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Well, Duh

Posted by david52 z5CO (My Page) on
Tue, Jul 24, 12 at 13:22

Begin quote "Watching Democrats and Republicans hash out their differences in the public arena, it's easy to get the impression that there's a deep disagreement among reasonable people about how to manage the U.S. economy. Nothing could be further from the truth.

In reality, there's remarkable consensus among mainstream economists, including those from the left and right, on most major macroeconomic issues. The debate in Washington about economic policy is phony. It's manufactured. And it's entirely political.

Let's start with Obama's stimulus. The standard Republican talking point is that it failed, meaning it didn't reduce unemployment. Yet in a survey of leading economists conducted by the University of Chicago's Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate. On the harder question of whether the benefit exceeded the cost, more than half thought it did, one in three was uncertain, and fewer than one in six disagreed.

Or consider the widely despised bank bailouts. Populist politicians on both sides have taken to pounding the table against them (in many cases, only after voting for them). But while the public may not like them, there's a striking consensus that they helped: The same survey found no economists willing to dispute the idea that the bailouts lowered unemployment.

-snip-

How about the oft-cited Republican claim that tax cuts will boost the economy so much that they will pay for themselves? It's an idea born as a sketch on a restaurant napkin by conservative economist Art Laffer. Perhaps when the top tax rate was 91 percent, the idea was plausible. Today, it's a fantasy. The Booth poll couldn't find a single economist who believed that cutting taxes today will lead to higher government revenue -- even if we lower only the top tax rate.

The consensus isn't the result of a faux poll of left-wing ideologues. Rather, the findings come from the Economic Experts Panel run by Booth's Initiative on Global Markets. It's a recurring survey of about 40 economists from around the U.S. It includes Democrats, Republicans and independent academics from the top economics departments in the country. The only things that unite them are their first-rate credentials and their interest in public policy.

Let's be clear about what the economists' remarkable consensus means. They aren't purporting to know all the right answers. Rather, they agree on the best reading of murky evidence. The folks running the survey understand this uncertainty, and have asked the economists to rate their confidence in their answers on a scale of 1 to 10. Strikingly, the consensus looks even stronger when the responses are weighted according to confidence.

The debate in Washington has become completely unmoored from this consensus, and in a particular direction: Angry Republicans have pushed their representatives to adopt positions that are at odds with the best of modern economic thinking. That may be good politics, but it's terrible policy.

The disjunction between the state of economic knowledge and our current political debate has important consequences. Right now, millions of people are suffering due to high unemployment. Our textbooks are filled with possible solutions. Instead of debating them seriously, congressional Republicans are blocking even those policy proposals that strike most economists as uncontroversial.

This inaction has no basis in economics. Instead, it's raw politics -- a cynical attempt to score points in a phony rhetorical war or a way of preventing their opponents from scoring a policy win.

The debate about the long-run challenge posed by the federal budget deficit has also become divorced from economic reality. The same panel of economists was almost unanimous in agreeing that "long run fiscal sustainability in the U.S. will require cuts in currently promised Medicare and Medicaid benefits and/or tax increases that include higher taxes on households with incomes below $250,000." Only one in 10 was uncertain. None objected.

-snip-

The consensus, of course, can be wrong. On the probable consequences of economic reforms, though, leading economists are more likely to be right than politicians running for re- election. Their solidarity needs to be taken seriously. Too much of what passes for economic debate in Washington is the product of faith, not evidence.

It's time to put economics back into the economic debate.

Here is a link that might be useful: link


Follow-Up Postings:

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RE: Well, Duh

The debate in Washington has become completely unmoored from this consensus, and in a particular direction: Angry Republicans have pushed their representatives to adopt positions that are at odds with the best of modern economic thinking. That may be good politics, but it's terrible policy.

Che Dio benedica Paul Krugman; he has a forum and uses it to get this message across to his readers.

When evidence shows that austerity is hurting economies, silence from the ruling class.


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If you can't take the word of the IMF...... well depends on who you read.
Christine Lagarde "The International Monetary Fund has advised the Obama administration not to tighten its belt too quickly to reduce the public deficit, warning that to do so could further weaken the US economy by the end of this year with possible global implications.

In its report for 2012, the IMF has delivered a pessimistic forecast for the US economy, predicting that growth will remain modest over the next two years. The fund's managing director, Christine Lagarde, said that America's economic recovery "remains tepid. It is economic recovery, we are in positive territory, but it is tepid".

She pointed to two main risks facing the world's largest economy: exposure to the potential contagion spreading out from the euro debt crisis, and political uncertainty in Washington that was preventing agreement on fiscal policy that in turn threatened to push the US off a "fiscal cliff".

Here's how Fox reported the same story GENERALLY well sort of ..actually not at all other than the IMF ahd something to say about the economy.

"An international lending organization says U.S. lawmakers must work quickly to avoid sharp tax increases and spending cuts that could throw the economy into recession next year.
The International Monetary Fund also says in an annual report on the U.S. economy that Europe's debt crisis could slow U.S. growth. A recession in Europe would lower profits for large U.S. corporations, pushing down their stock prices.
The IMF forecasts the U.S. economy will grow 2 percent this year and 2.3 percent in 2013, roughly in line with forecasts by the Federal Reserve and private economists.
But if Congress doesn't do something to prevent the tax increases and spending cuts early next year, the impact could shave 4 percentage points off U.S. growth and result in a recession, the IMF says."


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There must be something in the waters consumed by Washington politicians and policy wonks. Collected dysfunction at best, public insanity at worst. The Repubs fear a new wave of New Deal-like legislations serving the interests of libruls and other commie socialists.


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In the report, the IMF called on the United States in 2013 modest debt reduction, and urged the U.S. government as soon as possible to get Congress to agree to raise the debt ceiling. Oh no not that againnnnn!


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The lack of participation on this thread brings to mind something Eleonor Roosevelt is said to have penned or spoke:

"Great minds discuss ideas; average minds discuss events; small minds discuss people."- Eleanor Roosevelt

I believe those distinctions are overstated but the general points hold true.


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RE: Well, Duh

"Great minds discuss ideas; average minds discuss events; small minds discuss people."- Eleanor Roosevelt

I wonder what kind of minds discuss grasshoppers...come to the Dark Side, Marshall. Chill awhile.


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RE: Well, Duh

I found this quote interesting:
Angry Republicans have pushed their representatives to adopt positions that are at odds with the best of modern economic thinking. That may be good politics, but it's terrible policy.

I think this is really representative of a greater point that Republicans generally are better at doing what it takes to get elected while Democrats too often tend to think that thier policy making will speak for itself. And that is a wonderful ideal, but not necessarily realistic.

Republicans often center themselves for the duration of a campaign, then get into office and swing hard right wrt policy. Whereas Democrats generally govern in the center, but allow themselves to be marginalized to the far left over and over again during campaign seasons.

It's very frustrating as a lifelong Democrat, to see this played out almost every election cycle. The ideal is wonderful, but we really really need more principals who are skilled in both policy and realpolitik. Namely that when we have tremendous victories in the executive and/or the legislative branches is not the time to be conciliatory, as Obama tried to be, and even as that finely tuned political animal Clinton tried to be. Our [Democrat] electeds seem to think this makes them look generous, and maybe they are right about that, but it ultimatley also turns them into suckers every damn time.

Biting my nails to see if Obama will have the chance to try this out in November!


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Do great minds find politics banal in the extreme?


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I would say banal describes it well enough... we already know that any extreme will have a non-workable plan, or no plan, for the economy... but that the sane majority knows what needs to happen in order to restore some balance. We also know it will take just shy of a miracle to ever get some semblance of balance restored; that's not how the major power players want it, happy as they are with the status quo... for now.

Right now, it's about an election... not about what's truly good or workable for the citizens, nation, and economy. Though, I suppose that depends on where the information comes from.

Marshallz, you know numbers aren't my strong suit... but in the overall picture it's not too difficult to see where loyalties lie, nor how likely it is what scenarios might play out.

I would hesitate a guess that the little guy is in trouble, and things won't get better for quite some time.

"Too much of what passes for economic debate in Washington is the product of faith, not evidence." I would change the word "faith" to "farce", though, for accuracy's sake.


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Have yet to meet a great mind! I've met a lot of big egos though & tons of blowhards! I need only look in the mirror on certain occasion to find both in residence!


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The whole business is depressing. The type of campaigning for the Presidential seat this year is appalling to me. Those who are party voters are irritating to me. Those party voters who publically declare themselves to be independent thinkers/voters are fools, to me.

The voter resistance and outright rejection of all topics necessary to focus upon in order to drag this country into a stronger and better position in which to serve it's citizens is amazing to me.

The anger which flows to those brave citizens who dare to publically acknowledge that our country is no longer a country for which to be greatly proud of saddens me.

If we refuse acknowledge our failings for exactly what they are and how large they have become, there is no hope for correction and improvement. We can't correct what we refuse to acknowledge.

We only fall ever closer to third world status as we wave the flag and blather to those who only want to hear the words that we are NUMBER 1, the best country in the whole world!

I recently took a break from all news and the internet - became overloaded: enough is enough is enough. Logged back on only to find a totally curious, outrageously self serving, simply dreadful, totally unuseful, 150 responsed thread. Quickly backed out broke again for a few days.

Had I been active during that time, I would have been a part of those 150 responses, those sort of threads bring out the absolute worst of me. (I frankly wonder if that was the very intention of the thread in the first place.) What is it about that sort of thead which will bring active participation but this thread of such an important topic is EXTREMELY unlikely to ever reach that 150 response mark.


David, thanks for bringing in his article.

To me, states what is self evident.

All Americans had better read it and embrace the truth of it.

Especially since we have gotten and will continue to get the "leaders" we have created, cultivated and most certainly deserve.


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Excellent article, david.

I'm going to highlight some of its significant findings--for those "readers" who don't like to read long posts and therefore probably missed these goodies:

in a survey of leading economists conducted by the University of Chicago's Booth School of Business, 92 percent agreed that the stimulus succeeded in reducing the jobless rate.
Oh my goodness, the experts mostly agree the stimulus worked as it was supposed to! We wouldn't know that if we just listened to the politicos.

there's a striking consensus [among experts] that they [bank bailouts] helped
Oh my goodness, the experts think the bank bailouts were good! D.C. doesn't seem to know that!

The Booth poll [of the experts] couldn't find a single economist who believed that cutting taxes today will lead to higher government revenue
Oh-oh,--Demi's in agony over this discovery!

the Economic Experts Panel run by Booth's Initiative on Global Markets . . . includes Democrats, Republicans and independent academics from the top economics departments in the country.
What--you expect me to believe Democrats and Republicans and Independents can agree on anything? Oh, among experts with academic credentials, they do! Well, what do they know?

Conclusion:
Angry Republicans have pushed their representatives to adopt positions that are at odds with the best of modern economic thinking
Hey, why are you putting down Republicans? Can't a Republican/Independent get any respect around here? Isn't their opinion (based on no facts) as good as anyone else's opinion (based on provable facts)?

There you go--the Reader's Digest Highly Condensed version of the article--for your benefit. Not sure anyone will benefit from my comments, however--: (

Kate


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Kate, the young man who fills in for Maddow was hitting some of these very points this morning. I was busy while it was on and missed a lot, but remember hearing some of those points being made.

P.S. I certainly benefit from all your contributions in here.

I would love for Igrid to comment on this article. I'm hoping like heck she will stick around H.T. but am not counting on it. :(


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But I think it equally important to point out that the Democrats proposal to keep the Bush tax cuts for those below $250,000 a year is completely bogus, as well as stating that with a few tax increases, we'll be able to sustain Medicare, Medicaid, and Social Security.

The reality is, of course, that taxes need to go up across the board, Medicare and Medicaid need to be seriously modified, and spending, including defense spending, needs to get seriously lopped.


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I would concur, Kate... especially on the part about cutting taxes. Revenue is a must, and we can't go about gaining revenue through austerity only, by slashing everything to pieces. Of course no one wants to pay more in taxes, but it's the only way to fix part of our problems.

The facts stand. They're not hard to locate or figure out.


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It may be true that Medicaid and Medicare need to be re-structured and reformed in some ways, but the problem is that the only option the Republicans are willing to discuss is ABOLISHING MEDICAID AND MEDICARE.

Somehow, I do not see completely getting rid of them as improving Medicaid and Medicare.

Kate


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Serious attention to defense cuts would make a huge difference.

I certainly agree that EVERYTHING needs to be addressed , but if defense isn't deeply cut with wisdom attached to the areas within defense which needs deep cutting, then the rest won't make enough difference to make long term improvements in our country's financial picture.

We cannot sustain the defense spending we continually attempt to keep in place. It's not only unnecessary to the defense of our country but worse, it creates a false sense of security for way too many.


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It may be true that Medicaid and Medicare need to be re-structured and reformed in some ways, but the problem is that the only option the Republicans are willing to discuss is ABOLISHING MEDICAID AND MEDICARE.
Somehow, I do not see completely getting rid of them as improving Medicaid and Medicare.

I dunno, I would say Medicaid and Medicare SHOULD be abolished.

And replaced with a system that covers everybody regardless of age or financial circumstances.

But hey, it's your country, not mine.


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What do you know HG?

- your country has lousy health care and everybody in Canada wishes they could flee to the U.S and get really good care instead of that backward stuff with ill educated doctors, all which you are stuck with - and besides, you all are living in near poverty because the govt takes all your money in the form of taxes in order to provide you AND the lazy good-for-nothings with free coverage for when they knife perhaps you but certainly everyone else around them all up on a drunken Saturday night brawl.

The "drunken Saturday night brawl" part I made up. The rest concerning Canadian health care, I learned right here in H.T by some members who are active to this very day, all revealed to me when President Obama was attempting to overhaul the health care problem that the conservatives had ignored for all those decades -

- those conservatives who were back then just FINE with big business health insurance who were taking care of them just FINE and how dare that scary Obama man have the audacity to attempt to shove his foreign born ideas down our throats?

So they made sure that their reps fought Obama every step of the way (GOP aka the unified party of NO!) and the health care reform bill which the U.S Supreme Court just upheld as having been *legally* shoved down their throat by that scary Obama man is what they are stuck with, legally, after all.

Because they (the conservative reps and those who voted them in) weren't willing to cooperate and offer their own valuable and workable ideas on how to create a unified, accepted and very meaningful health care reform bill which would benefit all Americans because they were too busy trying to undo every good thing the new President tried to change because that was the promise made to the conservative voters when that scary Obama man was voted into office - they are not stuck with the health care reform bill which was so little when it could have been so very wonderful.

Because they were much too busy getting those tea creatures in office, those creatures who were gonna change this country for the better!

and ALSO......because you Canadians aren't all THAT, and don't you forget it.

You might have health care AND education tied up in your corner along with better unemployment figures and much lower debt and perhaps a generally higher standard of living for the majority....... but we have the bombs and can blow you away, so don't tread on us.


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Great minds discuss ideas; average minds discuss events; small minds discuss people.

Bitter minds discuss themselves.

-Ron-


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instead of that backward stuff with ill educated doctors, all which you are stuck with - and besides, you all are living in near poverty because the govt takes all your money in the form of taxes

You forgot the dirty scalpels and 10 women all giving birth in the same room, all screaming (aparently because we don't have anesthesiologists here) and having to phone our politicians in order to get approval for medical treatment.

I learned that from Hot Topics posters too. Cause they have a friend who has a cousin who talked to their babysitter's dog-walker who used to live in Canada and saw it with their own eyes.

but we have the bombs and can blow you away, so don't tread on us.

The scary part of the whole thing is, as much as I know you are joking when you say it, this sentence very much illustrates American foreign policy around the world. Well, mostly in second and third world countries, really. But I think we would be kidding ourselves to think that being a white and somewhat-Anglo (we know how much you guys love the cheese eating surrender monkeys) country that we are always going to be safe.


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Small minds apparently also have a hobgoblin, named Foolish Consistency.


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David, I most sincerely extend my apologies for derailing your very interesting and very important thread - I honestly thought I was ready to read and participate in H.T. again without giving an ugly reaction to some of the stuff I read in here, but I find to my utter dismay that I'm obviously incorrect. I read a few threads and then unloaded my *extreme* frustration in your great thread and for that, I'm very sorry.


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Mylab,

You're still talking about economic policies, I don't see that you derailed the thread.


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begin quote

On July 1, Canada Day, Canadians awoke to a startling, if pleasant, piece of news: For the first time in recent history, the average Canadian is richer than the average American.

According to data from Environics Analytics WealthScapes published in the Globe and Mail, the net worth of the average Canadian household in 2011 was $363,202, while the average American household's net worth was $319,970.
A few days later, Canada and the United States both released the latest job figures. Canada's unemployment rate fell, again, to 7.2 percent, and America's was a stagnant 8.2 percent. Canada continues to thrive while the U.S. struggles to find its way out of an intractable economic crisis and a political sine curve of hope and despair.

The difference grows starker by the month: The Canadian system is working; the American system is not. And it's not just Canadians who are noticing. As Iceland considers switching to a currency other than the krona, its leaders' primary focus of interest is the loonie - the Canadian dollar.

As a study recently published in the New York University Law Review pointed out, national constitutions based on the American model are quickly disappearing. Justice Ruth Bader Ginsburg, in an interview on Egyptian television, admitted, "I would not look to the United States Constitution if I were drafting a constitution in the year 2012." The natural replacement? The Canadian Charter of Rights and Freedoms, achieving the status of legal superstar as it reaches its 30th birthday.

Good politics do not account entirely for recent economic triumphs. Luck has played a major part. The Alberta tar sands - an environmental catastrophe-in-waiting - are the third-largest oil reserves in the world, and if America is too squeamish to buy our filthy energy, there's always China. We also have softwood lumber, potash and other natural resources in abundance.

Policy has played a significant part as well, though. Both liberals and conservatives in the U.S. have tried to use the Canadian example to promote their arguments: The left says Canada shows the rewards of financial regulation and socialism, while the right likes to vaunt the brutal cuts made to Canadian social programs in the 1990s, which set the stage for economic recovery.

The truth is that both sides are right. Since the 1990s, Canada has pursued a hardheaded (even ruthless), fiscally conservative form of socialism. Its originator was Paul Martin, who was finance minister for most of the '90s, and served a stint as prime minister from 2003 to 2006. Alone among finance ministers in the Group of Eight nations, he "resisted the siren call of deregulation," in his words, and insisted that the banks tighten their loan-loss and reserve requirements. He also made a courageous decision not to allow Canadian banks to merge, even though their chief executives claimed they would never be globally competitive unless they did. The stability of Canadian banks and the concomitant stability in the housing market provide the clearest explanation for why Canadians are richer than Americans today.

Martin also slashed funding to social programs. He foresaw that crippling deficits imperiled Canada's education and health-care systems, which even his Conservative predecessor, Brian Mulroney, described as a "sacred trust." He cut corporate taxes, too. Growth is required to pay for social programs, and social programs that increase opportunity and social integration are the best way to ensure growth over the long term. Social programs and robust capitalism are not, as so many would have you believe, inherently opposed propositions. Both are required for meaningful national prosperity.

Martin's balanced policies emerged organically out of Canadian culture, which is fair-minded and rule-following to a fault. The Canadian obsession with order can make for strange politics, at least in an American context. For example, of all the world's societies, Canada's is one of the most open to immigrants, as anyone who has been to Toronto or Vancouver will have seen. Yet Canada also imposes a mandatory one-year prison sentence on illegal immigrants, and the majority of Canadians favor deportation. Canadians insist that their compassion be orderly, too.

This immigration policy is neither "liberal" nor "conservative" in the American political sense. It just works. You could say exactly the same thing about Canada's economic policies.

Canada has been, and always will be, overshadowed by its neighbor, by America's vastness and its incredible versatility and capacity for reinvention. But occasionally, at key moments, the northern wasteland can surprise.

end quote

Of course, the "We're Numbah One" force was out in full armor poking holes in this, but hey.....

Here is a link that might be useful: link


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RE: Well, Duh

the net worth of the average Canadian household in 2011 was $363,202, while the average American household's net worth was $319,970.

As great as this seems to sound, I would point out that much of that net worth is based on what many consider to be an overinflated housing market.

As much as we are not expecting that bubble to burst as it did in the US, suddenly and violently, it still means that a correction in housing could drop those net worth numbers back.


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The reality is, of course, that taxes need to go up across the board, Medicare and Medicaid need to be seriously modified, and spending, including defense spending, needs to get seriously lopped

Eventually, that's what has to happen.
However, in the short term, while the economy is slow, we cannot raise taxes except on those who can afford to pay them.
When the economy revs up again, yes, put a silver bullet through the heart of The Bush Tax cuts, and the rest of his awesomely disastrous Presidency.


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