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(The Atlantic)   Conclusion: "An increase in government spending never leads to a significant rise in private spending. In fact, in most cases it leads to a significant fall"   (theatlantic.com) divider line 124
    More: Obvious, government spending, UCSD, free enterprise, private sector  
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1891 clicks; posted to Politics » on 26 Apr 2012 at 2:47 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-04-26 10:47:27 AM  
1. No, that isn't what the article says at all.

2. Jones's basic premise is that the stimulus led to job shifting instead of job creation. (well, 47% anyway) But when pressed, he didn't know if those jobs that were 'shifted' were then filled. And he doesn't know how many jobs were actually created.

3. Basically, the study Jones did was so limited in scope as to be useless.
 
2012-04-26 11:37:00 AM  
It's Freeper Friday one day early!
 
2012-04-26 11:55:47 AM  
Ever hear of the Civilian Conservation Corps?
 
2012-04-26 12:18:58 PM  
OMG an article says something against my political belief! DOWNVOTE NAO
 
2012-04-26 12:21:24 PM  

cman: OMG an article says something against my political belief! DOWNVOTE NAO


Read the comment made by Dinki at the start of this thread. Then you might understand the downvoting.
 
2012-04-26 12:24:56 PM  

cameroncrazy1984: cman: OMG an article says something against my political belief! DOWNVOTE NAO

Read the comment made by Dinki at the start of this thread. Then you might understand the downvoting.


Yes, I am sure that Dinki is a far better economist than an actual economist
 
2012-04-26 12:25:56 PM  

cman: Yes, I am sure that Dinki is a far better economist than an actual economist


Like Paul Krugman?
 
2012-04-26 12:30:48 PM  

Dusk-You-n-Me: cman: Yes, I am sure that Dinki is a far better economist than an actual economist

Like Paul Krugman?


Considering that I am constantly being told to trust the experts in a related field (i.e. scientists on climate change) I find that quite funny that you would invoke that name.
 
2012-04-26 12:31:49 PM  

cman: Considering that I am constantly being told to trust the experts in a related field (i.e. scientists on climate change) I find that quite funny that you would invoke that name.


OK.
 
2012-04-26 12:34:29 PM  

cman: cameroncrazy1984: cman: OMG an article says something against my political belief! DOWNVOTE NAO

Read the comment made by Dinki at the start of this thread. Then you might understand the downvoting.

Yes, I am sure that Dinki is a far better economist than an actual economist


GOP Troll much?

All responsible economists will tell you increased government spending is a temporary effect that results in a retraction when the stimulus finishes. The idea is to create a bridge until the private sector catches up, or in this case alleviate some of the pain.

That's all additional government stimulus is, a temporary alleviation of some of the recession pain. No huge silver bullet, no "my party are gods and your party are shiat"... just a band-aid to make things a little better.
 
2012-04-26 01:01:04 PM  
Fine. We'll give you farks everything you want. Abortion banned, unions banned, gays in prison, every single "anti-business" regulation repealed. Because to be honest, we don't deserve good government.

Maybe a few decades of $1/day salaries paid out to child labor will make us farking remember why most of this shiat got passed in the first place.
 
2012-04-26 01:36:21 PM  

themindiswatching: Fine. We'll give you farks everything you want. Abortion banned, unions banned, gays in prison, every single "anti-business" regulation repealed. Because to be honest, we don't deserve good government.

Maybe a few decades of $1/day salaries paid out to child labor will make us farking remember why most of this shiat got passed in the first place.


What does banning abortions and throwing homosexuals in jail have to do with child labor?
 
2012-04-26 01:45:32 PM  

cman: What does banning abortions and throwing homosexuals in jail have to do with child labor?


Banning abortions boosts the supply of child labor, making it cheaper, and also freeing up the supply of able-bodied adults to arrest more homosexuals.
 
2012-04-26 01:50:30 PM  

tallguywithglasseson: cman: What does banning abortions and throwing homosexuals in jail have to do with child labor?

Banning abortions boosts the supply of child labor, making it cheaper, and also freeing up the supply of able-bodied adults to arrest more homosexuals.


Duh.
 
2012-04-26 01:53:19 PM  

themindiswatching: Abortion banned, unions banned, gays in prison, every single "anti-business" regulation repealed


What article did you read?
 
2012-04-26 02:16:26 PM  
The Congressional Budget Office is a bit more conservative than both of those textbooks: They offer high-low ranges for the multiplier, so I'll cavalierly report a midpoint: 1.5.

That's assuming equal chances for the low and high end, with no basis for that assumption.

They they go on to say:

They also note that after post-ARRA "discussions on this topic with its panel of economic advisers" (to be a fly on the wall at that meeting) they dropped their lower-bound multiplier estimate down to only 0.5: So they think there's a reasonable chance that a dollar of government spending shrinks the private sector by fifty cents.

How could that possibly be? How could extra government spending shrink the private sector? Well, in the simplest Keynesian model, it can't. You have to add some bells and whistles--let's call that "reality"--to get a multiplier less than one.


When the CBO says:

For instance, CBO estimates that a one-time increase of $1 in federal purchases of goods and services in one calendar quarter last year raised GDP above what it would have been otherwise by a total of 50 cents to $2.50 over several quarters.

Which, unless I'm reading it wrong, says that the multiplier of 0.5 means ADDITIONAL GDP, not less.

Furthermore (page 16):

A recent survey of studies based on certain types of historical evidence shows that estimates of indirect multipliers range from -0.3 to 3.6, although most of the estimates based on this empirical approach fall between 0.5 and 2.0. (See Valerie A. Ramey, "Can Government Purchases Stimulate the Economy?" Journal of Economic Literature, vol. 49, no. 3 [September 2011], pp. 673-685. CBO also benefitted from discussions of this topic with its Panel of Economic Advisers.) Several of those studies yield estimates that average between 0.5 and 1.0 over a long historical period. However, those studies do not specifically provide estimates for a period in which unemployment is high and interest rates are very low, as is true for the current period.

So... yea... Good work there.
 
2012-04-26 02:19:31 PM  
Ms. Ramey's paper looks interesting, but given my limited background in economics seems to require more careful reading than I can manage in my lunch hour.
 
2012-04-26 02:52:26 PM  
Garett Jones--Economist at George Mason University

Stopped reading there.
 
2012-04-26 02:54:58 PM  

cman: cameroncrazy1984: cman: OMG an article says something against my political belief! DOWNVOTE NAO

Read the comment made by Dinki at the start of this thread. Then you might understand the downvoting.

Yes, I am sure that Dinki is a far better economist than an actual economist


If you knew anything about economists, you would understand that this might be true.
 
2012-04-26 02:55:12 PM  

cman: Considering that I am constantly being told to trust the experts in a related field (i.e. scientists on climate change) I find that quite funny that you would invoke that name.


Well-played. Invoking AGW in a federal stimulus thread. It's too bad you couldn't have worked in a circumcision name-check, but you work with what you're given.
 
2012-04-26 02:55:14 PM  

cman: Considering that I am constantly being told to trust the experts in a related field (i.e. scientists on climate change) I find that quite funny that you would invoke that name.


Well, someone has to stand up to all those experts!
 
2012-04-26 02:57:34 PM  

cman: I am constantly being told to trust the experts in a related field


If one is bankrolled by the Koch brothers (as is Mr. Jones), their "research" needs to viewed with extreme skepticism.
 
2012-04-26 02:58:33 PM  
Cutting NPR and Planned Parenthood funding grows the economy by 1.Million.percent.
 
2012-04-26 02:59:42 PM  

cman: Considering that I am constantly being told to trust the experts in a related field (i.e. scientists on climate change) I find that quite funny that you would invoke that name.


Yup. "Find an expert whose opinion validates yours, then crow that expert's opinion from the rooftops," I always say...
 
2012-04-26 03:02:36 PM  
cdn.theatlantic.com - Megan McArdle

Knew without clicking it would be this hack.
 
2012-04-26 03:02:42 PM  

cman: cameroncrazy1984: cman: OMG an article says something against my political belief! DOWNVOTE NAO

Read the comment made by Dinki at the start of this thread. Then you might understand the downvoting.

Yes, I am sure that Dinki is a far better economist than an actual economist


Actual doctor:

www.crestock.com
 
2012-04-26 03:04:39 PM  
cman: (climate change)


Wow.

I am now embarassed as all hell to have supported you when you were being kicked around elsewhere, cman.

What the f*ck.
 
2012-04-26 03:04:58 PM  
 
2012-04-26 03:05:04 PM  

Wendy's Chili: Garett Jones--Economist at George Mason University

Stopped reading there.


OK, you piqued my interest.
http://mason.gmu.edu/~gjonesb/

As a macroeconomist, I investigate both long-term economic growth and short-term business cycles. My current research explores why IQ and other cognitive skills appear to matter more for nations than for individuals.

For example: A two standard deviation rise in an individual person's IQ predicts only about a 30% increase in her wage. But the same rise in a country's average IQ score predicts a 700% increase in the average wage in that country. I want to understand why IQ appears to have such a large social multiplier.

Good grief, really? IQ scores? This shiat is Comic Book Guy economics.
 
2012-04-26 03:05:05 PM  
How the hell does a multiplier of 0.5 imply a decrease in Consumption? Government spends $100, and GDP goes up by $150. It's not *ideal* because that $100 will have to be paid for at some point, but that's not the subject at hand.

Hopefully nobody brings up Ricardian Equivalence without some evidence backing it up.
 
2012-04-26 03:05:06 PM  
I know the headline is a troll and that isn't what the article says, but even if it was the case that government spending depressed private spending, if your sole metric was GDP growth then this is still stimulative so long as the crowding-out effect is less than 100% of the money spent.

If the government spending 100 dollars and it causes private investors to spend 40 dollars less, you have just increased GDP by 60 dollars.

There has not been a single peer-reviewed study that I am aware of that has found a crowding out effect of 100% or more. Things like the crowding out effect and substitution effect are real and should be recognized when considering policy, but they don't outweigh the benefits of stimulative efforts.
 
2012-04-26 03:05:18 PM  
Well, not if you spend money on the rich it doesn't.

"Money is like manure. If you spread it around it does a lot of good. But if you pile it up in one place it stinks like hell."

~Clint Murchison Jnr
 
2012-04-26 03:06:41 PM  
Your blog sucks.
 
2012-04-26 03:07:53 PM  

tallguywithglasseson: cman: What does banning abortions and throwing homosexuals in jail have to do with child labor?

Banning abortions boosts the supply of child labor, making it cheaper, and also freeing up the supply of able-bodied adults to arrest more homosexuals.


Banning abortions would be way too slow a way to increase the pool of cheap laborers to exploit. That's what we have illegal immigration for.
 
2012-04-26 03:11:36 PM  

cman: OMG an article says something against my political belief! DOWNVOTE NAO


Aaaaand you just sealed your fate. Nice knowing you.
 
2012-04-26 03:11:38 PM  

cman: What does banning abortions and throwing homosexuals in jail have to do with child labor?


Survey says: Things Newt Gingrich Wants
 
2012-04-26 03:12:20 PM  
Over in one, troll headline.
 
2012-04-26 03:15:50 PM  

pontechango: Wendy's Chili: Garett Jones--Economist at George Mason University

Stopped reading there.

OK, you piqued my interest.
http://mason.gmu.edu/~gjonesb/

As a macroeconomist, I investigate both long-term economic growth and short-term business cycles. My current research explores why IQ and other cognitive skills appear to matter more for nations than for individuals.

For example: A two standard deviation rise in an individual person's IQ predicts only about a 30% increase in her wage. But the same rise in a country's average IQ score predicts a 700% increase in the average wage in that country. I want to understand why IQ appears to have such a large social multiplier.
Good grief, really? IQ scores? This shiat is Comic Book Guy economics.


I was totally unsurprised that AEI was also involved in this.
 
2012-04-26 03:19:01 PM  
So private sector spending drops during a recession?

You don't say...
 
2012-04-26 03:24:12 PM  
Not really what the article says, but if you spend more money on the people, they have more money to buy goods and services, demand creates more jobs, the economy improves.
 
2012-04-26 03:30:15 PM  
Ctrl-F "never"

0 of 0
 
2012-04-26 03:32:17 PM  

Kittypie070: cman: (climate change)


Wow.

I am now embarassed as all hell to have supported you when you were being kicked around elsewhere, cman.

What the f*ck.


I dont deny climate change, I am strongly against the paranoia that people spew about how millions (possibly billions) will die if we don't do what they say.
 
2012-04-26 03:33:22 PM  
Here's one path to a tiny multiplier: Let's suppose the government is trying to find the right person for the job. Now, what if that person already has one....

Yeah, that totally describes the current economic situation.
 
2012-04-26 03:34:08 PM  

CheatCommando: pontechango: Wendy's Chili: Garett Jones--Economist at George Mason University

Stopped reading there.

OK, you piqued my interest.
http://mason.gmu.edu/~gjonesb/

As a macroeconomist, I investigate both long-term economic growth and short-term business cycles. My current research explores why IQ and other cognitive skills appear to matter more for nations than for individuals.

For example: A two standard deviation rise in an individual person's IQ predicts only about a 30% increase in her wage. But the same rise in a country's average IQ score predicts a 700% increase in the average wage in that country. I want to understand why IQ appears to have such a large social multiplier.
Good grief, really? IQ scores? This shiat is Comic Book Guy economics.

I was totally unsurprised that AEI was also involved in this.


It probably sounds a lot better if you don't understand the basic premise of the concepts.
 
2012-04-26 03:34:52 PM  
So, how often does it work out that way? Well, Valerie Ramey of UC San Diego (FD: one of my dissertation advisers) has looked at the major studies and written some of her own, and in a new article she concludes that in the U.S., "on balance government spending does not appear to stimulate private activity." Yes, it boosts government hiring--and lowers the unemployment rate--so on average you're getting a free lunch there. But Faberge shampoo-style stories you read about in freshman economics texts where "he spends money at her store, and she spends money at another store, and so on, and so on" just doesn't seem to show up in the real world.

So people hired to public jobs NEVER spend any money in the private sector?

Really? They spend ZERO money in the private sector when they get a public job? They never buy toothpaste? get a haircut? buy food?

NEVER?
 
2012-04-26 03:40:06 PM  

Corvus: But Faberge shampoo-style stories you read about in freshman economics texts where "he spends money at her store, and she spends money at another store, and so on, and so on" just doesn't seem to show up in the real world.


Neither does supply-side economics but that doesn't stop the righties from believing in that whopper.
 
2012-04-26 03:46:02 PM  

cman: I dont deny climate change, I am strongly against the paranoia that people spew about how millions (possibly billions) will die if we don't do what they say.


You mean like this?
 
2012-04-26 03:55:54 PM  

pontechango: As a macroeconomist, I investigate both long-term economic growth and short-term business cycles. My current research explores why IQ and other cognitive skills appear to matter more for nations than for individuals.

For example: A two standard deviation rise in an individual person's IQ predicts only about a 30% increase in her wage. But the same rise in a country's average IQ score predicts a 700% increase in the average wage in that country. I want to understand why IQ appears to have such a large social multiplier.


tgchan.org
 
2012-04-26 04:04:19 PM  
Wendy's Chili

Garett Jones--Economist at George Mason University

Stopped reading there.


Dont like market based economics I see.
 
2012-04-26 04:12:24 PM  
huh

you mean Dem-o-rat spending does not work

who said that here on FARK???????

no rights reserved
 
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