Improving the Stimulus Debate

Paul Krugman is deeply frustrating.  In today's New York Times op-ed, Krugman makes two important points about intellectual dishonesty - or perhaps mere intellectual hackery - among Republicans, but then engages in dishonesty/hackery of his own.  First, Krugman's good points.

Better math, please...

First, there’s the bogus talking point that the Obama plan will cost $275,000 per job created. Why is it bogus? Because it involves taking the cost of a plan that will extend over several years, creating millions of jobs each year, and dividing it by the jobs created in just one of those years.

Krugman is correct about the apples/oranges comparison between the one-time cost and multi-year salaries, but I think that misses a much bigger problem with this "cost per job" analysis. The $800+ billion is a total cost, not just salaries.  You're not just paying people...you're paying people to build things.  That requires concrete, steel, computers, machinery, and products whose costs cannot simply be compared to salaries. (which is not to endorse the spending; just to put it in context)

Sadly, people on the Right - people whose work I have liked - are making this point.  Worse, I've seen people on the Right argue that this is good "messaging", so we should ignore the fact that it's factually misleading.  I'm not sure why policy makers or citizens would - or should - trust us if we can't make simple distinctions like those outlined above.

A liquidity trap changes normal policy options...

Finally, ignore anyone who tries to make something of the fact that the new administration’s chief economic adviser has in the past favored monetary policy over fiscal policy as a response to recessions.  It’s true that the normal response to recessions is interest-rate cuts from the Fed, not government spending. And that might be the best option right now, if it were available. But it isn’t, because we’re in a situation not seen since the 1930s: the interest rates the Fed controls are already effectively at zero.

Krugman is correct about the normal options and those available now; it's a point he's made before (which I noted here, while reviewing Krugman's previous comments about fiscal stimulus.  At the time, there was still substantial room for monetary policy to have an impact.  That is no longer the case). 

Paul Krugman's own intellectual dishonesty...

Next, write off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

But, other than anarcho-capitalists, who says there is no worthwhile government spending?  The stimulus debate is not even remotely about whether we should fund the air traffic control system, or anything else as vitally important - there is already a budget process in place for those projects - but about whether we should fund/speed up funding for thousands of wish-list projects and programs around the country.  It should give you an idea of how thoughtful Krugman's objections are that he has to rely on a false dilemma (if some government spending is valuable, then complaints about completely different government spending must be spurious) to support his argument.

It is difficult to win a fight over the role and expansion of government in the midst of a crisis.  It is doubly difficult if we let Democrats frame the debate around the most important spending items possible, rather than the vast majority of more questionable spending. The value of spending is determined on the margins - whether the next dollar is worth spending - and that is where we ought to be fighing it.   Republicans can do two things to help themselves here:

  1. Continue to highlight the ridiculous spending in the stimulus bill
  2. Insist that the politicians (including the Mayors, et al, who are demanding these projects) provide cost/benefit metrics and means to measure the results for each project.  Did it create the number of jobs promised within its budget?  Did it meet the cost/benefit calculation for any other value promised? 

 (1) will ensure that the public is aware of the least valuable money being spent, while (2) can ensure that the public learns just how valuable/wasteful this spending turns out to have been.  If our argument is that the government spending will be wasteful, then it is vitally important to our future than we be able to measure and document the results.

3.333335
Your rating: None Average: 3.3 (3 votes)

Comments

demand futures contracts

out of all contractors, so that there will not be cost overruns.

Hm..

That's a really interesting idea.  Consider me intrigued.  How would that work in actual practice? 

it's a simple and obvious idea

that smart contractors already use.

You draw up your budget -- you say "Okay, Gas will cost $50 and I'll need 100 barrels". Then, to make sure that gas will continue to cost $50 five months from now, when you'll need it, you spend $5 a barrel to make sure that you will get gas at your designated price. You of course add the cost of the futures contract into your bill.

$5500 as the cost, instead of $5000. But it is a cost that you can bank on, and that will not overrun.

Likewise, you build in a certain percentage cost for replacement of heavy machinery (say you will on average get ten jobs out of your drill. pass on 10% of the drill cost to each customer) -- or you just pass on the price of the insurance you bought.

A lot of gov't construction projects...

... are done on a cost-plus bid.

It guarantees 10% beyond the costs to the contractor.

On many projects, this is done because the contractor has only a handful of people that can figure a bid.

In practice, it gives the contractor carte blanche.

Look at the fiasco of the Columbia River project.  Cost-plus bidding. 

Some repentance would not hurt.

Bush did not reduce the size of the government, Nor did he reduce the size of the national debt. Now we were in a war and that is a mission accomplished. for which we can say thank you.

But we need a change in the economy, Obama is not offering a change,

 

He is playing a shell game with money. The only way to build the economy is for people do be more productive; produce more stuff. If you want to see a rapid increase in production, a policy that said nobody would need to pay more in taxes than they did in 2008 for 2009 would encourage everybody to produce more in 2009.

Hat tip: http://fiscalconservatives.wordpress.com/2009/01/26/debunking-so-called-stimulus/

yes, and government programs have been responsible

for most of our increases in productivity. Here, we can increase productivity by adding capacitance to our electrical grid -- therefore meaning that we can generate mor ethan 10% power based on wind. Wind is a great productivity increaser, as you don't need to ship oil halfway across the globe. and you don't need to run refineries, nor ship to power plants, etc etc etc.

See? govt stimulus is good for you!

 

Electrical grid could use improvements

But we will not see any benefits until after 2010

sure, sure...

the improvement NOW will be in jobs.

I'm also a proponent of removing roads from circulation in places without people to support them. -we have too many highways, and they cost MORE and more.

Dorgan's pet project -- smart electric grid

if you have any ideas, drop him a line.

I guess it's not universal that you can sell electricity back to the grid?? humph. Do you have to pay for imaginary power? I don't. The idea of real and imaginary power flummoxed some legislator...

To Wayne: How can you be more

To Wayne:

How can you be more productive when we get paid more and receive more benefits that those in a third world country. What stuff can we produce that China can't build. Have you looked at the stores lately? And look at the junk out there. Plastic Santa Claus anyone? We are spending our money on junk. There is so much competition that one industry collapses the other. And if we don't do it then the Chinese will.

In the factories, for more productivity you have had robots, lean inventories, lean management to have 1 person do the work of 2 or 3 people, and then the internet which cuts out the resource department in the front office. The customer and the employee has to do more, because there is no one in the front office to help you. The employees have been cut, wages have been cut, healthcare has been cut, pensions have been cut.  But if there is help, you get it from someone over the phone from India.

You are going to have to change your ways of thinking, as we keep losing the middle class due to globalization. 

Focusing on exactly that question.

Yes we are better off than people in Africa. The average worker with a power drill can drill 10 times more holes per hour than the person working with hand tools in Africa. Yes he gets a considerable share of the benefit of using a power tool. Our modern farms out produce farms in third world countries, because of our use of machines as modern day beasts of burden.

If we could make our own energy even cheaper and not force the cost to be high in the US and cheap to import products from China .... well anybody can figure what that will result in. Either the same amount of product for 1/2 days work or twice the product in one days work.

Companies can of course help ... set the amount of work and let people who finish early by their own innovation go home early with a full days pay. Then revise the methods to the most efficient.

Well, productivity is being

Well, productivity is being on top of one's game. We have seen the Japanese over a period of 30 years. first with cheap labor and then they take the market share, and then we lose most of the steel industry, textiles, electronics, and automobiles.

Today it is the Chinese and other countries. We are sitting here seeing them take our jobs. And as I have said many times. We cannot compete with third world labor.

So I have said many times you need infrastructure spending, energy independence, mandatory vocational training, embryonic stem cell research, science, research and development. I believe that you will need an alliance with industry and government. For example, making a battery that will go on 100+miles to a charge. Another example is the airlines with a new air traffic control system that would give them more direct routes. This would save fuel and make them profitable and increase tourism. It is said that the U.S. airlines have some of the oldest aircraft, and making them profitable means they can buy new aircraft. Making an alternative fuel for airlines would help. There is a lot to be done, but we are short on time and money.

But I am afraid that we cannot compete with third world labor, and therefore there needs to be an all out effort to create new industries and find a way to create jobs that will stay here and not subject to going overseas. I view all jobs being vulnerable, and that is the way we have to look at it. So far with the last few years of laissez-faire and total disregard to our country, it has been very disappointing.  

We have the concepts given to us by the founding fathers.

Being rich is not all it is made out to be - no happyness there.

If the size of the government is reduced the amount of work we have that we get to keep is reduced. Without increasing productivity is the government is reduced by 1/2 we could either enjoy some extra times or keep more of what we produce.

The reason it appears we can not compete with Japan is taxes, our real tax rate is higher than theirs.

China is cost of labor, they are willing to work like slaves, but that is not a static situation, all developing countries when through a period before the middle class developed. India has developed a middle class.

Our cost to make stuff here does not require shipping across the ocean and product unsold sitting on a ship for several months. We can have awesome lives if the Government leaves the free market alone and does not over tax us.

Sorry, I disagree. It is

Sorry, I disagree. It is laissez-faire that got us here. Nothing has been done for years and we are fighting globalization. My job and others are lost due to globalization.  

It shows how the republican party has left the middle class. It shows why you lost the electoral college and the presidency as republicans don't get it. 

laissez-faire

Sorry, I disagree. It is laissez-faire that got us here.

In Between:  We have not had laissez-faire in this country for well over 90 years, if even then.  If you think George Bush, or even Ronald Reagan for that matter, were laissez-faire ideologues then you are even more of an idiot than I thought.

Greenspan was. Clinton was. Bush was.

need I keep going?

Fine, you're both idiots.

Let's see... Greenspan is an Objectivist, sure, but he was in charge of a CENTRAL BANK.  That is the antithesis of laissez-faire.  And Clinton?  Bush?  You waste my time with your nonsense.

throwing free money around, championing deregulation

makes him a laissez faire idealogue.

Seriously.

check out "the mess that greenspan made" ... it's a good blog.

Yes, I call it

Yes, I call it laissez-faire.

Bush did nothing on the deficits and debt. He did nothing on middle class jobs going overseas. He did nothing to project this country into the future to combat globalization. Bush did not attack the issues of the day. It was just tax cuts and doing nothing. That is the way a lot of us see it. Now, can we fix something or do we play politics. Or do we have to hear something by Bush in saying "free trade is good" as our jobs leave the country. I am sure we will hear that from Texas. Now how do you solve that problem. Peoples lively hood is at stake, and the economy is at stake. 

You have to ask yourself why the republicans lost the election.

only $136 of the Trillion plus dollars

A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended.

have you read much of the legislation?

a good deal of the health care relies on matching funds, anyhow. so yeah, we see matching funds from the states, which will help to make up that difference.

Keep on spreading the bogus information

If you have been paying any attention at all you should know by now that the CBO "Report" doesn't exist:

I've been calling around the Hill to figure out what's going on with the Congressional Budget Office report. Republicans say it proves infrastructure investment won't help the economy in the short term. What's become clear is, first and most important, there was no CBO "report," a definition that office takes seriously.

I've obtained the document that reporters were looking at and learned that it is a preliminary calculation of the spending schedule for one portion of the stimulus bill; it was performed for committee staffers before January 15. Since that time, the entire bill has changed a good deal and an actual CBO report outlining all of its costs will be forthcoming in the next week or so. The other thing to realize is that CBO cost estimates are based on historical projection of how departments spend money. Officials are confident that the executive branch can increase its rate of spending on shovel-ready projects given the urgency of the situation, so those historical projections apply less during an economic crisis like the one we currently face.

But hey, don't let reality bring you down.

 

I'll wait for WashingtonPost

to print a retraction.

So. suddenly, MSM is golden?

You kill me. First you are all about the horrible inaccuracies and distortions in the MSM; now their word is unimpeachable.

Hows this for the WaPo acknowledging that the WaPo was snookered? www.washingtonpost.com/wp-dyn/content/discussion/2009/01/23/DI2009012303458.html

Ben Pershing: It's true that there is no official report from the CBO yet "scoring" the entire stimulus package. What the agency did is run a portion of the stimulus through it's standard formula and then gave the basic data to some members of Congress, and it's those results that we've seen written about in the press. The coverage has been a bit misleading.

Howard Kurtz: I agree that the media coverage should have made clear that 1) this wasn't an official CBO report, and 2) this was spoon-fed to the media by Republicans to make their case.

 

That's because...

...the report wasn't final.  Mitch McConnell leaked a draft.

Repeating lies doesn't make them true

Nonsense. You can see the entire non-report here.

It is based on a very early version of the plan, and only a portion of it at that - $300 million of the $825 million (that which is headed for the Appropriations Committee,  not that for  the Ways and Means or Energy and Commerce Committees).

 

You Bail Them Out, We Opt Out. We Want Some TARP.

You Bail Them Out, We Opt Out. We Want Some TARP

Dear, I should say Expensive Chairman Ben S. Bernanke,

All of Our Economic Problems Find They Root in the Existence of Credit.

Out of the $5,000,000,000,000 bail out money for the banks, that is $1,000 for every inhabitant of this planet, what is it exactly that WE, The People, got?

If my bank doesn't pay back its credits, how come I still must pay mines?

If my bank gets 0% Loans, how come I don't?

At the same time, everyday, some of us are losing our home or even our jobs.

Credit discriminates against people of lower economic classes, as such it is unconstitutional, isn't it? It is an supra national stealth weapon of class struggle.

Credit is a predatory practice. When the predator finishes up the preys he starves to death. What did you expect? Where are you exactly in that food chain?

Credit gets in the way of All the Principles of Equal Opportunity and Free Market.

Credit is a Stealth Weapon of Mass Destruction.

Credit is Mathematically Inept, Morally Unacceptable.

You Bail Them Out, We Opt Out

President Bush Proposed the TARP, Senator Obama Voted It.

We Want Some TARP.

Opting Out Is Both Free and Strictly Anonymous.

My Solution: The Credit Free, Free Market Economy.

Is Both Dynamic on the Short Run & Stable on the Long Run,

The Only Available Short Run Solution.

I Am, Hence, Leading The Exit Out of Credit:

Let me Outline for You my Proposed Strategy:

My Prescription to Preserve Our Belongings.

Our Property Title: Our Free, Strictly Anonymous Right to Opt Out of Credit.

Our Credit Free Money: The Dinar-Shekel AKA The DaSh, Symbol: - .

Asset Transfer - Our Right Grant Operation - Our Wealth Multiplier - Our Liquidity TARP.

A Specific Application of Employment, Interest and Money.

[A Tract Intended For my Fellows Economists].

If Risk Free Interest Rates Are at 0.00% Doesn't That Mean That Credit is Worthless Already?

Since credit based currencies are managed by setting short-term interest rates, on which you have lost all control, can we still say that are managing?

We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.

In This Age of Turbulence The People Wants an Exit Out of Credit: An Adventure in a New World Economic Order.

The only other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.

It will be either awfully deadly or dramatically long.

A price none of us can afford to pay.

“The current crisis can be overcome only by developing a sense of common purpose. The alternative to a new international order is chaos.”

- Henry A. Kissinger

What Else?

Until We Succeed the Economy Will Necessarily Keep Sinking Into a Deeper and Deeper Depression

You Bail Them Out, Let's Opt Out!

Check Out How Many of Us Are Already on Their Way to Opt Out of Credit.

If You Don't Opt Out Now, Then When Will You?

Let me provide you with a link to my press release for my open letter to you:

Chairman Ben S. Bernanke, Quantitative [Ooops! I Meant Credit] Easing Can't Work!

I am, Mr Chairman, Yours Sincerely [As if I really had the choice.],

Shalom P. Hamou AKA 'MC-Shalom' Chief Economist - Master Conductor 1 7 7 6 - Annuit Cœptis Tel: +972 54 441-7640 Fax: +972 3 741-0824

err.. 1. i think you're on the wrong site.

can you cite some credentials? any shmoo can claim they're an economist.

Krugman's a liar who argues in bad faith....

...he's best ignored for the sake of sanity.

He's worth ten thousand of you.

when was the last time you did important economic research that might help save the american economy?

shoot, guess I shouldn't of waited.

My college thesis...

...when I discoverd that welfare was a giant waste of money.

*snort* shoot, we fixed that ages ago.

drop me a link to your thesis?

IN spite

of Conservatives who want to denigrate and invalidate Krugman, the man has this singular habit of being perpetually on the money.

Conservatives have been desperately trying to discredit and deflect Krugman's voice for years, but the Nobel committee chose not to listen.

Dr. Krugman is a National treasure to many Americans, who look forward to his columns and his blogposts to get an idea about where the GOP's dishonorable media machine wants to take the country's public opinion and shape the conventional wisdom.

And there's nothing that deeply dishonest outfits like the Heritage Foundation and American Enterprise Institute hate more than a Nobel-laureate PhD with a sharp pin who takes joy in letting the air out of their pompous pronouncements.

 

Is this the same Paul Krugman as...

Her is what

Dr. Krugman says this about Enron, in the very same link you provided

"The whole scene looks as if it had been constructed to illustrate the end of the corporation as we knew it."

Dr. Krugman was paid $37,500 by Enron to, as he puts it, "Give Enron executives briefings on economic and political issues," and that it had required him to "spend four days in Houston".

That's some damning evidence you got there, bub

Would you happen to be a follower of Luskin, the stalker?  Many on the right have applauded his efforts to take down Dr. Krugman for years.

Roubini, Stiglitz, bonddad, Tanta (god rest her weary soul)

why oh why are the liberals always the ones on the money? ;-)

Krugman

You state:

But, other than anarcho-capitalists, who says there is no worthwhile government spending?  The stimulus debate is not even remotely about whether we should fund the air traffic control system, or anything else as vitally important

You miss the bigger point made by Krugman I think. REGARDLESS of his issues with honesty, the Republicans are earning a reputation for attempting to obscure the truth! Until they stop this behaviour? Krugman will be right. We need to STOP trying to point out where Krugman and the Dems are being dishonest when it is sooooooo easy for them to show where WE are!

More Intellectual Hackery ... from Republicans

It's not a "draft" either:  It was part of a preliminary study, and it HAD NOT YET FACTORED IN ALL THE CHANGES.

Yet leading Republicans like Boehner were all over the Sunday News Programs, and Rush and Hannity and Beck have been all over this deeply dishonest ploy KNOWING it was bogus.

Yup, more of the same: Dissemble, Demonize, Divide, and do all you can to Obstruct.  Anything Democrats do.  Nah, the country won't notice.  They'll vote for us anyway.

Oh, and as to the comment:

 

"...But, other than anarcho-capitalists, who says there is no worthwhile government spending?.."

 

I give you the holy words of your patron saint, your prophet Ronald W. Reagan, repeated ad nauseam by all modern Conservatives:

"...Government is not the solution to our problerms, Government IS the problem."  and among his other "anarcho-capitalist" views, "Government does not solve problems.  It subsidizes them."

And they say irony is dead.

Bitching about the "intellectual hackery" of Republicans while taking a quote from Reagan's first inaugural address completely out of context.

Hilarious.

 

Irony lives on

..in our words, and in our deeds.  The "intellectual hackery" remark, doofus, was in the body of the post that started this thread.

But, in fact, Reagan's entire speech was cast in the context of that remark:  That there are no problems that Government can, or should be allowed to try and solve.  Please tell me where that quote is "..out of context." 

In a hilarious way, please?

Read for comprehension.

I linked the speech, shit-for-brains.  Feel free to peruse it.

That you believe this:

That there are no problems that Government can, or should be allowed to try and solve.

was the substance of the speech is a monument to the failure of the American education system.

 

Read

"...In this present crisis, government is not the solution to our problem; government is the problem. From time to time we've been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else? All of us together, in and out of government, must bear the burden. The solutions we seek must be equitable, with no one group singled out to pay a higher price....

...We are a nation that has a government--not the other way around. And this makes us special among the nations of the Earth. Our government has no power except that granted it by the people. It is time to check and reverse the growth of government, which shows signs of having grown beyond the consent of the governed...

...It is my intention to curb the size and influence of the federal establishment and to demand recognition of the distinction between the powers granted to the federal government and those reserved to the states or to the people. All of us need to be reminded that the federal government did not create the states; the states created the federal government...

...It is no coincidence that our present troubles parallel and are proportionate to the intervention and intrusion in our lives that result from unnecessary and excessive growth of government....

...In the days ahead I will propose removing the roadblocks that have slowed our economy and reduced productivity. Steps will be taken aimed at restoring the balance between the various levels of government. Progress may be slow, measured in inches and feet, not miles, but we will progress. It is time to reawaken this industrial giant, to get government back within its means, and to lighten our punitive tax burden. And these will be our first priorities, and on these principles there will be no compromise..."

 

The foundation, indeed the thesis of modern Conservatism:  Government doesn't work.

Reagan loved to say that the most frightening ten words in the English Language were "I'm from the Government, and I'm here to help."

This is completely "in context" with everything modern Conservatism stands for, indeed it was the foundation and the underlying theme of his Inaugural Address, as I've shown above, and it's the reason why Ronald W. Reagan is so revered among you and your motley crew: He speaks your language.

Oh, and your reply wasn't funny or hilarious:  Just kinda sad.

In other words,

when you said that the "context" of the speech was that "there's no problem government can, or should be allowed to solve", you were talking completely out of your ass. But because you're a pathetic emasculated douchebag, you're not man enough to own up to your bullshit -- so instead you'll cut-and-paste from the speech and puff your chest about how you were right all along, in the hope that casual readers' TLDR reactions will leave them to see only the latter, even though it's glaringly obvious to anybody who follows the thread that you're a worthless fucking liar.

People like you aren't worth the bullets it would take to be rid of you. Go crawl back under your bridge.

 

TLDR?

Not familiar with that acronym, Centerfire... what's that mean?

Edit: Nevermind! Used "the google" to find it out.

troll.

go godwin yourself.

It's absolutely priceless

to see you, of all people, claim somebody else is a troll.

 

when you provide nothing of substance, I feel like i ought

to call you out on it.

Unlike usenet trolls of yore, I do actually stick around and talk about interesting things. like logistics. when it moves me.

feel free to address my actual points when you get a chance, i'd love to hear it.

Your "actual points", as I've

Your "actual points", as I've pointed out repeatedly, are completely irrelevant to the conversation at hand about 99% of the time.  I've nonetheless wasted precious seconds of my life entertaining your pointless crap -- for example, noting the utter inaptness of your oh-yeah-but-what-about-this reference to Israeli kibbutzim in the context of a conversation that was expressly about the coercive collectivist utopianism that is American liberalism; or explaining to you in painful detail that you didn't have the first damn clue what you were talking about vis-a-vis "cop killer" bullets.

About the only marginally-useful point you've ever made was your observation that "social justice," broadly defined, might be in the self-interest of those of us in the leave-me-alone-and-get-your-hands-off-my-stuff camp, since it might forestall angry mobs violating our civil and economic liberties in less pleasant or predictable transactions than when the government does it.  But you steadfastly refused to engage with the responses to that argument, which simply underscored your trollish bona fides.

 

I'm man enough

to call you out on the stupid know-nothing bullshit you like to post, scumbag.

People like you aren't worth the time or effort it takes to deflate your pompous, prissy, self-indulgent, self-impressed overinflated egos.  But you make it so damn easy, it's hard to resist. 

I pity you, figuratively getting your face smashed in and never, never really understanding how or why.