tag:blogger.com,1999:blog-2499771266402854669.post8795142760763896239..comments2024-02-08T01:44:24.272-05:00Comments on ModeratePoli: Still arguing about the stimulusModeratePolihttp://www.blogger.com/profile/01721945380057992971noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2499771266402854669.post-68345856935694832642014-01-12T17:57:41.051-05:002014-01-12T17:57:41.051-05:00@Dangerous, not surprising that I agree with what ...@Dangerous, not surprising that I agree with what you say. I agree that you have to look at the political motives when evidence is lacking.ModeratePolihttps://www.blogger.com/profile/01721945380057992971noreply@blogger.comtag:blogger.com,1999:blog-2499771266402854669.post-91438679237549013162014-01-12T15:01:02.631-05:002014-01-12T15:01:02.631-05:00When it comes to these kinds of theoretical, non-p...When it comes to these kinds of theoretical, non-provable (or disprovable) arguments, you must look at the motives of the parties making them. Most of the time, those arguing against any kind of external stimulus on the economy will lose something if it's done, while those arguing in favor will likely gain from it.<br /><br />Hence, when Bush II was president, and the economy needed a stimulus, his political supporters wanted it since it would help him politically do a) do something and/or b) appear to be doing something. Bush's opponent also wanted stimulus to help their constituents, so there was little controversy about it. <br /><br />When Obama is president, however, his supporters want stimulus and his opponents don't. Only then do the arguments against stimulus and its perceived and real impacts gain some currency.<br /><br />Because the economy of individuals is so interconnected by definition, the tendency toward a pack mentality is virtually impossible to fight. Even if one wishes to swim against the tide -- investing when everyone else is cutting back -- failure to conform and simply the lack of interest could doom the event. So you have naturally reinforcing influences on the economy, good or bad.<br /><br />Particularly in a bad economy, pack mentality takes over but on a rational basis. At that time, the only way to stop the tide before it reaches an absolute bottom, is for an economy-moving force counteract the tide. Sober government intervention is pretty much the only significant individual entity that can make a difference. Your historical analysis provides sufficient proof of that since the causal relationship between stimulus and economic trends makes sense.<br /><br />Further, government stimulus is most effective in the form of creating direct demand. Government spending money to long-term infrastructure projects during an economic downturn is not only effective counter-cyclical investment, it also saves taxpayers money since the government can contract those services at lower prices than normal.<br /><br />Passive "encouragement" of demand via tax cuts or similar incentives are not nearly as effective positive counter-cyclical measures since it relies on many millions of individual decisions versus a handful of groups investment decisions.<br /><br />None of this economic theory means a darn in the realm of public policy and politics, however. In that case each party making the arguments for or against are doing so as a representative of their clients' or their own interests.Dangerousnoreply@blogger.com