Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Liberalism: Do You Agree We've Had Enough of It? -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (64489)	5/6/2009 3:48:48 PM
From: TimF	2 Recommendations Respond to of 224751

We still benefit from many of the things the CCC did what some 80 years ago! And those are the things people notice and remember, to a greater extent than the things that were not worth the cost, or where worthless, or even things that were net negatives before considering the budgetary cost. As Bastiat pointed out we have to look at both the seen and the unseen. Some people where employed because of the CCC programs who would not have been otherwise. Others where employed in CCC when they would have had more useful employment elsewhere. Others where unemployed BECAUSE of CCC. CCC clearly produced jobs in a gross sense, but its not so clear that it did so in a net sense, or that if it did do so in the short run, that the cost (budgetary cost, opportunity costs of the resources used, costs in terms of delaying adjustments in the economy etc.) per short term net job gained wasn't enormous. Tim, you make the choice - have some compassion for those less fortunate than you Pointing out that a program may not be beneficial has nothing to do with a lack of compassion. Compassion motivates the desire to have things be better for the less fortunate. But having that desire isn't the same as supporting programs because they claim to help the less fortunate. Compassion can be a motivation for particular goals, but it doesn't provide a method to determine if various ideas will actually be useful at meeting those goals, or if the cost to meet the goal through the program might not be greater than the benefits. I don't want to live in a lawless society because the economy is so bad You seem to consider the idea that Obama's measures might make things better, or that they might fail to do so, leaving it about as bad as it otherwise would be, but those aren't the only two possibilities. What if these measures make the economy worse, and so perhaps drive us closer to a lawless society?

To: Steve Lokness who wrote (64489)	5/6/2009 3:51:54 PM
From: TimF	2 Recommendations Read Replies (2) \| Respond to of 224751

I think this commenter states his case in slightly too strong of terms but I agree with some of his themes, and their relevant to the issues you raise. ------------------- Lee Kelly Says: May 5, 2009 at 9:44 pm Attempting to stimulate the economy with monetary and fiscal policy is hubris. Money enters the economy at a particular location; industries that receive money first will benefit disproportionately, that is, inflation will not stimulate the use of resources uniformly. However, the flow of additional resources to the stimulated industry is unsustainable. Once the distortions created by the stimulus are removed, prices will adjust and resources reallocated. Stimulating businesses to continue employing capital, which they should never have received, will not solve the underlying co-ordination problem. Instead, a stimulus will prolong a recession, since it will prevent the capital reformation necessary to put the economy back upon a sustainable development path. Although it is not mistaken to link recessions to a fall in aggregate demand, one has to consider why demand would fall in the first place. The simple answer is that resources have been squandered on goods and services which people do not want. In particular, many homes were built which buyers had no intention of ever living in or renting out. Before the bubble burst, that is, before the economy was exhausted of speculators, demand was sufficient to make such homes appear sensible investments, but only because the bubble created a temporary illusion of wealth. Once reality began to assert itself, many people realised that their spending was too loose. They bought stuff which they never would have if they understood the true value of their assets. Aggregate demand was too high–-artificially inflated from the last round of monetary and fiscal stimulus. The solution is not to stimulate aggregate demand more, but let it fall until prices reflect the real misallocation of resources that occurred during the bubble. Resources can then be redeployed to creating goods and services that people actually want to buy. Monetary and fiscal stimuli might increase spending, but at the expense of misallocating resources in the long run. One important function of prices is to prevent the reallocation of resources when the prevailing allocation is more valued, but inflation subverts this function and allows industries which receive the stimuli to draw resources from other uses toward themselves. When a recession begins, prices will begin to fall, but not all prices will fall proportionately. Some prices may fall a lot, others not at all, and others may even rise. There is not only a change in aggregate spending, but also in the composition of spending. It is foolish to believe that central bankers or politicians can competently weild monetary or fiscal policy. Which prices should go up, and by how much? What if the “idle resources” or “unemployed factors” are misallocated? Are not such actions in danger of setting up the next bubble, and subsequent collapse? Ultimately, stimuli amount to nothing more or less than trying to centrally plan the economy, albeit by different, and less direct, means than usual. thinkmarkets.wordpress.com