Friday, June 11, 2010


Greetings good citizen,

I don’t commonly attack conservative positions directly but today’s post from one of conservatism’s more ‘moderate’ voices piqued my curiosity.

‘Prune and Grow’? What could he possibly mean? Is this ‘more of the same’, er, BS that conservatives have been preaching for nearly four decades now, that ‘tax cuts pay for themselves’?

With our ‘social safety net’ in tatters and a radical drop in, er, ‘taxable domestic activity’ undercutting the support of longstanding social programs, is bonehead proposing we ‘cut’ these ‘social protections’ in a time when we need them most?

Which points directly to why ‘conservatism’ is widely considered an incurable mental disorder. It’s insistence on doing the same thing over and over, each time expecting a different outcome, is the very definition of insanity!

Well good citizen, are you insane?

Prune and Grow >
Published: June 10, 2010

Sixteen months ago, Congress passed a stimulus package that will end up costing each average taxpayer $7,798. Economists were divided then about whether this spending was worth it, and they are just as divided now. [How ironic is it that the ‘split’ between economists was starkly along ‘party lines’? It doesn’t help that neither of them ‘got it right.’]

The president’s economists ran the numbers through their model and predicted that the stimulus package would create or save at least three million jobs. John F. Cogan and John B. Taylor of Stanford and Tobias Cwik and Volker Wieland of the Goethe-University of Frankfurt argue that the White House methodology is archaic. Their model suggests the stimulus will create about a half-million jobs. [Left open to interpretation here is the definition of the word ‘create’. It is more bizarre that ‘Zippy’ resorts to using analysis by German economists to support his position.]

Edward L. Glaeser of Harvard compared the change in employment in each state to the amount of stimulus money it has received. He found a slight relationship between stimulus dollars and job creation, but none at all if you set aside three states: Alaska and the Dakotas. [What do the land of oil subsidies and banking heaven have to do with stimulus dollars?]

Over all, most economists seem to think the stimulus was a good idea, but there’s a general acknowledgment that we know relatively little about the relationship between fiscal policy and job creation. We are left, as Glaeser put it on The Times’s Economix blog, “wading in ignorance.” [Um, you don’t suppose it would be more accurate to state that these bought and paid for shills were ‘wading in their own massive stupidity’ do you? ‘Stimulus ‘works’ but you can only use it in a ‘closed loop’ if you want ‘reliable’ results. Otherwise you must be prepared to spend ‘insane’ sums for very modest results…as we are currently witnessing.]

If the economists are divided about what just happened, the rest of the world is not divided about what should come next. Voters, business leaders and their bought and paid for political leaders do not seem to think that the stimulus was such a smashing success that we should do it again, even with today’s high unemployment. [Let’s see, the government has spent trillions bailing out the financial sector, never mind the ‘stimulus’ which was less than a single trillion, a frightening number all by itself. So it would appear Mr. Brooks is advocating that government ‘reduce’ spending and let the private sector ‘grow the economy’…which displays a stunning lack of comprehension of how we got where we are today!]

They seem to see the fiscal floodgates wide open and that the private sector still only created a measly 41,000 jobs last month. [Note how ‘conservative math skills’ can turn a 200,000 job deficit into a 41,000 job gain.] That doesn’t inspire confidence. Furthermore, they understand something that is hard to quantify: Deficit spending in the middle of a debt crisis has different psychological effects than deficit spending at other times. [Um, nobody ‘misses the point’ that you can’t solve a debt crisis with more debt…or by cutting income, neither strategy will produce a positive outcome.]

In times like these, deficit spending to pump up the economy doesn’t make consumers feel more confident; it makes them feel more insecure because they see a political system out of control. [Does ‘Mr. Conservative’ want to hazard a guess as to how it got this way?] Deficit spending doesn’t induce small businesspeople to hire and expand. It scares them because they conclude the growth isn’t real and you’d think they know big tax increases are on the horizon. It doesn’t make political leaders feel better either. Lacking faith that they can wisely cut the debt in some magically virtuous future, they see shove their nations careening to fiscal ruin. [This from a ‘borrow and spend’ Conservative? What about the trillions wasted on the Middle East wars of choice? No ‘tax consequences’ there, huh?]

So we are exiting a period of fiscal stimulus and entering a period of fiscal consolidation. Last year, the finance ministers of the G-20 were all for pumping up economic activity. This year, they called on their members to reduce debt. In this country, deficits are now the top concern. [Considering who is ‘handling the reins’ of, er, ‘government’ this constitutes ‘fair warning’ that its time to ‘bend over and grab your ankles!’ courtesy of ‘the conservative party!’]

Some theorists will tell you that if governments shift their emphasis to deficit cutting, they risk sending the world back into recession. There are some reasons to think this is so, but events tell a more complicated story. [Lies are ‘always’ complicated, have you noticed that? Let’s see how they intend to ‘spin’ this bowl of steaming bullshit?]

Alberto Alesina of Harvard has surveyed the history of debt reduction. He’s found that, in many cases, large and decisive deficit reduction policies were followed by increases in growth, not recessions. Countries that reduced debt viewed the future with more confidence. The political leaders who ordered the painful cuts were often returned to office. As Alesina put it in a recent paper, “in several episodes, spending cuts adopted to reduce deficits have been associated with economic expansions rather than recessions.” [This is called ‘Twisted History’ where you bend the data to fit the desired outcome. If we were to look closer we would find ‘deficit reductions closely corresponded with period of high (asset) inflation, the ‘deficits’ were ‘inflated away’.]

This was true in Europe and the U.S. in the 1990s,[When ‘reported inflation’ was said to be ‘non-existent’ while asset prices outstripped income by a factor of four to one!] and in many other cases before. In a separate study, Italian economists Francesco Giavazzi and Marco Pagano looked at the way Ireland and Denmark sharply cut debt in the 1980s. Once again, lower deficits led to higher growth. [I have one thing to say and I’ve already said it…’Liar!’]

So the challenge for the U.S. in the years ahead is to consolidate intelligently.That means reducing deficits while at the same time making the welfare state more efficient, boosting innovation in areas like energy, and spending more money on growth-enhancing sectors like infrastructure. [This is code for the ‘new normal’, what he’s calling for is the economy to continue to exclude an ever larger portion of the population, leaving those caught on the outside looking in to ‘twist in the wind’.]

That’s a tough balancing act. [It has absolutely zero to do with balance, it is the usual conservative stance of ‘Got mine, fuck you!’]

The biggest task will be to reduce middle-class entitlement spending. Alesina found that spending cuts are a more effective way to stabilize debt than tax increases, though we’ll need both.

The second biggest task is to consolidate while addressing another problem: labor market polarization. According to a Hamilton Project/Center for American Progress study by David Autor, high-skill sectors saw no net loss of jobs during the recession. Middle-skill sectors like sales saw an 8 percent employment decline. Blue-collar jobs fell by 16 percent. [Um, what part of ‘Sales drives the boat’ doesn’t Bobo get? Is numbnuts saying we already have a ‘command economy?’]

In other words, the recession exacerbated the inequalities we’ve been seeing for decades. Somehow government has to cut total spending while directing more money to address the trends that threaten to hollow out the middle class. [Can you believe this disingenuous fuck? Tax breaks for the already wealthy AND incentives to move overseas had NOTHING to do with the ‘hollowing out’ of the US, it’s the government’s fault! How angry does Mr. Brooks think people will be when they discover that the government and the corporate sector are one in the same? Never mind that the conservative movement has faithfully and ardently supported them both!

During the period of consolidation, in other words, the government will have to spend less, but target better. That will require enormous dexterity and intelligence from a political system that has recently shown neither.

Um, since Republicans can do no wrong I highly doubt Mr. Brook’s finger is pointing toward a mirror.

We are also meant to ignore the past forty years where, surprise, surprise, capitalists have been tripping all over themselves to bring the world’s largest consumer markets up to speed!

It’s all about ‘numbers’ good citizen, if you don’t ‘get that’ by now you soon will.

Thanks for letting me inside your head,


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