krugman gets it

Discussion in 'Politics, Religion, Social Issues' started by zimv20, Sep 10, 2003.

  1. zimv20 macrumors 601

    zimv20

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    toronto
    #1
    i know some people here don't like him. i do.

    lots more at:
    link
     
  2. Frohickey macrumors 6502a

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    #2
    Krugman the Keynesian

    Here is an economist deconstructing another 'economist's' arguments. Pretty interesting read, IMO.
     
  3. zimv20 thread starter macrumors 601

    zimv20

    Joined:
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    toronto
    #3
    it is an interesting read. i don't know enough about economics to argue w/ the guy on that level, but his mockery of krugman for claiming that clinton's tax increase saved the economy didn't ring true w/ me. 'cuz i think it _did_ help the economy.

    regardless, i like krugman's political analysis. i find myself agreeing w/ most of what he says. not just because he's krugman, but 'cuz he's the voice for things i'm already feeling.
     
  4. Frohickey macrumors 6502a

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    #4
    How does a tax increase save the economy? Taxation reduces the money supply otherwise available for private economic activity, and when government spends it, its not as diversified as when people spend it. When you have a large deficit, its the same thing, you limit the amount of money available for individuals to borrow for diversified economic activity.

    The claim that it was all about paying off the debt is false. Clinton would have spent it all if it weren't for Congress stopping him from doing so. Alas, our current Congress doesn't know how to stop spending other people's money either. These people need to be on an allowance.

    As to your common ground with Krugman, at least you admitted it, though his economic analysis is usually found wanting. Its his political ruminations that you agree with.
     
  5. zimv20 thread starter macrumors 601

    zimv20

    Joined:
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    toronto
    #5
    now i'm no macroeconomist, but here's what i've observed over the years:

    1. reagan cut taxes, deficit went up, economy went down
    2. ghw bush raised taxes, economy starting coming out of recession
    3. clinton raised taxes, deficit became record surplus, economy went up
    4. bush cut taxes, record surplus became record deficit, economy tanked

    if a democrat wins in '04, he'll probably roll back bush's tax cut (though people will call it a "tax increase") and the economy will probably recover.
     
  6. Daveman Deluxe macrumors 68000

    Daveman Deluxe

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    #6
    Actually, when you look at history, changing economies were largely a result of the PREVIOUS president's action/inaction.

    When the stock market crashed in Hoover's term, it was largely due to Coolidge's inaction on growing economic crises during his term (the man slept for 14-16 hours a day!).
     
  7. Taft macrumors 65816

    Taft

    Joined:
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    Chicago
    #7
    Could you cite some credible supporting evidence please? As far as I remember from history class the signs of an economic crisis weren't apparent until Coolidge took office.

    Also I see no evidence to support the trend you assert to be true. Did Reagan cause the recession realized during Bush's presidency? Were Bush's economic policies the cause of the over-zealous capitalization of internet startups and hence the primary reason for the boom of the 90's?

    I need some evidence...

    Taft
     
  8. Desertrat macrumors newbie

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    Jul 4, 2003
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    Terlingua, Texas
    #8
    Hmmm. Coolidge/Hoover were even before my time.

    Everything I've read about the 1920s/1930s indicated there was a period of mass speculation in both stocks and in other investments such as Florida swampland. Low margin rates were common. There were also problems with balance of trade and cheap foreign imports. (Sound familiar?) In October of 1929, the bubble burst. Anybody remember the date of the Smoot-Hawley Tariff bill? That was supposed to be contributory to the world-wide hard times.

    There are some economic analyses which claim that the Depression would have ended sooner had FDR not instituted his changes, his "help" programs. I don't know. We were, finally, coming slowly out of it when WW II started. I'd have to guess that rationing and recycling were truly important to the country insofar as paying for the war and maintaining some sort of civilian economy. I know it wasn't very easy; I was seven when the war started.

    zim said, "1. reagan cut taxes, deficit went up, economy went down

    Reagan took office with a 13% or more inflation rate, inherited from Carter (Initiated by LBJ's guns'n'butter policies). His initial budget was $700 billion, also inherited from Carter. We had stagflation during 1981/1982 as high interest rates took the steam out of a vastly overheated economy. Thereafter, economic activity became more stabilized. Stock prices rose. By the end of his first term, the federal budget had risen to some $900 billion, and to $1.1 trillion by the 1999 budget. (This near-60% increase in eight years compares to the 75% increase in four years of the Carter administration.)

    2. ghw bush raised taxes, economy starting coming out of recession

    Bush I took office in 1989. The "white collar" recession got going in 1990, and was pretty much over by early 1992--in spite of what Clinton said. Taxes were raised in what, 1991? Bush got blindsided by Demo promises that the new tax monies would not be spent on expanded or new programs. They lied.

    3. clinton raised taxes, deficit became record surplus, economy went up

    The tax increase was at the beginning of the fantastic leap in economic activity generated by the IT boom and the stock market bubble. Boom times always generate more tax-income to government at all levels. This boom was ending in 2000, with no expectations that the good times would not roll forever. Plus, the end of the USSR allowed a dramatic decrease in military spending.

    The question nobody asks is how much higher the GDP would have been had Clinton NOT raised taxes. My own question is, how much of that surplus actually went to paying down the National Debt? Answer: Zilch, zip, nada.

    4. bush cut taxes, record surplus became record deficit, economy tanked

    Dubya got jumped on during the election campaign in 2000 for a comment about the forthcoming economic problems his advisors foresaw. ("Don't talk about it; that'll make it happen!") The economy did indeed begin to tank during 2000, and is still (IMO) tanking. Again, IMO, his tax cut is peanuts compared to all federal spending or income or GDP. Repealing it would not do doodly squat of notable benefit to anybody.

    And so here's today's world of a tanked economy. Personally, I don't think Bush or Dean or Ms Clinton or His Nibs Greenspan has a clue about how to deal with it. "If they coulda, they woulda." It's much like one of those mysterious diseases which isn't fatal, but only time and nature will cure. About the only thing I can guarantee you is that our economy won't get better from tax increases.

    'Rat
     

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