2
POPS Washington and the Jobs Market The larger measure of joblessness that includes marginal and part-time workers jumped 0.5% to 17.5%. And the average hours worked in a week stayed the same at 33.0, which means that millions of Americans working part-time will have to become full-time before employers start hiring new workers. If Democrats really want to create jobs and save themselves from a debacle in 2010, their best policy option is to stop creating so much investment uncertainty and additional barriers to business hiring. Stop trying to raise business costs by making it easier to unionize via "card check." Stop trying to raise energy costs with a cap-and-tax bill. Stop adding to the deficit and future tax burden with a 12% increase in domestic spending for 2010. Above all, stop trying to ram through Congress on a partisan vote a health-care bill that imposes a 5.4-percentage-point income tax "surcharge" on anyone making more than $500,000 a year......
4
POPSIs the Economy Recovering? The Curious Case of 1920 vs. 1929
The basic questions we need to ask here are: 1. Why do economies recover? 2. Are we recovering? Q. Why do economies recover? A. They recover because bad investments made during the bubble are liquidated, valuable capital is no longer being wasted on them, new capital is formed from savings, and profitable enterprises attract new capital to expand. Low real interest rates caused by increased savings encourage borrowing, manufacturers use the capital to make new machines, producers of consumer goods buy them, cash goes through the system, consumers see things are getting better, more consumer goods are produced, and consumers buy them. It has to happen this way or the recovery will fail. The difficult part of a recovery is ugly. Bankrupt firms need to fail so that valuable capital resources are not wasted on their continuing activities. This means that unemployment rises (10.2% now) and business bankruptcies are high. Trillions of dollars of asset values are wiped out.
8
POPSThe Forgotten Depression of 1920 The experience of 1920–21 reinforces the contention of genuine free-market economists that government intervention is a hindrance to economic recovery. It is not in spite of the absence of fiscal and monetary stimulus that the economy recovered from the 1920–21 depression. It is because those things were avoided that recovery came. The next time we are solemnly warned to recall the lessons of history lest our economy deteriorate still further, we ought to refer to this episode – and observe how hastily our interrogators try to change the subject.
2
POPSJohn Maynard Keynes: Don't call it a comeback And yet today, you can't click your way three links through the econoblogosphere without stumbling into a flame war between reenergized triumphalist Keynesian supporters of government intervention in the economy and bewildered, angry market fundamentalists who have just watched their painstakingly constructed world crumble around them. Just a few years ago the heat of the debate would have been unthinkable -- Keynes seemed to have about as much relevance to current economic policymaking as Winston Churchill does for the Middle East peace process.
8
POPSMoney For Nothing Incredibly, the lesson Obama draws from history is that past administrations didn't spend enough..."The real problem was that Roosevelt slowed down on public spending in the first two years," the president said, according to one congressman who was in the room. "If he'd just kept on spending that money, we'd have gotten out of the Depression quicker."
4
POPSKeynesian Foolishness I don't care how prominent, credentialed, or "accomplished" an economist is. If he says that burying cash in the ground can be a boon to society, then he should be immediately dismissed from public and academic discourse.
8
POPSCalling All Blue Dog Democrats CNSNews.com reports that congressional Democrats want abortion to be included as a health benefit in both government and private insurance plans -- using taxpayer money to fund abortion on demand. This exposes the lie that they want to reduce the number of abortions. Please. The plan would also inevitably result in government rationing of care, and the liberals driving the plan. The plan would result in government bureaucrats, rather than your doctor, having the final say over your care options. Then there's the wealth-redistribution mentality forever driving President Obama -- his obsession with leveling the economic playing field that underlies all of his major policy initiatives. This obsession explains why he supports capital gains tax increases even though they would hurt everyone, his endless appetite for soaking the rich with increasingly confiscatory taxes, and his single-minded determination to bankrupt this nation through no-growth deficit spending. . . .
7
POPS The Stimulus Spending That Didn't Stimulate Barack Obama has fatally undermined our currency, our solvency, our financial stability and -- ultimately -- our economy, all to spend money that has had no economic effect! But the results are in: None of Obama's spending is doing anything to help the economy. Of course, the process of household savings, designed to pay down debt, is very healthy. Economists call it de-leveraging. By the start of the recession, the debt American households owe had risen from 70 percent of their annual income in 1995 to 140 percent (excluding mortgages). Now it's on its way back down again. And, eventually, that will lead to a real recovery -- if Obama doesn't wreck the currency and bring on mega-inflation before then (but he probably will).
2
POPS Keynesian Economics Is Strangling Our Economy So if Keynesian spending is theoretically flawed and doesn’t work in the real world, why are politicians on a spending binge? As I state in the conclusion, they love spending other people’s money. youtube video (7:29)
1
POPSOkun's Law For my part, I tend to lean away from the Keynesian view that sees recessions as times of inadequate “aggregate demand.” Rather, recessions are essentially times when there is a mismatch between the mix of goods and services demanded by individuals in the economy, and the mix of goods and services that was previously supplied. The clear area of mismatch here is in housing, as well as various sectors of the economy that have made a business of irresponsibly increasing the debt burden of the nation (including mortgage companies, investment banks, and other purveyors of leverage). Those mismatched sectors are experiencing enormous losses, as they should. The job of economic policy is to ease that transition in a way that reduces the spillover onto the broader economy.
3
POPS "Are They All Democrats Now?" Almost at the end of FDR's second term, the economy was getting worse, with unemployment at more than 20 percent. Folsom cites the words of FDR's treasury secretary and one-time confidant, Henry Morgenthau Jr., to make his case. These words should serve as a chilling reminder to all politicians even considering jumping on Obama's FDR big-spending bandwagon: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started. And an enormous debt to boot." Burton W. Folsom Jr. in "New Deal or Raw Deal? How FDR's Economic Legacy Has Damaged America."
4
POPSKeynesian Borrowing Won't Solve Our Economic Problems Similarly, President Clinton and the Republican Congress applied the balanced budget rule in the mid 1990s, producing a long period of steady economic growth. Washington's response to the recession has been ever-expanding borrowing for stimulus packages and bailouts: (1) $150 billion in February; (2) $850 billion in October, and, coming soon; (3) Obama's $800 billion stimulus package. These packages are implementations of Keynesian economics which advocates increased government borrowing during recessions. But government borrowing has severe long-term costs. The late Milton Friedman, founder of the fiscally conservative alternative known as monetarism, often pointed out: "There ain't no free lunch!"
4
POPSThe Dirty Secret of the Financial Crisis: Our Banking System's Broken
The Levy institute suggests that some banks are "too big to save." … "Time to Bail Out: Alternatives to the Bush-Paulson Plan," by Dimitri Papadimitriou and Randall Wray. Their perspective is Keynesian, not market worship. They argue … that the bailout is proceeding backward. Instead of saving Wall Street first, government should devote its heavy firepower to reviving jobs, incomes and business enterprises. The banks will not get well or begin normal lending until there is overall economic recovery. The financial system, meanwhile, can be managed much as it was during the Depression, with regulators weeding out doomed banks and closing them, putting troubled banks under conservatorship and supervising healthy ones closely to prevent excesses. "If we are going to leave insolvent institutions open, it is critically important to replace or at least control management," the Levy paper explains. "Business as usual would be a disaster."
1
POPSOn Adopting China's Keynesian Economic Policies Why was Bernanke so eager to accept responsibility for a failure that occurred more than seventy years before he joined the Board? Because otherwise he and the economics profession in general would have had to concede John Maynard Keynes’ claim that a free market system is not self-regulating.
1
POPSThe Legacy of Keynes In the Keynesian framework, the largest chunk of spending is on account of consumer outlays. Therefore consumer outlays are regarded as the motor of the economy — consumption sets in motion real economic growth. But is consumption the motor of the economy? We suggest that one must make a distinction between productive and nonproductive consumption. While productive consumption is an agent of economic growth, nonproductive consumption leads to economic impoverishment.
3
POPS The Big Lie About The Great Depression The Depression lasted nearly a decade longer than it should have, due almost entirely to governmental meddling. "We have always known that heedless self-interest was bad morals," Roosevelt intoned in 1937. "We know now that it is bad economics." This point of view has a sterling reputation. That reputation, unsurprisingly, was created by FDR himself. FDR turned the Great Depression into a morality play -- a morality play in which those in favor of individual initiative were the sinners, while those who relied on government were the saints.
1
Pops
Newest Clips
Latest Comments
Most Pops
Print
Save
Turn on live update