Paul Krugman Misstates Bruce Bartlett

Bruce Bartlett opined on the impact of the stimulus bill; the reliably disingenuous Paul Krugman misrepresents the nature of Bartlett's argument.

Krugman excerpted this from Bartlett:

The problem is that the Obama administration was much too optimistic about how quickly stimulus spending would affect the economy. Christina Romer, chair of the Council of Economic Advisers, and Jared Bernstein, chief economist to vice president Joe Biden, forecast in January that the stimulus would reduce unemployment almost immediately.

Krugman's response:

Um, that’s totally false. Did Bartlett even look at the Bernstein-Romer paper?

As to whether Bartlett looked at the paper, his article described the the appendix quite accurately, so yes, I'll wager he did read it.  But did Krugman read either Bartlett of the Bernstein-Romer paper?

Bartlett's point is that the stimulus money has not even been spent, so it is too early to gauge its impact:

Another stimulus would be a grave mistake. The first one was justified by extraordinary circumstances. But it must be given time to work. People should not allow their impatience to lead to the adoption of policies that will not only fail to reduce unemployment this year, but could stoke inflation in the not-too-distant future.

Bartlett followed the paragraph cited by Krugman with this:

The forecast also showed the unemployment rate peaking at 8 per cent with the stimulus and 9 per cent without. Obviously this was wrong. Yet it would be incorrect to conclude that the stimulus was doomed to failure, as many Republicans and conservative economists argued.

Indeed, buried in an appendix, the Romer-Bernstein document presents reasonable estimates of how quickly different forms of spending would raise gross domestic product. Tax cuts and government transfers are slow to have an effect and have a low multiplier, raising GDP less than $1 for every $1 increase in the deficit even when fully effective after two years.

However, direct spending does not provide much stimulus if the money is not spent:

However, just 11 per cent of the discretionary spending on highways, mass transit, energy efficiency and other programmes involving direct government purchases will have been spent by the end of this fiscal year. Even by the end of 2010 less than half the funds will have been disbursed and by the end of 2011 more than a quarter of the money will be unspent.

Consequently, it is hardly surprising that five months after the stimulus bill passed it has not yet affected the unemployment rate. Unfortunately, other government data suggest that Mr Elmendorf may have been too optimistic about how fast stimulus spending would affect the economy. According to www.recovery.gov, which tracks this spending, at June 26 only $56.3bn has been paid out from the $157.8bn in funds allocated to various government agencies.

But even this overstates the economic impact because the agency primarily responsible for public works, the Department of Transportation, has spent virtually nothing. The website says it has made $20.5bn available, but just a tiny $441.5m has actually been spent.

The Christina-Romer paper had explained that the "shovel-ready" projects maybe weren't quite so ready:

The different components of the stimulus package also differ in terms of the timing of the jobs they
will create, and therefore serve different purposes in terms of cushioning the downturn and fostering recovery. Because it takes time to carry out new spending programs authorized by legislation, we expect the jobs created by spending on infrastructure, education, health, and energy to be concentrated in 2010 and 2011. At the other extreme are funds to protect the most vulnerable, which are generally spent promptly, and tax incentives for businesses to invest quickly.  State fiscal relief and broad-based tax cuts fall in between: funds for these programs can be disbursed quickly, but there can be a delay before the main response of spending.

I think Bartlett, Krugman, and Christina-Romer are all on the same page on the question of lagged effects.  Where Krugman and Bartlett differ is that Bartlett is claiming that the current non-performance of the stimulus was more or less to be expected, given the slow pace of spending - contra Krugman, the fact remains that the Christina-Romer paper and their projected employment graph show that some elements of the stimulus bill should have had an impact in the first six months, which has led to disappointment in some quarters.) 

Krugman is claiming that the stimulus was always too small and doomed to fail since we sent a boy to do a man's job.  Well, a boy to do an adult's job - a large adult.

Joe Biden is on the same page with Bruce Bartlett, arguing that the big spending is yet to occur.

Well, if the Administration oversold the impact first stimulus, they are going to have a tough time if they now argue simultaneously both that it is too soon to judge the first stimulus bill and that we need a second one.  Ain't it great having Biden around, instead of the obviously unqualified Sarah Palin?

MORE:  Biden didn't actually sing "Bomb, bomb, bomb, bomb bomb Iran" but I guess people picked up on the tune.

Comments

[peter]

Ain't it great having Biden around, instead of the obviously unqualified Sarah Palin?

yes

[DebinNC]

From Bartlett's "Why isn't the stimulus stimulating?" Forbes/6-25-09:

Increases in defense spending are the quickest to stimulate because 65% of the money is usually spent in the first year, rising to 88% the second year and 96% in the third. By contrast, only 27% of highway spending is spent the first year, rising to 68% the second year and 84% the third. Spending on water projects is even slower to come online, with only 4% spent the first year, rising to 24% the second year and 54% the third. The reason is simple. Much of what the Defense Department buys involves things that also have civilian uses. In effect, it is buying off the shelf so spending can be done quickly. But to build a new highway or dam is much more complicated. Plans have to be drawn up, land acquired, environmental impact statements prepared, public comments solicited, political and other objections dealt with, contracts written and put out for bid, etc. This takes years and years.

[sbw]

My comment posted on the NYT Krugman piece:

--
Krugman’s “key graph” should mark the actual unemployment rate to show how wrong Bernstein-Romer’s estimates were. Actual unemployment with the so-called Recovery Plan is much higher than unemployment projections without the plan.

So, did the so-called Recovery Plan generate enough fear to make unemployment worse? As a business owner, I think so.
--

[matt]

thoughts on Iran and Honduras. LUN

[Rick Ballard]

"Curley" (not Moe or Larry) Romer's claim that inventory replenishment will "spark" the recovery was dealt a blow today:

The ISM Non-Manufacturing Inventory Sentiment Index in June registered 67 percent. This is 4.5 percentage points higher than the 62.5 percent reported in May, indicating that respondents still believe their inventories are too high at this time. In June, 38 percent of respondents said their inventories were too high, 4 percent said their inventories were too low, and 58 percent said their inventories were about right.

The 10 industries reporting a feeling that their inventories are too high in June — listed in order — are: Wholesale Trade; Utilities; Construction; Information; Real Estate, Rental & Leasing; Other Services; Professional, Scientific & Technical Services; Health Care & Social Assistance; Accommodation & Food Services; and Retail Trade. The two industries reporting that their inventories are too low in June are: Educational Services and Public Administration.

Did she get her moron's credential from the same Crakerjack Box as Krugman?

SBW,

It doesn't have to be the nonRecovery Plan generating uncertainty. Toss in Crap & Charade plus MediScam.

Then make your layoff list.

[Why shouldn't Saudi Arabia and Egypt be scared shirtless of the Persians?]

Well if Biden's information is from the Times of London, I'm here to tell you their informant is a fabulist who might have guessed right about Saudi Arabia. Egypt has supposedly let Israeli cruise missile subs through the Suez, also. Biden may be offering no more than a truism, and were I Israel, I'd assume he has no credibility about what is going on in the Administration. They've got his number, and it is a wrong one.

[Molon Labe]

AJ Strata is tracking porkulus spending. Less than 1 percent has been spent so far.

[DebinNC]

Obama called the job stats "sobering", setting up the most rational explanation for their disastrous policies...that BO, Summers, and Romer have been drunk as skunks since February.

[Dave (in MA)]

"sobering"

My senior Senator had to consult the dictionary for the meaning of that term.

[Pagar]

If what MarathonPundit reports is true, and only 1% of the money has been spent, I would guess that by 2012 there will be millions of the Obama Stimulus signs just in time for ACORN to cast your vote for Obama.

Indeed they are. There are four of these placards within two miles of my home. In its rebuttal to Coburn's report, the White House claimed such signs are "customary."

But in my years on this planet, I've never seen such a proliferation of these "campaign signs." But The Chosen One has only been president for six months.

[Original MikeS]

By design, the $787 billion vote purchase plan won't have much effect until we enter campaign season. This bill promises to bring corruption to levels never before seen in Washington DC.
Yes we can!

[Ranger]

Just a quick note to point out that Krugman and the times have engaged in a little air brushing of his initial remarks. When I firt read it, I recall is saying:

That’s a lie. Did Bartlett even look at the Bernstein-Romer paper?

Now it says:

Um, that’s totally false. Did Bartlett even look at the Bernstein-Romer paper?

Did I just mis-remember?

[Bill in AZ]

I spent quite a bit of time on I-40 this past week, and saw a few of those "campaign signs".

The whole trip seemed particularly light in traffic, even with the 4th of July holiday coming up. I noticed in Holbrook a lone cyclist on a beat up old bike with a trailer behind it. Figured he was probably a laid off engineer. I'm afraid by this time next year after another year of Ogabe's Stimulus, the cars will be the exception, and there will be a lot of us laid off engineers on beat up old bicycles. But the freeways will be great for cycling on.

[Pofarmer]

Why would a tax cut be slow to spend? If you give me a tax cut, I have the money available that I would have paid in taxes, right now, today. Tax cuts, especially advanced depreciation, were great for equipment manufacturers.

[sbw]

Went back to the Krugman comments. OMG, has he been taken to the woodshed. I'll bet he doesn't read them. his ego couldn't take it.

[Pofarmer]

Oh good Lord.

Speaking of wrecking the economy. The State Legislature wouldn't let Ameren charge upfront to cover the cost of a new Reactor at Callaway, but they WILL allow them to CHARGE FOR REDUCING USAGE. Yes folks, you're expected to use less electricity, but it's going to cost you more. Because, you see, "saving is the same as generating." Except it's not, and, it seems, it costs more to save energy than to use it, which, ya know, presents a problem. I give you

http://www.kansascity.com/news/politics/story/1307200.html

Analysis | With new charge, saving electricity could end up costing Missourians
By DAVID A. LIEB
The Associated Press
More News

JEFFERSON CITY | Some Missouri residents and businesses soon could see a new charge on their electric bills — a fee for using less energy.

Though it might seem illogical, the new energy efficiency charge has support from utilities, most lawmakers, the governor, environmentalists and even the state’s official utility consumer advocate. The charge covers the cost of utilities’ efforts to promote energy efficiency and cut power use.

The assumption is that charging consumers for those initiatives ultimately will cost less than charging them to build the new power plants that will be needed if electricity use isn’t curtailed.

Legislation pending before Gov. Jay Nixon would set the criteria for state utility regulators to approve the energy-savings charges. If he signs the bill, the new law would take effect Aug. 28.

When lawmakers adjourned in mid-May, Nixon listed the little-publicized energy legislation as among his proudest accomplishments, describing it as a “good, good start on an energy policy” to be developed by his Department of Natural Resources.

“To save power is the equivalent of making power,” Nixon said, “and it’s a pretty seismic shift” in Missouri’s energy strategy.

Usually, regulators allow utilities to recoup the cost of building power plants or buying more power to meet customer demand. Recently, the Missouri Public Service Commission began allowing some utilities to pass along to customers the cost of programs that reduce demand for electricity.

For example, the commission last week approved a program in which St. Louis-based AmerenUE can offer credits to businesses that voluntarily shut down or scale back their electricity use during peak demand. AmerenUE will be able to recoup the cost for the program that starts Thursday by increasing the rates it charges business customers.

Kansas City Power & Light Co. already has 19 energy efficiency and demand-reduction programs, said Chuck Caisley, the company’s senior director of public affairs. He said the Public Service Commission is allowing the company to recoup up to $50 million of the programs’ costs under a rate plan in effect through 2010.

One of the company’s more popular energy-saving initiatives has provided free programmable thermostats to about 34,000 residential customers in Missouri and Kansas. KCP&L can remotely control the devices to reduce the frequency at which air conditioners run during peak demand times. The power company overrode customers’ air conditioners four times last year and twice so far this summer, Caisley said.

KCP&L was among the leading advocates for the Missouri legislation.

“It will allow us to spend a great deal more on energy efficiency, because it holds us harmless” for the cost, Caisley said.

The legislation applies to KCP&L, AmerenUE and the Empire District Electric Co., the publicly traded utilities that serve nearly three-fourths of the state’s population.

The utilities would have to get approval from the five-member Public Service Commission to pass on the cost of their energy-saving programs. To do that, the programs must result in an overall reduction in energy use. The legislation also requires the charges for the energy-saving programs to be listed as a separate line item on customer bills.

The U.S. Environmental Protection Agency estimates that energy-saving programs offered by utilities will add about 3 percent to the average electricity rates. But it says customers who participate in the programs could save 10 percent to 20 percent on their energy bills, and even those who don’t participate might save if utilities don’t have to buy more energy or build new power plants.

“It’s one of those rare utility bills that actually works out to everyone’s benefit,” said Missouri Public Counsel Lewis Mills, the state’s official consumer advocate.

Public Service Commission Chairman Robert M. Clayton III said he feared that Missouri’s heavily coal-dependent electric customers will see a sharp spike in rates if federal climate legislation limiting carbon emissions becomes law. That makes it even more important for Missourians to reduce their collective energy use, he said.

Although the commission took no position on the Missouri legislation, Clayton said he was fine with the idea of allowing utilities to recoup costs for energy-savings initiatives.

“Any tool we can give a consumer to reduce their usage is a good thing,” Clayton said, adding: “The trick is making sure the expenditure (by the utility) is a prudent expenditure and it’s going to achieve results.”

Editor’s Note: David A. Lieb has covered state government and politics for The Associated Press since 1995.
Posted on Sun, Jul. 05, 2009 06:11 PM

[Neo]

I couldn't resist this ...

Mugabe calls Johnnie Carson 'an idiot'

[Old Lurker]

"Increases in defense spending are the quickest to stimulate"

Not compared to "investing" (cannot believe I can even use that word in jest in this context...slap me now) the same trillion in immediate sustainable tax cuts targeted at actual investors on returns on their actual investments. (So sorry about those non taxpayers and non investors who don't get a piece of that action.)

[Old Lurker]

Sorry Po, we were posting the same idea at the same time.

[Pofarmer]

Great minds think alike OL.

[pagar]

On Independence Day, While Biden was assuring our enemies that if they want to get America out of Iraq all they have to do is create more violence:

Article

"Violence May Cause Disengagement From Iraq"

Some of our soldiers were making the supreme sacrifice:

Article

"Thank you, Aaron: A U.S. soldier’s sacrifice on Independence Day"

May God bless our troops and their families.

Fellow Americans, our troops die while American politicians encourage the enemy. We've seen this many, many times over the years. If we don't intend to win, we need to pull our troops back. I don't see any politician in Washington DC today that intends to win. I believe Gov Palin is the one politician we could have had in national office that is focused on our troops winning.

[PeterUK]

"“To save power is the equivalent of making power,” Nixon said, “and it’s a pretty seismic shift” in Missouri’s energy strategy."

Or "Giving back Missouri to the Buffalo" as it is known locally.

[daddy]

Bartlett's Familiar Misquotations?

[matt]

so that's where Johnnie Carson is! Did he bring assistant undersecretary McMahon with him?

PUK, wouldn't they give it to the Indians first? After all, with all that casino money they could pay a nice price.

[jorod]

Do you think maybe the Obama Administration doesn't know what it's talking about?

Do you think they fib a little?

[PeterUK]

Matt,Have you seen how much energy a casino uses? The Indians aren't stupid,the only things that will live there at those prices are buffalo.

[Pofarmer]

This energy idiocy is still bugging me. How in the world do you encourage jobs to stay in a state, let alone create new ones, when the OFFICIAL POLICY IS ENERGY RATIONING?

Seismic shift indeed.

Apparently we want jobs that don't need power, or are willing to work when the windmills are turning.

[sylvia]

Man that stimulus bill was a farce. First of all, to get it going would take too long anyway. By that time, the depression just increases.

Better to have a rise in the minimum wage, which would have a trickle up effect to raise more salaries. We need to equalize salaries with housing costs again (which is basically like lowering housing prices, but in the opposite way.) And that would also increase the tax intake and stimulate consumption and then production and then employment. And then couple that with moderate infrastructure improvement, which we have to do anyway.

And, we have NO problem in the low wage sector in unemployment now, as Wal Mart is hiring big time, so no one give me that argument. We have to accept the fact that we are moving to almost a total service economy. And to keep it healthy, we have to up the wages for services so that people have enough purchasing power to keep the economy flowing.

If everyone just listened to me, we'd fix things. I predicted the housing crisis, but no one listened to me on that either. Sigh, alas they never do.

[PeterUK]

The Conestoga wagon trains will soon be heading East to the sailing ships waiting to cross back over the Atlantic.

[sylvia]

But actually short of that, I think we should do nothing and just wait. First order, do no harm. Eventually the min wages will go up on their own as that low wage job market sector increases, and companies compete more for those workers.

The stimulus is just crazy. If I were a paranoid person, I would say it's a plan to bankrupt the US so a socialist paradise could take its place, kind of like some ACORN affiliated groups had a plan in the past to bankrupt the US by having everyone on welfare. But I'm not that paranoid. Well at least not quite yet.

[I'm making minimum wage, dammit.]

sylvia, if you raise the minimum wage people get laid off. Period.

[Neo]

Just like the fact that we can only have one President at a time, we can only have one stimulus at a time.

I'll consider the idea of a second stimulus when every last dime of the first stimulus is spent.

[Pofarmer]

Sylvia, you know as much about economics as I know about needle point, which is to say, not much.

[verner]

OK, now Drudge is reporting that Hillary is meeting with the Chavez mini-me in DC, so, draw that sickle and hammer on Honduras.

I HATE these people.

[Pofarmer]

The Conestoga wagon trains will soon be heading East to the sailing ships waiting to cross back over the Atlantic.

Horses and Oxen will be outlawed because of Methane emissions. We'll probably have to walk it.

[PeterUK]

"Horses and Oxen will be outlawed because of Methane emissions. We'll probably have to walk it."

In which case,there is a business opportunity for the Rickshaw Association Training Scheme.

[PeterUK]

Verner,
"OK, now Drudge is reporting that Hillary is meeting with the Chavez mini-me in DC, so, draw that sickle and hammer on Honduras."

How do you think Obama got a deal on nuclear missiles.

[verner]

PUK, he's more of a marxist than the Russians at this point. I think he would have done it unilaterally...

[sylvia]

PoFarmers, my professors who gave me A's in economics would beg to differ. You are thinking in a microeconomic way if you think raising min wage means layoffs, period - you have to think in a macroeconomic way. Don't think old school, think new school. Don't think in single dimensions, think multidimensionally.

[sylvia]

Yes where is the Republican outcry against the actions supporting lefties in Hoduras? Where is John McCain speaking out?

[Your fantasies are plain hurtful. How come?]

Raising the minimum wage means lay-offs. Period. New methods of thinking in other dimensions won't change that.

[sylvia]

Hey just lost a comment. Anyway, to repeat, where is John McCain speaking out on Honduras?

[PeterUK]

" Where is John McCain speaking out?"

John McCain is yesterday's man.

[All kinds of conspiracies about it lurk in the wings, too.]

Goldman-Sachs had a very interesting theft from their quant unit. Details at Memeorandum. I don't know the meaning of it all, but it looks like fun for someone.

[sylvia]

"Raising the minimum wage means lay-offs. Period. New methods of thinking in other dimensions won't change that."

If the working classes are not adequately compensated for their labor, or alternatively the investment classes are keeping too much of their income through higher housing costs, their purchasing power declines. When their purchasing power declines, manufacturers will sell less goods. When manufactures have less goods to sell, they start laying people off. When people are laid off, unemployment goes up, the economy tanks. Period.

Also when the investment class has too much to invest, they start investing in risky pyramid schemes that are unproductive and unnecessary, wasting precious capital, like the housing market, setting off another collapse.

It's all about balance. There needs to be a balance between consumption and investment. That's what the periodic boom and bust economic times are about, however if we manage policy carefully we can flatten out the crests a little.

[verner]

Anybody who still isn't convinced that the global warmaing scare is nothing more than marxist bullcrap needs to read this--LUN

It's all about taking away wealth from rich folks and giving to the poor via environmental mafia bosses in the UN who will naturally take their cut.

[EBJ]

I guess I learned the old economics:

New Economics:

1) Raise minimum wage
2) Trickle up
3) Everybody's rich!

It seems pretty obvious that when the minimum wage goes up some jobs will go away. Yes, some businesses will choose to 'eat' the costs from profits and some will raise prices. In the former instance, the minimum wage workers will have more to spend but the business will have less profit to distribute. It's difficult to see how that grows jobs. In the latter, higher prices mean less sales so maybe you lose an employee down the line.

There are studies going both ways on this (the studies break in accordance with the funding, coincidentally) but anybody that says there will be NO job losses is simply wrong.

[PeterUK]

Sylvia,
Which working classes,those who will be priced out of their jobs or those crossing the border or living in a low wage society.
Why do you think China shipped you so many goods.

[sylvia]

No the min wage should reflect the value of goods that one worker can create in an hour. However, with the advent of technology, I think this value has increased to the point where the wage does not reflect this amount. I think technology and the increasing service labor economy is cutting off money from the lower classes.

Let's face it, in theory we will be at a point someday where machines can do all our work. Who is going to get paid other than the machine owners? How can an economy function like that?

We need to find some way to "spread the wealth" around. That's what Obama's economists realize and are trying to blow money because they know they have to get it out there anyway they can to get the money moving. But they are trying the planned approach. I say just give the money to the people and let them spend it.

That's why the min wage should not be too high, because then yes layoffs will result, but it shouldn't be too low either, because that is just as bad.

[PeterUK]

Great galloping Engels Sylvia! You are dead on the button with 19th century Marxism.
This is the new economics? Get a refund from your Professors at once,you have been robbed.

[GMax]

Why dont we raise the minimum wage to $200 an hour. That way we will all only have to work about 1/2 a year and will have lots of time to spend the extra cash too. The very best of both worlds!

Isnt this new school thinking just great? What? You spoilsport, you mean I am not getting a pony for Christmas? WTF?

[sylvia]

"Yes, some businesses will choose to 'eat' the costs from profits and some will raise prices. In the former instance, the minimum wage workers will have more to spend but the business will have less profit to distribute. It's difficult to see how that grows jobs. In the latter, higher prices mean less sales so maybe you lose an employee down the line."

When the min wage workers have more to spend, they will buy more, even at higher prices. Especially because the consumption of the working classes is pretty standard - it's mostly about necessities, not luxuries. There will be a transition period but eventully sales will go up, profits will increase.

This has to balance out at a certain point where the price increase does not effect sales. Since the prices of necessary goods is not that high yet, and unemployment in the low wage sector is not high, we have room to improve in this category.

Hopefully this process happens naturally, but maybe in the future might need an assist.

[DebinNC]

It's scheduled to go up to $7.25 on July 24.

[jean]

Your a socialist Sylvia.I'm in the investment class .My husband has worked long and hard for what we have.You say "give the people money".I say free up industry so people can earn their own money to spend.What the heck do you think the investment class is going to do when the government starts taking more of their money.They are not stupid.They will quit working.Then you will have a lot more unemployment and no one to hire your poor pitiful working people

[sylvia]

Peter, what's old is new again. Like Shakespeare said, nothing new under the sun.

[sylvia]

"They will quit working."

Yeah I doubt it. They need to eat too. The investment class needs enough money to be rewarded, but not so much that it impedes consumption in society. There has to be a balance.

[jean]

Sylvia slavery was old too.It like socialism are best left in the past.

[Molon Labe]

New Economics:

1) Raise minimum wage
2) ???
3) Everybody's rich!

[sylvia]

Okay, think about it this way. Let's take your dream scenario. What if the government decided to lower the min wage to $3.00 an hour? Do you think that would help the economy and "grow jobs"?

Most companies would offer better wages to compete for employees. However, other companies might take advantage of it. What it would do is create a class of people dependent on government welfare and healthcare, which would raise all our taxes. It might temporarily raise the profits of the owners but eventually it would decrease sales, lowering profits. That would also increase prices eventually. Again, there has to be a realistic balance.

[Pagar]

IMO, William Ayers and his communist friends have done their Anti American work well. The
proof is in the postings.

[peter]

Okay, think about it this way. Let's take your dream scenario. What if the government decided to lower the min wage to $3.00 an hour? Do you think that would help the economy and "grow jobs"?
Actually, the answer is yes.

[narciso]

It's frightening, Pagar, how do they come up with higher wages, in a contractionary
economic environment, add to that the pressures from higher interest rates, how is that going to work

[clarice]

Jean--I sent you and Jane gmails.
Jane wrote earlier that she was having trouble posting here. I gave her the usual tips but as I fon't see a post from her I take it she's still in the maws of typhus pad.

[PeterUK]

"Peter, what's old is new again. Like Shakespeare said, nothing new under the sun."

Gee! Sylvia,does that our ancestors had birch bark computers and electric querns?

[Ranger]

Like Shakespeare said, nothing new under the sun.

Posted by: sylvia | July 06, 2009 at 07:12 PM

Actually, that's Ecclesiastes Book 1, Verse 9:

What has been is what will be,
and what has been done is what will be done;
and there is nothing new under the sun.

And thus, the posting proves the verse.

[PeterUK]

"The investment class" - Capitalists.

Forget the euphemisms Sylvia,stick to the book.
BTW have either you or your Professors been capitalists or factory wage slaves?

[Old Lurker]

It is such a waste engaging with that person. We have trod the minimum wage path with her so often no grass will ever grow on it.

[PeterUK]

OL,
Be fair,this girl got straight "A"s in indoctrination.

[Danube of Thought]

This administration seems to be of at least two voices on the stimulus. The other day Obama said it "has done its job." Now we are told that it has yet to begin doing its job, but it will.

Anybody know what the administration position actually is? And regardless which of those two alternatives it is, what is it about either of them suggests that we should do more of it?

[PeterUK]

"Anybody know what the administration position actually is?"

In the groove.Not on the right cheek,not on the left cheek,but right in the groove.

[Danube of Thought]

Nice little billet-doux from the UK Telegraph:

"The US economy is lurching towards crisis with long-term interest rates on course to double, crippling the country’s ability to pay its debts and potentially plunging it into another recession, according to a study by the US’s own central bank."

[Danube of Thought]

Re the UK Telegraph item, LUN. It's a must-read.

[DrJ]

Be fair,this girl got straight "A"s in indoctrination.

The irony is that I have found that university economics (at least the first few courses) has nothing to do with the real world. Try getting a business off the ground, and running one. That is a lot more useful.

As an aside, I was taught Economics by communists. And unabashed communists -- stories about J. Pierpont Porker were routine. And yes, these were required courses for all engineering students (though not from these particular clowns).

Back to writing proposal reviews. I have a deadline to meet (very soon!).

[Porchlight]

OT,

Suddenly I'm getting ads on the left sidebar for "Let it Roll," a new collection of George Harrison's greatest hits.

Kinda out of nowhere, for this blog. Wonder which keywords set it off?

I would rank Harrison's "What is Life" as one of my top 100 non-Beatles songs. Killer.

[sylvia]

"We have trod the minimum wage path with her so often no grass will ever grow on it."

Sorry. I haven't heard anything from anyone other than the simple maxim - raising min wages loses jobs. And I think I might have heard that one before, sorry. If I get an analysis beyond the simple and mundane and rote, I might actually one day be convinced. I'm still hoping.

[PeterUK]

"Kinda out of nowhere, for this blog. Wonder which keywords set it off? "

They do????

FREE MONEY NOW!!!

[sylvia]

You know, you've convinced me, then lets lower the min wage to $1.00 an hour. That way we can all (or the few slave masters at the top) have slaves running around doing all our bidding. And no unemployment. It will be just Ancient Rome in its last days. What a great time. Oh wait, that didn't work out too well in the end did it? Never mind.

[PeterUK]

Not a terribly accurate picture of Rome Sylvia.
Straight "F"s i history?

[Pagar]

with long-term interest rates on course to double, plus the news that we are going to reduce the amount of energy produced and raise the cost of it to insure that every one uses less. We're going to impose massive new restrictions on farmers to insure that every one pays more for food. Plus I read somewhere that Congress has already passed over 8000 pages of laws since 20 Jan 09 and undoubtedly will pass thousands more before the end of their reign of terror. How would anyone possibly know how to plan for anything? The tax code is so complicated that the Secretary of the Treasury can't even begin to understand it and yet no one is talking about doing anything about it. The list goes on and on?
And someone thinks the stimulus can work under these conditions. It's just not going to happen.

[clarice]

Sylvia, In D.C. I don't remember when it has ever been possible to hire anyone for the minimum wage. You know why? Because the demands for good workers exceeds by far the supply.

I expect this is the case in all major urban areas.

And my guess is that except for migrant farm labor, the same holds true. And when the cost of labor exceeds what the farmer can reasonably pay, the substitution of mechanical means to plant and harvest becomes attractive enough an option to foreclose further hires.

[narciso]

You know Lord Rove, is really starting to tick me off, saying Sarah has no future, didn't he have to resign as Deputy chief of staff, because on an ethical,sorry criminal matter, inflicted on him by Fitzgerald ignoring Armitage, in favor of him and Libby, but it was partially self inflicted
since he had refused to admit his contacts with Novak and Cooper to the President.

[Extraneus]

Who would apply for the slave jobs? Even illegal Mexican lawn-mowers make more than minimum wage. Their wives? No way, they make a *lot* more than that cleaning houses. Who would apply, and why don't we already have slaves?

[DebinNC]

DoT's link above ends with: "Should the cost of raising or refinancing public debt in the markets double, “the debt could just explode”, he said, adding that it would come to a head in “five to 10 years”.

Leading economic illiterates like me to ask, "What happens after the explosion?"

[sylvia]

"And when the cost of labor exceeds what the farmer can reasonably pay, the substitution of mechanical means to plant and harvest becomes attractive enough an option to foreclose further hires."

See that's my worry. Let's say we reach a level of efficiency where our technology lowers our demand for labor. Then what?

[PeterUK]

Pagar,
Don't forget the vast technical, engineering and financing problems associated with green projects. Government spending in this are won't stimulate anything but profit margins of the few companies who can undertake the work. Since it is a global market in derangement,it is also a seller's market,these companies will go to the highest bidder.

[Original MikeS]

Anybody know what the administration position actually is?

If you do, please let Obama know.

[Rick Ballard]

"What happens after the explosion?"

Hyper inflation. Or nothing. That was a pretty good piece but the vast majority of US Treasury debt rolls at <1-5 years with much more weight towards three than five. The bond vigilantes have made one raid and been driven back with a lot of help from other central banks. In fact, the level of help suggests that much of the developed world is so scared of the scenario outlined in that article that they will sell their own debt in order to buy US debt at a loss.

I can't quite pencil that one out on a "forever" basis but I'm sure that a highly credentialed moron could be found to pop off 5K words of gibberish to explain how it could happen. Just like inventory replenishment could happen in Q3, even though the shelves are chock full of merchandise.

The Regime (plus the Fed) have six plates spinning and four balls in the air. Now, that's entertainment.

If you find monetization entertaining.

[clarice]

Sylvia, I'd be greatly amused to hear your plan for keeping people employed at highly paid jobs when their work can be performed more cheaply and efficiently by machines.

[Jane]

I'm here Clarice.

There will be a transition period but eventully sales will go up, profits will increase.

No they won't. Have you ever run a business Sylvia?

[Rob Crawford]

"You know, you've convinced me, then lets lower the min wage to $1.00 an hour. That way we can all (or the few slave masters at the top) have slaves running around doing all our bidding."

You realize there wouldn't actually BE anyone working for $1 an hour, right?

"See that's my worry. Let's say we reach a level of efficiency where our technology lowers our demand for labor. Then what?"

Same thing we've always done -- invent new work.

You may have heard that, once upon a time, most working men in the US were employed on farms. They walked behind mules, they weeded and harvested by hand. Then machines came along that let one man accomplish what it had previously taken dozens.

Suddenly there was a lot less work available on farms. People moved into cities; whole new industries arose not just to supply the needs of the growing cities, but to take advantage of the concentration of available labor.

Factories changed, too. At first, every bolt was tightened by hand. Then you had air-powered tools, and a single worker tightened as many bolts as a dozen. Then along came robots -- a couple of technicians replaced dozens of VERY expensive men doing welding, painting, etc.

Yet we've always adapted.

Excepting, of course, those places where somebody got permission to use the force of government to prevent adaptation.

[Rob Crawford]

"Sylvia, I'd be greatly amused to hear your plan for keeping people employed at highly paid jobs when their work can be performed more cheaply and efficiently by machines. "

The same plan as any statist/stasist ever has: ban the machines!

[glasater]

"What happens after the explosion?"

Well--we are in uncharted waters so it really is anyone's guess. A family can prepare for a total breakdown in government and head for the hills with their survival gear.
I personally think with the cold weather coming upon us it would not be unreasonable to stock up on a year or two supply of food and medicines, etc. Silver coins and bullion in one's own possession is something I've been working on for a time.
But I'm with Kim in that the cold weather is almost a larger concern than the Zero administration.

[I'll spot you knowledge of how to start a fire, no need to get carried away]

Let's say we reach a level of efficiency where our technology lowers our demand for labor. Then what?

Shouldn't you grow a tree, chop it down, set two branches aside, pulp the rest, turn the pulp into paper, start a fire with one branch, use it to heat the other one into charcoal, write your message on the paper with the charcoal, and hand deliver these nuggets of wisdom if you're so opposed to technology lowering the demand for labor?

[Sue]

Another ethics complaint has been filed against Sarah. The per diem she was collecting. Huffington Post has it, if anyone is interested.

[verner]

Hey Sylvia, did they every mention that there's no free lunch at that Community College you attended? What about, if you're in a deep hole, stop digging?

OK--ignore mode is officially on.

Carbon tax 1,870 for a family of four beginning in 2012, assuming there will be enough families left to pay their light bills and drive their cars of course.

[sbw]

Foolish answers chasing foolish questions. Go back to Adam Smith.

It makes more sense to think of wealth as productivity that others willingly trade for, and Gross Domestic Product as the wealth generated if everyone worked as efficiently as possible.

Wealth is increased when someone figures a way to produce goods or services in less time, leaving extra time to produce even more.

Someone who can't produce what someone else wants needs to be retrained, not paid more under a minimum wage. A minimum wage decreases productivity.
Furthermore, every trade is even with each side getting value, even if it is script -- a dollar IOU for a good or service to be named later. A "trade imbalance" means one business/state/country is not producing goods or services that others want or not using what it buys to increase productivity.

Mercantilists mistake the symptom of trade imbalance as a need for trade restrictions when what is called for is reflection on what one chooses to produce with one's skills and artificial restrictions. We are at fault.

Adam Smith would point to collusion between interest groups as the underlying problem. You know, like government and unions, political parties and rent-seekers.

[Sue]

And J Crew has a press release that says...

"The Obama Girls Bring Some American Style to Moscow."

"Malia & Sasha wore J.Crew and crewcuts as they exited Air Fore One in Moscow — stylish in their trenches, they also accessorized with ballet flat shoes," the release says.

Where do I file an ethics complaint?

[verner]

Yo Sue!!!

[narciso]

That complaint was already voided monthes ago. the one who filed this one, Zane Henning, also filed one because she gave an interview to Greta in the Governor's mansion. This one will also be thrown out, but not after another 5-10,000 dollars of legal expenses

[RichatUF]

DoT-

Anybody know what the administration position actually is?

Blame Bush.