Why the Recovery failed.

[AztecWilliam]

The whole rationale behind the Obama recovery act of '09 was based on the usual Democrat faith in the Keynesian economic theory of government stimulus. Let's forget for a moment that the Left in this country either does not really understand Keynes' concept or chooses to forget it. Let's look at what actually has happened since the stimulus became law. Put simply, it has failed.

The piece I am linking to demonstrates this fact with very specific details and facts. It's a bit long, but worth reading. One has to assume that the voters, at least a majority of those who voted last November, either were totally ignorant of these facts or were simply overwhelmed by the Obama persona. Anyway, here are a few quotes that touch on some of the basic points.

The stimulus overseers faced a tradeoff: They could try to spend money fast, or they could try to spend it well.
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In a November 2009 report, the agency (i.e., the CBO) flatly declared that “it is impossible to determine how many of the reported jobs would have existed in the absence of the stimulus package.”
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One thing is clear, however: The economy’s performance continues to be far worse than the White House’s worst-case projections for what might happen if there had been no stimulus at all.
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Some of the program’s $833 billion went toward visible public works projects like paving runways and building toilets. But about a third of it went toward what economists call “transfer spending,” which includes aid programs for the unemployed and other low-income individuals. (Such spending, may I add, is not very useful if your goal is to create new jobs.)

reason.com/archives/2013/04/15/down-the-drain

AzWm

[azteccc]

November had nothing to do with Obama's persona and very little to do with his policies. November was served up on a platter for the GOP and each of the bumbling mess of potential candidates made Obama look like a much better option - which he was.

Now, why are you leaving out the 36% of the stimulus bill that was tax breaks? In true GOP fashion, a lot of those tax breaks went to corporations and AMTs. Isn't THAT supposed to be 'useful if your goal is to create new jobs'?

All the stimulus money STILL hasn't been spent. Keynesian theory would dictate that for the stimulus to be more effective than it was, it needed to be bigger and/or spent faster. Now, this is contentious and I agree it may not have been the proper policy, but it is true.

[AztecWilliam]

Apr 24, 2013 11:14:27 GMT -8 azteccc said:

November had nothing to do with Obama's persona and very little to do with his policies. November was served up on a platter for the GOP and each of the bumbling mess of potential candidates made Obama look like a much better option - which he was.

Now, why are you leaving out the 36% of the stimulus bill that was tax breaks? In true GOP fashion, a lot of those tax breaks went to corporations and AMTs. Isn't THAT supposed to be 'useful if your goal is to create new jobs'?

All the stimulus money STILL hasn't been spent. Keynesian theory would dictate that for the stimulus to be more effective than it was, it needed to be bigger and/or spent faster. Now, this is contentious and I agree it may not have been the proper policy, but it is true.

I'm still searching for a concrete example demonstrating that government stimuli can turn around a bad economy. I am convinced that simply borrowing money and pumping it into the economy will not do the trick. Let's say that you give school districts money to hire more teachers, or cities money to hire more policemen or firefighters.

Sure, those newly employed people will now receive salaries and wages and will in turn put much or most of that money into the economy via purchases of food, housing, clothing, entertainment, etc. That's all well and good, but the U.S. government cannot simply pay those folks' wages forever. Not with borrowed money.

At some point, local school districts and cities will have to find ways to pay those wages and salaries. That means higher taxes, which means less money in the private economy, or borrowing, which those entities cannot do, or laying off the new workers, who in turn will not be paying taxes or buying things. I just don't see how stimuli such as the 2009 version can really do much in the long term to solve our problems.

I would think that taking actions such as simplifying regulations or approving new oil drilling projects would be much more effective. In other words, changing the climate in which businesses must function. That would provide a long term improvement in the business climate. (I could also add lowering certain taxes.)

I think the real problem is that the "progressives" on the Left just cannot let go of the belief that an enlightened class of technocrats and bureaucrats can run economies better than people whose livelihoods are dependent on making good decisions. Politicians rarely get punished for imposing poorly thought-out and counter-productive policies on the privates sector. Executives and managers, on the other hand, get fired when their decisions cause their companies to suffer.

It is hard for those on the Left to consider the possibility that allowing the private economy to work things out minus massive government interference might just be the best policy. Here's an example. In the last election, Romney was criticized for claiming that the housing market had to be allowed to find its own bottom; until prices had fallen enough, there would be no real recovery in this vital sector of the economy.

What a beastly cruel fellow that Romney must be! Didn't he realize that if his policy were followed, there would be many thousands more families turned out of their homes? So there were programs designed to help home owners avoid bankruptcy. They did not work so well, and, anyway, they delayed the natural correction caused in the first place by the housing bubble. A bubble for which BOTH political parties share responsibility.

There is no end to denial of past realities where "progressive" philosophy is concerned. If the government really can do a better job of running an economy, why was the Soviet Union such a failure in that regard? And why has China changed course and adopted a semi-capitalist economic policy?

Sometimes doing nothing really is the best policy. That's hard to swallow if you have been taught that an elite vanguard of altruistic citizens should really be running things. Those elites may be, and probably are, patriotic, well-intentioned people. They are also more than anything utopians. God save us from utopians, because there never was nor will there ever be such a place or state of being. Not where fallible and error-prone creatures are involved.

We call those less-than-perfect creatures human beings!

AzWm