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Posts Tagged ‘stimulus’

I present below, without comment, a recent interview of Schiff (investor, Austrian economist, accurate predictor of the current crisis) where he talks about the economic crisis and the stimulus. He predicts hyper-inflation worse than anything we have ever seen if we keep going down this path.

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• Tom Daschle — big government healthcare lord with plenty of tax issues  — is out. Obama admits he screwed up. Refreshing.

• He might actually kill the terrible protectionist clause from the stimulus. I certainly did not expect this. 

• He has selected an excellent nominee for the secretary of commerce post, it’s a Republican who once voted to abolish the position!

These are early days yet. However, so far, from a libertarian viewpoint, Obama has proved to be excellent in the areas Democrats are supposed to be good at (due process, civil rights of detainees) and if his appointments and attitudes are any indication, significantly better than Bush in the areas the Democrats are supposed to be bad at (economics). I would be interested in seeing what stance he takes though if the Dems start pressing more contentious legislation (card check, fairness doctrine).

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An interesting post from Robin Hanson on the stimulus bill. Here’s an excerpt (emphasis mine):

Wise taxpayers who get stimuli tax rebate checks should mostly save them, realizing that future taxes must rise to pay for those checks.  For similar reasons, wise taxpayers should also spend less upon hearing about government spending increases.  So with wise taxpayers it is not obvious that tax rebates or government spending increases would help much with the downturn. 

The consensus among macro-economists seems to be that people can in fact be fooled by such stimuli, but as Tyler indicates, it is not clear which policies most fool us.  In particular, the more public attention we give to the stimuli, the less they might work.  We might make people realize that they need to compensate via saving, and the more we scare folks into thinking we need huge stimuli, the more we might scare them away from normal economic activity levels.

So should we stop explaining macro-economics during this crisis, and stop saying how desperately we need stimuli?

Read the whole thing. Also, if you are really into it, head over to Marginal Revolution to follow the ongoing Cowen-Krugman argument on stimulus and spending.

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From his latest column:

[W]rite off anyone who asserts that it’s always better to cut taxes than to increase government spending because taxpayers, not bureaucrats, are the best judges of how to spend their money.

Here’s how to think about this argument: it implies that we should shut down the air traffic control system. After all, that system is paid for with fees on air tickets — and surely it would be better to let the flying public keep its money rather than hand it over to government bureaucrats. If that would mean lots of midair collisions, hey, stuff happens.

I cannot make any sense of this purported analogy. Even ignoring the ridiculous comparison that glosses over distinctions between regulating commons and regulating private property, it seems that Krugman believes that if the government did not provide something, then it simply would not exist.

Here’s Nick Gillespie’s post on Krugman’s stimulus arguments.

Krugman is right about one thing though; there are both good and bad faith arguments going on about the economic crisis. I will let the reader decide which category Krugman’s column falls in.

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Tyler Cowen writes:

Yes, 40 percent of the Obama stimulus package will be a tax cut.  It’s already a talking point that “the Democrats have lost their nerve” but the reality is not so devious.  Obama wishes to deliver on his pledge to cut taxes (always electorally popular) and upon close inspection the economic team probably hasn’t found a lot of first-year stimulus spending it likes.  That leads to this obvious policy conclusion and of course it is very good news.  No, I do not think these tax cuts will drive recovery but a) less money will be wasted, and b) it shows that the Obama team is willing to flinch and be realistic, not just as a final compromise but indeed as an opening gambit.

I agree.

So far, all of Obama’s actions — from his excellent economic appointees to the current package — show that he is more a pragmatist than a far-left idealogue. Of course this does not mean his policies, economic or otherwise, will be great; merely that they will be less bad than some had feared. 

By the way, the Obama’s stimulus package is giving Paul Krugman “post-partisan depression”. Now that is definitely a great thing.

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