Tuesday, July 17, 2012

Fox News, Republicans accept Keynesianism

Fox News reports on a new study which predicts just over 2 million jobs will be lost if automatic budget cuts, agreed to during the debt limit standoff last summer, are allowed to occur this coming January.  These include over a million each due to cuts in domestic and military spending.  The article quotes prominent Republicans who are decrying the jobs that will be lost if the military budget is cut.

What exactly separates this kind of spending to boost employment from other kinds of government spending to increase employment?  Why is it good economic policy to pay someone a salary to guard a base, but not to teach in a school or build solar panels?

Why not a second round of stimulus?


NWest said...

It's not good policy. Military Spending is the biggest Republican blind spot and it has really hurt their credibility amongst folks who are looking for true cuts.

Deleveraging is happening everywhere, and more stimulus just makes the eventual pain worse, and screws young people just that much more.

The republicans are as much to blame for this mess we are in as the democrats.

TableTopJoe said...

I am going to disagree w/ NWest, in part.

I think that government spending is generally a good thing for the economy, up to a point. Certainly it is true that at some point, government spending crowds out private investment. Similarly, taxation, at some point, discourages investment.

The problem w/ Republicans, anti-spenders, and (it would seem) NWest, is that we can never have the discussion as to HOW MUCH it takes to crowd out/discourage the private sector from investing.

Infrastructure spending, on things such as bridges, dredged-out harbors, high-speed internet, paved streets, etc., is a good thing as long as we're building things that the general population will use. If we're building bridges out to the middle of the Atlantic Ocean, we will create jobs but get nothing in return for them.

Similarly, if we spend our government (tax) dollars on military, it has a return value up to a point. Keeping our shipping lanes safe from piracy is certainly a valuable exercise, but building weapons to defeat enemies that don't exist is wasteful.

It seems pointless to have a discussion about how big government should be, just as it's pointless to have a discussion about how big a car should be. Let's first talk about the goals, and then discuss the means to those ends. If what we're doing is counterproductive (discourages private investment) or fails to give a reasonable return on the public investment (bridges to the middle of the ocean) then we should re-evaluate the means to the mutually agreed upon ends.

NWest said...

Modern federal government spending is simply the notion that some people far away in Washington, D.C. know better how to spend other people's money than the people in the individual states / municipalities.

I agree, government spending is necessary for things such as police departments, and to some extent, a military.

However, my beef is that the spending is happening at the *national* level, rather than the state / local level, and more importantly - that the spending is done *on credit*!!

People are amazingly resourceful and innovative, if left alone. Localities and States are much closer to the problems, and can attack them from different angles. A top-down solution imposed from on high is not the answer.