Tranquilizing the Stimulators

by Don Boudreaux on January 10, 2009

in Energy, Myths and Fallacies, Stimulus, Taxes

The Competitive Enterprise Institute‘s Ryan Young and Drew Tidwell understand that there ain’t no such thing as a free stimulus.  Here’s a great letter by Ryan and Drew in the current issue of Time.  (You can find their letter on line by clicking here and scrolling down a bit.)  Oh, by the way: Ryan is working toward a graduate degree in Economics at GMU.

Kinsley’s latest missive in time falls prey to one of the oldest traps
in economics–Frédéric Bastiat’s broken-window fallacy. Just as a
broken window creates work for the glazier at the expense of the window
owner, money that Kinsley hopes to inject into the economy must first
be taken out of it. Add in collection costs and the usual political
malfeasance, and we have a net loss to the economy. There’s more:
Kinsley argues that last summer’s high oil prices were essentially a
tax on consumers; the money just went to oil companies instead of the
government. But he forgets that oil companies do not have control over
their prices. If they did, then why would oil prices ever drop?
Kinsley’s logic does not follow.

Ryan Young and Drew Tidwell,
Competitive Enterprise Institute, WASHINGTON

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Randy January 10, 2009 at 8:38 am

The underlying assumption of stimulus is that what the government does has value. The assumption can be proven only to the extent that what the government does has value to government.

vidyohs January 10, 2009 at 8:51 am

When we are young we visualize things much different than when we do when we gain experience.

When I was young and first becoming aware of taxes and government spending the first thing that did not make sense to me was that taxes were collected in the communities and states and sent to Washington D.C., then the government turned that around and sent back money to pay for things in the states and communities.

The youthful knowledge that money does not move through fingers without a large part of it sticking to those fingers prompted my first question about the logic of having an all powerful central government. Why do we do it?

Then when contracted to the government as a military man, salary paid for from that public treasury, I saw that I was being subjected to income taxes. That drove home the point that central all powerful government was wasteful. Why employ people to collect taxes from people being paid from taxes. Just reduce the salary by a nominal amount and eliminate that middle man.

From those humble beginnings a refuser was born.

Once you get bumped off the flatcar of the human train and can see the idiocy of it all, one begins to believe that derailing the train makes more sense than anything else one can do.

But, I am intelligent enough to know that, should I derail the train there would still be a large number of people (muirduck, STrUmPiT, et. al.) who would remain huddled on the flatcars terrified at the liberty and self responsibility forced on them.

The American people are so much like the badly burned victim in a burn ward. No matter the skill of the doctor there is no way we can heal without experiencing great pain. America has not yet felt the pain of the burns, that is farther down the socialist road that we are on. I'll live to see the pain, but I doubt I'll live to see the healing.

Martin Brock January 10, 2009 at 9:10 am

… money that Kinsley hopes to inject into the economy must first be taken out of it.

This is not the broken window fallacy. It's the zero sum game fallacy. With unemployment at 7.2%, employing the idle factors does not require breaking windows in order to fix them. In principle, new money can organize the idle factors to produce goods for one another without imposing any cost on fully employed factors, although this outcome seems unlikely.

Employing the idle factors to produce public goods does not have this effect, since the idle factors don't consume the public goods exclusively and must consume other goods; however, the value of the public goods to already employed factors can exceed the cost of employing the idle factors producing the public goods. This outcome also seems unlikely.

The problem with the new "stimulus package" is that its expenditure is centrally planned. Although credit organizing idle factors to profit is what we need, the previous "stimulus package", funneled through massive, established financial institutions by Bernanke and Paulson, had the same problem, not to mention the fact that many of the organizations were bankrupt from the get go.

Kinsley argues that last summer's high oil prices were essentially a tax on consumers …

I don't know what Kinsley argues, but the high oil prices did tax consumers ability to spend otherwise, so it was like a tax in this regard, despite the fact that oil companies have limited control over their prices. I certainly don't favor a new energy tax however, precisely because the higher oil price was like a tax in this regard and could easily return. A tax only limits the profits energy companies require to increase supply.

The U.S. economy is highly leveraged. The federal deficit is hardly the only evidence of this leverage. A leveraged organization may be unprofitable or barely profitable, if the organization's authorities sell expected future profits to bondholders and consume proceeds of the sale rather than investing them profitably. GM is not the only example of this phenomenon. Even if GM declares bankruptcy, bondholders may demand that a reorganization of GM's factors remain barely profitable and thus incapable of growth through reinvestment. GM thus is an infertile cow good only for the milk it gives or for slaughter. We can't expect it to employ other factors.

With established organizations so highly leveraged, idle factors cannot find a monetary price above subsistence in the market without additional credit. Lower wages need not create new employment in this situation. They may only increase deflationary pressure, thus precipitating more bankruptcy, whereupon bondholders again react by reorganizing unprofitable organizations into barely profitable organizations still incapable of employing other factors.

Deflation does not ease the pressure of bondholders. Bond prices may fall as buyers perceive inability to pay, but the obligation to pay principal and interest does not fall without bankruptcy, and a bankruptcy may lower these obligations only far enough to make the reorganized obligor barely able to pay.

Principal and interest payments are entitlements of bondholders, and like taxes, they're owed until some statesman says they're not. That an organization's executives oversold the bonds, while promising dubious growth to shareholders, is irrelevant. I'm happy for GM and other insolvent organizations to declare bankruptcy, but bankruptcy need not free organizations to employ idle factors at any price, much less a wage above subsistence, unless bondholders receive less than they're entitled to demand.

So if we're in this sort of liquidity crunch, what do Young and Tidwell propose to do about it? Ignoring this question doesn't change anything, even if we go on about the "immorality" of it all as we ignore it.

muirgeo January 10, 2009 at 9:33 am

The window was broken by paper pushers on Wall Street and an economy set up to reward unproductive parasitic financial speculation… including that which caused oil prices to rise far out of sync with demand. We are all paying to replace Wall Streets broken windows. They broke billions of windows.

In effect , ultimately we will take back their ill gotten gains and put them to productive use. We also will take the money that heavily subsidizes the oil industry getting their product to the market with lives and dollars of others. We will take the money they made from useless toxic paper and make products that add to the economy rather then steal from it. We will build roads and a new energy infrastructure, which, like a shiny new triple paned window will save us much money in energy cost, create jobs, increase wages, increase demand and cycle money through the economy. And in the process we will protect ourselves from the wind and weather with newer better windows more durable to the actions of thieves and invaluable to the private productive economy.

These young fellows working on their economic degrees will learn most by watching the real economy as it bounces back with intelligently planned stimulus creating a Dow over 20,000 before they even have their Phd's. They might want to re-think their theses before they go along to far.

RickC January 10, 2009 at 10:36 am

Sometimes I have this overwhelming feeling that muirgeo is just doing satire. Thanks for the laughs.

RickC January 10, 2009 at 10:46 am

Sometimes I swear muirgeo is here just for satirical purposes. Thanks for the laughs dude.

The Albatross January 10, 2009 at 10:49 am

An intelligently planned stimulus? Well there’s an oxymoron if I ever heard one. So who will “intelligently” design this stimulus? Perhaps people who are arrogant enough to think they can? Now I know why Paul Krugman is so fired up about it; I am sure he will be called upon to help wield all that power, so he can finally stick it to all those less intelligent people that the market rewards with more money then he gets. Keynes tried his hand at “intelligently” picking winners when he played the stock market (he made money and lost it all). I have two degrees in economics, and I have no idea where I would begin—the steel industry perhaps? How about rocket ships? We really could use with a big pyramid or something—think of the tourist dollars! How about public television? Because the U.S. lacks so much culture and could really do with more fine BBC costume dramas about sexual repression among the landed gentry during the late Regency period. Larry Flynt has suggested porn—judging by the amount of it on the internet (not that I have looked) that appears to be something highly valued by society. This “stimulus” is simply a new form of central economic planning. The Soviet Union had central economic planning and 64 million people DIED between 1917 and 1987. Oh and I should mention this figure does not include those directly murdered by the state but those who perished for lack of food and sheer neglect from those “intelligently” designing the stimulus. Will there be winners? Of course, all those big corporations who make the steel and asphalt (asphalt is made by oil companies)—no wonder they gave so much money to Democrats this year. The politicians will win BIG. Think of all the bacon they will bring home to the companies in their districts. This “stimulus” will ensure that they never get out of office, and we will be stuck with our own permanent little aristocracy. Now if you will excuse me I am off to find out what companies are located in John Murtha’s district, so I can buy shares and get me some winning out of this stimulus.

Martin Brock January 10, 2009 at 11:10 am

The window was broken by paper pushers on Wall Street and an economy set up to reward unproductive parasitic financial speculation…

Windows were literally broken and then repaired in Iraq, but you reserve your critique for "Wall Street". Wall Street might as well intersect Constitution Ave. in D.C., where the Fed is headquartered, a stone's throw from the Capitol building and the White House. Blaming "Wall Street" is more a political platitude than any sort of economic analysis. Wall Street is part and parcel of the state, as Paulson aptly demonstrates, yet you somehow expect the state to tame it.

They broke billions of windows.

Trillions. But who's counting?

In effect, ultimately we will take back their ill gotten gains and put them to productive use.

Who is "we"? Barack Obama? The Congress? You can't be serious.

… save us much money in energy cost, create jobs, increase wages, increase demand and cycle money through the economy.

If you can sell me something that'll save me much money in energy cost, why don't you? Why wouldn't I buy it? Why not extend you credit for this purpose, reflecting the savings you can deliver to me?

Statesmen can create as many jobs as they want, because citizens must accept what their employees produce or be shot for refusing. I won't dispute this point.

Why do you expect real wages to increase? Why will market demand to increase?

These young fellows working on their economic degrees will learn most by watching the real economy as it bounces back with intelligently planned stimulus creating a Dow over 20,000 before they even have their Phd's.

Why 20,000? Why not 25,000?

Is the dramatically slowing labor force growth in the U.S., practically to zero by 2020, relevant? European, Japanese and Russian labor forces already shrink, and China's labor force stops growing in the coming decade as well. Demands from pensioners and other titular lords do not shrink similarly in the same period, because their entitlements don't properly reflect their diminished investment in recent decades, particularly their investments in labor, by which I mean raising children.

Does the real economy matter at all, or are politics and finance now the only Reality we can recognize? Is Mammon the only God anyone understands anymore?

Per Kurowski January 10, 2009 at 1:19 pm

The US consumers shopped until they dropped and now it seems that their government is taking over with “we will stimulate until we drop”. We understand the reasoning but we can’t help feeling nervous about it.

There are seminars on “How to restore Global Financial Stability” but, in the name of the do-no-harm principle, let us not forget that the most important role for the US is to preserve the global financial stability we still have, namely the current role of their dollar in the international financial system.

Many American economists egged on by some foreign colle indicate, even in the face of the many surplus countries wanting to reactivate their own domestic demand, which leaves less resources to buy US debt, that there is absolutely no problem in sight…Let us pray they are right!

But, just in case, and especially after the unsettling recent experience with the adjustable mortgages, could we not ask the US to build up its debt with long term paper at fixed rates? I mean allowing so many to anchor their boats so close to the exit of that safe-haven the dollar currently represents seems not the wisest thing to do.

TrUmPiT January 10, 2009 at 2:05 pm

"Lunch" can be free if the conditions are right. If I own the pasture, the cows and the farm, I can have my workers (slaves) milk the cow and give me a glass of milk. My employees get paid in milk, so they don't starve. What the hell did I do to get the milk other than own the source. So we can clearly see that private property and ownership leads to a "free lunch." This, of course, is prime reason the private property must be restricted and restrained, so the rich don't get too rich and get everything for free at others' expense.

Another example: When I graduated from college, I told my mother I needed to move back home until I found a job. She told me that I needed to pay her some rent, basically changing the line/lie from "no free lunch" to "no free rent." But I said, "You don't pay rent either." "But I OWN the property!" she snorted. She owned, outright, a triplex that made money for her. You can see how this idea of OWNERSHIP creates a pigish sense of entitlement to free lunches and free rent to such an extent that my own mother felt justified in socking it to me. This is the sick world that you libertarians love and promote. Free lunch for me, and slavery for you. What an immoral joke!

Martin Brock January 10, 2009 at 2:21 pm

You can see how this idea of OWNERSHIP creates a pigish sense of entitlement to free lunches and free rent to such an extent that my own mother felt justified in socking it to me.

Get a job, deadbeat.

TrUmPiT January 10, 2009 at 2:38 pm

You are a nasty person, Martian Broke who has too much free time to waste insulting people. YOU work in a coal mine, you deadbeat. Who will pay for your black lung to go with your black personality? No one, I hope.

TrUmPiT January 10, 2009 at 3:07 pm

If there were a job for everyone who wanted one, there wouldn't be this talk about a stimulus. They're all "deadbeats" in Martian Broke's mind. I wonder what the unemployed and recently laid off would call Martian. From another planet?

The_Chef January 10, 2009 at 3:08 pm

All right children

Trumpit, take your neo-marxist ideas of ownership and slavery and get out of here. This is an economics blog, not a sounding board for your utopian masturbatory fantasy.

Yes restrict the rich, drive us ever closer to Ayn Rand's Vision of Government and the role it will and does play in our lives. How about an "Anti Dog Eat Dog" law that will force/coerce/violate businesses that succeed too well.

This trolling is really getting obnoxious. Suddenly any sort of active and productive discussion goes toward shutting you and muirduck up.

So please shut up, I'm trying to learn things.

muirgeo January 10, 2009 at 4:01 pm

"But, I am intelligent enough to know that, should I derail the train…."

Here's a good place to start… begin refusing your monthly government retirement check. That'll show'em!!

Cheers January 10, 2009 at 4:06 pm

TrUmPiT, I was wondering if you could explain something to me.

Do you believe that your mother (or the dairy farm owner) should not have had to pay for the house or field, or do you believe that the act of paying for it should not change your rights with regards to the property?

Oil Shock January 10, 2009 at 4:11 pm

I don't understand why amoeba armpit's posts deserve to stay on this blog.

liberty January 10, 2009 at 4:17 pm

I think the key phrase that must be investigated in the letter above is "must first be taken out."

Keynesians et al would argue that it isn't *first* taken out, but rather it is borrowed from the future in order to stimulate the present and get us to a bigger pie in the future; which will allow us to pay it back with interest. (Even if its somewhat wasteful in the process).

Keynes would say that we *must* do this, because right now we're stuck because consumption is too low, keeping employment down, etc. This theory is easily disproven. However, others might still argue that borrowing from the future makes sense.

What needs to be shown is how it isn't really the future but the present (as implied above) that we are borrowing from.

brotio January 10, 2009 at 4:30 pm

"Sometimes I have this overwhelming feeling that muirgeo is just doing satire. Thanks for the laughs." – Rick C

I'm about convinced that Trumpit is a satirist.

However, Muirgeo is a Socialist Evangelical Priest in the Church of AGW; led by His Holiness: The Divine Prophet Algore I.

It is ordained that Mother Gaia will sacrifice Her corpulent Son (The Divine Prophet) to the fire of AGW, absolving humanity of it's liberty and wealth so that Mother Gaia will be healed.

After Algore I is reclaimed by Mother Gaia, Muirgeo dreams of moving beyond his Priestly Duckdom and ascending to leadership of the Church of AGW. He will assume the title of, "His Holiness: Algore II". His mission will be to ensure that humanity never again possesses liberty or wealth, and to execute heretics who doubt The Church of AGW.

Martin Brock January 10, 2009 at 4:46 pm

They're all "deadbeats" in Martian Broke's mind.

You're lying. I never say such a thing. You're a deadbeat, because you expect to live in your mother's house at no cost when you could easily earn whatever modest rent she expects of you.

Oil Shock January 10, 2009 at 5:39 pm

Muirgeo's posts are ridiculously entertaining, where as armpit is outright stupid and obnoxious.

Oil Shock January 10, 2009 at 5:41 pm

brotio,

Talking about AGW, here is a good post on the topic. One of the commenters named poptech has a very good collection of links that throws a bucket of cold water on Al Gore's redhot lies.

link here

brotio January 10, 2009 at 6:11 pm

Oil Shock,

Thanks for the link. I read the article the other night but didn't get to poptech's post.

We're heretics, and Torquemierduck has taken notice! :D

sally January 10, 2009 at 6:29 pm

Kinsley failure to understand basic economic thinking is unacceptable. It is the equivalent of believing perpetual motion machines.

dg lesivc January 10, 2009 at 6:48 pm

Trumped,

You wrote,

"If there were a job for everyone who wanted one, there wouldn't be this talk about a stimulus."

There would be a job for everyone who wanted one, in a conmpletely free market. For, it would always tend toward equilibrium between the supply of and demand for manpower, as for anything else.

So, if a job for everyone is what you really want, stop trying to force the cost of hiring people above free market, equilibirum, full employment levels. Let the market bring the costs back down to its own levels, the levels at which there would be a job for everyone who wanted it.

By the way, Muirgeo is no longer your enemy. I have no quarrel with anyone wanting to live under socialism. My only quarrel is with those who would force it on others. And since Muirgeo would no longer do so, but, live and let live, he's alright, as far as I'm concerned.

vidyohs January 10, 2009 at 7:19 pm

Brotio,

Torquemierduck? Good shot.

Martin Brock January 10, 2009 at 7:19 pm

There would be a job for everyone who wanted one, in a completely free market.

The problem with this assertion is that "completely free market" is chimerical. It's a contradiction in terms. Property is not liberty. It is a minarchical restraint on liberty; otherwise, "life, liberty and property" is redundant.

Orderly markets require property, and property is not "free". A property right is forcible, or it's meaningless. Property is always a monopoly right at some level, and excessive monopoly can effectively rule out the participation of many factors in a market.

The role of the state in counteracting excessive monopoly is not to "bust" monopolies, because the state creates all monopoly in the first instance. The role of the state is to stop enforcing its counterproductive monopolies, so if Microsoft actually had a counterproductive monopoly in computer operating systems, the state might stop enforcing or loosen enforcement of the company's patents or copyrights for example.

vidyohs January 10, 2009 at 7:27 pm

Why muirduck, my little thumbsucking chihuahua, why would I give up something I earned by honoring every detail of my contracts? Ju gotta be real stoopid r something! (Oh cheet, I just realized, Chihuahuas don't suck their thumbs, they suck their little dew claws.)

It is your exhalted government that does not honor contracts, that cesspool entity delights in changing rules.

I performed, now they can perform. It is my most ferverent wish, my hope, my dream, that you, muirduck, through the excise taxes you pay, are personally bearing the enitre cost of my retirement. LOL, talk about poetic justice!

Crusader January 10, 2009 at 7:41 pm

I noticed for a long time now that muirgeo comes on here to bash all his right-wing bogeymen and never actually provide substance to the debate of how do we fix this economy.

This stimulus will be nothing but the Fed printing more trillions triggering hyperinflation. Good times ahead.

Crusader January 10, 2009 at 7:42 pm

Martin – what would be a more ideal society, that we restart in total anarchy and let a dictator rule over ever little fiefdom like in the old days? I'm not saying our current system is utopia, but it's a lot better then feudal Europe. That you seem to make no distinctions between the systems is weird.

dg lesvic January 10, 2009 at 8:46 pm

Martin Brock,

You've given us some very fundamental issues to wrestle with. I've done so at some length in my book, but, out of respect for the property rights of others here, will see how far I can get with a few words.

You wrote:

"Property is not liberty. It is a…restraint on liberty."

I have no idea how you would define liberty. But, to me, it is a synonym for freedom. And since only the strong could have freedom for aggression, freedom as an equal right of all must mean freedom not for but from aggression, the right to be let alone, to offer or withhold one's own resources, and none but one's own, however defined at any one particular time or place.

Given that definition of freedom, or liberty, the right of private property is the bulwark of it, and a restraint only on aggression.

You wrote:

"Property is always a monopoly right at some level, and excessive monopoly can effectively rule out the participation of many factors in a market."

There is no such thing as excessive monopoly in a free market. The market is the optimum, and, whatever the extent of monopoly in it, the optimum extent of it.

Crusader January 10, 2009 at 9:30 pm

dg lesvic – I guess liberty can be defined as within any system. After all, we are all bound by the laws of physics(gravity, friction) all conspire to prevent ultimate freedom of movement in the universe.

More practically speaking, one could theorize about levels of freedom within a laiszze-faire vs socialist democracy. It's a debate worth having. But not with the muirgeo types.

Gil January 10, 2009 at 9:43 pm

" Kinsley argues that last summer's high oil prices were essentially a tax on consumers . . ."

I'm surprised someone such as brotio or vidyohs didn't chime in with something like this:

"Can't Kinsley tell the difference between a free market transaction and an imposed government service? The money made by the oil companies was a free trade with the consumers of oil as opposed to a taxed-imposed government program. Whiners of oil prices can get a pushbide or convert a vehicle to electricity at their own expense."

dg lesvic January 10, 2009 at 10:02 pm

I had written:

"since only the strong could have freedom for aggression, freedom as an equal right of all must mean freedom not for but from aggression."

That should have been, "since only the strong could have freedom for aggression, and everyone freedom from it, freedom as an equal right of all must mean freedom not for but from aggression."

Randy January 10, 2009 at 10:05 pm

dg lesvic,

"I have no idea how you would define liberty."

He gets his definition from the royalist propagandists, whose response to the liberty movements of their time was the idea that liberty was only possible under the rule of a strong state (preferably a monarch, of course), and that complete liberty is really just a fantasy. As Hobbes puts it, the alternative (to Leviathan) is a "constant state of war of all against all", in which life is "nasty, brutish, and short" – scare tactics. Perhaps the intentions were noble, but what these propagandists forget is that people were rebelling for a reason. They imagined a divinely inspired state that would end the war of all against all, but neglected to mention where the people to run this state would come from. If we imagine a world populated with those who exploit and those who are exploited, then which class is likely to be drawn to the positions of power within Leviathan? Bottom line; Leviathan in practice is no divine state. It is a confederation of exploitation.

vidyohs January 10, 2009 at 10:28 pm

dg lesvic,

re: your discussion/debate/ring-a=round-the-mulberry bush with Martin.

Until you define property then there is no way to argue against Martin.

Property in the nature of a plot of land can be seen in the narrow view as restrictive to freedom as one first has to occupy it and defend it. What Martin does not understand or won't admit (take you around the mulberry bush on) is that when an individual makes the personal decision to occupy and defend a plot of land as his own property he is doing so freely and therefore his actions are but an extension of that freedom.

Martin strikes me as being in the infancy of his independent thought, he has good ideas that he seems to not yet have thought out very well. But, he can write reems on that that he thinks he knows.

Now, if we recognize that property is not just land then it becomes even harder for Martin to defend his position.

My garden tiller is my property and I can take it and use it where ever I wish and it does not restrict my movements or inconvenience me in anyway, so to assert (as Martin seems to be doing) that it is a loss of freedom is absurd. My bow, my gun, my camera and video equipment are property and like my garden tiller do not enslave me as much as they do liberate me.

Martin, I believe, means well but his thoughts, and his expression thereof, seem to be rather unintentionally loosely organized. In evidence I offer the fact that for Martin to make a post under 1,000 words is a rare treat, and even then I go to sleep long before I reach the end even when I suspect that there is a point in there somewhere.

In summary, property is an ambiguous word that needs defining before debates can be conducted with meaningful results.

Good luck.

dg lesvic January 10, 2009 at 11:25 pm

Americans once included human beings within their definition of property. They no longer do so. Other things may also come and go. But, however property is defined, the principles governing it remain the same. For, whatever it consists of, you either own it or you don't, and have a right to it or not, and total or partial, abolute or limited, and immutable or contingent.

Lee Kelly January 10, 2009 at 11:41 pm

Martin just means something else by the terms 'liberty' and 'property'. If I adopt his definitions, then I rarely disagree.

For example, for Martin your home is not really your property unless the rights associated with ownership are actually enforced. It is more of a practical or pragmatic thing. But for most libertarians, if the normative rules of ownership define something as your property, then it is rightfully yours even if you cannot exert any rights over it as a practical matter.

Lee Kelly January 10, 2009 at 11:50 pm

The deflationary aftermath of an inflationary boom is the solution to years of malinvestment and overconsumption. As interest rates increase so does the incentive to save (that is, more is supplied at a higher price).

Every dollar of debt is a claim on future production. Central banks overextend credit by expanding the money supply and thereby keeping interest rates too low. An economy is then set upon an unsustainable growth path, which is undone when people begin paying back or defaulting on their loans. Deflation and recession are the hallmarks of the correction, not the problem. As demand plummets and prices fall, malinvestments are purged from the economy and resources reallocated. Interest rates rise along with the incentive to save again, and labour is shifted away from services and towards industry (unemployment rises suddenly as this correction begins).

Prices are like messengers, and sometimes they bring bad news. The U.S. Government is trying to currupt the message by way of inflation. But it cannot change the underlying reality, all it can do is make prices send false messages.

The false message they intend to send is that Americans have more income to spend on consumption. This will stimulate supply and prolong the boom for a short time, but only by debasing the the currency. Eventually suppliers will start spending their dollars and realise they have been ripped off. Imports will then dry up and all the jobs saved by the "stimulus" will go anyway. In the meantime even more wealth has been squandered, making the rebuilding even more difficult.

brotio January 10, 2009 at 11:50 pm

"Good shot." – Vidyohs

Thanks!

Crusader January 11, 2009 at 1:38 am

Lee Kelly – you are correct in that if 2 people can't even agree on the definition of terms there can't be any debate.

Lee Kelly January 11, 2009 at 1:49 am

Crusader,

Definitions are conventional. It is possible to adopt an alternative set of definitions and state your views using the new vocabulary. It really does not matter whether you are using the words 'liberty' or 'property'. For example, I might say to Martin, 'the problem that concerns me is what set of property laws we should try to enforce, not what laws are currently enforced.'

This does not require you to adopt alternative definitions now and forever. To suggest that there can be no debate because of such a trivial obstacle is nonsense, especially when the root of any misunderstanding is recognised.

dg lesvic January 11, 2009 at 2:04 am

Lee Kelly,

You are so right on everything, and especially this nonsense about definitions. That's just a problem in the minds of the people here who want to sidestep a tough issue.

If, in the real world, we couldn't have defined property, there wouldn't be any. Whatever the grey areas, there had to have been a general agreement about what it consisted of. They grey areas are a problem for lawyers and judges, not economists. Almost all of the issues concerning property, in the real world, are not about what it consists of, but how to treat it. For example, the dispute over eminent domain takings. The takers don't challenge the definition of the property they're taking, just the sanctity of it.

dg lesvic January 11, 2009 at 2:19 am

And I would add this.

Vidyohs had said:

"Until you define property then there is no way to argue against Martin."

And no way to argue against anything in economics. Vid is not simply telling me that I can't proceed with economics, but that nobody can, that all economics is at a standstill.

And, Vid, I'm sure you get the point!

brotio January 11, 2009 at 2:24 am

RE: Gil's post of Jan 10, 2009 9:43:37 PM

Gil,

I have made the point that if you don't like the price of something, you're not obligated to buy it. Unless it's being sold by the Political Caste.

Mierduck is a Priest in the Church of AGW. They would require we walk, anyway. We can't even ride bikes, bikes are typically made of metal, which is a carbon-intensive endeavor. Some bikes are made of carbon fiber. They must be especially eeeevil to the Church of AGW.

I'd also like to point out that gas may not have reached those historically high prices if government had not outlawed oil extraction in so much of the United States.

dg lesvic January 11, 2009 at 2:25 am

No, not just that all economics is at a standstill, but that it never even started.

Crusader January 11, 2009 at 3:40 am

dg & Lee – I'm sorry but I totally disagree with you. If you can't have a common set of definitions you can't have an argument. That's the starting point.

dg lesvic January 11, 2009 at 4:58 am

Crusader,

What you mean is that we can't have economics, just socialism.

dg lesvic January 11, 2009 at 5:03 am

Let me restate that:

What you mean is that we can't have economics with those who don't want it. We have it with those who do, because we have all the definitions we need, whether anti-economists and anti-rationalists thinks so or not.

Babinich January 11, 2009 at 6:34 am

TrUmPiT on Jan 10, 2009 @ 3:07:21 PM

"If there were a job for everyone who wanted one, there wouldn't be this talk about a stimulus."

I'd like you to clearly explain how a program like "one heartbeat, one job" could be implemented.

Assuming that the aforementioned program can be implemented I'd like to know if you believe that these people should get to pick the jobs they perform?

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