Krugman: Obama Didn’t Spend Enough
Tags: Obama Depression.
Click here to get Caucus of Corruption: The Truth About The New Democratic Majority by Matt Margolis and Mark Noonan.
Liberals seemed determined on suicide:
Thus the stimulus bill fell far short of what many economists — including some in the administration itself — considered appropriate. According to The New Yorker, Christina Romer, the chairwoman of the president’s Council of Economic Advisers, estimated that a package of more than $1.2 trillion was justified.
Meanwhile, the administration balked at proposals to put large amounts of additional capital into banks, which would probably have required temporary nationalization of the weakest institutions…
We didn’t give enough money to the UAW, banks and State governments to cover their budget shortfalls – so goes liberal “thinking”. Two things about this:
1. If the Donks lose next year and Obama in 2012, the left will say the same thing they say about Carter in 1981: He lost because he wasn’t liberal enough.
2. Liberals are impervious to facts.
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27 Responses to “Krugman: Obama Didn’t Spend Enough”
Caucus of Corruption
Your thought process:
1- The stimulus package was not cost-effective.
2- One guy thinks that it should have spent more
3- That guy is a liberal
4- Therefore all liberals must think that the stimulus should have spent more
5- This viewpoint is crazy
6- Therefore, all liberals are crazy.
I only agree with points 1 and 2.
And 3, sorry.
“1. If the Donks lose next year and Obama in 2012, the left will say the same thing they say about Carter in 1981: He lost because he wasn’t liberal enough.”
How is that different from those on the right who say McCain lost because he wasn’t conservative enough, or that Bush was too liberal?
With regard to 2, as Krugman points out, many economists were of the same opinion. Many of those could reasonably be considered liberal (at least more or less). Others, not so much. Martin Feldstein is a case in point. Then again, to a doctrinaire conservative, anyone who is not also a doctrinaire conservative is a liberal.
I also disagree with Mark’s conclusion that there are facts available to indicate otherwise. Since another scenario didn’t happen, facts are unobtainable, for or against. The best that can be done is to try to draw parallels to what one believes are somewhat similar situations, and extrapolate to the present. But that procedure, while perhaps valuable, should not be confused with facts.
In addenda, I do agree with Mark’s point 1 though: if the Donks lose next year (especially in big numbers), they are almost certain to say they lost because Obama wasn’t liberal enough. But while I think that’s almost certain to happen, it wouldn’t necessarily be right — for the same reasons outlined in my previous comment.
ricorun,
Nonsense – we on our side predicted precisely what has happened: massive spending leading to bogus GDP growth accompanied with massive job losses and a continually declining economic base.
fr00tn00b,
Find me a liberal who:
1. Advocated spending less.
2. Now advocates tax and spending cuts.
3. Thinks Obama is being too liberal.
Mark: Nonsense – we on our side predicted precisely what has happened…
Apparently you haven’t been reading what Krugman, Feldstein, and a variety of others have been saying. Broadly speaking, they predicted the very same thing, albeit for very different reasons. Likewise, their prescription for what to do in the future is very different than yours (and presumably, “your side”, whatever that means). So who is right? The trouble is, there are precious few facts, whose interpretations are indisputable, to guide us. Rather, one has to rely on theory and extrapolation of past facts from perceived similar situations. That’s the point I’m trying to make.
And given that reality, why you think the conclusion is somehow set in stone is a mystery to me. Maybe it’s my inability to explain the situation clearly. Maybe it’s your inability to understand it. Or maybe it’s a combination of both. But none of the three changes the facts — or more to the point, the lack of them (along with the lack of certainty in interpreting them in new situations). Frankly, I constantly “marvel” at your (and others — it’s not just you by any means) ability to assert certainty in various situations when it’s clearly apparent that in most of them your initial assumptions don’t make sense.
Ricorun,
Are you kidding me? The data we have over the past 75 years entirely support my position – its as sure as night follows day that Obama’s plans will fail…and if we Krugmanize the plans, they’ll fail even worse. This isn’t a guess – everyone who has taken a dispassionate look at the past 75 years knows this.
Mark: Are you kidding me?
Unfortunately no, I’m not. And it’s pretty obvious that there is no such thing as a completely “dispassionate look at the past 75 years”. At best, that’s something which can only be approached as a limit. That’s the good news. The bad news is, even the experts are nowhere close. Incidentally, Krugman has addressed that issue recently. I’m not saying I necessarily agree with him beyond his general point (too much of a reliance on “simple” theory without realizing that, just perhaps, their theories didn’t map well onto reality). Other than that, I’m still thinking about what he said.
Ricorun,
That you refuse to look at the data because it discomforts you is your own problem, not mine. I’m not guessing: I know.
Mark: I’m not guessing: I know.
I’m sure you think you do. But that’s precisely the attitude I’m talking about. At any rate, it’s nice to know that, at least in your case, it’s not so much my inability to explain my argument, it’s your inability to transcend the limitations of your own. In other words, you are doing nothing more than appealing to authority — i.e., “I feel I am right (or someone I respect is right), therefore I (and they) must be right.
OT a bit, but once again I suggest that at least one semester in Logic should be required in every secondary school curriculum.
ricorun,
Nice link. Well worth reading and thinking about.
Mark,
What data have you examined that has lead to your conclusion?
I found the following comment from Rico’s Krugman link both a stunning admission, while, at the same time, not all that surprising:
I saw this crisis coming during the winter of 2006/07, and I’m neither an economist nor all that smart. Several years ago I kept a journal for around 6 months, IIRC, recording economic data such as unemployment, corporate profits, consumer price index, etc., from financial articles both in our local newspaper and from on-line financial sites like the Wall Street Journal and MarketWatch. The number of articles where it was stated that such and such a result surprised the majority of economists was about triple the number of articles where results matched or closely approximated predictions. Even the weatherman does better than that.
Casper,
All of it. I suggest you start with 1928 and read everything you can about our economic history since then. But please add the one thing that everyone has missed: the Depression started because of the lack of consumption occasioned by the fact that 20 million consumers, who would have been at the height of their life-time consumption, were killed ten years previously.
That blew a hole in the economy which could not really be filled – though easy credit managed to make it seem like it had been…but if one pays attention to the fact that Britain actually entered the Depression years before America and that things like America’s agricultural business was in dire straights long before 1929, it starts to become clear. And amazes me that everyone missed it.
Pretty much, all we’ve done since then is borrow and spend and pretend we’re getting wealthier. It hasn’t worked – it was masked from 1945 until 1975 by the fact that the US emerged from WWII as the only major industrial power not either bankrupt or literally blown to pieces; it has been partially masked since 1975 by the creation of massive amounts of consumer debt…but, its all gone wrong, now, and it can’t be fixed save by the creation of new wealth.
“Find me a Liberal who:
1. Advocated spending less.”
Less on what? Iraq?
“its all gone wrong, now, and it can’t be fixed save by the creation of new wealth.”
-Mark
Is wealth created or just transferred? If someone is selling, someone must be buying. Where is the creation?
cam,
When Obama says “spread the wealth around” what he really means is “spread the money around”…but money isn’t wealth. Money is just a convenience. Wealth is land, materials, labor and skills. You could drop a trillion dollars in cash on the poorest section of our poorest city and you wouldn’t have created even a penny of wealth, nor would you have spread any wealth around…unless you parachuted in the tools and skills necessary for wealth creation, all you would have done is give the citizens of that area a couple good years.
We have actually been quite diligently destroying our wealth – and at an accelerating pace over the past 30 years. We send our factories to China, as we all know, but we are also sending our mines to Chile and our farms to Mexico. Consumption is 70% of our GDP and no one bats an eye – consumption should be 50% or less of our GDP.
We’re going to have to go back to where we left off in 1929 and start all over again.
Is wealth created or just transferred? If someone is selling, someone must be buying. Where is the creation?
Cam, you said more about yourself with those three sentences than everything you’ve ever written.
Mark,
I have read a lot about economic history since 1929. I’ve also read a lot about economic history before 1929. Let’s just say I’ve come to some different conclusions than you have, but then so have a lot of other people.
While i agree with you that our economy is very messed up right now, I certainly don’t want to go back to 1929. For one thing, we can’t. The world has changed considerably since then. The world economy is much more connected than it was then. We can’t go back.
casper,
And yet, we must – we must return to sound money and making, mining and growing our own stuff. There’s really no other way.
Spook: I saw this crisis coming during the winter of 2006/07, and I’m neither an economist nor all that smart.
Good thing you weren’t in real estate. Because if you were, by then you’d have taken a real bath. I was, but fortunately I got out much earlier in late 2005, early 2006 — when long-term and short-term interest rates inverted. That to me was an important harbinger. There were others, but that was the biggie.
I dodged that bullet pretty well. In the ensuing months I took a lot of grief from various friends for putting so much money into bonds (tax exempt, in-state munis, to be exact). I did that for two connected reasons: 1) the AMT was a real concern for me (thus, investing in in-state munis offered a pay-off considerably beyond the modest interest rates the bonds paid (because of tax considerations) even if I was wrong about the stock market) and 2) I didn’t have much faith in the stock market — certainly not enough to counteract my concern about 1). That turned out to be prescient as well. But to be perfectly honest, I can’t really say I foresaw a total economic meltdown. But hey, I guess I could say I did, because there isn’t much I would have done all that differently if I had, lol!
Anyway, it should be understood that Krugman was one of the few economists that really did predict the present economic meltdown well before it happened — as well as the Asian economic collapse more than a decade before.
Mark,
I agree with you to a point. We need to start by producing our own energy. Personally, I’m partial to wind, solar, natural gas, and nuclear energy. We need to be get away from oil as much as possible. We need to invest in infrastructure. Transportation and the energy to start with. And we need to be regulating the banking industry a lot more.
casper,
We need mines, farms, factories, nuclear power plants, oil refineries, high speed trains, improved merchant ships, better port facilities…as it turns out, I’m reading a history of the construction of the Panama Canal…and I’m wondering if we could pull such a thing off these days…
Mark Noonan says:
November 7th, 2009 at 9:05 pm
“casper,
We need mines, farms, factories, nuclear power plants, oil refineries, high speed trains, improved merchant ships, better port facilities”
I agree, but where does the money come from to pay for it?
casper,
Get out of the habit of thinking in terms of money – our money is worthless.
We have, at this very moment, large needs for our people which are not being met out of our own resources – that is what we need to do: start making, mining and growing more of the things we’re using right now. This doesn’t require any significant investment of new wealth because we have slack capacity in mining, manufacturing and farming…once we’ve made a bit more wealth, then we’ll have to wealth to invest in actual expansions of mining, farming and manufacturing.
Mark,
“Get out of the habit of thinking in terms of money – our money is worthless.”
I’d be more than happy to take some of that worthless money off your hands if you want. LOL
Mining, farming and manufacturing all require labor. That requires money for pay. Where is that money going to come from?