Mister we could use a man like Herbert Hoover again

Republican presidential candidate Sen. John McCain today repeated his call for an across-the-board freeze on federal spending.

That's a bold and decisive approach to solving a problem. Unfortunately, the problem it addresses isn't the problem we're currently facing. And due to the very serious problem we're currently facing, McCain's proposed austerity plan is just about the Worst Possible Thing one could recommend.

McCain may be genuinely confused. He has repeatedly referred to the current financial crisis as a "fiscal" crisis. That's a different word that means a different thing, but McCain doesn't seem to appreciate that. He seems to think that the financial crisis is the same thing as a fiscal crisis -- a problem of the federal balance sheet being out of balance -- and so he has proposed a fiscal response, the freeze in federal spending.

Like John McCain, the editorial board at the paper is still struggling to comprehend or to respond to the financial crisis. And also like McCain, they've decided to treat it not as what it is, but as something else that they would have understood had that been happening instead. So they too are responding to a "fiscal" crisis, beating the drum for cuts in federal spending and proclaiming that government at every level can't afford to do anything right now beyond such cuts and freezes.

A freeze and a reduction in federal spending, they insist, is the only "honest" and "grown up" response to the current crisis. This is what Matthew Yglesias has been calling the New Hooverism. (FDR? Keynes? The 20th Century? Any of that ringing a bell, people?)

Faced with the onset of a global recession, a massive credit crunch and severe liquidity problems, John McCain, the sages at our paper and the rest of the New Hoovers are advocating not just less government spending, but much less government spending. Their response to a perfect storm of tight money crises is to make money even tighter. Brilliant.

This response would get you an "F" in any Econ 101 class -- unless, I suppose, the test question were something like, "What would be the quickest and most efficient way to turn a recession into a massive, crippling worldwide depression?"

It's not just McCain and the bigwigs at the paper, of course. This same foolishness has been promoted by the moderators of every national debate so far -- by Jim Lehrer, then by Gwen Ifill, and then by Tom Brokaw (who apparently wasn't listening when he did all those interviews with the "Greatest Generation").

This foolishness would be easier to tolerate if the fools advocating it weren't also being so condescending toward everyone who chooses not to follow them off of the cliff. Lehrer, Ifill and Brokaw all displayed this misplaced condescension of the stupid* -- each insisting that anyone who did not share their confused and perverse misapprehension wasn't Being Honest With The American People. This is apparently the lesson these journalists have learned from the past eight years: If you don't understand the problem, pretend it's because you're more courageous than those who do.

The drumbeat for the New Hooverism on the paper's editorial page has resulted in strange juxtapositions, such as this editorial appearing on the same day that the lead story in the local section described the millions of dollars and the massive public works project that will be needed to get the area's sewer system working properly.

That's a nice reminder that this New Hooverism literally stinks, but it also reminds us that this financial crisis presents an opportunity.

Thanks to eight years of the Bush administration, the United States once again has massive annual deficits and the largest total debt in the nation's history. That constrains what the government is able to do in terms of the increased federal spending that is called for by non-stupid economics in response to a crisis like the one we're now facing. But the massive public deficit the U.S. is facing isn't wholly a matter of dollars on the balance sheet, we also have a huge problem with deferred maintenance.

That maintenance deficit doesn't appear in the figures tossed around when we talk about the size of the budget deficit, but the total amounts may be even higher. Our bridges, highways, dams, levies, rail systems, power grid, power generation, broadband, water, sewage and food inspection infrastructure is all languishing from years of neglect and insufficient investment. These things are not luxuries and they are not options. They are national emergencies -- bright flashing red lights on the national control panel.

Spending on projects like these is exactly what non-stupid economics prescribes for a financial crisis like the one we're currently facing. It's also something we desperately needed to do anyway. Such spending may increase annual deficits in the short term, but investing in infrastructure pays long-term dividends that will more than pay for themselves over time. What we have here, in other words, is a solution neatly divided into two crises.

As long as we don't listen to the McCains, the Brokaws, the Lehrers, the editorial wisemen and the rest of the Hoover Brigade, we should be OK.

- - - - - - - - - - - -

* The Misplaced Condescension of the Stupid -- Band name, album title or three-volume comprehensive biography of the 43rd president? You choose.

Comments

[Caravelle]

Wow. If that's true, I hope Obama will have smart people working on the problem. And won't back down because of the flack Lehrer, Ifill, Brokaw et al may give him, not to mention the Republicans... (hah ! I can just imagine them becoming all for small government again once it's not about wiretapping Americans anymore but about building bridges and roads...)

(I'm assuming an Obama win because I've been brainwashed by FiveThirtyEight)

[Nix]

_The Misplaced Condescension of the Stupid_ is obviously a Culture ship name. Probably a GOU.

(The rest of your post is, as usual, 100% bang on.)

I can't believe anybody would be so stupid as to advocate such cuts. But then I'm reminded of how poorly the USA has so far mismanaged this situation. Add with this the crazy view held by seemingly most Americans that looking after your people is evil (socialism), and well, words fail me.

Suffice to say, if my European home country was not 'socialist' then I very much doubt a person like me, born to poor parents and born with a serious medical condition which has required costly surgeries would still be alive. Incidentally, when is the USA going to realise that allowing a large amount of your population to suffer third world conditions such as no health care is not a definition of a great civilisation?

++ points to Fred for bringing this to our attention.

[Cowboy Diva]

as per 538, I think the odds on an Obama win are something like 19:1.

FYI, for another picture of deferred maintenance:
As of 2002, the National Park Service (USDOI) deferred maintenance backlog was $4.9 Billion (Bush administration numbers) and increases by at least 9% a year.

How much are we spending in Iraq again? Besides the 4182 military fatalities?

[Lucia]

The argument seems to be that since the govt has to spend $x (where x is Inconceivably Large) to bail out basically the entire economy, there will be no money left over for (insert worthwhile spending project here). I have even seen it written that this might almost be some fiendishly clever GOP plan: since it's pretty clear that they will lose anyway, clearly they have to throw the economy in the toilet, whirl it about vigorously for a while, then hand the sodden, stinking mess to a Dem prez and Congress, riding to the rescue two or four years later loudly proclaiming that the Dems don't understand fiscal prudence, only tax-and-spend.

This of course ignores the basic facts 1) only tax-and-spend will get us out of this mess 2) there are strings attached to the bailouts, and barring complete catastrophe the govt will probably get most of its money back. (Oddly enough I worked for AIG for some years and still own a little stock [a little to begin with, and now much littler]. A couple of days ago I got a letter from AIG basically saying, "Congratulations! We had to sell 80 percent of the company to the government to stay afloat, so your stock is now vastly diluted and almost worthless! Yes, we know we're not allowed to do that without telling you first, but if you'd read the fine print you'd know we are if while telling you we'd go bankrupt, so we didn't have to tell you first, so we're telling you now." I would imagine that a lot of bank stockholders will be getting such letters as well.)

(Btw [dons copy editor hat] I think you mean levees. As in drove my Chevee to the levee.)

[Tonio]

Their response to a perfect storm of tight money crises is to make money even tighter.

Dumb question - why would the amount of general government spending affect the tightness or looseness of money? Is that simply because the spending pours money into the economy?

[Tonio]

I have even seen it written that this might almost be some fiendishly clever GOP plan: since it's pretty clear that they will lose anyway, clearly they have to throw the economy in the toilet, whirl it about vigorously for a while, then hand the sodden, stinking mess to a Dem prez and Congress, riding to the rescue two or four years later loudly proclaiming that the Dems don't understand fiscal prudence, only tax-and-spend.

That sounds like the conspiracy theory I've heard every election year since 2002 - that the oil companies deliberately drop gas prices near Election Day to influence voters to keep the Republican incumbents.

[Tonio]

My question about government spending putting money into the economy is based on the implication I perceive from fiscal conservatives - that when government taxes and spends, the money is somehow removed from the economy.

@ Tonio

My [very limited] understanding about the way this all works is that the government putting up cash behind the economy in some general $700 billion sense - and giving money to banks in particular - will help instill confidence in those banks. to put it bluntly, so much of our economy right now is invested in essentially fantastical notions of investments, that no one knows who is solvent right now. so specifically, banks won't lend to other banks because Lender doesn't know if Lendee will still be around tomorrow. having the gov't backing up Lendee bank and reassuring everyone that Lendee bank has money with basis in some reality will reassure Lender bank that they might someday get their money back. this will encourage the money to flow again, and that will in in turn help unfreeze the economy, and hopefully begin to get things moving again.

but again, my understanding of the whole thing is limited, and often distracted by thoughts of "they invested in what??"

[Myriad]

grr. that was me at 04:57

[Cowboy Diva]

Dumb question - why would the amount of general government spending affect the tightness or looseness of money? Is that simply because the spending pours money into the economy?

As we wait for the economics students to weigh in...

USGov needs money, so it convinces someone to loan it to them. But like us, the more we want to borrow, the greater the risk, the more interest we have to pay for the privilege of borrowing money. Also, with USGov borrowing all of the easy-to-get money, those entities left with money they are willing to loan are a lot more persnickety and therefore charge higher interest rates. If the USGov is in surplus, then interest rates should drop for the rest of us. In theory.

Now, being as how it is a Big Bully, the Federal Reserve declares how much the interest rate will be that it is willing to pay, and may tweak this number if they think goods/services are rising in cost too quickly, or if people are hoarding money and not spending it the way Good Americans should.

I seriously believe (until someone convinces me otherwise) at this point, inflationary pressures be damned, we should be raising interest rates some so people get in the habit of saving (and sharing wealth this way, thereby increasing the credit pool) rather than relying on the stock market, which of course loooves low-interest rates.

This theory (elementary school econ here I come) does not allow for the inflation caused by natural resource and commodities requirements (OIL!) required for most modern technology and developed-nation comfort levels.

[hapax]

Generally speaking, gas prices drop every autumn because the summer driving season is over.

when government taxes and spends, the money is somehow removed from the economy.

O HAI I TAXED UR MONEY BUT I EATED IT

[Cathy W]

Tonio-

I wouldn't say government spending 'pours money into the economy' unless they're borrowing heavily to sustain the spending - but it moves it around. And right now one problem is that money isn't moving around - people don't want to spend, and credit is harder to get. If a program like the WPA* or the CCC from the '30's were to be implemented, unemployed people would be given jobs (and thus the ability to spend), and society would get infrastructure - a win on both sides!

I think a lot of the conservative rhetoric about tax-and-spend is designed to hit a more emotional note than an economic one, based on some unspoken words in the phrase: tax (you) and spend (on someone who doesn't deserve it).

*As an aside, my daughter just started at a school originally built by the WPA. There's some lasting value...

[Tonio]

elementary school econ here I come

Sign me up. Molly Ivins once argued that when the Fed raises interest rates, it slows down the economy in an unjust way by putting people out of work. I've wondered if would be more appropriate to simply adjust the required margins on stock purchases - allegedly the allowed margins before 1929 were incredibly low.

[Tonio]

O HAI I TAXED UR MONEY BUT I EATED IT

Heh. I had pictured bureaucrats diving into pools of money in office basements.

[CombatQueer]

Hey Fred, thanks for talking about the massive infrastructure crisis. I spent much of the fall of 2007 doing research on the condition of New England's drinking water infrastructure and what I found wasn't good. It's not just that the drinking water systems are in bad shape, and they are, but it also that very few people know or care enough to really see the big picture of what it's going to mean when all our infrastructure woes come to a head at once.

Basically, we need to start pumping money into rebuilding our cities, towns, and highways, not just handing bricks of cash off to the the folks who got us in trouble in the first place.

[Mabus]

I confess...well, not total ignorance, but bafflement. Aren't we running a huge deficit already? Won't the Chinese (et al) eventually give up and cut off our credit? Is that scenario a misunderstanding, or is it outdated due to this additional crisis?

Cathy W: I think a lot of the conservative rhetoric about tax-and-spend is designed to hit a more emotional note than an economic one, based on some unspoken words in the phrase: tax (you) and spend (on someone who doesn't deserve it).

Well, yes. I earned my money working, and I want to eat; I want to get to work and visit my family; I want to pay my bills; and so forth. I don't want my money to be spent on a bridge to nowhere instead, or on feeding people who can work but would rather loaf. If wanting to be able to pay for the necessities and perhaps a few simple luxuries is emotional, then yes--the rhetoric is emotional. Note that I didn't call it "correct" or "accurate" or "properly targeted", but it seems like a perfectly understandable motivation.

Anon: I can't believe anybody would be so stupid as to advocate such cuts. But then I'm reminded of how poorly the USA has so far mismanaged this situation. Add with this the crazy view held by seemingly most Americans that looking after your people is evil (socialism), and well, words fail me.

It's not that looking after your people is evil--it's that a) people ought to look after themselves if they're able (which most of them are) and b) that the apparatus used to look after them can also be misused to meddle in their lives.

Suffice to say, if my European home country was not 'socialist' then I very much doubt a person like me, born to poor parents and born with a serious medical condition which has required costly surgeries would still be alive.

Out of curiosity...how costly are we talking about? Because...Kentuckian, poor parents, serious medical condition, and still here.

[Cowboy Diva]

"simply adjust the required margins on stock purchases - allegedly the allowed margins before 1929 were incredibly low."

Ah, no, I don't think will solve the problem. Margins at the time were when someone loaned you money so you could buy stock; if the stock went up (and stock always goes up, right?) then everybody wins. It wasn't so much that margins were low, it was that they existed in the first place.

Of course, their current descendant is derivatives; people betting on whether or not a stock (or other) investment (not the stock itself mind you) will gain or lose money. This is how we got in this mess now; people started using instruments of collateral debt (mortgages) as method of investing, because the rate of return was higher than a stock portfolio (or more standard bond/bank instrument) would provide. Then people started betting on whether the value of the collateral debt would go up or down, and then people were needed to insure the debt, and then people started defaulted on the original mortgages so the rate of return went south and insurance on debt payment started being called in...

[SchrodingersDuck]

Dumb question - why would the amount of general government spending affect the tightness or looseness of money? Is that simply because the spending pours money into the economy?

Remember, the government isn't just some monolithic bureaucracy, distant and detached from the real world (no matter how it may seem at times), it's also employer, contractor and customer for hundreds of thousands - possibly millions - of people nationwide.* If the government was to try to implement savings by, say, cutting down the National Parks system, then you've got hundreds of park staff out of work, dozens of maintenance companies left without a tender, and plenty of specialist tool companies facing a massive drop in sales.

From there, the situation easily snowballs - those unemployed wardens can no longer spend in the already suffering rural shops (not to mention that they'd be withdrawing Unemployment Compensation from the government, effectively negating what was gained in sacking them), those maintenance companies begin shedding staff, and the tool company stops buying as much metal, hurting the companies further up the supply chain.

The net effect of all this is that reduced government spending basically forces people to take more money out of banks, which hurts their liquidity, and that's the last thing we need now. The savings of a few thousand gov't workers may be pretty small, but once big companies are forced to withdraw funds to fill the revenue gap left by losing government contracts, you're talking about banks having to give up millions of dollars at precisely the worst possible time.

The only perspective sitting on a big pile of cash while the world goes up around you makes sense from is the warped one that Republicans have fostered - that money isn't just a means to an end, but valuable and useful in itself. It's this same paranoia about money that have led to the massive negative stigma around tax-and-spend and especially the national debt.

----

* Indeed, worldwide. Even Iceland, hardly known as an economic powerhouse, has managed to massively dent economies in other Western European nations (the UK, Netherlands and Scandinavia are the worst hit), just by refusing to pay compensation to international customers of Icelandic banks (all of which are now bankrupt). If the US government began seriously cutting services, most of the world would feel the shockwaves, as US companies withdraw from foreign markets to focus on keeping their flailing home base going and foreign companies lose one of their biggest markets. I doubt this would be an effective persuasion strategy to use, though; trying to persuade people to spend their tax dollars to help people in some other country is a fool's game.

[SchrodingersDuck]

Dumb question - why would the amount of general government spending affect the tightness or looseness of money? Is that simply because the spending pours money into the economy?

Remember, the government isn't just some monolithic bureaucracy, distant and detached from the real world (no matter how it may seem at times), it's also employer, contractor and customer for hundreds of thousands - possibly millions - of people nationwide.* If the government was to try to implement savings by, say, cutting down the National Parks system, then you've got hundreds of park staff out of work, dozens of maintenance companies left without a tender, and plenty of specialist tool companies facing a massive drop in sales.

From there, the situation easily snowballs - those unemployed wardens can no longer spend in the already suffering rural shops (not to mention that they'd be withdrawing Unemployment Compensation from the government, effectively negating what was gained in sacking them), those maintenance companies begin shedding staff, and the tool company stops buying as much metal, hurting the companies further up the supply chain.

The net effect of all this is that reduced government spending basically forces people to take more money out of banks, which hurts their liquidity, and that's the last thing we need now. The savings of a few thousand gov't workers may be pretty small, but once big companies are forced to withdraw funds to fill the revenue gap left by losing government contracts, you're talking about banks having to give up millions of dollars at precisely the worst possible time.

The only perspective sitting on a big pile of cash while the world goes up around you makes sense from is the warped one that Republicans have fostered - that money isn't just a means to an end, but valuable and useful in itself. It's this same paranoia about money that have led to the massive negative stigma around tax-and-spend and especially the national debt.

----

* Indeed, worldwide. Even Iceland, hardly known as an economic powerhouse, has managed to massively dent economies in other Western European nations (the UK, Netherlands and Scandinavia are the worst hit), just by refusing to pay compensation to international customers of Icelandic banks (all of which are now bankrupt). If the US government began seriously cutting services, most of the world would feel the shockwaves, as US companies withdraw from foreign markets to focus on keeping their flailing home base going and foreign companies lose one of their biggest markets. I doubt this would be an effective persuasion strategy to use, though; trying to persuade people to spend their tax dollars to help people in some other country is a fool's game.

[SchrodingersDuck]

Sorry about the double post

It's not that looking after your people is evil--it's that a) people ought to look after themselves if they're able (which most of them are) and b) that the apparatus used to look after them can also be misused to meddle in their lives.

Without getting too far OT, it's not so much that America doesn't want to be a socialist country, but that even the merest hint of socialism is enough to kill an idea - after all, the perjorative of choice against publicly-funded health care among conservative politicians is to call it "socialized medicine".

That said, it's always struck me as odd that, despite being so anti-federalism/pro-business, the US is one of only two countries I know of with government run school buses (the other being Canada). We've just started importing the idea in Britain, where until now, pretty much all school buses were run by private bus companies hired out by the local authorities.

[Cowboy Diva]

Well, actually, if you look at bus companies like Laidlaw, there are not a few school districts who contract that out.

I think a more interesting conversation thread would be concerning creating an cultural environment where people are expected (forced) to look after themselves, as opposed to one where people are encouraged to care for and help each other. Brother's keeper, good samaritans and all that rot.

[Jenna Moran]

Dumb question - why would the amount of general government spending affect the tightness or looseness of money? Is that simply because the spending pours money into the economy?

The revelation that opened my eyes to some of what goes on in economics recently is that money in the economy is like water.

Like the water in the clouds; like the water in the rivers; like the water in the sea. It changes the world by flowing.

When money is still it isn't wealth; it isn't work; it isn't value.

Instead it is as it flows from place to place that it creates life: wealth: work. It is because money lets one person work for another, invigorates the creation of goods and services, creates power to act non-locally, that it is useful.

Money is useful when it lives.

Where it changes hands it leaves its mark; where it sits it maketh stagnation.

Government spending isn't about spending more money. The point isn't the extra dollars/water. The point is the increased *flow*.

Obviously with all the usual caveats about doing so wisely and inflation and that the liberal or conservative viewpoint might not have as much wisdom as it thinks etcetera etcetera. But that's the idea---that money is a tool, and that without spending money we are not using that tool for the benefit of society.

[Mabus]

Cowboy Diva: I think a more interesting conversation thread would be concerning creating an cultural environment where people are expected (forced) to look after themselves, as opposed to one where people are encouraged to care for and help each other. Brother's keeper, good samaritans and all that rot.

How am I to keep my brother from starving in a gutter if I am little or no better off than he is? In order to help him, I must first be able to take care of myself. A country where most people provide for themselves will be flush with resouces to help the remainder who cannot; a country where most people rely on others to provide for them will be continually strapped for resources, as the number of people doing productive work dwindles.

Jenna Moran: Government spending isn't about spending more money. The point isn't the extra dollars/water. The point is the increased *flow*.

Obviously with all the usual caveats about doing so wisely and inflation and that the liberal or conservative viewpoint might not have as much wisdom as it thinks etcetera etcetera. But that's the idea---that money is a tool, and that without spending money we are not using that tool for the benefit of society.

I presume, then, that the anger directed at Dubya's urging the public to spend money and enjoy life in defiance of terrorism has to do with the means (via going into debt) rather than with the spending itself. Though that isn't the impression I got previously.

[Lila]

These two songs have become the soundtrack that accompanies the news in my head.

[Michele my bell-flower]

@Mabus: A country where most people provide for themselves will be flush with resouces to help the remainder who cannot

Yeah, because we seem to be so good at that whole "love thy neighbor" thing, huh? That's certainly the impression I get when reading Libertarian sites, rather than "hands off! this is MY PROPERTY!" *rolls eyes*

[Cowboy Diva]

"How am I to keep my brother from starving in a gutter if I am little or no better off than he is? In order to help him, I must first be able to take care of myself"

Well, how many of us have heard the good samaritan story and put ourselves in the position of the victim? There I am, beaten and robbed and left to die, and the only person who bothers to stop and help happens to be the weird pagan guy who will render me unclean just by touching me. Thanks, buddy; now I'm not only broke and injured but also socially/religiously connected with the dregs of society.

No. Sometime, Mabus, I think that if we are lying in the gutter waiting to die, we have to accept help from whence it comes. The people who were able to take care of themselves in that parable walked right by; why should they bother with helping someone who obviously could not help them?

I've always wondered about this parable. It is so easy to identify with the samaritan/heretic satanist, because after all, like him we would never walk right by a person in obvious pain, right? (Right?) But what changes when we realize that for the original listener of the story, the moral/question put to him was "Who is your neighbor?" In essence, "Who will be there for you; the person who has all you need, or the person you wouldn't even trust to shower regularly?"

*stepping down from this increasingly awkward soapbox*

[Mabus]

Michele: Yeah, because we seem to be so good at that whole "love thy neighbor" thing, huh? That's certainly the impression I get when reading Libertarian sites, rather than "hands off! this is MY PROPERTY!" *rolls eyes*

*rolls eyes back* Hey, I didn't say the people with that property would be willing to give it up--only that it'll be even harder to come by if it's not being produced.

That said, I suspect a certain amount of this protesting is over the difference between voluntary and involuntary giving. If I'm being pestered day in and day out to give me this, give me that, we want the other thing, I'm far less likely to be in a giving mood, don't you think? Still more so if I feel I've already had to give up more than I can afford.

But you're quite right--there are quite a few libertarians who, at least right now, would rather hide their money under the floor planks than let anyone else have it.

[Mabus]

You're doing fine, Cowboy Diva....I'm the one who usually gets piled on and gives up. But if you'd rather not, that's okay.

No. Sometime, Mabus, I think that if we are lying in the gutter waiting to die, we have to accept help from whence it comes. The people who were able to take care of themselves in that parable walked right by; why should they bother with helping someone who obviously could not help them?

The Samaritan seems to have been able to help--whether that detail is realistic or not. He had a "vehicle" to carry the beaten man to safety, and enough money to cover the cost of his treatment. It doesn't look as if the issue of ability had much to do with the parable's lesson.

Should someone--say, a Roman legionaire--have beaten up the priest and the Levite, taken their money, and used that to help the beaten man? Or would he then be no better than the original robbers? Perhaps in the poor fellow's position, I'd be willing to accept such help to save my own skin, true--I have no great faith in my own righteousness--but then who will help the new victims?

[Cathy W]

I presume, then, that the anger directed at Dubya's urging the public to spend money and enjoy life in defiance of terrorism has to do with the means (via going into debt) rather than with the spending itself.

That's part of it, of course - but, speaking for myself, it's somewhat deeper than that.

A) At the time, America was aware that something serious was happening; that we were most likely going to war. We, collectively, were ready to roll up our shirtsleeves and make some kind of effort - plant a victory garden, knit for the troops, collect scrap metal, whatever was expected of us - and we were told to go shopping, and being told that mindless consumerism was our patriotic duty really rang hollow against the profundity of the time time. Maybe a better orator than Bush could have made a better case that going on in absolute normalcy, once we were done mourning, was the way to show the terrorists that they couldn't beat us, but...

B) He wasn't telling us to 'spend money and enjoy life in defiance of terrorism' - he was telling us to 'spend money but watch out because there could be a terrorist right around the corner! Go to the mall - but be careful in case someone bombs it! Go shopping, but report that shopping bag someone left in the ladies' room!' See the difference?

[scyllacat]

Yeah, because we seem to be so good at that whole "love thy neighbor" thing, huh? That's certainly the impression I get when reading Libertarian sites, rather than "hands off! this is MY PROPERTY!" *rolls eyes*

I've (more and more tentatively) identified myself as a libertarian (LITTLE 'l') over the years, and are you sure the "hands off!" is not only addressed to the government? I mean, there is as much reason I don't want to identify with libertarians as there is reason that I agree with the principles.

And I'm poor, I volunteer for Public Radio and donate blood. I have picked up hitchhikers and gone to public parks with a pocket full of change and cigarettes to hand out.

And after 30 years in the world, I realized that part of the problems I'd had with understanding respect and charity was that I had never been allowed to CLAIM ownership, but encouraged to learn "share" before I understood the meaning of "mine." You can't give what does not belong to you.

But, ya know, if the people who have current "ownership" of the word "libertarian" (as an English major, I have learned that word meanings DO change, although I've also never gotten over my horror of it) are just a bunch of selfish, free-market neocons instead of community-minded, local-control people who want to be active in creating the better society they espouse, then I've got to pack up my tent and find another place to camp.

[Cowboy Diva]

Mabus,
had a conversation recently about the growth of the African Church and the death of the European church. We wound up talking about "institutionalized christian ideals" of universal healthcare, fairly strong social safety nets in Europe, and in Africa...not so much.

I think this is pertinent, because maybe we have reached a point in the US when those who call themselves christians can say, "You know what? We WILL figure out a way to help the least of these, cause we are all in this together."

WWJD is all well and good, and I know there are those in my life I can help in some fashion and who in turn want to help me; who am I to tell them "Get away you stinking legionnaire/crippled stroke victim/woman with a husband suffering from dementia! I can do this all by myself!"

[Mabus]

Cathy: Ahh. That helps a bit.

A) At the time, America was aware that something serious was happening; that we were most likely going to war. We, collectively, were ready to roll up our shirtsleeves and make some kind of effort - plant a victory garden, knit for the troops, collect scrap metal, whatever was expected of us - and we were told to go shopping, and being told that mindless consumerism was our patriotic duty really rang hollow against the profundity of the time time. Maybe a better orator than Bush could have made a better case that going on in absolute normalcy, once we were done mourning, was the way to show the terrorists that they couldn't beat us, but...

As a member of the working class--and, at that, one who very nearly escaped that lifestyle via education (and might yet, with a little luck)--it's difficult to think of the sorts of things I buy as "mindless consumerism". I buy food, the occasional set of new clothes when the old ones are wearing out, gasoline, and such--and maybe, every now and then when I have some extra, something entertaining to occupy the time, like a paperback book. I can sometimes sneer at a particularly useless purchase (bling-studded phones, for instance), but more often I look at a useful or fun bit of technology and wonder, "Why can't I have that? Why can't I live a more enjoyable life?"

That was where I--and, I suspect, a lot of more typical working-type folk--were hearing Bush come from at the time. We don't really understand "consumerism" very well, and it feels good to be told "You deserve better" for once instead of "You need to save more, be thriftier, and hand over a little more to the government each year." (Even if it's really being directed at people with more money than us, it still sounds as if it were aimed at us.)

As for B)...at the time, the people I know generally figured a reasonable amount of caution was a good thing. Some decided long ago that it had gone too far (myself included)...and some, not.

[Jeff]

Well, actually, if you look at bus companies like Laidlaw, there are not a few school districts who contract that out.

My girlfriend works for Durham, which is another private school bus company.

================

I'm the one who usually gets piled on and gives up.

Look out below -- here it comes!

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I don't want my money to be spent on a bridge to nowhere instead, or on feeding people who can work but would rather loaf.

How about the bridge over the Mississippi, or feeding people who've been laid off when the overpaid CEO took their jobs over-seas (excuse me, "offshore")? I know that libertarians have trouble seeing valid government projects EVAH, but I thought you were smarter than that? (Even the "Bridge to Nowhere" served a purpose: connecting an airport with the town that would use it.)

And don't get me started on Gramps McCrankypants bit about an "overhead projector" costing millions of dollars, because it was the one for a planetarium! Grrrr!

---------------------

as the number of people doing productive work dwindles.

Libertarian poppycock. Show that the number of people working or looking for work diminishes when welfare benefits increase. I bet you can't.

[Mabus]

Cowboy Diva: had a conversation recently about the growth of the African Church and the death of the European church. We wound up talking about "institutionalized christian ideals" of universal healthcare, fairly strong social safety nets in Europe, and in Africa...not so much.

I think this is pertinent, because maybe we have reached a point in the US when those who call themselves christians can say, "You know what? We WILL figure out a way to help the least of these, cause we are all in this together."

I've said this before--albeit in a more combative context--that a great deal of the libertarianism in Churches of Christ comes from the frontier atmosphere we emerged in. For most of our history, the majority of our membership has been too poor to really enforce (for instance) strict tithing rules. It's a situation where very few are actually in a position to help the rest, and often even they don't really have enough to make more than a drop in the bucket. So trying to get money from us has typically been a useless endeavor--we're better off trying to take care of our own families as best we can than doing a paper shuffle that doesn't have much effect. Even though it's less true today, two centuries of wrong-side-of-the-tracksedness has had an impact on our way of thinking.

Generosity is fairly substantial--enough, at least, to run some sizable orphan's ministries and the like--but it's difficult to organize when most people can contribute no more than a few dollars at a time. Nor does it help that, in our case, a money-handling ministry really did end up taking over a substantial fraction of the congregations (now known as the Disciples of Christ--heard of them?). Really big projects, such as church colleges, usually end up beholden to corporate donors.

[Mabus]

Jeff: How about the bridge over the Mississippi, or feeding people who've been laid off when the overpaid CEO took their jobs over-seas (excuse me, "offshore")? I know that libertarians have trouble seeing valid government projects EVAH, but I thought you were smarter than that? (Even the "Bridge to Nowhere" served a purpose: connecting an airport with the town that would use it.)

Actually, I have no problems with those. (Though there's a limit to how long you can continue to feed people...keep it means-tested, please.) I'm not Scott here. As long as a public works project is handled at the lowest reasonable level of government, has a definable and beneficial purpose, and enjoys popular support in its locale, I have no objections. Just don't expect me to be pleased if I discover that my income tax just ate the paycheck I needed to keep my electricity turned on.

[hapax]

That was where I--and, I suspect, a lot of more typical working-type folk--were hearing Bush come from at the time.

And how did you feel when he raised your taxes, let your bridges and roads and schools and libraries rot, and increased the debt burden on your children, and your children's children, while giving massive tax breaks to the top five-percent income bracket?

I'm all for helping the working folks. That's what I do for a living. People who mouth platitudes about "you deserve more", while grabbing everything that's not nailed down for themselves and their rich buddies, give me hemorrhoids of the soul.

[dr ngo]

When you've been through Herbert and J. Edgar Hoover, Anything else is a laugh.

Just sayin'.

[Brett]

Fiscal policy is a complicated thing - generally Keynesian economics are a good thing when done right (like when the massive spending for World War 2 pulled the country out of a recession and created large amounts of savings), but they can also fail if you don't do other necessary steps to shore up your economy. This is especially complicated when you get into financial sector issues; Japan failed to bailout their financial system for 8 years, instead preferring to slash interest rates down to near-zero, cut taxes, and spend unholy amounts of money on public works projects (until their government debt is greater than their GDP by nearly a factor of two). Of course, that might have had something to do with the fact that they were a heavily export-oriented economy whereas the US is a heavily domestic-driven consumer economy, but again, it's complicated.

I'd argue that we probably could get away with some expansions of fiscal policy, especially in terms of Unemployment Insurance (which supposedly generates about 1.74 dollars in consumer spending for every 1 dollar distributed) and infrastructure spending (for which we are long overdue). Re-building the energy grid would be a good idea as well, along with some investments in the scientific and key industrial areas (like building more nuclear plants). We could probably also cut some taxes, although you might want to put a trigger clause into the tax cut so that it ends when GDP gets above a certain percentage for two quarters.

[Chris]

Just don't expect me to be pleased if I discover that my income tax just ate the paycheck I needed to keep my electricity turned on.

The flipside of this is that if *someone*'s income tax doesn't cover the maintenance to the power plant, nobody's electricity stays turned on. Infrastructure doesn't grow on trees.

You can argue about where to draw the line, of course. But every time you turn on the light, flush your toilet, or walk down the street, you are using tax-supported infrastructure. To say nothing of the mugger who doesn't attack you because a policeman is present.

But it goes further than that - eaten any safe food lately? That nutritional information on the package is handy, isn't it? As long as someone makes sure it's accurate and not misleading, of course. If you rent, you probably have a fire extinguisher in your kitchen whether you bought one or not. Do you think that's the landlord's spontaneous generosity? Why do you get overtime when you work more than 40 hours a week (if you have an hourly wage job)? Just because your boss is a nice guy?

A lot of those regulations seem pointless - to people who haven't studied enough history to know what happened without them. Is it really necessary for the government to keep people from blocking fire exits? Yes. Yes it is.

I could go on, but I think you probably get the point.

[Tonio]

Margins at the time were when someone loaned you money so you could buy stock; if the stock went up (and stock always goes up, right?) then everybody wins. It wasn't so much that margins were low, it was that they existed in the first place.

I wasn't seriously suggesting adjusting margins, but simply wondering if that had been considered. Thanks for the information about derivatives.

Remember, the government isn't just some monolithic bureaucracy, distant and detached from the real world (no matter how it may seem at times), it's also employer, contractor and customer for hundreds of thousands - possibly millions - of people nationwide.

Very true. That was my point about conservative rhetoric - they seem to see government in the way that you describe.

it's not so much that America doesn't want to be a socialist country, but that even the merest hint of socialism is enough to kill an idea

On other boards I've heard Obama referred to constantly as a socialist. While I recognize that the usage there seems to be shorthand for things that have little to do with economic policy, I'm not exactly sure what those things are. It could be an indirect way of bashing Obama's skin color.

Like the water in the clouds; like the water in the rivers; like the water in the sea. It changes the world by flowing.

That makes sense. I was originally thinking of an air mattress analogy, where if one part of the mattress is depressed, the air is pushed into other areas of the mattress.

[Naked Bunny with a Whip]

inflationary pressures be damned, we should be raising interest rates some so people get in the habit of saving

But more inflation cancels out the benefits of saving.

[Brad]

Jenna Moran: The point isn't the extra dollars/water. The point is the increased *flow*.

Then my well has run dry.

A long time ago I read a book by Mack Reynolds called Depression or Bust. [SPOILERS AHEAD] The exact occupations are approximate, but the basic plot is clear: The United States is chugging along, spending money, happy as a clam. Then one day Homeowner A looks at his budget and decides, "Getting kinda tight there. Guess I better hold off on buying that lawn furniture."

Homeowner A calls hardware store owner B and cancels his order. Hardware store owner B says, "Gee, if people are making do with last year's lawn furniture, I don't need the new stuff cluttering up my store!" And he calls distributor C and scales back his order.

Distributor C cancels his new car from car dealer D.

Car dealer D cancels his trip to the Bahamas from Travel agent E.

Travel agent E cancels her plastic surgery – and so on and so on until CRASH! We're in a full blown depression.

Now there's some stuff in here about a family having to go all Euell Gibbons and live off roots and berries, and some stretches with a guy in the Treasurer's office, and a whole B-plot featuring two con men who would be too corny for Damon Runyon. They're working as marketing consultants.

Anyway, in the last chapter the guy from the Treasurer's office tracks down Homeowner A. He explains that today's ultra-computerized world can pinpoint how this crash started – when A cancelled his purchase. Treasury Guy gives A a special consultancy fee – enough to buy the lawn furniture. Which lets B place his order, C get his car, D get his trip, E get her nose, and suddenly everything's copa-dory and hunky-cetic.

I'm no economist, but I always worried about the underlying message that we HAD enough money, it was just a matter of freeing it up. Even then I felt there were plenty of people who just didn't have the money to spend. (And now I'm one of them.) I'm guessing the response would be, if those with money start spending, business will pick up to the point where businesses start hiring those without money.

Any thoughts?

[hapax]

Any thoughts?

My thoughts are that the top five percent of income earners in the U.S. now command nearly a quarter of the total income; that hourly wages for low and middle income workers have not increased in real terms since Bush took office; that the average family income has actually declined under his rule; that the income disparity between the rich and the poor in this country, which began to to rocket under Reagan, has now grown to its greatest levels since the Great Depression.

In other words, the vast majority of Americans can't spend us out of this recession. All of our wealth has been stolen, not by the Evil Socialist Government Handouts to Welfare Queens, but to the Cynical Republican Government Handouts to the corporate cronies and Wall Street wizards who engineered this world wide catastrophe.

Let Henry Paulson go buy his own fucking lawn chairs.

[Turcano]

Any thoughts?

The main problem with that logic is that economics, like biology, works with populations, not individuals; individual choices don't really make an economic difference in and of themselves except in extremely unusual situations (like in purchasing extremely specialized equipment or goods), but the choices of hundreds of people around the same time do.

[SchrodingersDuck]

Any thoughts?

The book seems to be making a valid point, but the metaphor/parable is stretched beyond all believability. The unspoken central tenet of the book is that every business runs at its absolute maximum - that a single sale makes the difference between profit and loss. If the economy worked like it did in the book, then the smallest event - a rainy day or a traffic jam - could spark a worldwide financial crisis. Random "black swan" crashes, like 1987's Black Monday, would be a regular occurance.

In reality, life just doesn't happen that way. Businesses can soak up the damage of a few bad sales - it doesn't matter if someone cancels their order today; someone else will make one tomorrow. Even if an entire city stops buying furniture and luxuries (if the major employer goes bust, for instance), then there are localised economic issues, sure, but the nation as a whole is largely unaffected.

Then ending, assuming that's how it happened in the book, is even dafter. If the economy has gone so badly to pot that families are down to foraging for food, why hasn't the travel agent gone bankrupt? Why hasn't rampant inflation quadrupled the price of furniture wholesale? Why does the homeowner care about buying new lawn chairs at all when the cost of keeping his family fed and warm is skyrocketing? And what about all the other customers of the furniture shop - surely with the ruined economy, they won't care about getting a new sofa. How is getting one extra customer going to rescue the furniture shop and save the US? It's like a trying to stop a wave of falling dominoes - even if you pick back up the one at the start, you're not going to stop the other ones falling.

[Kit Whitfield]

a country where most people rely on others to provide for them

Wrong emphasis. The idea is a country where people rely on each other. There's a difference between scrounging and reciprocity.

[Kit Whitfield]

I'm no economist, but I always worried about the underlying message that we HAD enough money, it was just a matter of freeing it up.

The impression I have is that the skyrocketing housing market has eaten up a lot of it. In order to own a property, people have had to pay much more than their houses were worth. (It was even worse in the UK than in the US; at its height, you could pay between three and five hundred thousand pounds for a two-bedroom house in London.) Now people have mortgages, but if the banks foreclosed or they put their houses back on the market, they couldn't get the same price for them. So a big part of the money crisis is that the money can't be freed up; it's essentially been wasted and can't be retrieved.

[inge]

Mabus: How am I to keep my brother from starving in a gutter if I am little or no better off than he is? In order to help him, I must first be able to take care of myself.

Back when I started to work, 20 years ago, I was flush with money. Yes, a significant part of my income went into social insurances (which had a risk pool of "every employee in the country"), but I could spend what was left to the last pfennig -- be it on fun or luxury or charity.

These days, the insurances have been half-dismantled. Yes, I take home a larger portion of a larger sum than I did twenty years ago. But I'm left with a heap of uncovered risk. There is no money for luxuries when the luxury is having your teeth fixed, and no money to give to people less lucky. Every last cent has to go into savings against catastrophic events that are on your trail like a horde of shambling zombies -- they won't get you, but only as long as you keep running.

Having to take care of myself instead of "everyone" tilts the risk so that I cannot in good conscience take care of anyone but myself, and the laws enforce that.

[inge]

Sorry, wanted to preview and hit send instead:

Mabus, cont.: a country where most people rely on others to provide for them will be continually strapped for resources,

Unfortunately I lost the link, but some months ago there was a very intersting essay somewhere on the internet on that point: How the rate of people able to work to those not able (too old, too young, too sick) created booms or busts. From the GM pensions fiasco over the Irish economic boom to perpetual poverty in some areas of the world: The less children (or in the case of pension fiascos, old people) a society has, the more efficient it is economically.

Anyone remember that one and has a link?