One of the disengenuous tactics of the Democrats in support of Porkulus was to imply that conservative economists agreed with it, and in fact they actually lie about this. For instance, the other day, I heard Governor Rendell defending Arlen Spector’s vote on it by saying that. But what conservative economists agreed on was that some sort of stimulus was needed, not that legislative atrocity. One of the economists slandered thus was Martin Feldstein, who has a piece in the Journal today on the potentially disastrous effects of upcoming tax cutsincreases on the economy.
The current outlook for an economic recovery remains precarious. Although the stimulus package will give a temporary boost to growth in the current quarter, it will not be enough to offset the combined effect of lower consumer spending, the decline in residential construction, the weakness of exports, the limited availability of bank credit and the downward spiral of house prices. A sustained economic upturn is far from a sure thing. This is no time for tax increases that will reduce spending by households and businesses.
As Tigerhawk notes, “You cannot spread wealth that hasn’t bee created in the first place.” But so-called liberals think that wealth is something that just happens, and that all that need be done is to properly distribute it.
potentially disastrous effects of upcoming tax cuts
I think you mean “tax increases”. Specifically, Feldstein talks about cap and trade, letting the Bush rate cuts expire for incomes over $250k, and taxing foreign-source income.
Although the stimulus package will give a temporary boost to growth in the current quarter, it will not be enough….
Sounds like support for ARRA, and an argument for ARRA II.
I think you mean “tax increases”.
Fixed, thanks.
Sounds like support for ARRA, and an argument for ARRA II.
Only to a blind supporter of ARRA. What it sounds like to me is support for a different stimulus bill that would have actually stimulated and done it soon (that the people voting for it would have at least have had time to read), instead of simply paying off Democrat constituencies for years to come.
Unfortunately, for some people wealth IS something that just happens. Even more unfortunately, for those same people their idea of proper distribution is to buy explosives and guns with it, to kill the infidel.
” think that wealth is something that just happens”
Certainly the Investment bankers think wealth is something that just happens.
If you compared the earnings of Merrill Lynch, in it’s lifetime to the losses of Merrill Lynch, they certainly had lost complete and utter track of what was value added in their operations.
There are very few people who understand genuine wealth creation or we would see far more investment into R&D, far more tax credits and incentives for R&D, Engineering, Manufacturing and durable investment and far fewer incentives for debt, finance, advertising and fluff.
certainly we would see far more incentives for small business instead of the advantages given to large and mega-corporations.
What it sounds like to me is support for a different stimulus bill that would have actually stimulated and done it soon
Look at the quote again. Feldstein says that ARRA “will give a temporary boost to growth in the current quarter”. He is saying that it is actually stimulating, and doing it soon.
Feldstein says that ARRA “will give a temporary boost to growth in the current quarter”. He is saying that it is actually stimulating, and doing it soon.
He didn’t in any way say that it was the best way to do it. Obviously, if you pass the biggest spending bill in US history, it will have some minimal stimulus effect, even if accidentally.
At the College of Engineering here at the “U”, we have a student inventor contest, and I was chatting with students who developed an app for the I-Phone.
One of the perks of the job I have is that I can offer my opinions on a range of topics in such social settings and students will act in a manner as if what I had to say was interesting. Been a student myself.
I was offering the opinion that the WOP-o-meter in the next booth could be offensive to persons of Mediterranean heritage; the students explained that “WOP” was current slang for a potent alcoholic punge served at house parties; I filled the students in that the term had in an earlier generation used as a derisive word for members of an immigrant minority group.
The subject of discussion moved on to the economy and the students expressed the common view among engineers that what engineers do is “real work” in designing, building, and testing things and that the students in the Business School are learning some kind of boojum that will allow them to earn higher pay without doing anything of substance.
Segueing from the ethnic slur meaning of “WOP”, I told the old, old joke about Heaven being something along the lines where “the British are the police, the French are the cooks, the Germans are the engineers . . .” and Hell is where “the British are the cooks, the Germans are the police . . . fill in the blanks . . . and the Italians are the finance people.”
I quickly added that I heard the joke told that way, but it was puzzling why there should be a knock on Italian people with regard to finance because it was the finance people of the Venice Republic and the Medici Bank that resulted in the revolution in finance that eventually financed the Industrial Revolution and brought us to our modern high-tech world.
I am an engineer and know only the rudiments of finance, and yes, I tend to cling to a kind of Marxist Labor Theory of Value or at least an Engineering Content Theory of Value. But where would engineers be if we were in a barter economy? With respect to the new movie, how did the Starship Enterprise get financed that the engineers, designers, and workers could put the thing together?
Yes, the world economy took a big hit and yes the failing is one of those high-paid finance people. I see the economic crisis as being something like the chain of cascading failure that can occur in an electric power grid, and once the grid collapses, it takes an orderly sequence of events to bring it back up. Explanations for the crisis of “overextended in credit” and “Americans (especially) living beyond their means” leave me cold.
How much credit is too much? Well, when you cannot realistically make payments, and also, when you didn’t provide enough margin to provide a “factor of safety.” Begins to sound like engineering to me. So maybe the finance dudes and dudettes were poor engineers, but that is not to say that finance is not a crucial part of our high-tech civilization and that finance does not contribute value.
Thomas Sowell was on Hannity tonight and brillitantly and pithily skewered the notion that the spending bill has done any good for the economy. He pointed out that since lending, investment, output and monetary velocity are all down, the Obama/Congressional spending program is really an economic sedative rather than a stimulus.
What does Tomas Sowell say about the 700 Billion in TARP
that Paulsen blew last year?
Paul, recall an ancient maxim:
If all of us contemplate the infinite instead of fixing the drains, many of us will die of cholera.
Good engineering is necessary to a successful society, and so is good finance and good management and good sales. I’ve been working in a small firm for 7 years now, watched it double in size roughly, mostly by adding sales and marketing people, and I am right glad of it. Those people work hard for their pay, and they do very necessary things for me and my products that I would be very unhappy about doing myself. You can’t just build some new widget and sit back and wait until strangers ring up your phone and ask for it. You’ve got to get it out there in the world, let people know it exists and why they might want to buy it, and someone has to answer all the dumb questions about it newbies ask. That’s what sales people do, and they are invaluable.
Bad salesmanship, and bad finance, and bad advertising are all wasteful and stupid, of course. But so is bad engineering and bad science.
Frankly, more firms and ventures have failed for lack of good management, good finance, and good salesmanship than have ever failed from bad engineering. The tragic story of DEC comes to mind, for example; a company with fantastic tech but crappy management. Then there’s IBM, whose tech is historically mediocre, but who have thrived for a century because, from typewriters to big iron to microcomputers to Java/Linux software, they are sales-driven: they sell what people want, not what seems cool and clever to their top engineers. Worth noting: IBM still employs engineers. DEC does not.
Why don’t you Google it and get back to us on that?
> If you compared the earnings of Merrill Lynch, in it’s lifetime to the losses of Merrill Lynch, they certainly had lost
Is Jack Lee willing to apply his criteria everywhere it applies or is he just looking for an excuse to bash ML?
I ask because, as Warren Buffet points out, the collective profit of airlines is smaller than the investment….
One might argue that airlines are nevertheless a good thing because they provided value to their customers. Besides, no one is entitled to a positive return on their investment, so it’s really none of our biz whether airline investors made money – they were willing to accept the gains so they get to accept the losses.
But then we’d have to ask whether the same applies to ML.
The Taxpayers haven’t had to bail out the airlines. Public sector investment
has been FAA and Airports. ML Has me on the hook for 42 Billion.
> ML Has me on the hook for 42 Billion.
Taxpayers didn’t have to bail out ML either. Our political leaders decided to do that.
I note that Obama has doubled-down on Bush’s strategy. So, if Lee is going to argue that Bush was wrong and Obama is right, he’s arguing that more bailout is better.
If he’s arguing more bail out is better, it’s unclear how he can argue against bailouts.