Keynesianism

A better life is your job, not the government

Americans have this tendency to pick a President that will promise to give them a better life.  They want prosperity, and any failure to deliver can kill a political career almost as fast as a dead girl or live boy.  In all of this hoopla, something gets missed.  One key factor that is constantly overlooked.  It’s not the government’s job to give you a better life, it’s their job to make sure you have a chance to do that for yourself.

The truth is that government hasn’t been doing their job lately.  Many regulations actually prevent entry into various fields, lobbied for by corporations looking to protect their profit share.  Licensing requirement for jobs with such high risk towards human life like interior decorator and hair stylist put up ridiculous barriers for people to make a living.  This isn’t how it should be.

Unfortunately, this nation is no longer capitalist, but corporatist.  Corporations lobby for massive regulations that they know will choke out smaller competitors.  Why choke out the little guys who pose no real threat?  Because enough little guys can make up a sizable market share, something the big guys covet.  By choking out these smaller companies, they grow without having to really compete with like sized companies.

For some people, the American Dream is their own business, but the various levels of government have put up so many obstacles that many have had to abandon their version of The Dream.  Now, if so many politicians are concerned with fairness, tell me where the fairness is in that?

Of course, fairness isn’t something the government can or should provide.  There will always be unfairness in the world.  Efforts to create “fairness” automatically create “unfairness” for someone else.

Expect another record budget deficit this year

A couple of weeks ago, I noted that the budget deficit for FY 2010 had topped $1 trillion, this would be the second straight year with a trilion dollars in red ink. On Friday, the White House announced that it expects the budget deficit to reach a record $1.47 trillion before it’s all said and done:

New estimates from the White House on Friday predict the budget deficit will reach a record $1.47 trillion this year. The government is borrowing 41 cents of every dollar it spends.

That’s actually a little better than the administration predicted in February.

The new estimates paint a grim unemployment picture as the economy experiences a relatively jobless recovery. The unemployment rate, presently averaging 9.5 percent, would average 9 percent next year under the new estimates.

The deficit for FY 2011, next year, is expected to be around $1.4 trillion. Obama wasn’t kidding when he said we’d have trillion deficits as far as the eye can see.

But wasn’t ObamaCare supposed to help bring down the budget deficit? That was part of the reasoning, right? Well, thoses “savings” are not all they’re cracked up to be:

Pelosi: “Unemployment checks creates jobs faster than almost any other initiative”

Defying logic and reason, House Speaker Nancy Pelosi tells us that unemployment checks create jobs. Seriously, she actually said that.

Unemployment checks do not create demand, it redistributes wealth and disincentives the unemployed from looking for work, creating a drag on taxpayers (remember when Paul Krugman believed that, you know, before he became a shill for Obama). Remember when Bush said that stimulus check would create demand? Guess what? They didn’t.

Does anyone still take her seriously? This is the same person that told us that Congress would have to pass ObamaCare “so that [we] can find out what is in it.”

Merkel schools Obama

President Barack Obama is getting an economics lesson from German Chancellor Angela Merkel:

Chancellor Angela Merkel championed German export strength as “the right thing” for her country, spurning President Barack Obama’s call to boost private spending as both leaders prepare for Group of 20 talks.

Merkel, addressing a business audience in Berlin today, said she told Obama in a phone call that cutting government debt is “absolutely important for us,” exposing a second point of contention ahead of the June 26-27 G-20 summit in Canada.

Reducing the budget deficit by 10 billion euros ($12 billion) per year “won’t put a brake on the world’s economic growth,” Merkel said, relating what she told Obama yesterday. Germans are more likely to spend money if they feel the government “is taking precautions” to ensure solid finances, she said.

While Obama is urging countries in the G-20 to spend, spend, spend. Merkel is basically saying that spending more money, or the Keynesian tactic of “stimulating” the economy through deficit spending, will only set Germany up for failure in the future.

Accepting fiscal advice from the United States is like going to a drug dealer to break a heroin habit.

Obama’s visit to Ohio costs workers a day on the job

At the end of last week, President Barack Obama visited Ohio to continue to sell the “stimulus” bill, which passed Congress in February 2009. The visit cost workers at a children’s hospital a day without pay presumably because of security reasons.

When will this guy stop campaigning?

Poll shows economists doubt impact of stimulus spending

Back in February, President Barack Obama told reporters that “every economist, from the left and the right, has said, because of the Recovery Act, what we’ve started to see is at least a couple of  million jobs that have either been created or would have been lost.” Of course, that wasn’t entirely true.

The bad news for President Obama is that more economists are doubting the impact of the Keynesian-style “stimulus” spending passed by Congress:

In latest quarterly survey by the National Association for Business Economics, the index that measures employment showed job growth for the first time in two years — but a majority of respondents felt the fiscal stimulus had no impact.

NABE conducted the study by polling 68 of its members who work in economic roles at private-sector firms. About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House’s Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.

That sentiment is shared for the recently passed $17.7 billion jobs bill that calls for tax breaks for businesses that hire and additional infrastructure spending. More than two-thirds of those polled believe the measure won’t affect payrolls, while 30% expect it to boost hiring “moderately.”

Quick Thoughts on Chartalism

Chances are that you’ve never heard of chartalism (unless you arrived here because you Googled the word). I’ve been reading an increasing number of articles which argue certain points which are central to the economic theory of chartalism. This theory is centrally focused on characteristics of a fiat currency regime. The basic assumptions and conclusions are sounds although I have not studied it enough to have a fully informed opinion. Further, I disagree on principle with some conclusions on the surface level.

So what is it all about? Basically, the chartalists suggest that the state issues fiat currency via government spending and recoups (destroys) the money via taxation. Thus, fiat issue is no more than printing money and, if the government did not do so, there would be no money for citizens. This extends to a conclusion that the private sector cannot save money unless the government runs a deficit. This is further shown by using simple algebra with the formula for GDP. This reinforces the argument of the adherents.

I see a few basic flaws in this theory. First, if there were no fiat money, that would not destroy economic activity. There would be, at a minimum, barter activity. Second, it seems to ignore debt (or at least under-appreciate its role like most all schools of economic thought). Since private banks issue credit, the state is not the only entity which can issue currency (depending on one’s definition).

Why “stimulus” doesn’t work

John Stossel explains the broken window fallacy:

Barack Obama: Believer in Free Markets? (cue the laughter)

Hoping to deflect accusations that he is a socialist, President Barack Obama told reporters that he believes in the free market:

Speaking to the Business Roundtable, which groups some of the country’s top chief executives, Obama called for support of his administration’s efforts to overhaul financial regulation and create jobs.

Obama’s remarks were set against a backdrop of unease in the business community about his economic and budget policies as well as his legislative drive for healthcare, energy and financial regulatory reform.

“Contrary to the claims of some of my critics, I am an ardent believer in the free market,” Obama said in prepared remarks.

Obama said his efforts to enact sweeping legislation to overhaul financial regulations and set caps on carbon emissions to fight climate change were not aimed at thwarting businesses.

“We have arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of ‘government takeover’ or even ‘socialism’,” Obama said.

Poll: 6% of Americans believe “stimulus” created jobs, 7% believe Elvis is alive

A CBS News/New York Times poll released a few days ago, before the one-year anniversary of the passage of the so-called “stimulus” bill, shows that only 6 percent of repondents believe Keynesian-style spending has “created” jobs.

The public should be skeptical. Despite the Obama Administration’s claims that a drepression was averted, a ridiculous assertion, we were told that unemployment would remain around 8 percent. We were told that without this deficit spending, which has had no measurable impact on the economy, unemployment would surpass 9 percent. Unemployment surpassed 10 percent with stimulus spending.

Comparing this to some other polls, Rob at Say Anything points out that back in 2006 a third of respondents to a Scripps Howard believed that 9/11 was an inside job. On the 25th anniversary of Elvis Presley’s death, 7 percent of respondents to a CBS News poll believed he was still living.

Taxpayers aren’t buying it.


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