Comments for Brooks Does the Big Lie on Stimulus (with no shame) at http://www.cepr.net , comment 1 to 32 out of 20 comments http://www.cepr.net Mon, 20 May 2013 01:57:42 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16279 Calgacus, The New Deal: Keynesian stimulus really started under Hoover with his expansion of federal spending by 50% during his administration. And yet by the end of the Thirties unemployment was still 10%. That's not much of a success. Postwar: Keynesians can't take credit for recoveries after wars and natural disasters as that has been happening already for centuries. Europe in the 1400's experienced a massive increase in economic activity after the horrors of the 1300's but that was well before the rise of strong central governments or Keynes. Watered-down Prescriptions: That's circular reasoning as it explains away failures by presupposing that Keynesian stimulus would have worked. To put it another way, if the PIIGS are still in trouble ten years from now would that be "proof" that their governments just weren't austere enough? The Seventies: And there's the rub for Keynesians. With the Great Society, military spending, the space program, the complete dismissal of the barbarous relic and Nixon declaring "I am a Keynesian in economics now", the 70s should have been a golden era for Keynesian economics. Instead the Phillips Curve blew up in a burst of stagflation and many Keynesians had to go back to the drawing board. China: IMHO China is a bubble and its ghost cities will serve as stark reminders of the foolishness of runaway stimulus. I also believe that commodity suppliers to the Chinese bubble, like Canada, Australia and Brazil, are consequently in for a fall. - Locus Wed, 02 May 2012 04:46:10 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16274 Economic theory also predicts that for a large enough sum of money there will be economists who will say that the stimulus did not work regardless of what they actually believe to be true. Integrity, Smart, Good-looks AND Funny?!... come on Dean, stop dicking with me; say yes: MARRY ME - JOHN MARTIN Tue, 01 May 2012 18:53:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16272 Locus: Any time it has been tried. Particularly when following what real economists like Keynes, Lerner, Minsky, MMTers, etc have suggested, rather than confused, watered-down prescriptions. The New Deal. The WPA. The economic direction of WWII in the USA. The whole world during the postwar Keynesian full employment era til the 70s or 1980. China, the past 30 years, and particularly in the aftermath of the GFC. After the GFC, Keynesian stimulus worked exactly as predicted. If the "stimulus" was enough, as in China, fine. If it was half as much as recommended, as in the USA, not so fine. Australia - somewhere in between. Austerity is a disaster in Europe, as predicted. Modern moronic mainstream economics works very hard to concoct meaningless garbage pseudomathematics ( makes a real mathematician vomit) in order to confuse things. But Keynesian economics, MMT economics boils down to accounting. Arithmetic. Disagreeing with it is innumeracy. - Calgacus Tue, 01 May 2012 10:05:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16253 Calgacus, I notice that you have the time to (a) impugn people's integrity. I notice that you have the time to (b) question people's mental state. I notice that you have the time to (c) insult people's intelligence. But somehow you just couldn't find the time to mention any of the innumerable Keynesian success stories that supposedly litter the annals of history. I'm sure you were just pressed for time because you were late for a Mensa meeting. - Locus Mon, 30 Apr 2012 17:28:40 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16230 Locus: Keynesian economics, particularly Keynes's or MMT's version of Keynesian economics, with the primary weapon being targetted fiscal expenditure - works. History proves this unequivocally. All wealthy people know this. They just want the expenditure targetted at them, for doing nothing, at best. And they usually succeed. The only reason people disagree is because (a) they are paid to (b) they are insane or (c) they are stupid. 99% of academic economists are all three, and they work very hard to make everyone else (c) & (b). You should really try for (a) also if you aren't already. - Calgacus Sun, 29 Apr 2012 18:15:42 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16216 It strikes me that you have failed to cite the best evidence supporting your case that the stimulus worked. To wit, after plunging at an average annual rate of nearly 8 percent during the )ct 2008 -- March 2009 period, the economy began to recover (and the recession ended) in June 2009, according to NBER business-cylce dating committee. While the recovery hasn't been nearly as robust as anyone hoped or wanted, it noneless began about 4 months after the stimuls was passed in Feb 2009. . . . - David Dickson Sun, 29 Apr 2012 00:28:11 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16215 Paul, I complain that all Keynesians seem to do is make excuses for how Keynesianism [i]should[/i] have worked but didn't. And your response is ... a list of excuses. Thank you for proving my point for me. - Locus Sat, 28 Apr 2012 16:32:05 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16213 David Brooks is good for us. He shows us that it's not ignorance or incompetence that keeps us from being NYT columnists, but our unwillingness to spout drivel in support of the 1%. - PeonInChief Sat, 28 Apr 2012 12:05:07 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16212 [quote]Keynesian economics is highly successful in academia and political circles. It just falls on its face in the real world.[/quote] When has Keynesian economics [i]ever[/i] fallen on its face in the real world? In 1937, FDR tried to balance the budget by raising taxes and cutting spending - the exact opposite of what Keynes advised. In 2009, Obama cut the amount of the stimulus because he, and all other economists, misjudged the depth of the Great Recession which was much worse than was known at the time. In the late 1970s, massive oil price increases combined with the OPEC oil embargo set off inflation that had nothing to do with Keynesian economic principles. Keynesian economics is responsible for the consequences of following Keynesian principles, nothing else. Perhaps you could explain where exactly in The General Theory of Employment, Interest and Money Keynes got it wrong regarding the real world economy. - Paul Sat, 28 Apr 2012 08:58:52 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16211 JSeydl, The evidence in support of Keynesianism is so overwhelming that its critics must be receiving "large sums" to "muddy the waters". Strangely though instead of regaling the world with a list of success stories, Keynesians seem to spend almost all of their time making excuses for why Keynesianism [u]didn't[/u] work. The central bank wasn't accommodative enough, or the stimulus wasn't big enough or a single policy mistake was made in 1937 or there was an external oil shock or ... and on and on and on. Keynesian economics is highly successful in academia and political circles. It just falls on its face in the real world. - Locus Sat, 28 Apr 2012 08:08:46 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16210 Of course Brooks does The Big Lie, that's his job. That's always been his job, he's the living embodiment of cowardly centrism where no matter how crazy or dishonest or evil one party acts, he's always there to muddy the waters by saying "but the democrats..." or "both sides do it" or there are extremists on the left AND on the right." I'd recommend reading driftglass.blogspot.com for brilliant writing and the shredding of Brooksian ideology. - dominic Sat, 28 Apr 2012 01:58:03 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16209 In 1932, after 3.5 years of continually declining GDP, GDP started growing in the first quarter of FDR's presidency. In 2009, after 18 months of continually declining GDP, GDP started growing in the first quarter after the stimulus was signed into law. That seems to be very persuasive evidence that the stimulus worked. What permits the conventional wisdumb to sow "confusion" is the delay between the end of a recession and the start of the economic boom. The public seems to believe that the recession continues until the boom begins, even though there is a big difference between declining GDP and slowly growing GDP. - H-Bob Fri, 27 Apr 2012 13:18:07 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16208 This: [quote]Many esteemed and/or Nobel Prize-winning economists like Joseph Stiglitz, Larry Summers and Christina Romer argued that it would help lift the economy out of recession [/quote] Followed by: [quote] The economists who supported the stimulus now argue the economy would have been worse off without it."[/quote] Struck me as I read it as one of the most dishonest misdirections in some time. The "Now" passage is the really sleazy one, since it's essentially a factual statement, but in a string with the other gives an impression that basically amounts to a lie. Stiglitz thought that the stimulus would help, and that it was too small. Now, he thinks taht it helped, and that it was too small. Brooks paints it an entirely different way and it's rank dishonesty. In 2011, David Brooks praised Sarah Palin's natural political talent. Now, he thinks that she's an extremist and a lunatic. Of course, Brooks said that she was an extremist and a lunatic in the first instance also, but if I leave that out and just say that "now" he thinks that, which is true, it gives another impression. What a sad thing that the New York Times is allowing such dishonesty. - Timezoned Fri, 27 Apr 2012 10:30:40 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16207 [quote]Unfortunately when Keynesian policies work there is little direct evidence of it[/quote] The auto industry recovery from collapse to record profits in less than 3 years is overwhelming evidence that Keynesian stimulus - Cash for Clunkers specifically - worked exactly as predicted. - Paul Fri, 27 Apr 2012 09:35:12 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16206 Actually it is hard to determine how effective the stimulus was - the judgement depends on modeling, which is always suspect (without a long record of successful prediction, which economics does not have). Unfortunately when Keynesian policies work there is little direct evidence of it - the economy remains on a steady course and what is visible is deficits, when there would have been a recession; and taxes which appear excessive or other restraints, when there would have been a bubble. This is fundamental, not a matter of complexity. What is perfectly clear from history, and what Brooks as well as policy makers in the US and Europe should have learned, is that austerity does not work. This lesson actually was learned in the Depression, but has been forgotten or never learned by new generations of conservatives. Also other specific claims made by conservative politicians and economists are demonstrably false. We know that high tax rates do not impede economic growth, nor is the problem excessive regulation. I have updated my graph showing the effect of tax-cutting on private investment: http://www.skeptometrics.org/PrivateInvestment/PrivateInvestment.htm The claim that private investment is inversely related to tax rates is at the heart of conservative economics, but the evidence shows the opposite. Will Brooks ever learn this? Private investment in the current cycle has actually recovered at a rate comparable to that in previous cycles, but the crash of 2008-9 was so deep that it will take many years to get back to trend level. This is why government investment is needed (the stimulus does not show up on this graph). - skeptonomist Fri, 27 Apr 2012 08:43:31 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16205 ron unz wrote an essay showing how little of the criminal behaviour of pharmaceutical companies is reported in the american press. vioxx produced by merck was recalled & eventually a class action suit was settled for about $5 billion. the death rate in america went down quite a bit, which is somewhat strange because it was due almost entirely in the age group (65+) which used vioxx. so unz calculated that 500,000 seniors died from heart attacks & strokes who had used vioxx. FDA officials apologized, promising to do better in the future (yeah, right, when pigs fly). so brooks is obviously unaware of this or else still believes the earth is flat. as to brooks saying it's just so complicated that no one can know if stimuluses work, look at the facts david. the great global capital that has emerged in the last 30 years from the moving of trillions of dollars from the poor to the wealthy has 2 diverging ways of using this money. in america & europe speculative investment has gone in to derivatives. keynes warned of "casino capitalism" back in 1936. china & india have used stimulus to build their infrastructure & manufacturing base. based on their gdp growth, it looks like the asian economies are proving to be right. so it looks like stimulus is on the right track. poor david, he defends a system that lewis lapham wrote over 20 years ago that every time you go into a bank there should be a giant roulette wheel there to let you know how they gamble with your money. the bankers (not the poor tellers) should all be made to wear court jester costumes. - mel in oregon Fri, 27 Apr 2012 08:32:50 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16204 [quote]IIRC that's completely true (though my recollection is that they also didn't clean up their zombie banks fast enough, which is a finance/finance regulation policy issue not really monetary). [/quote] This is sort of a misconception. The zombie banks became zombie banks because of the deflation. Here's Bernanke in 1999 (http://www.princeton.edu/~pkrugman/bernanke_paralysis.pdf): [quote]Consider a hypothetical small borrower who took out a loan in 1991 with some land as collateral. The longterm prime rate at the end of 1991 was 6.95% (Table 1, column 3). Such a borrower would have been justified, we may speculate, in expecting inflation between 2% and 3% over the life of the loan (even in this case, he would have been paying an expected real rate of 4-5%), as well as increases in nominal land prices approximating the safe rate of interest at the time, say 5% per year. Of course, as Tables 1 and 2 show, the borrower’s expectations would have been radically disappointed. [Tables show deflation] To take an admittedly extreme case, suppose that the borrower’s loan was still outstanding in 1999, and that at loan initiation he had expected a 2.5% annual rate of increase in the GDP deflator and a 5% annual rate of increase in land prices. Then by 1999 the real value of his principal obligation would be 22% higher, and the real value of his collateral some 42% lower, then he anticipated when he took out the loan. These adverse balance-sheet effects would certainly impede the borrower’s access to new credit and hence his ability to consume or make new investments. The lender, faced with a non-performing loan and the associated loss in financial capital, might also find her ability to make new loans to be adversely affected.[/quote] But I agree w/ your second point; the the asset price bubble in the 1980s was what ultimately led to the liquidity trap in the 1990s. - JSeydl Fri, 27 Apr 2012 07:45:19 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16203 [b]JSeydl[/b] wrote, [quote]Japan's failure in the 1990s was a monetary policy failure.[/quote] IIRC that's completely true (though my recollection is that they also didn't clean up their zombie banks fast enough, which is a finance/finance regulation policy issue not really monetary). But their original sin was the bubble that generated that crisis, the asset price bubble (mainly real estate but also lots of other things). I could be wrong, but I recollect hearing things like at one point the land in Tokyo or maybe the Tokyo area was worth more than all the land in the continental US. That's just asking for some serious trouble. - liberal Fri, 27 Apr 2012 07:07:37 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16201 Brooks is not an economist. His bio is a news reporter, elevated to a Serious Talking Head at the NYT. So who are his paymasters he spews his propaganda for? - Dave Fri, 27 Apr 2012 07:00:29 +0100 http://www.cepr.net/index.php/blogs/beat-the-press/brooks-does-the-big-lie-on-stimulus-with-no-shame#comment-16200 [quote]Twenty years and debt reaching 230% of GDP and still a stagnant economy.[/quote] Things look better on a per capita basis. Furthermore, IIRC Japan's economy has many strengths (notwithstanding things like the Fukishima disaster). But the problem is that there's more to the game than macroeconomic policy. Japan undoubtably has its own incompetent, evil kleptocratic elite busy screwing things up there, just as ours is here, in ways outside the realm of monetary and fiscal policy alone. - liberal Fri, 27 Apr 2012 06:52:35 +0100