> I think you need to read some Keynesian economic theory
I've read it and rejected it. How's Keynes been working out for you lately?
> having the government at this time use it's credit to borrow can break this > cycle just long enough to start a cycle in the reverse direction.
That's an interesting reading of Keynes. So you mean to say that as soon as we're out of the slump, government should stop using its credit to prop up the economy?
> Why is it that some people spent tons of money on big-screen TVs without > putting any money into their retirement fund? Same reason.
Don't oversimplify. There's a pretty strong argument that buying the TV is a better decision than putting money in your retirement account.
> You doubt that infrastructure is good and useful? Like... roads, > electricity, water, sewage systems... these things aren't useful, or > aren't worth the cost of building them? Are you seriously claiming that > infrastructure doesn't have any economic benefit? Maybe you're a genius > with some obscure and unexplained theory, but I don't know anyone who > would agree with you.
This is going to come off bad, but seriously what is the deal with people like you thinking that the only qualification for a spending effort is that there is positive value in it? I just don't get it.
It's like if I tried to tell you that no one would ever purchase a coach plane ticket because the first class ticket is obviously a superior product. You'd turn around and tell me that it is a matter of how much more expensive the first class ticket is and how that marginal cost compares to how the person values the marginal benefit. Why do you understand microeconomics when we're talking about the private sector but then naive (pardon the euphemism) when we start talking about government?
> For example, companies aren't going to put their offices someplace > with [poor infrastructure]
If you're looking for a better return on investment as far as attracting companies, take a closer look at the tax code. Just a hunch but if you ask the last 100 companies that left the US why they left, they're not going to say poor infrastructure.
1. Make less incentive for productive members of society to work hard 2. Increase incentive for unproductive members of society to work hard 3.... 4. Profit!
When gov't does this kind of spending, they are either taxing heavily or borrowing.
We have a progressive income tax system, so when the government taxes heavily they are taking money from productive members of society and redistributing that money to failed businessmen, lazy workers (although I know liberals want to believe these don't exist), dishonest workers, and criminals.
What's more likely to happen here is that government will BORROW the money. And, sorry bud, that DOES take money out of the economy. All that interest goes to foreign economies... mostly China.
Retarding the economy is good for the economy? Yeah right.
What you're talking about is keeping companies from making poor predictions based on an economic bubble, because when the bubble pops the downturn is way worse. But what you're missing is that free markets don't create bubbles; governments do.
Trying to explain economic evolution to this crowd will only get you hanged. Most of these people don't accept that their annoyance in needing to re-tool results in a net positive for the economy.
The question is not whether the work can be done remotely. The question is whether the work is done by people who would otherwise be doing work that can be done remotely. If you provide work to a pool of workers whose usual work can be done remotely, then you improve the situation for the 10% of the pool you can cover, but hurt the situation for the other 90% you can't, as companies employing them will feel increased cost pressure to send their work remote.
You can demand that the stimulus money only directly go to US workers, but that will just put more pressure on private sector to move a greater % of its work to non-US workers. Parent was right; this ends up being money to India and China directly or indirectly. Thank your tax laws.
We're the first generation to indulge in excess? Are you kidding me?
Also, I'm pretty sure many past generations believed they had "full" knowledge of their ecology too. In a few decades from now, people will be laughing at our "full" understanding just like we laugh at the "full" understanding of a few decades ago.
> Goverments have to worry about the whole population, unlike businesses that only > have to worry about themselves.
This is a good point.
> Because most of the time the demand for people is high enough in the private > sector that unemployment is low enough so the goverment doesn't have to get > involved. No need to spend effort creating jobs when the free market delegates > jobs more efficently.
You ducked the question and contradicted yourself. You said that it is cheaper to employ people than deal with their unemployment. So why wouldn't the government work to maintain near 0% unemployment? Even if unemployment is only 3%, according to your logic it would be in the gov'ts best interest to bring that lower.
If "creating jobs" has no downside, then I'm pretty pissed at the gov't that we have any unemployment at all.
> If the private sector and free market were capable of keeping people employed > and working with decent income it wouldn't be nescessary. But unfortunally the > free market is very dysfunctional when it comes to societal needs.
What are you basing that on? You just asserted it with no explanation. You also ignore the possibility that "creating jobs" may hurt the economy more.
The free market is dysfunctional when it comes to societal needs? You mean like improving everyone's standard of living? I would consider that a societal need.
You don't seem to be very on-board with capitalism.
> Putting people to productive work isn't usually be bad for a country as a whole, > unless those people could be put to more efficent work elsewhere.
Again, you just assert that. Ignoring that you called the work "productive", the point I made is that the benefits of this work do not outweigh the costs. You make the point that there is a hidden cost of unemployment. Ok, let's show that this hidden cost is enough to justify us doing work that we wouldn't otherwise see as beneficial enough to justify the cost.
> Right now more jobs creates more spending, which helps break the economic problem
Why does more spending fix the problem? All we need is more spending, more debt, and less savings, right? Yes, that has done wonders for us and will have no long-term consequences and will not increase the burden on a social safety net that is already underfunded by ~$50 trillion.
> Even according to this, building useful infrastructure sounds like an "investment".
Then why didn't we do it already?
> Unfortunately, we've under-invested in our infrastructure for several decades, an > in recent times somehow magically expected the "free market" to take care of > keeping our bridges from falling down.
This is absolute hogwash. The government decides when to invest in roads and bridges.
> Building good and useful infrastructure is an investment, and one that happens to > have a side benefit of "creating jobs".
Doing good and useful stuff is good and useful, you say? Profound.
The problem is that you have to show that it is good and show that it is useful and show that those benefits are a net gain after subtracting the costs. And, yes, I'll even let you throw in some voodoo about how "creating jobs" creates value in the equation, if you show your work.
People like you are quick to call belief in the free market a belief in "magic", but then you can't explain how the government spending money it doesn't have or that it takes from its citizenry creates new wealth. That's the real magic... a group of people who don't produce anything creating wealth for its citizens.
The secret is that all government can do is move wealth around, and in so doing a portion of that wealth evaporates in bureaucracy. You can't tell me you don't see a problem with that in the long run.
Here's the problem. If that's the case (meaning, if these are investments that pay off better in the long run), then we would have already decided to do them. But they aren't. These are "investments" we only decided to do when we needed to "create jobs". This is only a good thing if "creating jobs" makes up for the amount of value we needed in order for this investment to make sense (benefits greater than costs). The problem is that no one can actually make a coherent argument for why "creating jobs" ends up making up that missing value. That's why they use the term "create jobs", because it sounds like such a good thing.
But then I go back to: why doesn't the government always create jobs?
> Most of it goes to a trademark holding company aka tax shelter in the > Cayman Islands as "trademark license fee".
And do you ever ask why?
> Back in the 50's, corporations shared tax responsibilities evenly with > the American individual. Now, corporations pay about 7% and 60% didn't pay a dime.
And do you ever ask why this changed?
> Meanwhile, you lose about 33% of your paycheck to state and federal taxes, then > get taxed on the gas you put in your car and the stuff you buy
Oh it's much, much worse than that. Not only do you pay taxes on the stuff you buy (ie, sales tax), but you pay a ton more in taxes that are hidden in the price of the products you buy (you hinted at this above). Due to increased competition and the ability to sell overseas more cheaply (increasing demand which affects the company's pricing model), companies can bake more taxes into the price you pay and avoid the taxes biting into their profit margins. When you buy a pair of scissors, you are paying sales tax, yes, but you are also paying payroll tax and partial income tax on the wage earner who mined the ore for the scissor blades. Same for the wage earner who formed the steel. Same for the wage earner who molded the blades. Same for the wage earner who dealt with the plastic. Same for the wage earner who molded the handles. Same for the wage earner who marketed the product. Same for the wage earner who stocked the shelf. Same for the wage earner who cleaned the store's floor. Et cetera. You pay a TON of taxes. I honestly believe if people understood how much money they pay their government to keep it running, they would be outraged and there would be considerable increased scrutiny on the government's behavior.
It truly is incredible how much the consumer pays to fund this government. Not to mention that flat consumption taxes -- and that's what this ends up being since I pay the same tax component in my scissors as the mother of 2 on welfare does -- are incredibly regressive.
I don't know. That seems to be the majority view. I wish I was more formally educated in economics, because there must be something fundamental I don't understand that everyone else does. In my view, if you take out $x in debt now to temporarily relieve a problem and pay it back over y years, you are going to pay much more than $x. And if what you got for $x wasn't even worth $x to begin with (back to the cost-benefit analysis), then isn't that a huge loss for the economy over the long-term?
I just see this country's wealth being eroded by foreign debt interest. And I see individual's wealth being eroded by domestic inflation.
But, like I said, I am not a formally educated economist.
Wow, I hate to be a typical slashdot commenter, but:
Bzzzt. You're wrong.
An investment is something you do when the benefits outweigh the costs. If that was the case here, it would have been on the books before the decision to "create jobs."
This is being done to "create jobs". The logic is: we need jobs, so we might as well do something that has some value and isn't a total loss.
Creating jobs in a partially useful area is a LOSS MITIGATION STRATEGY not an INVESTMENT.
The whole idea of "creating jobs" is ridiculous. If "creating jobs" is what it sounds like, then why doesn't the government always do it? And why don't we blame government when there is a rise in unemployment?
IF the government is paying for this with tax money (that it doesn't have), then this is just a wealth distribution tool (otherwise where are the wages coming from to pay these currently unemployed people?). IF the government is paying for this with debt and inflation (more likely), then this is just a temporary fix that increases the long-term consequences.
Let's call "creating jobs" what it is: floating more debt and printing more money into the economy and at the same time keeping people busy and superficially happy, with no concern for the long-term consequences. Deciding to do more stuff than was planned in order to create new jobs is by definition doing things where the benefits don't outweigh the costs for the "investment".
When do we stop deciding to screw over the country to temporarily relieve the difficulties of the minority few?
> It would seem to contradict what you said initially to some extent. The > government is in the truck building business, but the competition is still winning.
If you believe the Big 3, they would be dead by now without the bailout. Your point is valid, though; I oversimplified. The subsidy can cause the foreign competitor to need a far superior product to compete, or the subsidy can cause the domestic producer to compete on level grounds even though they have a far inferior product. Really, though, it's two ways of looking at the same thing. The subsidy screws with the marginal cost of the superior product.
Of course they do, which is why they are bad. What's your point?
> By that logic, one might conclude the solution to our current economic > crisis is to socialize industry. Then we would put our foreign competition > out of business and bring our jobs back home in one action. No?
Some people are calling for that. Unfortunately, the cost in tax dollars is higher than the cost in market price, which means a net loss for society in the long run. But we already know this, right? That's why we chose Capitalism...
But, you are right. It would lock foreign competitors out of our market. No one is going to pay $30k for a car they can get at no additional cost from the US government.
I feel like you think I'm being argumentative; I'm not trying to be. If there are questions about the viewpoint I have, I'll answer. But I definitely think there is a problem with the current tendency to think that gov't is the answer to everything. I work with government every day; the level of inefficiency and the number of people who get paid to do nothing is astonishing. If you haven't seen it first-hand, you don't understand.
If what you were saying is true, you'd be the richest person in the world. All you would have to do is buy up companies that were oversold after missing an analyst target.
Your assumption is that this is overselling and has no real relationship to the value of the company. But that assumption begs the question of why you don't take advantage of this superior knowledge and reap huge personal profits.
Hating capitalism because its participants goal is to make more money is utterly stupid. When your company makes more money, it is better for you. Is it a dollar-for-dollar increase? No. Is it a better ratio than any other system? Yes.
Slashdot Mirror
> I think you need to read some Keynesian economic theory
I've read it and rejected it. How's Keynes been working out for you lately?
> having the government at this time use it's credit to borrow can break this
> cycle just long enough to start a cycle in the reverse direction.
That's an interesting reading of Keynes. So you mean to say that as soon as we're out of the slump, government should stop using its credit to prop up the economy?
> Why is it that some people spent tons of money on big-screen TVs without
> putting any money into their retirement fund? Same reason.
Don't oversimplify. There's a pretty strong argument that buying the TV is a better decision than putting money in your retirement account.
> You doubt that infrastructure is good and useful? Like... roads,
> electricity, water, sewage systems... these things aren't useful, or
> aren't worth the cost of building them? Are you seriously claiming that
> infrastructure doesn't have any economic benefit? Maybe you're a genius
> with some obscure and unexplained theory, but I don't know anyone who
> would agree with you.
This is going to come off bad, but seriously what is the deal with people like you thinking that the only qualification for a spending effort is that there is positive value in it? I just don't get it.
It's like if I tried to tell you that no one would ever purchase a coach plane ticket because the first class ticket is obviously a superior product. You'd turn around and tell me that it is a matter of how much more expensive the first class ticket is and how that marginal cost compares to how the person values the marginal benefit. Why do you understand microeconomics when we're talking about the private sector but then naive (pardon the euphemism) when we start talking about government?
> For example, companies aren't going to put their offices someplace
> with [poor infrastructure]
If you're looking for a better return on investment as far as attracting companies, take a closer look at the tax code. Just a hunch but if you ask the last 100 companies that left the US why they left, they're not going to say poor infrastructure.
I'm not complaining about anything. I'm explaining that there will be an indirect effect.
1. Make less incentive for productive members of society to work hard ...
2. Increase incentive for unproductive members of society to work hard
3.
4. Profit!
Um, what?
When gov't does this kind of spending, they are either taxing heavily or borrowing.
We have a progressive income tax system, so when the government taxes heavily they are taking money from productive members of society and redistributing that money to failed businessmen, lazy workers (although I know liberals want to believe these don't exist), dishonest workers, and criminals.
What's more likely to happen here is that government will BORROW the money. And, sorry bud, that DOES take money out of the economy. All that interest goes to foreign economies... mostly China.
Retarding the economy is good for the economy? Yeah right.
What you're talking about is keeping companies from making poor predictions based on an economic bubble, because when the bubble pops the downturn is way worse. But what you're missing is that free markets don't create bubbles; governments do.
Trying to explain economic evolution to this crowd will only get you hanged. Most of these people don't accept that their annoyance in needing to re-tool results in a net positive for the economy.
The question is not whether the work can be done remotely. The question is whether the work is done by people who would otherwise be doing work that can be done remotely. If you provide work to a pool of workers whose usual work can be done remotely, then you improve the situation for the 10% of the pool you can cover, but hurt the situation for the other 90% you can't, as companies employing them will feel increased cost pressure to send their work remote.
You can demand that the stimulus money only directly go to US workers, but that will just put more pressure on private sector to move a greater % of its work to non-US workers. Parent was right; this ends up being money to India and China directly or indirectly. Thank your tax laws.
perhaps instead of complaining that we're "allowing" companies to export work, we should ask the question of why companies want to export work
Oh god... cue pirate jokes.
We're the first generation to indulge in excess? Are you kidding me?
Also, I'm pretty sure many past generations believed they had "full" knowledge of their ecology too. In a few decades from now, people will be laughing at our "full" understanding just like we laugh at the "full" understanding of a few decades ago.
Get over yourself.
> Goverments have to worry about the whole population, unlike businesses that only
> have to worry about themselves.
This is a good point.
> Because most of the time the demand for people is high enough in the private
> sector that unemployment is low enough so the goverment doesn't have to get
> involved. No need to spend effort creating jobs when the free market delegates
> jobs more efficently.
You ducked the question and contradicted yourself. You said that it is cheaper to employ people than deal with their unemployment. So why wouldn't the government work to maintain near 0% unemployment? Even if unemployment is only 3%, according to your logic it would be in the gov'ts best interest to bring that lower.
If "creating jobs" has no downside, then I'm pretty pissed at the gov't that we have any unemployment at all.
> If the private sector and free market were capable of keeping people employed
> and working with decent income it wouldn't be nescessary. But unfortunally the
> free market is very dysfunctional when it comes to societal needs.
What are you basing that on? You just asserted it with no explanation. You also ignore the possibility that "creating jobs" may hurt the economy more.
The free market is dysfunctional when it comes to societal needs? You mean like improving everyone's standard of living? I would consider that a societal need.
You don't seem to be very on-board with capitalism.
> Putting people to productive work isn't usually be bad for a country as a whole,
> unless those people could be put to more efficent work elsewhere.
Again, you just assert that. Ignoring that you called the work "productive", the point I made is that the benefits of this work do not outweigh the costs. You make the point that there is a hidden cost of unemployment. Ok, let's show that this hidden cost is enough to justify us doing work that we wouldn't otherwise see as beneficial enough to justify the cost.
> Right now more jobs creates more spending, which helps break the economic problem
Why does more spending fix the problem? All we need is more spending, more debt, and less savings, right? Yes, that has done wonders for us and will have no long-term consequences and will not increase the burden on a social safety net that is already underfunded by ~$50 trillion.
http://i.l.cnn.net/money/2008/10/15/news/rainy.day.fortune/barr_SAVINGS_RATE_graphic.gif
> Even according to this, building useful infrastructure sounds like an "investment".
Then why didn't we do it already?
> Unfortunately, we've under-invested in our infrastructure for several decades, an
> in recent times somehow magically expected the "free market" to take care of
> keeping our bridges from falling down.
This is absolute hogwash. The government decides when to invest in roads and bridges.
> Building good and useful infrastructure is an investment, and one that happens to
> have a side benefit of "creating jobs".
Doing good and useful stuff is good and useful, you say? Profound.
The problem is that you have to show that it is good and show that it is useful and show that those benefits are a net gain after subtracting the costs. And, yes, I'll even let you throw in some voodoo about how "creating jobs" creates value in the equation, if you show your work.
People like you are quick to call belief in the free market a belief in "magic", but then you can't explain how the government spending money it doesn't have or that it takes from its citizenry creates new wealth. That's the real magic... a group of people who don't produce anything creating wealth for its citizens.
The secret is that all government can do is move wealth around, and in so doing a portion of that wealth evaporates in bureaucracy. You can't tell me you don't see a problem with that in the long run.
Here's the problem. If that's the case (meaning, if these are investments that pay off better in the long run), then we would have already decided to do them. But they aren't. These are "investments" we only decided to do when we needed to "create jobs". This is only a good thing if "creating jobs" makes up for the amount of value we needed in order for this investment to make sense (benefits greater than costs). The problem is that no one can actually make a coherent argument for why "creating jobs" ends up making up that missing value. That's why they use the term "create jobs", because it sounds like such a good thing.
But then I go back to: why doesn't the government always create jobs?
> Most of it goes to a trademark holding company aka tax shelter in the
> Cayman Islands as "trademark license fee".
And do you ever ask why?
> Back in the 50's, corporations shared tax responsibilities evenly with
> the American individual. Now, corporations pay about 7% and 60% didn't pay a dime.
And do you ever ask why this changed?
> Meanwhile, you lose about 33% of your paycheck to state and federal taxes, then
> get taxed on the gas you put in your car and the stuff you buy
Oh it's much, much worse than that. Not only do you pay taxes on the stuff you buy (ie, sales tax), but you pay a ton more in taxes that are hidden in the price of the products you buy (you hinted at this above). Due to increased competition and the ability to sell overseas more cheaply (increasing demand which affects the company's pricing model), companies can bake more taxes into the price you pay and avoid the taxes biting into their profit margins. When you buy a pair of scissors, you are paying sales tax, yes, but you are also paying payroll tax and partial income tax on the wage earner who mined the ore for the scissor blades. Same for the wage earner who formed the steel. Same for the wage earner who molded the blades. Same for the wage earner who dealt with the plastic. Same for the wage earner who molded the handles. Same for the wage earner who marketed the product. Same for the wage earner who stocked the shelf. Same for the wage earner who cleaned the store's floor. Et cetera. You pay a TON of taxes. I honestly believe if people understood how much money they pay their government to keep it running, they would be outraged and there would be considerable increased scrutiny on the government's behavior.
It truly is incredible how much the consumer pays to fund this government. Not to mention that flat consumption taxes -- and that's what this ends up being since I pay the same tax component in my scissors as the mother of 2 on welfare does -- are incredibly regressive.
I don't know. That seems to be the majority view. I wish I was more formally educated in economics, because there must be something fundamental I don't understand that everyone else does. In my view, if you take out $x in debt now to temporarily relieve a problem and pay it back over y years, you are going to pay much more than $x. And if what you got for $x wasn't even worth $x to begin with (back to the cost-benefit analysis), then isn't that a huge loss for the economy over the long-term?
I just see this country's wealth being eroded by foreign debt interest. And I see individual's wealth being eroded by domestic inflation.
But, like I said, I am not a formally educated economist.
Wow, I hate to be a typical slashdot commenter, but:
Bzzzt. You're wrong.
An investment is something you do when the benefits outweigh the costs. If that was the case here, it would have been on the books before the decision to "create jobs."
This is being done to "create jobs". The logic is: we need jobs, so we might as well do something that has some value and isn't a total loss.
Creating jobs in a partially useful area is a LOSS MITIGATION STRATEGY not an INVESTMENT.
The whole idea of "creating jobs" is ridiculous. If "creating jobs" is what it sounds like, then why doesn't the government always do it? And why don't we blame government when there is a rise in unemployment?
IF the government is paying for this with tax money (that it doesn't have), then this is just a wealth distribution tool (otherwise where are the wages coming from to pay these currently unemployed people?). IF the government is paying for this with debt and inflation (more likely), then this is just a temporary fix that increases the long-term consequences.
Let's call "creating jobs" what it is: floating more debt and printing more money into the economy and at the same time keeping people busy and superficially happy, with no concern for the long-term consequences. Deciding to do more stuff than was planned in order to create new jobs is by definition doing things where the benefits don't outweigh the costs for the "investment".
When do we stop deciding to screw over the country to temporarily relieve the difficulties of the minority few?
> It would seem to contradict what you said initially to some extent. The
> government is in the truck building business, but the competition is still winning.
If you believe the Big 3, they would be dead by now without the bailout. Your point is valid, though; I oversimplified. The subsidy can cause the foreign competitor to need a far superior product to compete, or the subsidy can cause the domestic producer to compete on level grounds even though they have a far inferior product. Really, though, it's two ways of looking at the same thing. The subsidy screws with the marginal cost of the superior product.
> Massive bailouts don't constitute demand-divorced tax revenue?
Of course they do, which is why they are bad. What's your point?
> By that logic, one might conclude the solution to our current economic
> crisis is to socialize industry. Then we would put our foreign competition
> out of business and bring our jobs back home in one action. No?
Some people are calling for that. Unfortunately, the cost in tax dollars is higher than the cost in market price, which means a net loss for society in the long run. But we already know this, right? That's why we chose Capitalism...
But, you are right. It would lock foreign competitors out of our market. No one is going to pay $30k for a car they can get at no additional cost from the US government.
I feel like you think I'm being argumentative; I'm not trying to be. If there are questions about the viewpoint I have, I'll answer. But I definitely think there is a problem with the current tendency to think that gov't is the answer to everything. I work with government every day; the level of inefficiency and the number of people who get paid to do nothing is astonishing. If you haven't seen it first-hand, you don't understand.
> Truly funny MadTV skit.
I know; I was just as shocked as you were.
If you think the stocks are tanking without a reduction in value of the stock itself, then why don't you guy some?
If what you were saying is true, you'd be the richest person in the world. All you would have to do is buy up companies that were oversold after missing an analyst target.
Your assumption is that this is overselling and has no real relationship to the value of the company. But that assumption begs the question of why you don't take advantage of this superior knowledge and reap huge personal profits.
Hating capitalism because its participants goal is to make more money is utterly stupid. When your company makes more money, it is better for you. Is it a dollar-for-dollar increase? No. Is it a better ratio than any other system? Yes.