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Jason Welker

Economic View - A Dose of Skepticism on Government Spending - NYTimes.com - 5 views

www.nytimes.com/...11view.html

shared by Jason Welker on 21 Nov 11 - No Cached
  • the centerpiece is likely to be a huge increase in government spending
  • John Maynard Keynes
  • A main focus was how to avoid, or at least mitigate, the recurring slumps in economic activity.
  • ...17 more annotations...
  • Economic downturns, Mr. Keynes and Mr. Samuelson taught us, occur when the aggregate demand for goods and services is insufficient.
  • Higher consumer spending expands aggregate demand further, raising the G.D.P. yet again. And so on. This positive feedback loop is called the multiplier effect.
  • these Keynesian prescriptions make avoiding depressions seem too easy.
  • each dollar of government spending can increase the nation’s gross domestic product by more than a dollar
  • The solution, they said, was for the government to provide demand when the private sector would not.
  • less than a third of the increase takes the form of private consumption and investment.
  • Professor Ramey estimates that each dollar of government spending increases the G.D.P. by only 1.4 dollars.
  • In practice, however, the multiplier for government spending is not very large
  • If you hire your neighbor for $100 to dig a hole in your backyard and then fill it up, and he hires you to do the same in his yard, the government statisticians report that things are improving.
  • it is unlikely that, having wasted all that time digging and filling, either of you is better off.
  • inefficient spending
  • bridges to nowhere,
  • increase in economic well-being.
  • a rigorous cost-benefit analysis of each government project.
  • To this day, we have yet to come to grips with how to pay for all that the government created during that era
  • a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.
  • tax cuts will be a larger piece of the Obama recovery plan than was previously expected.
Aaron Palm

David Ranson: The Revenue Limits of Tax and Spend - WSJ.com - 0 views

online.wsj.com/...4608104575217870728420184.html

revenue limits tax spend hauser's law

shared by Aaron Palm on 19 May 10 - Cached
  • President Obama's fiscal 2011 budget, the Congressional Budget Office (CBO) estimates a deficit that starts at 10.3% of GDP in 2010. It is projected to narrow as the economy recovers but will still be 5.6% in 2020. As a result the net national debt (debt held by the public) will more than double to 90% by 2020 from 40% in 2008.
  • They do not include deficit spending resulting from the new health-insurance legislation. The revenue numbers rely on increased tax rates beginning next year resulting from the scheduled expiration of the Bush tax cuts. And, as usual, they ignore the unfunded liabilities of social insurance programs,
  • "Hauser's Law," as I call this formula, reveals a kind of capacity ceiling for federal tax receipts at about 19% of GDP.
  • Aaron Palm on 19 May 10
     
    We can never collect more than 20% tax rate
Jason Welker

Life on Severance: Comfort, Then Crisis - WSJ.com - 1 views

online.wsj.com/...SB125780714976639687.html

keynesianism wages recession sticky wages unemployment

shared by Jason Welker on 10 Nov 09 - Cached
  • The family recently vacationed in Virginia Beach, Va., and likes to dine on Porterhouse steaks. Since losing his job, Mr. Joegriner, 44 years old, has had several offers. He's turned each down in hopes of landing a position comparable to what he held before.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Unemployed Americans unwilling to accept lower wage jobs! This sounds like evidence of the "sticky wages" Keynesian observed in his arguments for fiscal stimulus!
  • Mr. Joegriner is a member of what might be called the severance economy -- unemployed Americans who use severance pay and savings to maintain their lifestyles. Many lost their jobs in 2007 and 2008, and thought they'd soon find work. Now, they're getting desperate.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      I bet these people just wish they had taken that good offer a year ago. Finance people laid off during this recession must have an artificially inflated view of their own value in the labor market: over-inflated like the assets they had dealt in!
  • Last week, lawmakers passed a bill extending unemployment benefits up to 20 weeks. Unemployment benefits, which typically last about 26 weeks, were expected to run out for 1.3 million people by the end of the year, according to the National Employment Law Project.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Extending unemployment benefits, while it is a NICE thing to do, only increases the downwardly inflexible nature of wages.
  • ...3 more annotations...
  • The dramatic changes in such sectors mean that many of the eliminated jobs will never come back. Some workers may suffer a permanent hit to their standard of living.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      Why won't certain jobs ever return to the US economy? Is it at least partially BECAUSE American workers are so unwilling to accept lower wages?
  • When Michelle Patterson was laid off as an executive director of marketing for a publishing company in January, she figured she could subsist comfortably, at least for a while, on the $20,000 she had reserved from her savings and severance combined.
  • She spent as much as $250 a week on networking meals and drinks with contacts. Some days, she scheduled up to four coffee meetings a day, picking up the tab most of the time. She also spent $30 a month for pedicures and $150 on her hair.
    • Jason Welker
      Jason Welker on 10 Nov 09
       
      You've got to be kidding me! This is what our world has come to. Unemployed Americans, delusional about their own worth, spending $180 a week on what, mani-pedis?
  • Jason Welker on 10 Nov 09
     
    Things are scary out there for the unemployed in America! This article tells some sad stories of opportunities lost and next eggs blown! It also illustrates a key concept from AP and IB Economics: the theory of sticky wages and prices, at the heart of Keynesian macroeconomics. 
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