Economics.
My economists trump your economists. http://online.wsj.com/article/SB10001424052748704679204575646603792267296.html For the past two years, economists writing on these pages and elsewhere have debated the merits of federal stimulus programs. President Obama's compromise on the Bush tax cuts this week might be seen as at least partial recognition that keeping marginal tax rates from rising across the board is the best stimulus now, especially if the deal leads eventually to making the cuts permanent. The economic data rolling in confirm that recent temporary, targeted stimulus programs have not worked, and that their enactment was a triumph of Keynesian wishful-thinking over practical experience.
Of course, the argument isn't new. The phrase "failed stimulus" has been a staple of Republican rhetoric since the fall of 2009. But it was wrong then and it’s wrong now, at least according to the the people most qualified to judge it. As David Leonhardt wrote in the New York Times: Perhaps the best-known economic research firms are IHS Global Insight, Macroeconomic Advisers and Moody’s Economy.com. They all estimate that the bill has added 1.6 million to 1.8 million jobs so far and that its ultimate impact will be roughly 2.5 million jobs. That was in February of 2010. Fifteen months later, in May of this year, the nonpartisan Congressional Budget Office estimated that, as of the most recent quarter, the Recovery Act had increased the number of people employed by between 1.2 million and 3.3 million and increased the number of full-time equivalent jobs by 1.6 million to 4.6 million compared with what would have occurred otherwise. And just a month ago, the president's Council of Economic Advisers came up with similar estimates (2.4 to 3.6 million jobs) using its own forecasting models. You'll find a few critics on the right who dispute the reliability of these models, but they are a distinct minority and it's not as if they have a compelling alternative theory. Keep in mind, by the way, that the administration had predicted the Recovery Act would create 3.5 million jobs, which is on the high end but in the same ballpark as most other estimates. Yes, the administration also predicted unemployment would peak at around 8 percent. That was obviously very wrong. The jobless rate hit 9 percent in the middle of 2009 and, except for a brief period this year, hasn’t dipped below since. Those are the figures critics always use to make their point. But few mainstream experts doubt that, if not for the Recovery Act, today’s unemployment rate would be significantly higher. The administration's error, in other words, seems to have been in anticipating how bad things would get, not in figuring out what to do. That's particularly true when you consider not just the size but the shape of the Recovery Act. The initiative invested heavily in projects likely to strengthen the economy in the long-run while delivering relief to people who very much needed it. Via Time's Mike Grunwald: Yes, the stimulus has cut taxes for 95% of working Americans, bailed out every state, hustled record amounts of unemployment benefits and other aid to struggling families and funded more than 100,000 projects to upgrade roads, subways, schools, airports, military bases and much more. ... The "fun stuff," about one-sixth of the total cost, is an all-out effort to exploit the crisis to make green energy, green building and green transportation real; launch green manufacturing industries; computerize a pen-and-paper health system; promote data-driven school reforms; and ramp up the research of the future. Grunwald, who is writing a book on the subject, notes reports of serious fraud have been minimal, thanks to unprecedented transparency. (If anything, the safeguards against abuse have been too effective, because they slowed some of the spending.) ProPublica's Michael Grabell, who is also writing a book on the subject, seems to agree: After Hurricane Katrina and the Iraq reconstruction, many analysts predicted that the federal stimulus program would be rife with fraud, waste and abuse. At least so far, it hasn't been. Grabell goes on to note that, so far, legal prosecutions have produced convictions over just $1.9 million of fraud -- or less than 0.01 percent of the program -- although it's always possible more cases will appear later on. Meanwhile, the least effective parts of the law were most likely the poorly targeted tax cuts that Republicans and conservatives insisted upon as a condition of enactment. The most credible case against of the Recovery Act is the one from the left, by the likes of Paul Krugman: It wasn't large enough. But that’s an argument in favor of going "big, long, and global" on a second stimulus, as E.J. Dionne recently put it – and the very opposite of what Republicans are saying. Update: Over at the Washington Post, Dylan Matthews has done an exhaustive and detailed survey of nine major studies on the stimulus, including both modeling and econometric studies. I can't do justice to the write-up here -- and I'm not sure I'm really qualified to judge it -- so I'll just quote his conclusion: "I’m inclined to believe that the preponderance of evidence indicates the stimulus worked." http://www.tnr.com/blog/jonathan-co...y-act-worked-obama-infrastructure-investment#
It's unquestioned that a stimulus would provide some boost. However, it's like saying "I need energy to run a marathon, so instead of watching my diet and training, I'll just do a bunch of cocaine." In the short term, of course you're going to run faster. However, you'll soon run out of energy and be broke because Bolivian Marching Powder is expensive.
Not a bad analogy. To boot, you feel like shit after the cocaine wears off. The cocaine wearing off is the 2010 job growth that would have happened in 2009.
I like the $17,000,000.00 OSU got suddenly just as they were to fire the head basketball coach. The fact he's the President's wife's brother had nothing to do with it. Oh yeah, they ended up giving him another chance. Now THAT'S an effective stimulus plan!
nothing to do with the job growth part. Don't need a chart to show me your stat. It's just a poor tag along analogy to the cocaine one is all. It's ok. You'll get 'em next time.
Look at Obama's graph again. With his plan, the actual unemployment rate was much worse than without it. And recovery delayed from Q3 to the next Q3.
Anyhow, I'll let Henry Morgenthau, FDR's treasury secretary, speak to the effectiveness of the New Deal. The link is to a PDF of the transcript of his testimony in 1939 to the House Ways and Means committee. http://www.burtfolsom.com/wp-content/uploads/2011/Morgenthau.pdf Starting on page 3: "Now, gentlemen, we have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong, as far as I am concerned, somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. We have never taken care of them. We have said we would give everybody a job that wanted it. We have never takend care of the people through your mountains and your mountains who get a $30.00 or $40.00 a year income. There are 4,000,000 that don't have that much income. We have never done anything for them. I want to see those people taken care of." He goes on to rail against big deficits and suggests taxing the rich to pay for govt. spending. But the spending didn't work. "The biggest deterrent of all, I think, is that the country does not know when the end is in sight and this unbalancing of the budget, that's the biggest deterrent of all and that's what frightens people. I had a man travel up and down this country and he has come back -- an intelligent fellow; he has kept away from big cities -- and the unanimous report was that people are not afraid of paying more taxes if they are convinced that it is honestly spent, but they are against waste." AND: "I say after eight years of this Administration we have just as much unemployment as when we started. And an enormous debt to boot! We are just sitting here and fiddling and I am just wearing myself out and getting sick. Because why? I can't see any daylight. I want it for my people, for my children and your children. I want to see some daylight and I don't see it."
