1) What if I'm not particularly confident that a Keynesian stimulus will do anything for the economy? Or for that matter, confident that macroeconomists know what they're doing? Am I allowed to complain about it then? (And point out that it looks to me as if politicians are using a 'stimulus package' as an excuse to do what they wanted to do anyway, just like Bush did with his tax cuts back a year or two ago.) I confess that my understanding of Keynesian economics is not perfect, but I find myself highly skeptical of its proposed policies.
2) Just because the government is spending so-and-so much money on something that could be useful doesn't mean that that money will not be wasted. OK, so they're planning on spending $500 million on flood-reduction projects on the Mississippi. My post-facto evaluation of whether that spending is wasteful or not would start with calculating how much flood damage that spending will prevent
( ... )
It's better for her if she simply gets a check, but in terms of the economy, it doesn't matter.
Huh? Do you have an alternate conception of the economy in which the 'economy' is independent of the outcomes of the people that make up the economy? She is worse off by $15,000, nobody else is better off, ergo the economy as a whole is worse off by $15,000.
And the people who sell the TV that she would have bought if she hadn't have had to buy child care are worse off by exactly the same amount. Shifts in her spending patterns don't change the accounting.
And before you retort that if she would have just socked the money away in the bank, there's no loser, let me point out that saving the money increases the money supply for borrowing, bidding down the interest rate, inducing other consumption in the economy (which, at a fixed money supply, will turn into $15,000 spending somewhere else).
I'm going to back up here and state what I see as some fundamental definitions/assumptions (laws?) concerning the economy. Somewhere in here there's got to be a fundamental assumption I'm making that you disagree with, because I don't understand how it can possibly be "good" to pay for hand-copied encyclopedias in order to "stimulate the economy." So please tell me what part of the following you disagree with
( ... )
Brett and I have sort of come to the conclusion that it's because "there exist people who want a job badly enough that the value of their leisure time to them is negative as long as they don't have a job."
As I said somewhere... else (gah, this is a long thread), this economic analysis doesn't apply all the time. Under good economic circumstances, it's idiotic to have the government make useless work. It's also idiotic to provide tax cuts during that time, though it's more idiotic to have them do useless work.
In these economic conditions, when the unemployment rate is high, it's possible to increase the net value of the economy by turning a negative value into zero - which can be accomplished with a useless job or a tax cut. Is it better to turn a negative value into a positive one? Of course. That's why productive work is best to stimulate the economy.
I'm not sure about your accounting here. First of all, if the recession gets bad enough, there are going to be people whose days are spent (almost) literally doing nothing but sitting around and sending out resumes looking for *any* job. They might be willing to take pretty much anything that would pay for its own commute costs and provide health insurance, but if the economy in the area is doing badly enough then there might simply be no job to be had. In this case, as long as there is *some* nonzero productive worth from a government job, then isn't it worth it all around to provide such a job? I mean, I guess one could argue that if there's a bunch of people in a given geographical area capable of working who have no work to do then they should found their own business or move or something. But the problem with the former is that it's simply impractical for many people and the problem with the latter is that we live in family groups and moving each time one of the family loses their job is extremely inefficient
( ... )
I'm confused, I think - you're saying that if someone is doing unproductive work (whether spending time with kids, or doing the hokey pokey), the person's enjoyment of that work affects the economy?
Spending time with her kids isn't unproductive as I've stated the scenario! It produces $15,000 worth of enjoyment for her, as measured by how much she'd have to get paid to do something else. The loss to the economy comes from turning that $15,000 worth of enjoyable time with her children into $0 worth of tedious time doing the hokey pokey (or copying encyclopedias, or whatever).
I'm just starting out in the world, and I love to play video games. According to me, my time playing video games is worth $35K/year. I get a job offer of $40K to copy encyclopedias, something that I feel has no worth, other than my obtaining $40K.
1) What if I'm not particularly confident that a Keynesian stimulus will do anything for the economy? Or for that matter, confident that macroeconomists know what they're doing? Am I allowed to complain about it then? (And point out that it looks to me as if politicians are using a 'stimulus package' as an excuse to do what they wanted to do anyway, just like Bush did with his tax cuts back a year or two ago.) I confess that my understanding of Keynesian economics is not perfect, but I find myself highly skeptical of its proposed policies.
2) Just because the government is spending so-and-so much money on something that could be useful doesn't mean that that money will not be wasted. OK, so they're planning on spending $500 million on flood-reduction projects on the Mississippi. My post-facto evaluation of whether that spending is wasteful or not would start with calculating how much flood damage that spending will prevent ( ... )
Reply
Huh? Do you have an alternate conception of the economy in which the 'economy' is independent of the outcomes of the people that make up the economy? She is worse off by $15,000, nobody else is better off, ergo the economy as a whole is worse off by $15,000.
Reply
The people who take care of her kids are better off by $15,000.
Reply
Reply
Reply
No, I don't, and no, it isn't. Turning valuable labor and resources into nothing destroys wealth, and that makes the economy poorer.
Reply
Reply
As I said somewhere... else (gah, this is a long thread), this economic analysis doesn't apply all the time. Under good economic circumstances, it's idiotic to have the government make useless work. It's also idiotic to provide tax cuts during that time, though it's more idiotic to have them do useless work.
In these economic conditions, when the unemployment rate is high, it's possible to increase the net value of the economy by turning a negative value into zero - which can be accomplished with a useless job or a tax cut. Is it better to turn a negative value into a positive one? Of course. That's why productive work is best to stimulate the economy.
Reply
Reply
Reply
Reply
Reply
I'm just starting out in the world, and I love to play video games. According to me, my time playing video games is worth $35K/year. I get a job offer of $40K to copy encyclopedias, something that I feel has no worth, other than my obtaining $40K.
Is the net gain in the economy really only $5K?
Reply
Reply
Reply
My time playing video games is worth $14 trillion dollars!
I only make $40K copying encyclopedias. Net gain in the economy is roughly -$14T.
Whoops.
Reply
Leave a comment