naked capitalism

Anonymous Jones says:

I’m always amazed when I read comments like this. Your knowledge is so much less than you imagine it to be.

“It weakens future growth.” Growth of what? Growth for whom? I have to imagine that those not participating in the “benefits” of future growth probably wouldn’t care too much about some growth if that solely meant that a select few will later become more wealthy. Every policy decision has winners and losers. There are always distributional concerns, not the least of which here include inter-class and inter-generational distribution concerns. A good starting point for an intelligent analysis is to use precise terms. Many would reject the idea that the only logical way to evaluate this particular policy decision is on the basis of some ill-defined future growth.

“Even the CBO will tell you that.” Well, then it must be right. Actually, the issue about what drives measures of economic “growth” appears so overwhelmingly complex and the data accumulated over the centuries seem so inadequate that I would question anyone who thinks that it is obvious that either all attempts to stimulate have a chance at success or that all attempts to stimulate achieve nothing more than “kicking the can down the road.” The data analysis is almost always flawed because it is almost never an apples-to-apples comparison. To wit, I really doubt that the relatively enormous federal expenditures in the first half of the 20th century targeted at transforming Los Angeles into a shipping and industrial center, from building the Port of LA (which was totally useless for just about anything before the feds built a man made harbor) to starting the nearby interstate highway network, were a negative drag on the normal measures of overall economic growth, whether your scope of analysis encompasses Los Angeles, the State of California, or the US as a whole.

“There is little incentive for small business growth.” This is just some random statement planted in the comment with no apparent factual basis. I run two small businesses in California, a state with obviously high regulation on a relative basis. I have no idea why you think I have little incentive for growth. It seems to me that I have a huge incentive for growth, and in fact, both of my businesses have been growing, even in this current recession. With my businesses growing, I have received the benefits of this growth. How am I not incentivized under your theories? Further, regulations don’t just add to my cost structure. Of course, they do add costs, but they also seem to provide me with a safer economic environment, which gives new consumers less reason to avoid trying my products, makes my supply chain safer and more efficient, and can also level the playing field in many other important ways. So this idea that regulations are solely a negative for my two businesses also does not comport with my experience. I don’t know what the proper level of regulation should be, and I doubt you do either.

“Even one of the president’s own advisers.” Well, if one of the president’s advisers once said something in a paper, it certainly must be true (or at least widely accepted as true within the administration).

“Higher taxes kills the real economy.” Lawlessness and insecure borders also kill the real economy. Can you really not see that the issue is more subtle than lower-taxes-must-always-be-good? Should taxes be zero in your ideal world? If you say yes, then there is no reason to continue discussing the issue. If you say no, then there has to be an intelligent analysis of the proper level of taxation, which requires far more than a few paragraphs on the “tax multiplier.” I don’t know what the proper level of taxation is. I could easily imagine that the proper level is higher than the level currently in place.

“The administration is killing our economy. They must know these things.” What is their motivation for doing this again? I missed that in your analysis. To be honest, it doesn’t really appear that you thought all this through.

In any event, intelligent people have spent their lives studying the “stimulus” topic and yet amazingly, they don’t all agree with your conclusions. I doubt all those who disagree are just shilling. That leads me to believe the issue isn’t as simple as you portray it.