Comments on: A brief philosophical argument about the role of government, stimulus and recession

By: My best and worst calls of 2008: a credit crisis retrospective - Credit Writedowns

Sat, 09 Jan 2010 06:51:15 +0000

[...] A brief philosophical argument about the role of government, stimulus and recession [...]

By: The year in review at Credit Writedowns – Stimulus - Credit Writedowns

The year in review at Credit Writedowns – Stimulus - Credit Writedowns — Sat, 09 Jan 2010 06:19:37 +0000

[...] A brief philosophical argument about the role of government, stimulus and recession – Dec 2008 [...]

By: Hal Horvath

Hal Horvath — Fri, 19 Jun 2009 08:29:00 +0000

I think of the stimulus as buying time (against a collapse), and do not expect a general recovery in the US *unless* sufficient *new* types of business arise. In short we need a new direction in the economy. At the end of WWII, there was much new technology ready to be brought into consumer products, for example.

On the other hand, if miraculously the Chinese peg to the dollar ended, then we could have new manufacturing jobs of course, which would help some.

This kind of question is the real issue at this point.

By: Hal Horvath

Hal Horvath — Fri, 19 Jun 2009 02:29:00 +0000

By: Hal Horvath

Hal Horvath — Fri, 19 Jun 2009 01:29:00 +0000

By: John Creighton

John Creighton — Wed, 24 Dec 2008 04:46:45 +0000

If we look to government to break from the status quo are we fooling ourselves? Aren’t governments self perpetuating institutions? Doesn’t the fact that the government regulates media and controls education help perpetuate a conformity of opinions and a reward for meritocracy? Isn’t it competition that helps foster excellence and promote our own strengths and individuality? Shouldn’t we rather look for government that gives freedom to break from the status quo instead of one that trys to promote whatever new view fancies the politically correct ideology of the elite of the time? The most fundamental freedom is the freedom to think freely. That comes from us making our own choices instead of the government planning our lives.

By: Edward Harrison

Edward Harrison — Tue, 23 Dec 2008 18:42:55 +0000

@John Creighton, we agree regarding stimulus to cushion the blow on the way down. On the way up, it remains to be seen whether stimulus will quicken the recovery. I am of the view that it will. However, that is a contentious issue that will be difficult to resolve. But, at a minimum, stimulus will prevent worse case scenarios on the way down — that much we can agree on.

With regard to redistribution, I’m glad you responded. It is very much an argument that goes to the core of one’s belief system and is therefore fraught with emotional investment. But, looking at the issue more dispassionately, I tend to feel that the status quo is self-perpetuating and breeds a “feeding at the trough” mentality. Therefore, I am keenly aware of the need for government to reduce the reinforcing nature of the status quo. I am of the view that this past quarter century clearly demonstrates this “feeding at the trough.”

Ultimately that is bad for society as it breeds resentment and leads to a violent pendulum swing in the other direction. When you say it’s about soaking the rich, that is an ideological viewpoint that invites an equally ideological response. I would argue that it would be more beneficial over the long-term to realize that some redistribution will occur and one must work to ensure that it does not become excessive.

Comments?

By: John Creighton

John Creighton — Tue, 23 Dec 2008 04:51:43 +0000

To me a redistributive tax policy means stealing from the rich and giving to the poor. Since the rich pay most of the taxes, the poor see social services as essentially free and thus may demand a size of government which is overly burdensome and hard to sustain. That said I think a negative income tax system would be better then a welfare system.

I’ll accept that stimulus can ease the cushion the blow but I’m not convinced it will speed the recovery. A large stimulus package means an increased taxation burden on the upside. It also means that their will be less weeding out of the less productive business (economic Darwinism) during the downturn. Some people (e.g. Ron Paul) say that the bailout will only make the recession longer. To me the alternative to the bailout/stimulus is worse but I believe intervention on the downside is necessary to this degree largely because of bad monetary policy on the upside.

By: Edward Harrison

Edward Harrison — Sat, 13 Dec 2008 03:34:15 +0000

@cynic,

welcome to the blog. redistribution is seen in certain circles as code for taking what should be mine and giving it to someone who doesn’t deserve it. we should avoid that interpretation and see government and taxation as naturally redistributive. that makes obama’s comments seem much less sinister.

when you talk about siphoning off money, I take it to mean special interests and this is the real problem with redistribution. I’m all for a debate about how we should be taxed and how that tax should be spent. what I am not happy about is some special interest group using money and influence to shift monies to their benefit.

As for recession, it is painful but necessary. getting rid of the excesses you mention will put things on a much sounder footing.

By: cynic

cynic — Sat, 13 Dec 2008 02:10:41 +0000

the term redistributive has deeply socialistic connotations, especially when coming from someone like obama, and within/after the roiled political atmosphere of the bush administration. While its true taxation takes from all to allocate funds for acts that benifit the whole the impressions of late is that our money has been siphoned off to private contractors with connections, friends of hank, pork barrel programs and other gross improprities.

on a side note..I support universal healthcare because lawyers, insurance fraud, and insurance companies have crippled the industry. Their first step should be to punish frivioulious lawsuits, and provide thousands of free ride scholorships to medical students to swell the ranks and lower doctors wages. However i have little faith in the govt doing anything the right way where politics and special interests can benifit from the rape of the people

which of course brings us to the bailout…recession is mandatory. depression may be mandatory. debt levels were unsustainable. asset prices inflated. bailout powder is being blown on trying to maintain the facade. healing will not happen until confidence is restored. accounting tricks, level 3 assets loss hiding, false colloratal for fed loans, book cooking will not help, just ensure our downfall. powder being burnt as we speak.

waste, pork , and corruption is all i see. the empowered feasting while rome burns in teh background.