Friday, August 17, 2012
Thursday, December 02, 2010
There are times when I marvel at the arrogance of my commenters. I don't profess to be an expert on the economy. In fact, I'm not sure anyone is....except the usual cast of characters that comment here...in their minds. For example, when I say that TARP and the stimulus saved the economy, they say I'm an idiot. And a socialist. When I say that it saved jobs, same thing. When I say it helped GDP, same thing. Why? Because I don't think like them...libertarianese, I guess.
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?