How much for a degree?

[MSimon]

"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 now if I am wrong somebody else can have my job. I want to see this country prosper. 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. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot."

From a Treasury Secretary Henry Morgenthau 1939 diary entry.

We are in a secular decline. i.e. we have wrung all the excess profits out of current mass technology (computers and controllers, communication advances). There is nothing on the immediate horizon that can absorb all the profits at a good rate of return.

The only thing that can be done is to put more (and it does not require much) money into research. i.e. lay the ground work for the next advance.

All the stimulating in the world will not help because people are paying down debts. All the stimulus will do is build up government debt.

And the people are smarter than the government and economists. They don't want any more bail outs. All they do is prop up failing companies. If the companies failed those left would be in a better position. So the stimulating and bailing are long term detrimental.

[Maui]

Hmm... but I'm not sure that quote supports your theory that spending doesn't help. That quote comes at the end of the Great Depression and it is generally agreed that the New Deal and/or WWII spending were a major factor in pulling us out of it.

I have nothing to say on the bailouts-- I'll leave those decisions to those wiser than I.

But it makes perfect sense that deficit spending by government when in a recession can be a good counter-balance to over-cautious consumers who don't want to spend. There will always be debate over how much and how, but I don't buy for a second that stimulus bills are universally a bad idea.

[MSimon]

Maui,

That the New Deal helped is the popular understanding.

Recent research says it hurt.

http://en.wikipedia.org/wiki/New_Deal#D ... statistics

http://newsroom.ucla.edu/portal/ucla/FD ... elNum=5409

Yes WW2 spending helped. Countries buying arms from the US were the biggest boost. The second biggest was taking 11 million men and women off the job market.

After WW2 we sold goods to a world whose industries had been destroyed. In addition the technical advances of WW2 were applied to commercial enterprises. Factories (paid for by the government) were converted.

In other words we pulled out of it by supply side measures. Something the current administration is not philosophically inclined towards.

[seedload]

Here's a survey of economists from October in which 74% agreed on the need for a second stimulus. And one from November found 82% supported a third based on an assumption that a second would be passed before the year was out.

Trusting economists and climate scientists might just be our biggest problem.

Maybe, just maybe, this isn't that complicated.

Maybe, just maybe, rather than taking money out of the economy in order to give it back - don't take it out in the first place.

Maybe, just maybe, rather than spending unpresidented amounts of money on goverment directed development of alternative energy sources, we trust that ecomomics and free markets will find a solution.

Maybe, sometimes, most times, we are better off doing nothing at all.

It is a tough platform to sell.

[Aero]

Maybe, just maybe we should look at this issue as an Economic and Security problem and convert our personal transportation industry to electric vehicles! $400,000,000 per day removed from our economy by foreign oil is a problem we know we have, and converting to electric vehicles is a solution we know will work. Maybe we should focus our efforts on a problem we know we have and a solution we know will work.

Once we are keeping a few 10's of millions per day of that money, we can look to see if we are helping reduce CO2, and speculate on how much we have eliminated of the global warming "problem" and other pollutants. We can focus on alternative energy sources and upgrading the grid in light of our new economic reality. A much more useful activity.

But first, we have to start keeping some of that $400,000,000 that we are sending to foreign countries and governments each day. But consider, 365 days a year, $142,400,000,000 each year might solve our balance of trade problem, strengthen our dollar, end our oil wars, balance our budget (not!). Unless we can find politicians we can trust to work in our best interests.

All it will take to accomplish the above is that we drive electric cars. But of course it costs to much so we have to focus on something else and avoid looking at the solution we know will work.

[Mike Holmes]

I would agree that economics is highly problematic as a field. I think part of the problem is something akin the the Heisenberg Effect, where if you observe the phenomenon, you affect it.

But, that said, the other percentage of economists are agreeing with you. So a complete distrust of economists wouldn't really give you any idea what to do, would it? How about we look at the actual arguments, instead of casting shadows on peoples' professions?

'Cause it's all the laywers' faults, after all!

Er, where was I... oh, yes, we're really not sure, and anyone who claims to be sure is selling something. That includes the supply siders who are selling less taxes which benefits them directly, not just the side that wants spending who we can suspect of wanting the money to go into their pockets.

There have been occasions when both theories have been tried, and succeeded, and both tried and failed. What some few propose is that, in fact, spending policies don't really have much of an effect at all on the direction of the economy. That there's really not a whole lot anyone can do. No politician will sell that they can't improve your lot, but it may well be true.

That all said, what I think is prudent is to look at just what is spent, and how, and how they benefit us. Including the drag from interest payments (meaning the argument to spend less has merit, yes). And allow the economy to right itself like it's done over and over again after every "crisis."

And, again, people need to put this crisis in perspective. It's hard to do so when it's your job that's lost, I'm not unsympathetic. But that sort of churn is part of modern capitalism always, and right now it's still just not that bad. We still have less unemployment than many other first world nations have when they're doing well economically. The mortgage forclosure rate is nowhere near Great Depression levels. Banking has not failed like it did then, it's merely in a slump. Er, we don't have malaria epidemics because people cannot afford medicine or even nets to sleep in.

I love when there are these dire predictions that the downturn could last another year. Ever hear of the 30 years war? Where 90% of the popluation of what is now Germany died? That's a long-term problem. What we have here is just a normal variation in the standard economic progression of a capitalist society.

If you're going to ride the wave, expect that it'll be a little rough at times. And plan for the future understanding that you'll be OK in the long-run. As MSimon says, don't panic. Think about what to spend on, and if that's a good investment.

Mike

[seedload]

All it will take to accomplish the above is that we drive electric cars. But of course it costs to much so we have to focus on something else and avoid looking at the solution we know will work.

"the solution we know will work".

Well, I don't know that this will work. Make gas illegal. Tell the auto industry it HAS to build electric cars only. Rebuild the grid. All of this based on the assumption that AE will be able to supply enough power to suit our needs/desires.

I definitely do NOT know that this will work.

I definitely know that your solution sucks if there is not a problem.

[MSimon]

Actually the supply siders are probably right.

We got out of the Depression by building up industry.

The trouble is that it is not all warm and fuzzy.

Make rich people richer? The very idea. Harumph.

[Mike Holmes]

So, your argument is that, it's not pretty, so it must be true? Assumption of truth because your argument is the more ironic?

Not all medicines must taste bad. The inference that the opposition opposes it because they only seek comfortable solutions is an ad hominem attack, once again.

Oh, wait, I was supposed to see the humor or irony in the comment, and missed it, right?

Mike

[Aero]

All it will take to accomplish the above is that we drive electric cars. But of course it costs to much so we have to focus on something else and avoid looking at the solution we know will work.

"the solution we know will work".

Well, I don't know that this will work. Make gas illegal. Tell the auto industry it HAS to build electric cars only. Rebuild the grid. All of this based on the assumption that AE will be able to supply enough power to suit our needs/desires.

seedload, do you really want to make gas illegal? That's your idea, not mine. Gasoline powered vehicles will be around for generations to come.
Make the manufacturers make only electric vehicles? You could try, but I predict you won't get very far. I suggest rather that we buy and drive electric cars which can be made at an affordable price, not the prices they are asking now. Then the market will force them to manufacture electrics to meet the demand.
And we don't need to rely on Atomic Energy only, its in the mix but so are many other sources. And anyway, once we gain the energy efficiencies available from converting to electric cars, I predict there will be quite a lot of petroleum available at stable prices to fuel generating stations if we choose to use it that way.

I definitely do NOT know that this will work.

I definitely know that your solution sucks if there is not a problem.

Not a problem? What part of the $400,000,000 per day sent to foreign oil producers do you not understand? How can you justify saying that is not a problem for our national economy. You can't because it is unjustifiable. You can't justify it by solving a different problem, and you can't justify it by saying that you like things the way they are, because the way things are, our nation's economy is going down the tube. Even if you were a supplier of foreign oil, you would prefer a stronger U.S. economy so you could charge more.

[MSimon]

So, your argument is that, it's not pretty, so it must be true? Assumption of truth because your argument is the more ironic?

Not all medicines must taste bad. The inference that the opposition opposes it because they only seek comfortable solutions is an ad hominem attack, once again.

Oh, wait, I was supposed to see the humor or irony in the comment, and missed it, right?

Mike

No. I think it is true because it worked twice. FDR and war industries. Reagan (an economist) got us out of the Carter malaise that way. If you count JFK lowering taxes that would be 3 times.

IMO we will get out of this one the same way. Demand side will prove ineffective. Once that fails something else can be tried.

You can always count on Americans to do the right thing - after they've tried everything else. Winston Churchill

[MSimon]

Here is a supply sider who has decided to go out of business rather than face higher taxes and more government regulation.

http://www.americanthinker.com/2008/12/ ... osses.html

Now you have to ask yourself. What will it take to bring guys like this back into the market place?

[hanelyp]

I subscribe to the idea that wealth, personal and national, comes from production. Not spending, consumption, controlling the money supply, or 'fair' distribution. Thus to get more wealth you need to encourage production, such as by allowing producers to keep more of the fruits of their labors. Which I suppose is pretty much the idea behind supply side economics.

[Nanos]

> What will it take to bring guys like this back into the market place?

Perhaps we need different business people, ones prepaired to take less profit and put up with the redtape. (I'm not a fan of redtape myself.)


> subscribe to the idea that wealth, personal and national,
> comes from production.

Likewise.

> Thus to get more wealth you need to encourage production
> such as by allowing producers to keep more of the fruits of
> their labors.

Does 'producers' also mean employees ?


> I suggest rather that we buy and drive electric cars which can
> be made at an affordable price, not the prices they are asking
> now. Then the market will force them to manufacture electrics
> to meet the demand.

Agreed.

Though my own design of electric vehicle is on budget hold due to my girlfriend having just been made redundent (The company she worked for has been around nearly a hundred years, employed 30,000+ staff and we didn't imagine it would go bust owing some $500 million..), our income has dropped to nothing, and with local unemployment now at some 25% getting another job isn't looking particularly likely at the moment.

As such we are going to have a go at web stuff and be one of those businesses prepaired to make do with less profit and lots of red tape..

[MSimon]

Perhaps we need different business people, ones prepaired to take less profit and put up with the redtape. (I'm not a fan of redtape myself.)

People have been looking for the New Socialist Man for 100 years. No socialist country has ever been able to find enough of them.

Generally it is better to deal with human nature as it is.

Capitalism works like this: The hardest worker gets the million dollar prize. The second hardest gets $100,000 all the rest get $1,000.

Now suppose in order to make things "fair" the hardest worker gets $2,000 and all the rest get $1,000. Why make the extra effort if the payoff is so low?

Going into business is high risk. If the rewards don't overmatch the risk you might as well get a government job and add to the red tape. ;-)

Why put in 80 hour weeks for a small uncertain reward when you can put in a 40 hour week for a certain reward? People who want to go into business are a relatively rare lot. They ought to be encouraged.

The countries that have reduced the reward have trouble attracting people who want to start businesses. They come to America for that.