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(SanDiego UnionTribune)   Remember last week when Gov. Brown announced that for the first time in 20 years, California was no longer going to be a fiscal laughingstock? Yeah....about that   (utsandiego.com ) divider line
    More: Followup, Legislative Analyst's Office, welfare reform, Vallejo  
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2607 clicks; posted to Politics » on 22 Jan 2013 at 8:19 AM (3 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-01-22 08:25:08 AM  
 
2013-01-22 08:28:19 AM  
An opinion piece loaded with nonsense and written by a Republican operative? In Papa Doug's newspaper? Shocked, I am.
 
2013-01-22 08:29:32 AM  
Isn't it outrageous that California is fulfilling its obligations to pay retirement benefits as promised to former employees who paid into said pension fund?

The little people don't deserve nice things like pensions.
 
2013-01-22 08:33:39 AM  
So, the fifth paragraph says a nonpartisan group scored it as balanced but the agency head is mad that it doesn't pay down the entire wall of debt nor does it properly screw over public employee pensions.

Well, I'm goddamn shocked that the entire problem isn't fixed with one budget proposal.
 
2013-01-22 08:35:06 AM  

LibertyHiller: An opinion piece loaded with nonsense and written by a Republican operative? In Papa Doug's newspaper? Shocked, I am.


I figured as much but as I'm from the other coastline, I know not which sites I should trust as news and not opinion.

/it's like a Californian submitting a Boston Herald piece on why we're back to being TAXACHUSETTS because of a 1% increase on income tax and a decrease in sales tax
 
2013-01-22 08:35:43 AM  

somedude210: LibertyHiller: An opinion piece loaded with nonsense and written by a Republican operative? In Papa Doug's newspaper? Shocked, I am.

I figured as much but as I'm from the other coastline, I know not which sites I should trust as news and not opinion.

/it's like a Californian submitting a Boston Herald piece on why we're back to being TAXACHUSETTS because of a 1% increase on income tax and a decrease in sales tax


also, subby
 
2013-01-22 08:43:26 AM  

somedude210: LibertyHiller: An opinion piece loaded with nonsense and written by a Republican operative? In Papa Doug's newspaper? Shocked, I am.

I figured as much but as I'm from the other coastline, I know not which sites I should trust as news and not opinion.

/it's like a Californian submitting a Boston Herald piece on why we're back to being TAXACHUSETTS because of a 1% increase on income tax and a decrease in sales tax


Actually it was a HUGE .25 % increase of sales tax that according to these guys will put our economy in total collapse.

Yes 25 CENTS for every $100 is what California republicans are freaking out about.
 
2013-01-22 08:46:45 AM  
This article is basically one giant use of this logical fallacy:

www.biopoliticaltimes.org
 
2013-01-22 08:46:49 AM  
I hope my uncool niece, Teresa, who lives in California, isn't in trouble.
 
2013-01-22 08:52:30 AM  

topcon: I hope my uncool niece, Teresa, who lives in California, isn't in trouble.


Just make sure she steers clear of the suede denim secret police.
 
2013-01-22 08:57:21 AM  
It's too early to know the fallout of California's higher income-tax rate. What if the millionaires move?

If you genuinely haven't developed a statistical model for it, the default assumption in budgeting is to assume the same thing that happened last couple times you raised the tax in question. If you don't even know _that_, the default accounting assumption is no change (reasonable in this case since the increase is nowhere near relocation costs, even over a decade).

There, problem solved.
 
2013-01-22 08:58:20 AM  

Corvus: Actually it was a HUGE .25 % increase of sales tax that according to these guys will put our economy in total collapse.

Yes 25 CENTS for every $100 is what California republicans are freaking out about.


I was talking about the proposed tax hikes in MA that Patrick proposed during his State of the Commonwealth speech last week, but point taken
 
2013-01-22 09:00:44 AM  
I saw the phrase "government idealism" and J thought the articke was going to bash trillion-dollar flight-deck-prancing wars in pursuit of non-existent WMDs and temporary female suffrage and education from a party that hates female suffrage and education back home.

I was mistaken. Spittle-flecked outrage over tax increases.
 
2013-01-22 09:02:58 AM  

Jim_Callahan: It's too early to know the fallout of California's higher income-tax rate. What if the millionaires move?

If you genuinely haven't developed a statistical model for it, the default assumption in budgeting is to assume the same thing that happened last couple times you raised the tax in question. If you don't even know _that_, the default accounting assumption is no change (reasonable in this case since the increase is nowhere near relocation costs, even over a decade).

There, problem solved.


Statistical models are far too complex for today's Republicans. It's much easier for them to assume that every millionaire is going to immediately shut down their businesses and move to the Cayman Islands.
 
2013-01-22 09:07:07 AM  

Zeno-25: Isn't it outrageous that California is fulfilling its obligations to pay retirement benefits as promised to former employees who paid into said pension fund?

The little people don't deserve nice things like pensions.


Those same little people that also allowed their government to raid their pension funds?

This is the issue that is at the heart of the Social Security issue. The baby boomers paid into the SS trust fund for years. The government (voted in by the boomers, mind you) then started borrowing money from that trust fund to finance wars and what not. Now we're at the point where we have to start paying back the trust fund, and that is going to be extremely painful. Who should bear the pain for our poor financial planning? In my opinion, the boomers should take a good portion of it.

To make everyone's favorite analogy, it would be if an individual set aside a decent amount of money every month for retirement. He then started "borrowing" money out of that account, and using it to give his family a very nice life. Now it is time to retire, and it turns out all he has in the account are IOUs. What is the proper course of action? Boomers would have you believe that the individuals kids should pay off all the IOUs he incurred, regardless of how painful it will be for them. Someone sane would say that the individual should bear the brunt of the pain.
 
2013-01-22 09:08:49 AM  
But I was assured in the Sports tab last night that Real MurkinsTM would all move to a state income free tax haven like Florida. I also found out that Lefty is about as dumb as he looks, has really bad tax accountants & lawyers, and that 50 million in pre-tax normal income just isn't that much in the face of the tax increases.

/Phil actually said that he had a "62, 63% combined tax rate"
//Lefty AWing again? Never!
 
2013-01-22 09:14:38 AM  

MattStafford: Zeno-25: Isn't it outrageous that California is fulfilling its obligations to pay retirement benefits as promised to former employees who paid into said pension fund?

The little people don't deserve nice things like pensions.

Those same little people that also allowed their government to raid their pension funds?

This is the issue that is at the heart of the Social Security issue. The baby boomers paid into the SS trust fund for years. The government (voted in by the boomers, mind you) then started borrowing money from that trust fund to finance wars and what not. Now we're at the point where we have to start paying back the trust fund, and that is going to be extremely painful. Who should bear the pain for our poor financial planning? In my opinion, the boomers should take a good portion of it.

To make everyone's favorite analogy, it would be if an individual set aside a decent amount of money every month for retirement. He then started "borrowing" money out of that account, and using it to give his family a very nice life. Now it is time to retire, and it turns out all he has in the account are IOUs. What is the proper course of action? Boomers would have you believe that the individuals kids should pay off all the IOUs he incurred, regardless of how painful it will be for them. Someone sane would say that the individual should bear the brunt of the pain.


I largely don't have any issues with your assessment of who should pay. But I do have a question: what would you prefer the federal government do with Social Security revenues to avoid this whole IOU thing in the first place?

Should they just throw the money in a giant vault and only pull it out when absolutely necessary? It would lose value there over time and force us to raise the FICA tax rate further just to stay where we are at now with the trust fund balance.

Should we invest the money in the stock market instead of in T-bills? Man, if you were worried about socialism before, I'd hate to see what you say about real full-throated socialism as the government buys about ten percent of every corporation in the country. Then there's the whole issue of what happens when the stock market goes in the toilet like in 2008.

T-bills may not be a perfect solution, but they're the best anyone has come up with as of yet.
 
2013-01-22 09:15:25 AM  

Zeno-25: Isn't it outrageous that California is fulfilling its obligations to pay retirement benefits as promised to former employees who paid into said pension fund?

The little people don't deserve nice things like pensions.


It's unsustainable. Something about the way public employees get compensated has to change.
 
2013-01-22 09:22:51 AM  

Serious Black: I largely don't have any issues with your assessment of who should pay. But I do have a question: what would you prefer the federal government do with Social Security revenues to avoid this whole IOU thing in the first place?

Should they just throw the money in a giant vault and only pull it out when absolutely necessary? It would lose value there over time and force us to raise the FICA tax rate further just to stay where we are at now with the trust fund balance.

Should we invest the money in the stock market instead of in T-bills? Man, if you were worried about socialism before, I'd hate to see what you say about real full-throated socialism as the government buys about ten percent of every corporation in the country. Then there's the whole issue of what happens when the stock market goes in the toilet like in 2008.

T-bills may not be a perfect solution, but they're the best anyone has come up with as of yet.


T-Bills are fine, the issue is more of what the government spent that money on. If the government invested the money in things that were productive, as opposed to the military/safety nets, this wouldn't be a big issue. If there is nothing productive for the government to spend that money on (which very well may be the case), then yes, either put it in a vault or put it in the stock markets. Lending the money to the government and having the government spend it on the military/safety nets is probably just above burning it, in terms of safekeeping that trust fund.

Lock

Box
 
2013-01-22 09:25:52 AM  
When did funding pensions become "rewarding public employees"?
A pension is part of compensation. It's not a reward, it's part of the farking wage.

And then Republicans wonder why people are having trouble retiring. Christ.
 
2013-01-22 09:27:10 AM  
FTFA: "But this rosy view doesn't take into account the negative effects of new taxes and regulations, said David Wolfe, the legislative director of the Howard Jarvis Taxpayers Association"

Yeah, so crazy people don't like it.
 
2013-01-22 09:29:01 AM  

pudding7: Zeno-25: Isn't it outrageous that California is fulfilling its obligations to pay retirement benefits as promised to former employees who paid into said pension fund?

The little people don't deserve nice things like pensions.

It's unsustainable. Something about the way public employees get compensated has to change.


No, something about how we get the money to pay for them has to change. Honor the contracts, you see.
 
2013-01-22 09:30:44 AM  

MattStafford: military/safety nets


Not going to completely disagree with you, but never, ever put these two together as if they share any kind of relation or equivalency.
 
2013-01-22 09:42:43 AM  

Sergeant Grumbles: Not going to completely disagree with you, but never, ever put these two together as if they share any kind of relation or equivalency.


They both have a very low ROI.
 
2013-01-22 10:01:39 AM  
Came here to grumble about the UT, see that it's covered right away. Very Satisfied.
 
2013-01-22 10:10:31 AM  

Sergeant Grumbles: When did funding pensions become "rewarding public employees"?
A pension is part of compensation. It's not a reward, it's part of the farking wage.

And then Republicans wonder why people are having trouble retiring. Christ.


Yup. The real problem is wages have stagnated/sunk so badly over the last 30 years that people don't even realize they're being pwned right up the ass by the big business/bought congress tag team. They see government workers getting the compensation the middle class *should* be getting and assume the government workers are making out like bandits - rather than the truth, which is that society is failing in this way for most people now.

Care about 2 parent households and traditional values? Then we need to curb the falling wages so households don't need 2 full-time wage earners again.
 
2013-01-22 10:12:51 AM  

bulldg4life: So, the fifth paragraph says a nonpartisan group scored it as balanced but the agency head is mad that it doesn't pay down the entire wall of debt


Couple of points: The San Diego U-T is a right wing rag. Demanding the state pay down its bonds immediately or be considered insolvent is the same as demanding a current mortgage holder pay off their mortgage immediately or be considered insolvent.
 
2013-01-22 10:14:11 AM  
Article: If you believe actual economists then California is fine. However if you listen to Derpconomists California won't survive unless we steal all the pensions to give tax breaks for the wealthy!!!
 
2013-01-22 10:21:45 AM  

MattStafford: Sergeant Grumbles: Not going to completely disagree with you, but never, ever put these two together as if they share any kind of relation or equivalency.

They both have a very low ROI.


What do you think people on welfare do with their money? Burn it to stay warm?
 
2013-01-22 10:24:08 AM  
That read like a blog post on Atlas Shrugged or RedState, not an op-ed from a paid writer. I remember back when the Union Tribune had actual journalism going on.
 
2013-01-22 10:25:28 AM  

Serious Black: MattStafford: Sergeant Grumbles: Not going to completely disagree with you, but never, ever put these two together as if they share any kind of relation or equivalency.

They both have a very low ROI.

What do you think people on welfare do with their money? Burn it to stay warm?


I thought they use it to buy crack, Cadillacs and malt liquor.
 
2013-01-22 10:26:24 AM  

Delay: bulldg4life: So, the fifth paragraph says a nonpartisan group scored it as balanced but the agency head is mad that it doesn't pay down the entire wall of debt

Couple of points: The San Diego U-T is a right wing rag. Demanding the state pay down its bonds immediately or be considered insolvent is the same as demanding a current mortgage holder pay off their mortgage immediately or be considered insolvent.


The same argument that has Medicare $70T in debt or whatever SUPERLARGE number they're using this week.

Sure, if you add up all estimated medical costs for everyone currently living in the US who will be eligible for the plan (even a teenager whose first day of work was yesterday) without figuring in the payroll taxes you'll be collecting from them (not to mention the yet-unborns who will be paying payroll taxes by time our fresh-faced teenager retires), you come up a bit short.

The same argument that hyperventilates about the US being $17T in "debt", while forgetting that the bulk of that debt is intragovernmental (something like 65% of it), and isn't due for 20+ years.
 
2013-01-22 10:41:23 AM  

Dr Dreidel: Sure, if you add up all estimated medical costs for everyone currently living in the US who will be eligible for the plan (even a teenager whose first day of work was yesterday) without figuring in the payroll taxes you'll be collecting from them (not to mention the yet-unborns who will be paying payroll taxes by time our fresh-faced teenager retires), you come up a bit short.


This is how they're already killing the Post Office, and it's working.
 
2013-01-22 10:42:04 AM  

Serious Black: What do you think people on welfare do with their money? Burn it to stay warm?


Consumption is not investment. Consumption has zero ROI. This isn't a difficult concept, yet it somehow evades so many people.
 
2013-01-22 10:45:34 AM  

MattStafford: Consumption is not investment. Consumption has zero ROI. This isn't a difficult concept, yet it somehow evades so many people.


So in other words, yes, you think they burn it to stay warm.
 
2013-01-22 10:48:52 AM  
I love how they always try to spin it as a "payback to unions" rather than a pay increase to the millions of public employees who have gone without one for about 5 years. Freaking fascist coonts.
 
2013-01-22 10:55:55 AM  
FTFA: "State Senate Republican Leader Bob Huff, writing in the Republican-leaning Flash Report, accused Brown of playing a shell game with the tax-increase funds, which were promised to public schools but are now being used to reward public employees. "

How dare they take the funds meant to help public employees and use them to reward public employees!

Gotta love how people are mad that the government has to artificially create a middle class because the private sector wants to pay everyone else peanuts and create a massive lower class. Yeah, the government is the bad guy. If everyone was working for the government (and I understand how bad that sounds) no one would be having money issues.

$7.25-$8.00 an hour, at 34 hours a week, is not enough to raise a healthy American family. Until the poorest of the poor can adequately create a positive environment for their children America is failing.
At $80,000 a year, the state of CA is truly providing enough for their best and brightest to work for the government and provide for future generations. How are you helping, corporations?

More money paid=more money spent=more taxes.
 
2013-01-22 11:05:44 AM  

MattStafford: Serious Black: What do you think people on welfare do with their money? Burn it to stay warm?

Consumption is not investment. Consumption has zero ROI. This isn't a difficult concept, yet it somehow evades so many people.


Actually the social safety net stuff does have a huge ROI. Starting with the obvious, food assistance programs. In addition to preventing people from going hungry, that money gets spent in the private sector, allowing grocery stores, and all that supports grocery stores (Truck drivers delivering groceries, farmers, and those companies that make food). Then you've got housing assistance, which keeps people from being homeless, making it easier for them to find work, as they'll have an address, in addition to being able to shower and have a phone.

Then there's things like medicaid, which is a real nice thing too. Since the medical staff will actually get paid for services rendered. As it is, the uninsured don't get check ups or anything, so whenever they do end up in the emergency room, things are usually a lot worse than they would be otherwise. This requires expensive surgery, and the doctors won't refuse to operate. They'll do the surgery, and they won't get paid for it. Neither will the support staff. So yeah, more people getting paid is a nice return too.
 
2013-01-22 11:06:56 AM  

Sergeant Grumbles: So in other words, yes, you think they burn it to stay warm.


Please explain to me how consumption has a positive ROI. If the government cuts a check to a guy for 100 bucks, what happens? He spends it on a TV (let's say an American TV, just so your theory has even half a chance of making sense. If he spends it on a foreign TV, as is likely the case, you've literally done nothing). The TV manufacturer notices the increase in demand, and starts producing more TVs. This is where I assume your analysis ends - more TVs being made = stronger economy = positive ROI. Obviously, what really happens is the TV manufacturer makes an extra TV, and finds that there is no demand for that TV (the government only cut one check to the guy). The TV manufacturer scales down production, and you return to the status quo.

Where is any sort of ROI from consumption. Please explain to me how borrowing 100 dollars and buying a TV somehow makes our economy stronger. It is farking asinine.
 
2013-01-22 11:10:27 AM  

LectertheChef: Actually the social safety net stuff does have a huge ROI. Starting with the obvious, food assistance programs. In addition to preventing people from going hungry, that money gets spent in the private sector, allowing grocery stores, and all that supports grocery stores (Truck drivers delivering groceries, farmers, and those companies that make food). Then you've got housing assistance, which keeps people from being homeless, making it easier for them to find work, as they'll have an address, in addition to being able to shower and have a phone.

Then there's things like medicaid, which is a real nice thing too. Since the medical staff will actually get paid for services rendered. As it is, the uninsured don't get check ups or anything, so whenever they do end up in the emergency room, things are usually a lot worse than they would be otherwise. This requires expensive surgery, and the doctors won't refuse to operate. They'll do the surgery, and they won't get paid for it. Neither will the support staff. So yeah, more people getting paid is a nice return too.


Consumption is not investment. The only ROI gained from safety nets is the prevention of riots (which is not negligible, but still not a huge ROI).

To show how stupid your argument is - imagine you are in charge of an African nation. Would you think it wise to start borrowing massive amounts of money to distribute to your people? Do you honestly believe that your country will be better off in the long run?
 
2013-01-22 11:12:29 AM  

LibertyHiller: An opinion piece loaded with nonsense and written by a Republican operative? In Papa Doug's newspaper? Shocked, I am.


Doug Manchester, San Diego's own pocket Rupert Murdoch. He owns both San Diego county daily papers (SD Union Tribune and North County Times) now.

The other major publication is the San Diego Reader, also owned by another ultra-right-wing Catholic a free weekly that (I believe) hasn't won a single journalism or creative writing award of any kind in its 40 years of publication.

There is one other news source in San Diego, KPBS public radio and TV station, an NPR affiliate.
 
2013-01-22 11:16:36 AM  

Sergeant Grumbles: MattStafford: Consumption is not investment. Consumption has zero ROI. This isn't a difficult concept, yet it somehow evades so many people.

So in other words, yes, you think they burn it to stay warm.


What do you think Gulfstream employees do with their money? Look, I know where you're coming from, and it's true the marginal propensity to consume is higher for lower income individuals which does make it more effective as stimulus, but he's right that actually investing in expanded infrastructure is the most bang for your buck in the long term. There is obviously the "make-work" aspect of repairing highways, building light rail, strengthening the electrical grid, and expanding high speed internet access that allows for temporary employment of low-skill labor, but after the crisis locals are able to take advantage of these public goods which lower barriers of entry into markets.

Transfer payments have their place, but he's saying that comparatively they are weaker than investment if we're looking to raise government revenues by expanding the economy in the long term.
 
2013-01-22 11:21:19 AM  

bulldg4life: So, the fifth paragraph says a nonpartisan group scored it as balanced but the agency head is mad that it doesn't pay down the entire wall of debt nor does it properly screw over public employee pensions.

Well, I'm goddamn shocked that the entire problem isn't fixed with one budget proposal.


Yeah, stopped reading at that point. "It doesn't pay all of the wall of debt within the time period". Fark you in the ear Mr Goal Post Mover. If your guys were in office they'd be "Debt doesn't matter".
 
2013-01-22 11:24:10 AM  

MattStafford: Sergeant Grumbles: So in other words, yes, you think they burn it to stay warm.

Please explain to me how consumption has a positive ROI. If the government cuts a check to a guy for 100 bucks, what happens? He spends it on a TV (let's say an American TV, just so your theory has even half a chance of making sense. If he spends it on a foreign TV, as is likely the case, you've literally done nothing). The TV manufacturer notices the increase in demand, and starts producing more TVs. This is where I assume your analysis ends - more TVs being made = stronger economy = positive ROI. Obviously, what really happens is the TV manufacturer makes an extra TV, and finds that there is no demand for that TV (the government only cut one check to the guy). The TV manufacturer scales down production, and you return to the status quo.

Where is any sort of ROI from consumption. Please explain to me how borrowing 100 dollars and buying a TV somehow makes our economy stronger. It is farking asinine.


But when the TV is purchased the manufacturer derives some profit beyond the cost of the unit, and producing that new TV will create wages for their workforce. Both the company and the employees can use that money to consume/invest, which benefits the next manufacturer, etc.

The whole concept of pump-priming is that when you create semi-artificial demand you increase the velocity of money, which has a positive multiplier effect.

PQ = MV. Learn it and love it.
 
2013-01-22 11:27:59 AM  

MattStafford: Serious Black: What do you think people on welfare do with their money? Burn it to stay warm?

Consumption is not investment. Consumption has zero ROI. This isn't a difficult concept, yet it somehow evades so many people.


Holy farking shiat. You have to go a long way to find something so dumb about basic economics it surprises me but you have won the prize you bright and shining star.

(Hint - the I in ROI is the return on the GOVERNMENT'S investment and is particularly high when that investment is made in people who have a high marginal propensity to consume)
 
2013-01-22 11:44:13 AM  

MattStafford: LectertheChef: Actually the social safety net stuff does have a huge ROI. Starting with the obvious, food assistance programs. In addition to preventing people from going hungry, that money gets spent in the private sector, allowing grocery stores, and all that supports grocery stores (Truck drivers delivering groceries, farmers, and those companies that make food). Then you've got housing assistance, which keeps people from being homeless, making it easier for them to find work, as they'll have an address, in addition to being able to shower and have a phone.

Then there's things like medicaid, which is a real nice thing too. Since the medical staff will actually get paid for services rendered. As it is, the uninsured don't get check ups or anything, so whenever they do end up in the emergency room, things are usually a lot worse than they would be otherwise. This requires expensive surgery, and the doctors won't refuse to operate. They'll do the surgery, and they won't get paid for it. Neither will the support staff. So yeah, more people getting paid is a nice return too.

Consumption is not investment. The only ROI gained from safety nets is the prevention of riots (which is not negligible, but still not a huge ROI).

To show how stupid your argument is - imagine you are in charge of an African nation. Would you think it wise to start borrowing massive amounts of money to distribute to your people? Do you honestly believe that your country will be better off in the long run?


Yes, I would. Though for me, since it's not all a zero sum game, it's not a situation of one or the other. I could put money directly into the hands of the people, as well as build up my country's infrastructure. Then, being a dictator in Africa, I would build up my Army, conquer my neighbors, and steal their stuff. Plus kill whitey and rape his women.
 
2013-01-22 11:47:27 AM  

Grungehamster: The whole concept of pump-priming is that when you create semi-artificial demand you increase the velocity of money, which has a positive multiplier effect.


And what happens when you eventually destroy that money and destroy that demand? Does the multiplier effect work in the opposite direction?

Suppose you hired a bunch of people to start building tanks. Those employees would buy things with their money. The tank factory would have to buy supplies. Those people would buy things with their money. Retail stores would pop up around the factories. Service stores would pop up around the factories. The economy would be booming.

Now what happens when you stop building tanks and lay those people off?

Long Term thinking - Learn it and love it.
 
2013-01-22 11:49:00 AM  

Tigger: Holy farking shiat. You have to go a long way to find something so dumb about basic economics it surprises me but you have won the prize you bright and shining star.

(Hint - the I in ROI is the return on the GOVERNMENT'S investment and is particularly high when that investment is made in people who have a high marginal propensity to consume)


It just blows my mind how many people think that borrowing money and giving that money to people so they can buy TVs is an economically sound plan. It seriously does. Are you incapable of thinking anywhere besides the short term?

Suppose you hired a bunch of people to start building tanks. Those employees would buy things with their money. The tank factory would have to buy supplies. Those people would buy things with their money. Retail stores would pop up around the factories. Service stores would pop up around the factories. The economy would be booming.

Now what happens when you stop building tanks and lay those people off?

Long Term thinking - Learn it and love it.
 
2013-01-22 11:50:22 AM  

LectertheChef: Yes, I would. Though for me, since it's not all a zero sum game, it's not a situation of one or the other. I could put money directly into the hands of the people, as well as build up my country's infrastructure. Then, being a dictator in Africa, I would build up my Army, conquer my neighbors, and steal their stuff. Plus kill whitey and rape his women.


You would fail as a leader. Borrowing money and consuming with that money is a surefire way to destroy an economy.
 
2013-01-22 11:51:52 AM  

MattStafford: Grungehamster: The whole concept of pump-priming is that when you create semi-artificial demand you increase the velocity of money, which has a positive multiplier effect.

And what happens when you eventually destroy that money and destroy that demand? Does the multiplier effect work in the opposite direction?

Suppose you hired a bunch of people to start building tanks. Those employees would buy things with their money. The tank factory would have to buy supplies. Those people would buy things with their money. Retail stores would pop up around the factories. Service stores would pop up around the factories. The economy would be booming.

Now what happens when you stop building tanks and lay those people off?

Long Term thinking - Learn it and love it.


Why would anybody stop building tanks? When you have enough tanks, you can sell them to other countries, so that everybody can have tanks. Tanks are awesome. The tank factory could also be converted to build other stuff, and some of those people who were paid to design the tank could maybe start a company of their own, building stuff they came up with themselves. Like a rolled taco maker. The world needs rolled taco makers. Why hasn't Wall St funded the development of a rolled taco maker?
 
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