3 Fallacies in Obama's Public-Sector Stimulus Strategy

[Chris]

Struggling to pare this down to a couple few paragraphs so you might want to follow link and read in entirety.

3 Fallacies in Obama's Public-Sector Stimulus Strategy (http://reason.com/archives/2012/06/19/three-fallacies-in-obamas-public-sector)
One. Obama’s talk of a public-sector stimulus is guided by the Keynesian conviction that what’s necessary to restore overall economic growth is large aggregate demand. If local governments are handed money to hire more public workers—teachers, cops, librarians, social workers—these people will consume more goods and services, which will stimulate other industries. Every dollar pumped into their pockets will magically multiply into several more.

It’s a neat theory—but fanciful....

...Two. But suppose that “free” money appeared like manna from heaven to finance the stimulus spending Obama craves. Then boosting aggregate demand would complement private-sector activity and boost overall growth, right? Wrong.

Harvard Business School researchers... found that this money produced not private-sector growth but retrenchment....

...Three. The public sector doesn’t just indirectly crowd out private job growth but directly clobbers it as well. That, in fact, is why the regulatory state—the main public-sector enterprise—exists. You can argue that its key products (red tape and mandates) are necessary for public safety, but you can’t argue that they lead to job growth. As the regulatory state grows, the private economy shrinks—and that’s exactly what’s been happening on President Obama’s watch....

[Trinnity]

It's a state-ist philosophy. That's why it fails.
The more people have of their own money to spend, the more the economy is stimulated. We know this philosophy in my household as "common sense". Others know it as Austrian.

Anyone interested can check out these links:
http://mises.org/etexts/austrian.asp
http://mises.org/

[Chris]

Mises, from Omnipotent Government, on etatism (statism):
The most important event in the history of the last hundred years is the displacement of liberalism by etatism.

Etatism appears in two forms: socialism and interven*tionism. Both have in common the goal of subordinating the individual unconditionally to the state, the social apparatus of compulsion and coercion.

Etatism too, like liberalism in earlier days, originated in Western Europe and only later came into Germany. It has been asserted that autochthonous German roots of etatism could be found in Fichte's socialist utopia and in the sociological teachings of Schelling and Hegel. However, the dissertations of these philosophers were so foreign to the problems and tasks of social and economic policies that they could not directly influence political matters. What use could practical politics derive from Hegel's assertion: "The state is the actuality of the ethical idea. It is ethical mind qua the sub*stantial will manifest and revealed to itself, knowing and thinking itself, accomplishing what it knows and in so far as it knows it." Or from his dictum: "The state is absolutely rational inasmuch as it is the actuality of the substantial will which it possesses in the par*ticular self‑consciousness once that consciousness has been raised to consciousness of its universality."

Etatism assigns to the state the task of guiding the citizens and of holding them in tutelage. It aims at restricting the individual's freedom to act. It seeks to mold his destiny and to vest all initiative in the government alone....

[Peter1469]

Just remember that very large corporations are not creatures of the free market and will enslave or control you just as surely as government will.

[Chris]

Just remember that very large corporations are not creatures of the free market and will enslave or control you just as surely as government will.

But can do so only by political means, iow, through government corruption, what we call crony capitalism.

[Deadwood]

But can do so only by political means, iow, through government corruption, what we call crony capitalism.



And there is the fourth mislead on the Obama jobs strategy. They do not work over the medium to long term, that was proven in Lydon Johnson's "War on Poverty" and even before that by FDR.

But is sells. Anyone unemployed, under-employed or working away from home because of the economy wants hope, they want some idea that things are going to get better. And, like someone who's had a nagging illness for a long time, miracle cures start sounding good.

And being the rock star campaigner, Obama can make it sound like all we need to do is send him some $ and pull his level in November and the streets will be paved with gold and there will be an electric car in every garage.


But then we'll be paying 65% on the dollar just for interest.



And that is exactly what the Obama strategy is aimed at.

Now, the geniuses in the DNC war room need to ask themselves, is it working?

'The One' is neck and neck with a baggage laden, less-than-stellar, faux conservative, and by all accounts he's being seriously out-gunned in money raising by the Romney camp.

That may be that Obama has his own albatross: his record.

[Chris]

"And there is the fourth mislead on the Obama jobs strategy. They do not work over the medium to long term..."

Interesting, just made that very point on another forum, specifically about bailing GM, how it was as short-sighted as corporations focusing on quarterly profits instead of long-term, sustainable growth. Had government not bailed them, the company, its capital, its employees would have been distributed among other auto manufacturers, existing and upcoming, or even other industries. Instead we bailed GM so they could move to China.

[Deadwood]

"And there is the fourth mislead on the Obama jobs strategy. They do not work over the medium to long term..."

Interesting, just made that very point on another forum, specifically about bailing GM, how it was as short-sighted as corporations focusing on quarterly profits instead of long-term, sustainable growth. Had government not bailed them, the company, its capital, its employees would have been distributed among other auto manufacturers, existing and upcoming, or even other industries. Instead we bailed GM so they could move to China.


Interesting. It was just reported this week that the Canadian-based Magna Corp was lined up to buy all of GM Canada and some of the US operations. Their plan was to buy the brands of the models that had promise along with the parts manufacturing plants.


Had they been allowed to follow the natural path of the market, all those jobs would still be here.

[Peter1469]

But can do so only by political means, iow, through government corruption, what we call crony capitalism.

That is not entirely true. Very large businesses can crowed out competition without any help from government whatsoever.

[Peter1469]

"And there is the fourth mislead on the Obama jobs strategy. They do not work over the medium to long term..."

Interesting, just made that very point on another forum, specifically about bailing GM, how it was as short-sighted as corporations focusing on quarterly profits instead of long-term, sustainable growth. Had government not bailed them, the company, its capital, its employees would have been distributed among other auto manufacturers, existing and upcoming, or even other industries. Instead we bailed GM so they could move to China.

Great points.

[Trinnity]

Bottom line, the recovery never happened because the Obama govt's policies and interference in markets with regulations and meddling prevented it.

Want the country to have a chance to recover?

Throw his commie/dictator/king wannabe ass out of office in November. Four more years of his shit will be the death of the greatest country that's ever existed on the face of this Earth.