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Author Topic: Job creation and stimulus  (Read 1067 times)
JA37
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May 08, 2011, 07:14:45 AM
 #1

Came across this graph. http://www.bobcesca.com/blog-archives/2011/05/graph_of_the_da_1.html

The hypothesis of the creator is that the stimulus works. What say you?

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The Script
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May 08, 2011, 08:36:59 AM
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Came across this graph. http://www.bobcesca.com/blog-archives/2011/05/graph_of_the_da_1.html

The hypothesis of the creator is that the stimulus works. What say you?

I think that they have been going back and forth for a century, one wants to steer markets, the other wants them set free.  There's a boom and bust cycle, and good reason to fear it, it's the low interests rates, or the animal spirits.   Grin

But seriously, I adhere to Austrian economics, because so far it is the school that makes the most sense to me and who correctly predicted the latest economic collapse.  They hold that government spending, while it may create some jobs, is more harmful than good because it is taking money from the private sector (taxes, inflation) and then attempting to redistribute it.  The problem is that government is less efficient than the private sector so it is probably doing less to help the economy with the money than what would have happened if it were left in the private sector.  Of course it's impossible to know for sure exactly what would have happened and what would be different, but a combination of economic deductive logic and past historical examples seem to point to government intervention in the economy causing more harm than good. What do you think?
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May 08, 2011, 08:40:12 AM
 #3

Came across this graph. http://www.bobcesca.com/blog-archives/2011/05/graph_of_the_da_1.html

The hypothesis of the creator is that the stimulus works. What say you?

I think that they have been going back and forth for a century, one wants to steer markets, the other wants them set free.  There's a boom and bust cycle, and good reason to fear it, it's the low interests rates, or the animal spirits.   Grin

But seriously, I adhere to Austrian economics, because so far it is the school that makes the most sense to me and who correctly predicted the latest economic collapse.  They hold that government spending, while it may create some jobs, is more harmful than good because it is taking money from the private sector (taxes, inflation) and then attempting to redistribute it.  The problem is that government is less efficient than the private sector so it is probably doing less to help the economy with the money than what would have happened if it were left in the private sector.  Of course it's impossible to know for sure exactly what would have happened and what would be different, but a combination of economic deductive logic and past historical examples seem to point to government intervention in the economy causing more harm than good. What do you think?
The more hands that money touches, the better shape the economy will be in.

But there's a catch with the government forcing money to change hands more times than it would normally - a lot of that money changing is just for the sake of money changing.  In other words, waste.  Sure, the money gets circulated, but often without corresponding increases in GDP.

Whether waste outweighs the benefit of extra circulation is entirely up for debate.  Government does ensure more jobs for more people, but at what cost to the public who was already working?
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May 08, 2011, 09:40:26 AM
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Whether waste outweighs the benefit of extra circulation is entirely up for debate.  Government does ensure more jobs for more people, but at what cost to the public who was already working?

That, I believe, is the right question.  Here is an article from the Mises site that talks about government spending and its affects on the economy.  It's rather long so I've included a couple paragraphs of what I feel summarizes his main points:

"Government, in fact, is a large disequilibrating force on the market. It forcibly redistributes economic goods, removing them from a process of economization and instead investing them toward the realization of less important, or less preferred, ends. In other words, it distorts the continuous process of coordination."

He goes on to say:

"Whether some degree of government is necessary to allow the market to operate, while being outside the scope of this essay, deserves commentary. The belief that government is necessary to at least guarantee individuals's property rights is not uncommon. However, knowing that property rights are absolutely essential for a working coordination process, it seems difficult to think that individuals themselves would consider the allotment of resources toward the end of securing their property rights as having secondary importance to something else — especially since the attainment of "something else" may require secure property rights."

And finally:

"Overall, we can safely conclude that government spending causes more harm than good; it redistributes the means of production toward the attainment of ends considered inferior by the individuals who make up the society that government is allegedly acting to improve."

I think that last sentence pretty well describes my opinion.  In the question of "more bottom up or more top down" I am definitely supporting the "bottom up" philosophy.
benjamindees
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May 09, 2011, 01:10:12 AM
 #5

Stimulus creates crappy jobs and since most Americans are dependent morons they will eventually take a crappy job rather than starve so yes I suppose in one sense it "works".

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kiba
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May 09, 2011, 01:29:42 AM
 #6

You don't create jobs, you fill them.

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