Krugman: GOP Austerity Causing Unemployment

[Sundial]

'With this 868 BILLION borrowed and spent taxpayer dollars--unemployment with remain below 8.2%--and it will create millions of private sector jobs"--Barack Obama

You need to work on your fake Obama quotes. That's pathetic.

 

[Sundial]

You still haven't explained what wealth the government produces.

I have. You're just not listening.

 

[Big Fitz]

I have one question. Since no cuts and "austerity" programs have yet been passed or made...

... WHAT Austerity could be causing unemployment?

 

[Oldstyle]

I have one question. Since no cuts and "austerity" programs have yet been passed or made...

... WHAT Austerity could be causing unemployment?

Couldn't have put it better myself, Fitz.

I can only assume that the board's progressives believe that a "promise" to cut spending is the same as already having done so.

 

[Quantum Windbag]

Actually it's closer to 20%. And government doesn't consume GDP, it creates it. And the average government worker creates value not just for himself, but for everyone who benefits from his services - whether they're students, drivers, people who just enjoy living in a free, democratic country.

So, pretty much everything you said was wrong.

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

The government creates GDP by doing things like building roads, educating children, and defending the country.

Every dollar anybody ever spends comes from somewhere else. That has nothing to do with anything.

Every expense is also income. If you pay anyone anything it's an expense to you, and income to someone else.

When somebody says such-and-such "consumes" X% of GDP, they're simultaneously it produces that same percent.

Two of those things do not contribute to GDP, the other is incidental, it does not add any real value to anything, it just makes it easier to move things around.

Every dollar spent comes from somewhere else because dollars are a government imposed fiction to control trade. They have no value themselves, and do not contribute to GDP. Why did you even mention them?

Every expense is not an income to someone else. If a tornado comes along and wipes put your business and you elect not to rebuild that is still an expense on your part, with no corresponding income to anyone. That is an extreme example to make the point that the world is not a simple place, and economics is not a zero sum game.

It is possible to create wealth without making other people pay for it, which is where real increases in GDP come from, The government cannot create wealth, which is why it is a net loss on the economy. No matter how hard it tries it will not spend as much money as it sucks out of the economy. The ROI on your taxes is a negative number.

Some government expenses are good for the economy, the roads you mentioned earlier are an example of good government spending. The problem is that the government has managed to increase its own costs of doing business to the point that even the boost we get from infrastructure spending is negligible.

 

[Quantum Windbag]

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

That's not quite correct.

In the Keynesian model, government supports private spending because the private sector is not spending. Keynes argued that recessions were often due to a lack of demand, so when a recession hit and private demand pulled back, government demand should increase to offset the lack of private demand.

In the national accounting function, G is consumption as well as investment. It is a net positive. The argument against Keynesian spending is that as G rises, C and I declines. Keynes supporters argue otherwise.

Private sector production would fall if the government were taking resources from the private sector the private sector would otherwise use. If the private sector isn't using those resources then the government isn't taking them away. It's using resources that would otherwise go to waste.

That almost makes sense, and I actually enjoyed reading Krugman's oped about this. The problem I see is that he is ignoring the fact that government policy got us into the mess, and now he wants the government to try and spend us out of the mess.

One of the reasons private sector resources are tied up is because the government has devalued the dollar to the point where commodities are increasing in prices. This has resulted in an artificial bubble that is propping up some economies that should have collapsed already, Argentina is an example. It has also resulted in the private sector being unwilling to invest.

Krugman thinks that the answer, since monetary policy is already at the point where nothing can be done to encourage private sector investment, is to effective seize those assets and let the government spend them instead. I can tell you read his column because you are spouting some of the same terms he used.

I do not think the solution is to break windows in order to force money to start circulating, I think it is to actually take his advice and do something that does not make sense, tighten up the money supply so dollars are worth more. This will drive down the costs of commodities, and even of luxury import goods.

Look at that, I actually think Krugman has a point about the problem, he just, as always, thinks the solution is to drain money from the private sector. I think it is best to leave it in the private sector, just like Warren Buffet does, which is why he never invests in the government.

 

[Quantum Windbag]

I have one question. Since no cuts and "austerity" programs have yet been passed or made...

... WHAT Austerity could be causing unemployment?

Shhh.

 

[Quantum Windbag]

I have one question. Since no cuts and "austerity" programs have yet been passed or made...

... WHAT Austerity could be causing unemployment?

Couldn't have put it better myself, Fitz.

I can only assume that the board's progressives believe that a "promise" to cut spending is the same as already having done so.

That might explain it. It would certainly explain why they think Obama kept his promise to cut the deficit in half by the end of his first term.

 

[Political Junky]

Yea Socialists/Progressives are all out of answers. Krugman is a dunce. Why don't they try 'Austerity' first before declaring it a failure? They spent $16 Trillion more than they took in. That's the opposite of 'Austerity' for God's sake. WTF is wrong with Krugman? Try it first then slam it if it doesn't work. Till then,Krugman and all Socialists/Progressives are full of sheet.

That's why people study economics, it beats trusting your gut.

 

[Sundial]

How does the government create GDP? Keynesian theory treats private sector and public sector spending separately because the private sector spending supports public sector spending. Every dollar the government spends comes from the private sector, the government does not create GDP.

This can be clearly seen if we use the production method to determine GDP, government actually figures in as an expense in this model. If we use GDP(I) government subsidies actually factor in as a negative.

The government creates GDP by doing things like building roads, educating children, and defending the country.

Every dollar anybody ever spends comes from somewhere else. That has nothing to do with anything.

Every expense is also income. If you pay anyone anything it's an expense to you, and income to someone else.

When somebody says such-and-such "consumes" X% of GDP, they're simultaneously it produces that same percent.

Two of those things do not contribute to GDP, the other is incidental, it does not add any real value to anything, it just makes it easier to move things around.

Every dollar spent comes from somewhere else because dollars are a government imposed fiction to control trade. They have no value themselves, and do not contribute to GDP. Why did you even mention them?

Every expense is not an income to someone else. If a tornado comes along and wipes put your business and you elect not to rebuild that is still an expense on your part, with no corresponding income to anyone. That is an extreme example to make the point that the world is not a simple place, and economics is not a zero sum game.

It is possible to create wealth without making other people pay for it, which is where real increases in GDP come from, The government cannot create wealth, which is why it is a net loss on the economy. No matter how hard it tries it will not spend as much money as it sucks out of the economy. The ROI on your taxes is a negative number.

Some government expenses are good for the economy, the roads you mentioned earlier are an example of good government spending. The problem is that the government has managed to increase its own costs of doing business to the point that even the boost we get from infrastructure spending is negligible.

Yes, dollars are a government imposed fiction. They don't "control" trade, though, they make it more efficient. That's one of their great advantages. Providing dollars is one of the most important functions government performs.

Expenses and losses are not the same thing. A disaster is a loss. Rebuilding is an expense.

GDP creates wealth, but wealth is not GDP. Suppose a country built everything it needed, and everyone retired. Its GDP would be zero, even though everyone in the country was rich. If, on the other hand, everything was destroyed, the people would be poor, but GDP would rise, once they started to rebuild. GDP is work, measured in dollars. It is not wealth, and it's not dollars.

It is possible to create wealth, without paying anyone. For example, if you raise your child, you contribute nothing to GDP, but if you pay someone else to do it, GDP goes up. That's one of the long-standing criticisms of GDP.

The government creates money by spending, and destroys money by taxing. When there's not enough money, the government should spend more and tax less. When there's too much, the government should tax more and spend less. The government sucks money out of the economy only when it taxes more than it spends.

Think of it this way: Suppose everyone paid their taxes in cash, and bales of dollars showed up on the steps of IRS buildings throughout the country. Suppose the government paid for everything with cash, and mailed all the cash from Washington DC.

Should the government gather up all those old dollars, put them on planes, and fly them to DC? Or would it make more sense to shred them, and print new ones?

What difference would it make?

 

[California Girl]

If government spending is necessary to sustain the recovery, is it crazy to pursuing cuts in spending now, while unemployment is still about 9%?

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

Where the fuck do you think Big Daddy gets the money to pay those bureaucrats, numbnutz?

And that is what the left struggles to understand. Every one of those jobs that they are 'creating' are costing the economy money..... Europe tried that approach. Greece, Spain, Ireland, the UK. And look at the price they are paying. All they did was delay the inevitable. And now, their austerity is worse than it would have been if it had not been for an overblown public sector.

This is not rocket science.

 

[bripat9643]

You still haven't explained what wealth the government produces.

I have. You're just not listening.

Yes, I am listening. All you did is whine that Social Security is a transfer payment.

What kind of "wealth" does the EPA produce? Dept of Agriculture? NLRB?

 

[bripat9643]

The government creates GDP by doing things like building roads, educating children, and defending the country.

Every dollar anybody ever spends comes from somewhere else. That has nothing to do with anything.

Every expense is also income. If you pay anyone anything it's an expense to you, and income to someone else.

When somebody says such-and-such "consumes" X% of GDP, they're simultaneously it produces that same percent.

No they aren't. People on Social Security aren't producing jack squat. Neither are Medicare recipients, Welfare Queens, etc. When I go to Lowes and buy a lawn tractor, I have received something in exchange for my "expense." When I pay my FICA taxes, I receive nothing.


Furthermore, the government doesn't educate children. It merely warehouses them and indoctrinates them. Now one would pay for the "education" the government provides voluntarily - which means its worthless. It's like calling drilling a hole in your head a "service."

 

[PeteEU]

Conservatives don't want to believe this, but if the government fires people that means more people unemployed.

Hard to believe, I know.

Where the fuck do you think Big Daddy gets the money to pay those bureaucrats, numbnutz?

And that is what the left struggles to understand. Every one of those jobs that they are 'creating' are costing the economy money..... Europe tried that approach. Greece, Spain, Ireland, the UK. And look at the price they are paying. All they did was delay the inevitable. And now, their austerity is worse than it would have been if it had not been for an overblown public sector.

And what the right fails to understand is the situation in Europe and the economy in general.

Define an "overblown public sector". And yes Europeans want UHC and a social safety net and are willing to pay for it.

The European issues are different from country to country. For example, Ireland it is massive personal debt after years of American inspired over spending. Greece it is state debt. UK it is denial, personal and public debt. France it is pension systems, Italy it is a political system, Germany it is also in part the pension systems. Spain it is unemployment due to a building boom crash.

This is not rocket science.

Actually it seems it is for most conservatives in the US these days. They fail to understand that massive austerity measures in a problematic economy will cause massive economic problems... sadly it seems the conservatives in the US failed to learn from history.

 

[NYcarbineer]

I have one question. Since no cuts and "austerity" programs have yet been passed or made...

... WHAT Austerity could be causing unemployment?

Local governments have lost 550,000 jobs since September 2008. For starters. That doesn't include private sector jobs lost when governments cut back on purchasing goods and services.

That was Krugman's point.

You conservatives should be happy. Mass unemployment in the area of jobs directly or indirectly connected to government spending is what you people want,

isn't it?

 

[PeteEU]

We must stop spending and taxing the living hell out of everything.

Huh? Spending dropped from 2009 to 2010. We see spending dropping more now in 2011. All while taxes are at historic lows.

You're either a liar or willfully stupid.

The President's (non-existent) budget for 2009 totals $3.1 trillion.

2009 United States federal budget - Wikipedia, the free encyclopedia

The President's budget request for 2010 totals $3.55 trillion.

2010 United States federal budget - Wikipedia, the free encyclopedia

Have you tried to compensate for inflation?

 

[bripat9643]

Private sector production would fall if the government were taking resources from the private sector the private sector would otherwise use.

It has. Our GDP is much lower than it would be if the government hadn't sucked up so much of our wealth.

If the private sector isn't using those resources then the government isn't taking them away. It's using resources that would otherwise go to waste.

the "resources" you refer to are the working lives of millions of Americans. Working for themselves rather than slaving away for the benefit of the millions of tics and hangers-on of this fascist regime is hardly a "waste." Just ask them. I'm sure almost everyone believes they could put the 50% of their income they send to the government to good use if they were allowed to keep it.

 

[bripat9643]

Cool.

Then you are okay with government cutting off it's addiction to the miltary industrial complex.

A little radical..but it's for the best.

I didn't say that. Military spending is necessary, but it still hurts the economy.

 

[NYcarbineer]

You still haven't explained what wealth the government produces.

I have. You're just not listening.

Yes, I am listening. All you did is whine that Social Security is a transfer payment.

What kind of "wealth" does the EPA produce? Dept of Agriculture? NLRB?

What wealth does the defense department produce?

 

[NYcarbineer]

Cool.

Then you are okay with government cutting off it's addiction to the miltary industrial complex.

A little radical..but it's for the best.

I didn't say that. Military spending is necessary, but it still hurts the economy.

All military spending is necessary?