More than likely, it's because I don't agree with them which is a mammoth sin when you operate in a world where everyone is never wrong and has to win the argument every single time. I'm certain, however, that I'm in good company.
I guess Mr. Zandi and Mr. Blinder are also idiots. And socialists. And fascists. Let's just ignore the fact that they are both fully qualified economists and focus on the common trait they share with myself: they think that the government can help the economy. They think it DID in this case. And they have the proof to back it up. Further, it helped prevent a worldwide financial collapse.
Zandi and Blinder offer the first comprehensive estimate of our full response to the crisis: Absent the financial rescue and the stimulus, "GDP in 2010 would be about 6 ½ percent lower, payroll employment would be less by some 8 ½ million jobs, and the nation would now be experiencing deflation."
Notice the part I bolded. AND THE STIMULUS. More importantly, they (and me) are issuing all of you naysayers a challenge.
Different models do give different answers. That's why we say we welcome others to try and estimate this. But you can't make anything come out that you want. These models are fitted to real data. They're not just made up. They describe how the U.S. economy worked in the past.
Making anything come out that you want...say, if you have the same idea (cut taxes for the rich, cut corporate taxes, deregulate blah blah blah) over and over again on how to fix the economy?
So, by all means, let's see your model, folks. I welcome you to try.
Oh, and don't forget to come up with some solutions going forward as both Zandi and Blinder have.
Blinder: I would do two things, both aimed at jobs. I would do the so-called new jobs tax credit on a much bigger and better scale than the HIRE Act, which was a baby step. The second thing I would do is a WPA-like program of temporary, direct, public hiring. People could work in parks, in maintenance, the many paper-shuffling jobs there are in government. You could save a lot of state and local jobs that would otherwise be terminated.
Zandi: If the unemployment rate was peaking at 7 percent, I'd say no worries, no need for more stimulus. But I'm nervous about 9.5 percent unemployment when you have a zero percent interest rate and a huge deficit. If we're all wrong and we go into recession, we've got no policy response. So I think it's prudent to err on the side of doing too much rather than too little. And we can do that. We're not Greece or Britain or Germany. We have a 3 percent 10-year Treasury yield. We have always solved our fiscal problems, and the world has faith we will solve our future ones. So we have the resources.
I've been saying pretty much the same thing all along. I guess all three of us are idiots, though. Anyone is who thinks the government is the solution, right?
25 comments:
why are u telling your commenters to come up with solutions when you can't? You just found a link.
Do you read this blog, sw? He's been saying the same things both of these guys have been saying every day.
The second thing I would do is a WPA-like program of temporary, direct, public hiring. People could work in parks, in maintenance, the many paper-shuffling jobs there are in government. You could save a lot of state and local jobs that would otherwise be terminated.
People have told you multiple times that government does not create wealth, it sucks it out of the productive areas of the economy. So you found at least one other idiot that can't figure out why putting people in a Government job doesn't help...big surprise! He says add more people to government payrolls which can't already support their bloat to make government....less efficient?!! And this is a solution? Criminy!! I would have thought a high level economist like
Zandi:But I'm nervous about 9.5 percent unemployment when you have a zero percent interest rate and a huge deficit. If we're all wrong and we go into recession, we've got no policy response. So I think it's prudent to err on the side of doing too much rather than too little. And we can do that. ... We have always solved our fiscal problems, and the world has faith we will solve our future ones. So we have the resources.
This comment should scare you but it probably doesn't. First he laments about unemployment and deficit and then say we should do more. Yeah, spend more on credit and hope to God that rest of the world thinks we are a safe bet. All riding on world sentiment that we are good for it. Using the government to "do too much" is NEVER a good idea.
Let's just say I disagree with both of them and you.
Oops, second paragraph I left a sentence fragment in there, sorry.
"at least one other idiot that."
May I ask what it is that you do for a living, 6Kings? Alan Blinder is economist that served on the board of the Fed. He's got nearly 40 years of experience of working with the economy. So, he's not an idiot. Just because you don't like what he has to say doesn't mean that he's an idiot. Funny, I just said the same thing to my 5 year old nephew.
Mark has laid out a challenge for you. Use your own model and calculate whether or not the stimulus and TARP worked given the data which cannot be altered. This how the US economy works. Why are you having such difficulty with this?
Seems to me like there is some data to work with here.
"GDP in 2010 would be about 6 ½ percent lower, payroll employment would be less by some 8 ½ million jobs, and the nation would now be experiencing deflation."
So, these are projections based on a model. Let's here some other models then for what might have happened. Any takers?
I refuse to play M's game. He says the actuaries that work for the SSA are engaging in "hypothetical's" about SS's future, but he can find a couple of economists that can declare what would've happened without the stimulus.
You can have it one way or the other, but not both.
Anyone here a professional economist? No? Good, now that we've got that out of the way, we can all agree that none of us possess the expertise to create an economic model that is going to convince anyone of anything, especially when compared to something professionals produce. So you can drop the "come up with your own model" bullshit. None of you would be able to come up with your own model either, and you know it. Now, a salient fact:
"Zandi and Blinder offer the first comprehensive estimate of our full response to the crisis: "
Oh, so they have the first one. Good for them. If another model comes out from "fully qualified economists" that doesn't paint quite the same picture, you will grant it the same amount of credibility, no doubt? Given that the events in question were relatively recent, I'm pretty confident that this won't be the only model and estimates we will see.
"I've gone back to every recession and depression and looked at the policy efforts to address the downturn, and try to at least capture the different ways in which policymakers have tried to generate a recovery."
This is interesting. I would like to ask Zandi and Binder what this means. It sounds as if they are making the assumption that whatever policymakers did resulted in the recovery, without considering that actions policymakers took had no effect at all. Mark, you seem to know all about this model though, maybe you can take a crack at the question?
"Different models do give different answers. That's why we say we welcome others to try and estimate this. But you can't make anything come out that you want. These models are fitted to real data. They're not just made up. They describe how the U.S. economy worked in the past."
I find this claim that the models describe how the U.S. economy worked in the past interesting and slightly hard to believe. A model that doesn't rely on special cases in order to predict results and yet gets the answers correct would be extremely valuable. For example, if you could create a model that simply accepted as input a bunch of relevant variables for the US economy - say, adult population, education levels of that population, current tax rates, current interest rates, and it spit out the GDP and unemployment rates and was accurate for various historical years, that would be a very powerful model. Mark - you can chime in here right? How accurate is their model and why?
And finally, for this bit of projection:
>There are times when I marvel at the arrogance of my commenters.
For example:
>I don't profess to be an expert on the economy.
If you aren't an expert on the economy, why do you say things like this:
"For example, when I say that TARP and the stimulus saved the economy"
Right there. You know those things how? Why do you not preface your statements with "I think", or "I believe"? That is one reason you get called idiotic, especially when you employ it when talking about conservatives. Would it be annoying if I stated "Mark beats his wife" with a kind of certainly that I most certainly do not possess? That is one reason you are called idiotic.
The second would be because of your consummate lack of skill in backing up your claims when countervailing information (usually in the form of questions) is presented. You either ignore them or try to deflect off onto tangents. You want to talk about laissez faire/socialistic/keynesian policies - which ones? Why are they good/bad? I marvel at the way you seem to operate - the world appears to be this collection of unrelated events that just float around, waiting for Mark to pluck them out at random. None of them have any underlying principles that can be usefully argued about - some days one thing works, some days a different thing works, just for the heck of it. This catches you a lot of flak too - you don't appear to have any root principles that guide your thinking, which means arguing with you is like fighting with an amoeba. You beat down one tentacle, only to have another tentacle rise up, even though the second tentacle is made of exactly the same stuff as the first. (Eh, a poor metaphor, but you get the picture.)
(Tess, I like your argument. Did you defend any of the past GOP Presidents against accusations of idiocy w/ that same argument? Certainly someone rising to the office of President of the United State must be a pretty intelligent person, even though you don’t like what he has to say, right? No reply necessary…we all know.)
Though I’m not an economist, I am a junior mathematician of sorts and a Vulcan for logic, so rather than just cutting and pasting another economist’s opposing view, let’s just look at some points that should be disconnected from one’s academic credentials.
At a cost of $814 billion (w/ approx. $570 billion actually used so far), the left claims credit for between 1.4 and 3.3 million “created or saved” jobs. If we ignore the impossible to prove “saved jobs” notion and just count them as a created jobs, that’s approximately $172,000 per job. Is that money well spent?
And lest we forget, unemployment is still high (static and/or rising), and with private sector employment declining while government employment increases (by approx. 10% at last count), these ‘created or saved’ jobs are more on the public side. So, in non-economist speak, if you have less and less people working yet we’re paying for more and more government employees, how can that possibly be good? Or maintained? Or expanded upon (in coming years)?
Now, one could argue that the purpose of any stimulus is just to be a pump-primer, giving the economy a kick start and hoping that the market then responds. Yet, from my perhaps less than thorough reading, I see that bank lending is down…way, way down. I read that those banks are heavily investing in treasury bonds rather than lending. Weren’t these the banks we bailed out to loosen their lending policies to jump start the economy? Or was that just corporate welfare?
As stated, I’m not an economist, but I’m open to education. Help me understand, because these two guys don’t fill me w/ much confidence.
Well, I give just dave props for at least coming out with some numbers. Do they not fill you with confidence because you don't agree with what they are saying? I agree with you on government employees. That Times puzzle that Mark put up a little while ago had a choice to cut federal pay or reduce the work force. I chose cutting the work force because, as you say, it makes no sense right now.
It was corporate welfare. The banks don't want to lend and people don't want to hire because they are making money right now without doing either because of how low a cost investing in treasury bonds is at present. But here's a question: aren't these same T bonds that are supposedly part of the SS Ponzi Scheme? If they are junk, why are the banks investing in them?
@Hap-based on what you have posted here, I would say your description of Mark is more accurate of yourself. You may not be like this outside of this blog but your personality here is one of constant deflection.
" How accurate is their model and why?"
I believe that was the question that Mark asked of YOU. Instead of a long paragraph of personal insults, let's hear your answer.
But here's a question: aren't these same T bonds that are supposedly part of the SS Ponzi Scheme? If they are junk, why are the banks investing in them?
You are conflating two hugely different things. No, T-bills are not junk - they are backed up by the ability of the U.S. govt to collect taxes and make good on them - they are a very solid financial instrument. But they are an obligation of the govt to pay later for what was borrowed today. Make no mistake about that - the govt eventually has to make good on them.
A Ponzi scheme is based on paying out previous investors (principle and interest) with money from new investors. That is exactly what SS does - it pays out current benefits not from the contributions of those who paid in long ago, but out of current worker contributions. At any point stop the current inflow of money and the system will collapse (after collecting on all of the T-bills in the trust fund).
Now, whether you like me or not, the above is factual. If you choose not to believe it - well, that is your prerogative.
See what happens when you ask a reasonable question - you get a reasonable (and reasoned) response. You bitch at me with leftist moralizing - I'll cut you right back down to size.
I'll probably regret this but...Juris, are you saying that Ponzi, and those who run similar schemes, have a credit rating that is comparable to the United States federal government? I know you don't think much of our leaders but what sort of world do you envision where the "current inflow of money will and the system will collapse?" Is this an apocalypse fantasy? Equating Ponzi and the United States Treasury is plainly silly. Further, I completely reject your definition of a Ponzi scheme. As Mark has said repeatedly, there is no intent to deceive and abscond with money. Your correlation is a sad attempt to win the argument, again, by making a comparison that doesn't fit. Why don't you just accuse the government of raping children? It's basically the same thing.
there is no intent to deceive and abscond with money
You realize that even absent a bad man stealing the money that it's still a ponzi scheme because the structure of it makes it a ponzi scheme?
It is financially, mathematically and logically impossible to have perpetual return because of the structure.
a credit rating that is comparable to the United States federal government
Translation: "I don't know anything about economics, but we can't be out of money because we still have checks in the checkbook."
Tess, since you asked nicely...
are you saying that Ponzi, and those who run similar schemes, have a credit rating that is comparable to the United States federal government?
Go back to my previous post and read my first sentence, repeated here for your convenience: You are conflating two hugely different things.
Do you understand that? You are mushing into one statement, two completely independent things that really don't go together. I'm going to try to help you untangle that.
Credit-worthiness (rating) of the debt is entirely independent of how that debt instrument is used. Debt issued by the U.S. govt is the most solid, safe financial investment you can make. It is very low risk (and tends to set the floor on yields due to that nature).
Most shaky investment schemes/scams rely on much riskier financial instruments which have higher yields. The scam artist claims to be able to pick only the best of the high-risk and never gets burned (which should be the first clue that he is lying).
So that is the basics on return versus risk. Low risk, low return; higher risk, higher return. There can be some variations, but that's a pretty fair basic assumption. Ponzi and Madoff both promised high returns with low risk. It would be very foolish to assume such high yields could come with the same level of risk associated with U.S. govt debt. So, no, there is no way you can equate the 'credit worthiness' of any private investor - Ponzi or legitimate - with the U.S. govt.
Now, let me explain SS again. You "pay in" for 40ish years. You retire and start to collect benefits.
Where is the money coming from for your benefits check. Is it coming from an 'account' that had all of your contributions in it and has been sitting there collecting interest? Or is it coming from current workers payments in?
Many people believe (falsely) it is the former, but it is in fact the latter. Everything you ever paid in, didn't go into some savings account for YOU, it was paid out to the people receiving benefits then.
I'm going to stop there on this post and ask, is there any part of this you don't understand? If you want me to, I can then explain the next step.
"It is financially, mathematically and logically impossible to have perpetual return because of the structure."
That's completely wrong. If adjustments are made to the system similar to the several that are suggest by Simpson-Bowles, the Esquire guys, or the Times puzzle we did, it is not only possible but completely valid.
Guard Duck, we are not "out of money." We still maintain our Triple AAA credit rating and good standing in the world due to our wealth. Could the same by said of Ponzi's company? No.
Juris, your explanation of the differences between Ponzi and the US government is quite accurate. And it demonstrates why your analogy is poor. Ponzi's goal was to rip people off and trick them. There is no tricking with SS. Everyone knows that the money you are paying in is being collected by someone else. And when you begin to collect it will be from someone else.
Because of your emotions regarding government, you have jumped to the conclusion that this paradigm and THIS ALONE make it like a Ponzi scheme. You (and others here) have done this on purpose because it's part of the narrative the government is ripping people off with the butt of a gun!
Oh, and I hope Tess forgives you for being so condescending.
Hmmm...why didn't I think of this before?
From dictionary.com
Ponzi scheme:
a swindle in which a quick return, made up of money from new investors, on an initial investment lures the victim into much bigger risks.
No swindle, no quick return, no luring, no bigger risks w/SS.
There is no tricking with SS. Everyone knows that the money you are paying in is being collected by someone else.
Really M? Ask your granny if she is living off of what is collected from current wage-earners. SS was sold as a pension - you put in, you get out. It is still described that way in SSA literature. Even FDR couldn't sell it as a straight-up income transfer. And, as an income transfer it tends to be highly regressive, taking from current day low-wage earners to pay older people without respect to their financial situation (i.e. many SS beneficiaries hardly need it).
I won't call SS a fraud, but it is very deceptive because it almost never deals with this basic premise. Most people believe that the Trust Fund is some magic pot of money that will pay them their benefits - not realizing that their benefits are paid off the backs of current workers. I think you might be surprised at their reaction if they were told the truth.
Those adjustments you mentioned? Answer this - if SS is structurally sound, why would adjustments be needed?
Adjustments are needed because our society has changed. There are more people now. Social Security isn't the only government program that needs changes. The DoD needs quite a bit as well. How could the government in the 1930s predicting the baby boom?
I thought of another analogy regarding this debate. When someone says, "Let's go boating!" we would all expect to show up at a lake, get on a boat, and tool around for awhile. Boating several key ingredients...a boat made of wood or metal and water are two key ones. A Ponzi Scheme also has several key ingredients. So when some of you claim that SS is like Ponzi scheme, it's basically like you have asked me to go boating, I show up, and all you have is a piece of wood or metal. I ask where the boat is and the water and you say, "Well, boats are made of this. Let's just carry it around here on land because that's basically the same as boating."
It's not. See how silly you all sound?
A boat and stick? Please. A better analogy would be the black fire truck.
We see a fire truck painted black and say - "look, a black fire truck."
You say it can't be a fire truck because fire trucks are red and that is not red so it's not a fire truck.
Juris tells you that some fire trucks are yellow, and it's not the color that makes the fire truck - it's the function.
You say that that is neither red nor yellow and is obviously not a fire truck because is doesn't say fire department on the side.
DT says that it doesn't matter what is says on the side, the damn thing has fire hoses, a water tank, pump, lights and siren - it's a fire truck.
You come back asking whether it has ever actually put out a fire - showcasing some other red colored fire truck as the epitome of fire trucks that have put out fires and since our black example hasn't put one out it is not a fire truck.
At this point my head explodes.
Adjustments are needed because our society has changed.
Such as more benefits were added and not more funding? Because there were still plenty of workers to retirees, and now there isn't?
Maybe you even recognize that a progressive social program shouldn't be funded by the most regressive taxation mechanism imaginable?
We see a fire truck painted black and say - "look, a black fire truck."
You say it can't be a fire truck because fire trucks are red and that is not red so it's not a fire truck.
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