How is it that economists have done such a poor job of educating the public?

This mis-information is getting a boost from wealthy special interests that want to protect their status from social spending that distributes wealth more fairly.

The inaccurate images that politicians use to conjure up visions of regular folks is really hurting the quality of the debate.

Burly laborers, farmers and diner waitresses only make up so much of US economy. People who are clerks in an office make up a huge chunk of our workforce yet they almost never appear in political settings. It's easy to say 'X' isn't a real job but what are people who provide services and administration supposed to do when the economy stops spinning?

Somebody mentioned in the last election that more Americans 'farm gold' in the World of Warcraft video game than actual farm in America but when was the last time you heard videogame play mentioned in a political speech?

The actual life of Americans bears very little resemblence to the stereotypical images that politicians use to talk about the economy and life in America and it's killing the debate on the stimulus.

Lots of people work in school offices and medical offices. Those are real jobs to be saved and grown. To hear Congress talk you'd think our workforce looks like the Village People.

First, this is not the public, this is newspaper editorial board. Second, the current elite (who range in age from the fifities to their thirties) have been subjected to a generation conservative/libertarian conservative triumpalism in op eds, books, and talk shows. Statements that "government spending is a zero-sum game" are simply asserted as facts without proof (although this "fact" ceases to exist when we borrow trillions of dollars to go bomb and invade somebody or hand out billions to banks and rich people in tax cuts). Mankiw links to it, Tyler Cowan spouts it along with the entire Chicago crew of economists, and libertarian conservatives like Megan McArcle repeat it.

Krugman has been complaining in his blog about the fact that, as Rick Kane says, supposedly reputable economists use nonsense like the Dispatch does in their arguments against government spending. But really, it has been present all along in supply-side "economics", which has been supported by the Republican party and legions of media pundits. It's no big surprise that they continue to talk nonsense.

Uh, yeah, there's tons of idle capital, that's why the finance sector is cratering & every other day someone wants a bailout.

Unfortunately, I see neither side, whether the right-wing or the "Reality based community", is willing to remotely consider that maybe, just maybe, the current crisis is not cyclical but structural, & the economy that has been built is -- and always has been -- unsustainable.

I agree w/ the bashing of stimulus. Not because it's zero-sum, but because IMO it's beside the point. The problem with an overwhelmingly consumption-based economy is that what makes sense on an individual level (holding off on spending) is "bad" for the national numbers. Barring a humongous explosion in the bargaining power of labor (so that debt can be an absolute emergency measure again, and not treated like printing more money -- hint hint), the means for keeping the consumption we're used to just don't exist.

What $300 billion dollars? You only get to that figure by including unemployment and increased spending on medicaid, something we would be obligated to do in any event.

The notion that this bill is larded up with the liberal wish list is pretty much nonsense, if you look at the CBO breakdown and then cross check it against the bill itself you find that the spending is tightly focused on jobs and infrastructure. And yes some of those jobs are in areas like education and health care. Jeez the economic right spends half of their time explaining away income inequality as the result of a skill premium and the other half gutting public education.

As the King of Siam says "It's a puzzlement". Well actually it isn't, these guys just don't like paying taxes. Most every part of their 'economic' argument is just working back from that conclusion.

the economy has a vast amount of idle labor and capital right now. If the government doesn't spend the money no one will spend it.

This statement reminds me of a parody GM print ad I saw recently. It said "You wouldn't buy our crappy cars and trucks, so we'll be taking your money anyways".

What makes the government so omnipotent in thinking it knows how better to use capital than consumers and businesses themselves? Backers of stimulus are good at talking about how it will aid unemployment, but are weak on balancing that with the negative aspects of taking on new debt, higher taxes, or printing money to fund stimulus.

This is the thinking that Keynes and Roosevelt had to combat to get the economy out of the Great Depression.

I was under the impression that WW2 got us out of the Great Depression? At least that's what the unemployment charts seemed to indicate last I checked.

But I think WWII involved massive amounts of government spending on all sorts of stuff, so much so that the consumer sector was squeezed into submission. And the need for soldiers took huge numbers of people out of private employment. So if that's true, the sensible thing to do would be for the government to spend all sorts of money on all sorts of stuff, but we could skip the war part this time.

The argument for tax cuts has always been that the money will be invested by the private sector and will create jobs. What happened during the last 8 years is that the ivestments (and jobs created) were made in China and the BRIC countries. There is nothing in current proposals for new tax cuts that will force investments to be made in this country.

A successful stimulus program would be a wooden stake through the heart of GOPpers and their media cohort. Having witnessed the success of sensible economic policy, voters would reject the failed economic policies of the GOP.

As many have pointed out, Republican eonomic rhetoric has never been constrained, or even heavily influenced, by the facts. This piece, like so many, fails to distinguish assumption from fact. That is an easy way to support a false conclusion.

Dean does a great job in exposing the false logic of such pieces.

I think at the heart of it, there is a strong moral sense here that we must be punished for our excesses and failures and trying to escape this is wicked.

b-psycho: I agree w/ the bashing of stimulus. ... The problem with an overwhelmingly consumption-based economy is that what makes sense on an individual level (holding off on spending) is "bad" for the national numbers.

But that's exactly the argument for a stimulus. You've put Keynesian theory in a nutshell.

the means for keeping the consumption we're used to just don't exist.

You're right - and the trade deficit says so. But what would you rather have, a 5-6% reduction in your consumption, or the more serious reduction that comes with unemployment?

Anon:
"what would you rather have, a 5-6% reduction in your consumption, or the more serious reduction that comes with unemployment?"

I don't think I got across my point...

There's going to be reduction anyway, it is obvious & I never argued otherwise. I'm saying the previous increase never should've happened, because (as we now know) it was built on wealth that never truly existed. People are going to be surprised by the time we actually find the bottom.

What I'm talking about w/r/t stimulus is that it's sign of inherent systemic failure that it's even an option. Hence the reference to labor: for several decades we've simultaneously squashed labor power & promoted conspicuous consumption. That this (combined with the endless goosing of Big Finance, from loose monetary policy to straight-up handouts) would lead to a debt-based death spiral should have been obvious.

One thing about the moral purging theory that I find odd is that the peopley who enjoyed the party, the John Galts of the last ten years, are not the ones who will be subjected to the moral purging, but rather all the factory workers, retail workers, construction workers, laid off police officers, teachers, etc., whose incomes stayed flat the last eight years until they got the pink slip. I guess they could be called the sacrificial lambs or goats for the Senator John Ensign's of the world.

By the way, this argument about how Government spending based on debt does not create debt really negates the supply tax myth since a dollar of tax cuts financed by debt is simply transfering the burden of Government spending from present taxpayers to future taxpayers, who will of course, according to the myth spun by the rational expecatations school will then save and not spend their current income because they will anticipate the future tax.

BTW: Just because I'm not arguing for the stimulus bill doesn't mean I'm arguing against it either. I've actually pointed out on my own blog an example of how the Republican spin on it is bunk.

I'm more interested in the long term though. And in the long run, my preferred tactics lean more towards the views of people like Roderick Long or Kevin Carson than to any mainstream politico. So I'm no conservative, in case anyone else here thinks that -- if anything I'm to the left of you guys.

patient renter wrote, I was under the impression that WW2 got us out of the Great Depression? At least that's what the unemployment charts seemed to indicate last I checked.

The Depression wasn't entirely vanquished until WWII, but unemployment actually went down a lot under the New Deal, until 1937 when Roosevelt under pressure from people with the same sentiments as the ones you've unwisely expressed here cut spending and increased taxes.

The essence of the problem, is that there is too much money on the supply side of goods and services relative to the demand side, i.e., too much money for the production and not enough money for the consumption. Or, in other words, there is not enough money to buy what is produced.

What then have to be done, it's to take money from the hands of the investors and transfer it in the hands of the consumers, or, take brand new money from the central bank and give it to the consumers instead of the investors and producers, or do both. Not forgetting that the governments can be consumers too.

If we don't do that, we will have to wait that the relative over-supply of goods and services disappear. This means that we will have to wait that the global prices decrease to a level that will permit to the global money in the hands of consumers to be sufficient to buy the goods and services already produced.
If we don't want to wait, or not want that the prices decrease, we may destroy a part of the actual production till the remaining production decrease to the level aforesaid, and in the same time, stop all new production.

Make your choice !

Patient renter this unemployment figures you cite do not include WPA and CCC jobs. However comparative figures include all military draftees and labor camp workers in Germany as employed. Put behind barbed wire and forced to make bombs by Hitler Employed. Volunteer to build out Yosemite National Park by FDR? Even though you get paid? Unemployed. Anti-New Deal much? Well I think so.

Inspired by Dean I did an analysis of the spending called out by the Dispatch at Angry Bear. Between Head Start, 'wellness', and teacher skill training I could not get the total above .4% of the total package.

obviously there is a vast amount of idle labor right now, but is there really a large amount of idle capital too? Where is it? this is a serious question, not sarcasm.

Dean,

The Dispatch has always been the mouthpiece of the Wolfe family. "Facts" and "quality reporting" are not their goal. It's the only daily in Columbus and has an openly conservative agenda.

Propaganda is its modus operandi - it's a very small-town mentality. The Wolfe family simply doesn't care about the nation's well-being.

Anti-New Deal much? Well I think so.

I haven't stated my opinion of the New Deal, but you're free to think whatever you want.

All I mentioned was that unemployment was still elevated straight up till WW2. The idea that the New Deal saved the day is certainly not without dispute.

Anti-New Deal much? Well I think so.

I haven't stated my opinion of the New Deal, but you're free to think whatever you want.

All I mentioned was that unemployment was still elevated straight up till WW2. Argue around it however you want.

Anti-New Deal much? Well I think so.

I haven't stated my opinion of the New Deal, but you're free to draw whatever assumptions work for you.

All I mentioned was that unemployment was still elevated straight up till WW2. Argue around it however you want.