France to form new government

[Doc Savage Fan]

Also, you appear to be arguing that the same amount of consolidation would have been significantly less damaging if it took the form of spending cuts instead of tax increases. What is the research basis for this?

http://www.heritage.org/research/re...-the-great-recession-and-european-debt-crisis

One of the main lessons of the scholarly literature on deficit reduction is that it is a mistake to lump together tax increases and spending cuts.[6] In the Special Report, Alberto Alesina and Veronique de Rugy review the last two decades of academic writing on deficit reduction, which they term “fiscal adjustment”:

[Economists] seem to have recently reached a consensus that spending-based fiscal adjustments are not only more likely to reduce the debt-to-GDP ratio than tax-based adjustment, but also less likely to trigger a recession. In fact, if accompanied by the right type of policies—especially changes in public employees’ pay and public pension reforms—spending-based adjustments can actually contribute to economic growth....
However, it is important to refrain from oversimplifying these results because fiscal adjustment packages are often complex and multiyear affairs. Many successful (i.e., expansionary and debt reducing) fiscal adjustments in this literature are ones in which exports led growth when the rest of the global economy was healthy or even booming. While there has been some recovery in the midst of the recession, we should recognize that achieving export-led growth may be much harder today when many countries are struggling.
While austerity based on spending cuts can be costly, the cost of well-designed adjustments plans will be low.... [T]he alternative for certain countries could be a very messy debt crisis.[7]​

Presenting research at The Heritage Foundation in October 2013, Daniel Leigh of the IMF showed that he and his colleagues estimate that tax-based fiscal consolidations lead to three or four times as much decline in consumption and gross domestic product (GDP) as spending-based fiscal consolidations.[8]
...............

There are a handful of recent scholarly papers (I found four) that estimate both tax and spending multipliers over a multi-year horizon.[19] As presented in Table 2, these papers display a near-consensus that tax multipliers are stronger than spending multipliers.[20] Equally important, tax multipliers generally grow stronger over time, and spending multipliers generally weaken. Consistent with my estimates from data during the recent crisis, tax increases directly and increasingly diminish private-sector activity by more than the value of the tax, but spending cuts have little impact on private GDP, and the impact on total GDP disappears over time as the private sector replaces the lost government spending.

 

[glenn1]

Why are those things stupid?

I'll treat this as an honest question that you're willing to thoughtfully consider the answers. Reasons they're stupid:

1. State spending - the entire reason most states have "balanced budget amendments" is to force the hard choices when times aren't so great. Politicians and the public can allow themselves to lay off workers who are otherwise untouchable, rationalize the tax rates and structure, and decide what programs really are worth keeping. When the Feds play Santa Claus this process is short-circuited. This is especially counter-productive in places where the political situation is the worst (e.g. Detroit, Illinois, etc.) because it allows the corruption and rot to persist.

2. High speed trains to nowhere - Really? Do you honestly not understand why spending money on completely random and economically pointless infrastucture based purely on political fetishes is wrong? If you want to subsidize fixes to crumbling bridges or leaking municipal water/sewer systems, that at least has a defensible purpose and economic benefit.

3. Really shitty companies like Chrysler - Oh yeah, because if there's one thing the U.S. needs is to keep alive inefficient companies with terrible quality products no one wants and that have a supremely non-competitive human capital infrastructure to boot. Just keep on writing the checks to keep the pets.com, Enrons, Woolworth's, and the like. Maybe subsidize America Online dial-up service while you're at it, it's all stimulus!

4. 99+ weeks of unemployment - Of course the key to a dynamic economy is indirect subsidies to consumer staples companies. With a premise like "the unemployed will spend the money faster" you can't go wrong - heck, why not just speed up the process and give the money to the homeless instead? They'll spend it even faster than the unemployed, helping to maintain the revenues of the local liquor and convenience stores - just think of the "multiplier effect" of that.

What does that have to do with what you said above & what specific remedies do you recommend?

And, uhh, what does any of it have to do with France?

Eskimospy recommends stimulus always and in every case including France earlier in the thread, so it's directly applicable. In his dreamworld government would entice everyone to empty their wallets and maxing out their debt service no matter what it's spent on. Which is exactly how we ended up with repetitive huge bubbles in multiple asset types and large inflation in consumer staples now. His worst fear seems to be that people will start paying down debt rather than buying yet more consumer product shit since he thinks that's somehow deflationary when it's the exact opposite. Unless and until consumers (and governments to a lesser extent) start getting their debt service levels down they won't be able or willing to take on large expenditures, which is itself deflationary.

Specific remedies would be broad-based direct payments to the population (like the Bush 'stimulus checks') and universally applicable tax cuts like raising the amount of the standard exemption. Governments should follow by reducing their policy portfolios and reducing size and scope down to more core functions. A consumer debt jubilee might have also been an option as well, but it seems that ship has already sailed. The biggest keys are that efforts cannot be narrowly targeted (e.g. to the unemployed) and should be aligned to helping consumers better align current spending to expected future income. Which for the vast majority of people means *not* spending the money on current consumption and reducing debt instead.

 

[fskimospy]

http://www.heritage.org/research/re...-the-great-recession-and-european-debt-crisis

One of the main lessons of the scholarly literature on deficit reduction is that it is a mistake to lump together tax increases and spending cuts.[6] In the Special Report, Alberto Alesina and Veronique de Rugy review the last two decades of academic writing on deficit reduction, which they term “fiscal adjustment”:

[Economists] seem to have recently reached a consensus that spending-based fiscal adjustments are not only more likely to reduce the debt-to-GDP ratio than tax-based adjustment, but also less likely to trigger a recession. In fact, if accompanied by the right type of policies—especially changes in public employees’ pay and public pension reforms—spending-based adjustments can actually contribute to economic growth....
However, it is important to refrain from oversimplifying these results because fiscal adjustment packages are often complex and multiyear affairs. Many successful (i.e., expansionary and debt reducing) fiscal adjustments in this literature are ones in which exports led growth when the rest of the global economy was healthy or even booming. While there has been some recovery in the midst of the recession, we should recognize that achieving export-led growth may be much harder today when many countries are struggling.
While austerity based on spending cuts can be costly, the cost of well-designed adjustments plans will be low.... [T]he alternative for certain countries could be a very messy debt crisis.[7]​

Presenting research at The Heritage Foundation in October 2013, Daniel Leigh of the IMF showed that he and his colleagues estimate that tax-based fiscal consolidations lead to three or four times as much decline in consumption and gross domestic product (GDP) as spending-based fiscal consolidations.[8]
...............

There are a handful of recent scholarly papers (I found four) that estimate both tax and spending multipliers over a multi-year horizon.[19] As presented in Table 2, these papers display a near-consensus that tax multipliers are stronger than spending multipliers.[20] Equally important, tax multipliers generally grow stronger over time, and spending multipliers generally weaken. Consistent with my estimates from data during the recent crisis, tax increases directly and increasingly diminish private-sector activity by more than the value of the tax, but spending cuts have little impact on private GDP, and the impact on total GDP disappears over time as the private sector replaces the lost government spending.

Why don't you try using something other than an ultra right wing think tank?

 

[Doc Savage Fan]

Why don't you try using something other than an ultra right wing think tank?

Why don't you dispute the conclusions of all studies cited instead of bashing the source?

 

[dphantom]

Why don't you try using something other than an ultra right wing think tank?

develop an argument why this is wrong instead of throwing insults. Heritage is hardly "right wing". It is a conservative think tank.

 

[fskimospy]

develop an argument why this is wrong instead of throwing insults. Heritage is hardly "right wing". It is a conservative think tank.

No, I don't feel any need to develop arguments against a source that is so obviously biased.

I will try to contain my laughter at the idea that heritage is not right wing.

 

[dphantom]

No, I don't feel any need to develop arguments against a source that is so obviously biased.

I will try to contain my laughter at the idea that heritage is not right wing.

Ah yes, when presented with a cogent argument from a valid source that disrupts your ingrained belief system, denigrate the source. You probably do not even realize that position then diminishes your argument to nothing.

 

[Doc Savage Fan]

No, I don't feel any need to develop arguments against a source that is so obviously biased.

I will try to contain my laughter at the idea that heritage is not right wing.

Many credible studies and sources were cited which support their conclusion. The fact that you choose to attack Heritage instead of rationally refuting their conclusion speaks volumes. This is why it's hard to have a reasonable discussion with you.

 

[fskimospy]

Why don't you dispute the conclusions of all studies cited instead of bashing the source?

How many times do we need to have this discussion? Cite objective, nonpartisan sources.

I don't understand why anyone would read anything out of the heritage foundation if they were trying to understand an issue. You know as well as I do that they have a very specific agenda. My guess is the reason people read their stuff is so that they can be told what they want to hear.

 

[fskimospy]

Many credible studies and sources were cited which support their conclusion. The fact that you choose to attack Heritage instead of rationally refuting their conclusion speaks volumes. This is why it's hard to have a reasonable discussion with you.

I like how you're trying to make your inability to use objective sources into anyone's fault but your own. That speaks volumes about you. Anyone interested in having a reasonable discussion wouldn't be citing the Heritage Foundation.

You know better than this.

 

[fskimospy]

Ah yes, when presented with a cogent argument from a valid source that disrupts your ingrained belief system, denigrate the source. You probably do not even realize that position then diminishes your argument to nothing.

It's not a valid source. You realize that the Heritage Foundation is an organization with the explicit goal of promoting conservative economics, right? How foolish would someone have to be to think that such a source was giving an accurate assessment of the issue?

The fact that you guys are still so readily duped by these guys despite their obvious history says a lot more about you than it does about me.

 

[realibrad]

I like how you're trying to make your inability to use objective sources into anyone's fault but your own. That speaks volumes about you. Anyone interested in having a reasonable discussion wouldn't be citing the Heritage Foundation.

You know better than this.

You are by far one of my favorite people to debate with, but this is pretty weak. If the logic and reasoning are not sound, then establish why. You have thousands of posts and are on here pretty much every day, so its not like you don't have the time. You are posting in this thread so you have established your interest in this subject, so why not spend the time establishing why its incorrect?

Knowledge transcends those who find it, and is separate from its finders bias. Just explain why its wrong, instead of saying that it comes from a biased source and has no merit.

 

[Jhhnn]

I'll treat this as an honest question that you're willing to thoughtfully consider the answers. Reasons they're stupid:

1. State spending - the entire reason most states have "balanced budget amendments" is to force the hard choices when times aren't so great. Politicians and the public can allow themselves to lay off workers who are otherwise untouchable, rationalize the tax rates and structure, and decide what programs really are worth keeping. When the Feds play Santa Claus this process is short-circuited. This is especially counter-productive in places where the political situation is the worst (e.g. Detroit, Illinois, etc.) because it allows the corruption and rot to persist.

2. High speed trains to nowhere - Really? Do you honestly not understand why spending money on completely random and economically pointless infrastucture based purely on political fetishes is wrong? If you want to subsidize fixes to crumbling bridges or leaking municipal water/sewer systems, that at least has a defensible purpose and economic benefit.

3. Really shitty companies like Chrysler - Oh yeah, because if there's one thing the U.S. needs is to keep alive inefficient companies with terrible quality products no one wants and that have a supremely non-competitive human capital infrastructure to boot. Just keep on writing the checks to keep the pets.com, Enrons, Woolworth's, and the like. Maybe subsidize America Online dial-up service while you're at it, it's all stimulus!

4. 99+ weeks of unemployment - Of course the key to a dynamic economy is indirect subsidies to consumer staples companies. With a premise like "the unemployed will spend the money faster" you can't go wrong - heck, why not just speed up the process and give the money to the homeless instead? They'll spend it even faster than the unemployed, helping to maintain the revenues of the local liquor and convenience stores - just think of the "multiplier effect" of that.



Eskimospy recommends stimulus always and in every case including France earlier in the thread, so it's directly applicable. In his dreamworld government would entice everyone to empty their wallets and maxing out their debt service no matter what it's spent on. Which is exactly how we ended up with repetitive huge bubbles in multiple asset types and large inflation in consumer staples now. His worst fear seems to be that people will start paying down debt rather than buying yet more consumer product shit since he thinks that's somehow deflationary when it's the exact opposite. Unless and until consumers (and governments to a lesser extent) start getting their debt service levels down they won't be able or willing to take on large expenditures, which is itself deflationary.

Specific remedies would be broad-based direct payments to the population (like the Bush 'stimulus checks') and universally applicable tax cuts like raising the amount of the standard exemption. Governments should follow by reducing their policy portfolios and reducing size and scope down to more core functions. A consumer debt jubilee might have also been an option as well, but it seems that ship has already sailed. The biggest keys are that efforts cannot be narrowly targeted (e.g. to the unemployed) and should be aligned to helping consumers better align current spending to expected future income. Which for the vast majority of people means *not* spending the money on current consumption and reducing debt instead.

Gawd.

In the face of massive layoffs in both the public & private sectors, the answer is... force more layoffs?

High speed rail is worse than burying death in the desert or giving it to the Israelis to test it blasting the shit out of the Pals? I'm sure they said much the same thing about the REA, the TVA & countless other New Deal programs back in the 30's.

Really shitty companies? Are they really shitty employers? Do they offer better wages & benefits than being on unemployment? Do we need the jobs, or not? What jobs are the Job Creators offering instead?

Hyperbole about extended unemployment benefits in the face of the greatest dearth of employment since the 1930's? Then wandering off into absurdity about America's most unfortunate class, the homeless- do we want more homeless, or fewer? Do UI benefits help or hinder that?

And, by all means, reduce govt to its core functions so that more people will be laid off, so we can exaggerate the mania/ depression of financialized capitalism with a little debt jubilee fantasy thrown in on top. Cut taxes when half the population doesn't pay federal taxes, make direct payments to people who won't spend it in the face of economic uncertainty. Yeh, that'll stimulate the economy.

Helluva plan.

 

[dphantom]

It's not a valid source. You realize that the Heritage Foundation is an organization with the explicit goal of promoting conservative economics, right? How foolish would someone have to be to think that such a source was giving an accurate assessment of the issue?

The fact that you guys are still so readily duped by these guys despite their obvious history says a lot more about you than it does about me.

it is an absolutely valid source and does promote a view of economic theory that is obviously at odds with yours. That does not make you right by default.

 

[Jaskalas]

What about... Chicken Little!?

Is it time for Zimbabwe & the Weimar Republic to be dragged out as false banners?

Nothing but peace and prosperity if the US permanently added that $1 trillion stimulus to the yearly budget?

Your post forces me to cite an extreme example to try and get you to admit a simple truth. That there IS a limit. That there ARE negative consequences. Thus far no one on the Left has addressed that stimulus can cause harm. You all speak of it like some magic cure all.

Economics is solved if we just... spend more! Gosh, why didn't anyone ever think of that...

 

[fskimospy]

it is an absolutely valid source and does promote a view of economic theory that is obviously at odds with yours. That does not make you right by default.

It doesn't make me right by default, I just have no interest in refuting obviously biased sources that have a documented history of dishonesty. Your mileage may vary.

 

[Jhhnn]

it is an absolutely valid source and does promote a view of economic theory that is obviously at odds with yours. That does not make you right by default.

Yeh, Heritage espouses the economic theory that led us to this place- explosive inequality, profound lack of employment opportunities, financial deregulation, Tax cuts for the financial elite, Neocon foreign policy, smaller govt- a fountainhead of the whole failed package of Right Wing ideology made national policy over the last 35 years or so.

That makes them credible in what way, exactly?

 

[Jhhnn]

Nothing but peace and prosperity if the US permanently added that $1 trillion stimulus to the yearly budget?

Your post forces me to cite an extreme example to try and get you to admit a simple truth. That there IS a limit. That there ARE negative consequences. Thus far no one on the Left has addressed that stimulus can cause harm. You all speak of it like some magic cure all.

Economics is solved if we just... spend more! Gosh, why didn't anyone ever think of that...

The Cassandras of the right wing have been dead wrong about the consequences of deficits so far. No bond vigilantes. No inflation. No Dollar devaluation.

What we have seen is incredible over valuation of financial instruments of all kinds because of mal-distribution of income.

Of course there is some limit to the benefit of deficits. Don't pretend to say that you have the vaguest idea where that limit may be. Like it or not, we're still flirting with the disaster of deflation in all realms other than the stock market.

 

[glenn1]

Gawd.

In the face of massive layoffs in both the public & private sectors, the answer is... force more layoffs?

Yes, unless you prefer the Greek model where millions of unproductive government employees are kept on for the sake of "stimulus."

High speed rail is worse than burying death in the desert or giving it to the Israelis to test it blasting the shit out of the Pals? I'm sure they said much the same thing about the REA, the TVA & countless other New Deal programs back in the 30's.

So given the choice between updating core infrastructure and HSR you'd rather build trains from Fresno to Bakersfield and have the bridges and sewers in those cities failing.

Really shitty companies? Are they really shitty employers? Do they offer better wages & benefits than being on unemployment? Do we need the jobs, or not? What jobs are the Job Creators offering instead?

If you're going to subsidize companies then why the weakest ones? Why not subsidize Apple instead of Chrysler? Would we rather push jobs at thriving companies or prop up failing ones like FannieMae with government receivership?

Hyperbole about extended unemployment benefits in the face of the greatest dearth of employment since the 1930's? Then wandering off into absurdity about America's most unfortunate class, the homeless- do we want more homeless, or fewer? Do UI benefits help or hinder that?

You want to help the unemployed? Buy out their leases or upside down mortgages and help move them to where jobs are instead of trapped with 99 weeks searching fruitlessly for jobs that don't exist in Detroit and other econonic wastelands.

And, by all means, reduce govt to its core functions so that more people will be laid off, so we can exaggerate the mania/ depression of financialized capitalism with a little debt jubilee fantasy thrown in on top. Cut taxes when half the population doesn't pay federal taxes, make direct payments to people who won't spend it in the face of economic uncertainty. Yeh, that'll stimulate the economy.

Yeah, heaven forbid we keep onboard government employees whose jobs provide minimal value to taxpayers. And unless they're burying it in the backyard, the money doesn't magically disappear when people save it or use it to pay debt. The money simply gets recirculated into hands where present consumption is prioritized, and the first person enjoys their reduced debt burden or increased savings fund.

 

[Moonbeam]

It doesn't make me right by default, I just have no interest in refuting obviously biased sources that have a documented history of dishonesty. Your mileage may vary.

How odd. Every time some religious wacko group comes to my front door I spend the day listening to their propaganda with open and fresh ears just in case they have the real truth to offer and aren't looking for some new sucker to tithe at their church. How utterly rational of you to preempt their spiel, but I bet it upsets the wacko suckers who bit that hook.

 

[BoberFett]

The Cassandras of the right wing have been dead wrong about the consequences of deficits so far. No bond vigilantes. No inflation. No Dollar devaluation.

What we have seen is incredible over valuation of financial instruments of all kinds because of mal-distribution of income.

Of course there is some limit to the benefit of deficits. Don't pretend to say that you have the vaguest idea where that limit may be. Like it or not, we're still flirting with the disaster of deflation in all realms other than the stock market.

That "mal-distribution of income" is what has prevented inflation. If the deficit spending had flowed to consumers rather than the wealthy, there would be inflation, negating the effect of that stimulus. Why is that so hard to understand?

The liberal answer is always "people need to buy more shit." That's as much a failed economic policy as right wing economics, you idiots just haven't realized it yet.

 

[dphantom]

How odd. Every time some religious wacko group comes to my front door I spend the day listening to their propaganda with open and fresh ears just in case they have the real truth to offer and aren't looking for some new sucker to tithe at their church. How utterly rational of you to preempt their spiel, but I bet it upsets the wacko suckers who bit that hook.

I personally subscribe to a view of economic liberalism and free markets. If that makes me a wacko, I will wear the title.

 

[dank69]

I personally subscribe to a view of economic liberalism and free markets. If that makes me a wacko, I will wear the title.

Is that because you like butt-fucking customers or because you like being butt-fucked by corporations? Maybe a little of both?

 

[dphantom]

Is that because you like butt-fucking customers or because you like being butt-fucked by corporations? Maybe a little of both?

I think that is highly inappropriate.

 

[dank69]

I think that is highly inappropriate.

Change it to fucking if you need a more delicate term.