Rolling US Economy Into The Shitbin Thread

http://www.nytimes.com/2009/01/11/business/economy/11view.html?_r=1&partner=permalink&exprod=permalink

People don’t usually spend their money buying things they don’t want or need, so for private transactions, this kind of inefficient spending is not much of a problem.

uh

On that stupid article:
http://www.fivethirtyeight.com/2009/01/intellectual-dishonesty-gasp-from.html
http://gregmankiw.blogspot.com/2009/01/importance-of-being-exogenous.html

His response to Silver is pretty telling.

Mankiw's article is a classic example of what I mentioned above: simply assuming that private spending is inherently efficient and productive - "People don’t usually spend their money buying things they don’t want or need" - with the converse assumption about public spending: that governments actually make a habit of spending their money buying things they don't want or need. (He actually uses the phrase "bridges to nowhere").

If that's the starting point - the grounds upon which you begin your argument - then the argument becomes very circular, and very easy.

Mankiw's argument is essentially that private spending is inherently more efficient and more productive than government spending. It's a widely supported place to begin an argument, which is why Silver isn't disputing the multiplier effect discussed in Ramer's paper. Silver is a smart guy but he's no economist.

After all these years of being Bush's economic adviser I would kindly ask Mankiw to step off and shut up, frankly. I have to wonder if his students laugh at him.

He advised Bush from 2003 to 2005.

And given that he's written two very popular college textbooks that are widely used, I doubt they are laughing at him all that much.

Suggest new textbooks.

One of many troublesome passages from that Mankiw piece:

Rahm Emanuel, the incoming White House chief of staff, has said, “You don’t ever want to let a crisis go to waste: it’s an opportunity to do important things that you would otherwise avoid.”

What he has in mind is not entirely clear. One possibility is that he wants to use a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.

Yes, and maybe he wants to use a temporary crisis as a pretense for engineering cheese farms on the moon. Maybe. Also, his response to Silver was disappointing. Not invalid, but less than convincing as support for the point Silver was rebutting:

Essentially, Silver says that the Romers study exogenous tax changes, the tax changes now being contemplated in DC are not exogenous, and therefore the multipliers estimated by the Romers do not apply to thinking about current policy.

Though Silver wildly overstates his case (w the bogus Whopper-cholesterol analogy), the potentially valid underlying argument is that exogenous and non-exogenous tax changes may not be precisely equivalent in effect - that the benefits of tax cuts enacted under "perfect" circumstances may not be achieved under other circumstances. Would have liked to see more response from Manikew on this point.

Mankiw's argument is essentially that private spending is inherently more efficient and more productive than government spending. It's a widely supported place to begin an argument...

― Dandy Don Weiner

I don't think this is what Mankiw is doing at all. In making his points about trading ditches, "bridges to nowhere," and the idea that "people don’t usually spend their money buying things they don’t want or need," Mankiw is making a passive, lazy attack on government itself. He's merely playing to a widely accepted stereotype regarding government's inherent ineptitude, rather than making a reasoned argument of any sort.

contenderizer, i think there must be compromises between the hands-off approach of the last 10 years and "expecting the government to track and account for all private sector dollarses" - a concept i have never even imagined.

― Tracer Hand

Wasn't suggesting that you had imagined such. Just looking for clarification. And yeah, 100% aggreance WR2 the need for a hands-on approach.

What he has in mind is not entirely clear. One possibility is that he wants to use a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.

Any former member of or adviser to the Bush administration who can utter these sentences without irony should be keelhauled.

^ that too

And given that he's written two very popular college textbooks that are widely used, I doubt they are laughing at him all that much.

― Dandy Don Weiner, Monday, January 12, 2009 11:33 AM (1 hour ago) Bookmark Suggest Ban Permalink

Suggest new textbooks.

― Lord Byron Lived Here, Monday, January 12, 2009 12:06 PM (40 minutes ago) Bookmark

jesus, am i aging myself by saying that we used samuelson and nordhaus for econ 101 & 102?!? (nb: i already knew that mankiw has written intro to econ textbooks, thanks to brad delong)

He's merely playing to a widely accepted stereotype regarding government's inherent ineptitude, rather than making a reasoned argument of any sort.

"stereotype"

Also, someone around here might wanna do a better job at defending Emmanuel's comment.

I'd agree that Mankiw sort of distorts the Romer conclusion, but Mankiw's first assertion about Ramer multipliers is still the elephant in the room here.

Mankiw's a shit who let laffer curve nutjobs dick over this country while he was on watch at the CEA.
And the next person who posts a link to a David Brooks piece on this thread is getting a temp ban.

if we can all agree that American "government" is "incapable" of investing money without tremendous waste, can we also agree that American "businesses" are "improperly incentivized" to invest money without creating inflationary speculative bubbles that damage the lives of ordinary citizens?

"business" and "government" all get scare quotes from now on because lol what's the difference

Emmanuel's comment requires no defense, is the unobjectionable stating of a self-evident (though perhaps impolite) truth. Crises require responses, and therefore force/enable people to do things they might otherwise put off. Reading into this a threat regarding Emmanuel's intention to engineer "a permanent increase in the size and scope of the government" is silly only to the extent it isn't paranoid. And/or contemptible.

And lazy usage on "stereotype"? Okay, noted.

American "businesses" are "improperly incentivized" to invest money without creating inflationary speculative bubbles that damage the lives of ordinary citizens? refrain from fucking shit up for everyone else.

perhaps impolite? Like so many things that come out of his mouth, that comment was snarky and cynical. Using a crisis and fear to accomplish political goals--which is exactly what Emmanuel is suggesting--is contemptible.

Oh Don, fuck you. FUCK YOU.

We have eight years worth of threads for you to complain about that on rolling back to beginning of this board, but no, you save that for some comment made by a democratic WH chief of staff.

"contemptible! it's just contemptible I said!"

"can't believe you guys let him get away with that!"

He advised Bush from 2003 to 2005.

These were years in which nothing contemptible happened.

Using a crisis and fear to accomplish political goals--which is exactly what Emmanuel is suggesting--is contemptible.

Oh come on. First off, take out "and fear" -- that's something you've imported into this equation. And then... really? Really really? Are we all so lily-livered and pure of heart that we tremble at such a cynical thought? I hope not. Using a crisis to accomplish political goals is reasonable. Is Machiavellian, sure, but makes good sense. Crises free things up. Anyone smart enough to deserve political power knows this.

For example, Bush and co. used a crisis to accomplish all sorts of political goals. Do I fault them for this? YES! I fault them not for their cynical usage of the crisis, but for the contemptible nature of the goals they advanced. In that respect, jury is still out on Obama/Emmanuel & co.

contenderizer, if you plan to continue to just big bird my comments after I make them, let me know so I can stop posting.

Mankiw's argument is essentially that private spending is inherently more efficient and more productive than government spending. It's a widely supported place to begin an argument

Er, DDW, if his premise is the same as his conclusion, then he has not made an argument at all. As Tracer pointed out, such an argument simply circles back on itself and merely asserts what it purports to prove.

Also, Bushco's crisis exploitation franchise is where the fearmongering you mention becomes a real issue. So far, Emmanuel is well in the good WR2 the difference between "admirably cynical" and "morally reprehensible".

last, again, to DDWeins

http://www.ritholtz.com/blog/wp-content/uploads/2009/01/sgs-emp.gif

We have eight years worth of threads for you to complain about that on rolling back to beginning of this board, but no, you save that for some comment made by a democratic WH chief of staff.

If you have missed my contempt for Bushco over the past eight years on ILX then you haven't been paying attention. And I know you have been paying attention. You're such a grumpy old fucker Tombot that you become delusional even when (I assume) you are sober. When you tell me to fuck myself, it gives me a giant boner.

Also, as I have mentioned multiple times elsewhere, I happen to think Emmanuel is the perfect, consummate asshole for the job he has taken.

Some of these suggestions inspire doubts. For instance:

Don't trust the rumor mill. Not only is office gossip unreliable, but it can have a debilitating effect, said Smith. Instead, he recommends listening to your company's human resource department for reliable information.

http://jmtskyviews.com/catalog/images/catbert.jpg

http://www.becker-posner-blog.com/archives/2009/01/on_the_obama_st.html

Romer talking about the stimulus plan. Girl has an almost comical delivery. Strange cut shot at 2:52, though.

on a lighter note ..., the WSJ editorial page provides the nation with much-needed laughs during these challenging economic times ... o_O

It's so off the charts retarded that it's frightening

Haha I was wondering when someone would post that.

I love the idea that somehow the libertarian rookies who worked at the Cato Institute somehow just didn't 'get it' yet, but post-Atlas Shrugged, they 'got it'. They could have made it easier on them and just made them read a postcard that said 'EVERYTHING YOU ALREADY THINK IS RIGHT'.

http://l.yimg.com/img.tv.yahoo.com/tv/us/img/site/57/98/0000035798_20061116111134.jpg

This is wonderful:

In one chapter of the book, an entrepreneur invents a new miracle metal -- stronger but lighter than steel. The government immediately appropriates the invention in "the public good." The politicians demand that the metal inventor come to Washington and sign over ownership of his invention or lose everything.

The scene is eerily similar to an event late last year when six bank presidents were summoned by Treasury Secretary Hank Paulson to Washington, and then shuttled into a conference room and told, in effect, that they could not leave until they collectively signed a document handing over percentages of their future profits to the government. The Treasury folks insisted that this shakedown, too, was all in "the public interest."

Note the failure to include small detail about, "in return for billions of taxpayer dollars..."

yeah, that sitdown was more on the level of the Five Families carving out their territory and haggling over their percentages w/ Vito Corleone as the presiding officer than some quasi-Stalinist 5 Year Plan.

http://www.nakedcapitalism.com/2009/01/why-so-little-self-recrimination-among.html

Acemoglu calls for external checks ("the right incentive and reward structures"), when the record of the last 20 years is that a neutral to positive view of greed allows for ambitious actors to increasingly bend the rules and amass power. The benefits are concentrated, and the costs often sufficiently diffuse as to provide for insufficient incentives (or even means) for checking such behavior. Like it or not, there is a role for social values, as nineteenth century that may sound. The costs of providing a sufficiently elaborate superstructure of rules and restrictions is far more costly than having a solid baseline of social norms. But our collective standards have fallen so far I am not sure we can reach a better equilibrium there.

this

+ don, "delusional" is what I get sometimes when your hyperbole, seemingly fueled by a special pair of future-glasses which have allowed you to discover the true intent and effects of the incoming administration, continues to be delivered with no caveats whatsoever as to the agency or attitudes of the milk spillers. as you know, we have historically agreed on this thread more than we have disagreed, but I tire rapidly of what I view as trumped-up accusatory remarks aimed at the president-elect and his choice of horsemen. While I don't really have a problem raising questions about the stimulus package, the current ongoing blather contains a lot of partisan ass-covering and you've shown no interest in avoiding that. Plus you linked to Brooks. Friedman is up next I assume?

that post about greed should also go on my other thread where I was trying to air out ideas about what a post-scarcity economy might look like

From that ridiculous, blathery, "well, I don't really know and can't prove, but I suspect" post:

...the stimulus will be smaller then they estimate...

Becker post that DDWeiner linked, I mean

Agree that Romer's rhetorical style is a bit o_0. Super strong rising-pitch emphasis placed on seemingly random words, ripe for SNL parody, if she's ever visible enough to bother with. Otherwise, not sure why you liked that long interview, DDW. It's a getting to know you kinda deal, no big news on any front.

I just thought Romer's speaking style was hilarious. And the crotch shot at 2:52 was even funnier.

FWIW the links I post here aren't meant to be an endorsement of the content as much as something to add to the discussion or, for some people, to apparently shit in their Froot Loops.

Tombot I love you man. Really. I don't care if you accuse me of hyperbole, either. Rahm Emmanuel is a known prick and he's proud of it. I will take shots at that asshole forever and if you don't like it I don't care.

I haven't been critical of Obama's plan or his minions at all on this thread (save for that asshole above), other than asking for some good economists to weigh in on the long term effects of multi-trillion dollar stimulus packages.

As Bush fades out this final week in office, I just hafta say that, as low as his ratings are today, in three years I expect his name will inspire such extreme bitterness that it will make his current unpopularity seem trivial and light-hearted by comparison. That's when we'll all know how fucked this economy really is and we'll be living it every day.