Sunday, December 8, 2013

Objectivity and Attitude Simple Arithmetic

The other day I quoted John Cochrane:

We're about a trillion dollars below trend, so the government needs to borrow an additional $750 billion a year (I'm usuing the Keynesian 1.5 multiplier) and blow it on whatever is handy; Solyndras, high speed rail, windmills, any old rathole will do so long as it's "spent." (Sorry, I'm not doing a very good job of expounding this position. Not my job.)

So how does "the Keynesian 1.5 multiplier" work? 1.5 times $750 billion is a trillion? Is that it?

How about 1.5 times $667 billion, maybe?


jim said...

You could get a trillion dollars in increased spending into the economy by eliminating the FICA tax. It is puzzling why people think that increased government spending is the only way. More govt spending has no realistic possibility of happening. The refusal to accept that reality makes it seem that liberals are every bit as stupid or corrupt as the right portrays them.

Jazzbumpa said...

jim -

Wow - that is total nonsense.

When have the liberals not accepted that the current congress won't go for more spending?

Give me a cite or two.

And relating that to corruption surpasseth all understanding.

Eliminating FICA is a patently horrible idea. It funds SS and keeps it from being a welfare program.

There's a lot that could be done just with tax policy to increase labor's share, which is the root of the problem, but the Rethugs will obstruct everything.

We're basically screwed, for a long, long time.


jim said...

Hi Jazz,

If it were accepted that increased spending is not possible then that wouldn't be the only proposal on the table.

The tax that has seriously cut into labor's share is the FICA tax. We could let China and Japan fund SS.

The Arthurian said...

"We could let China and Japan fund SS."

No, we shouldn't do that.

We should look at how spending-money in this country has been suppressed over the decades, and how the use of credit has been encouraged by policy to compensate for the suppression of money. We should realize that these changes have influenced economic growth for the worse. We should understand that certain ranges of some monetary balances have beneficial effects, and other ranges have harmful effects on growth. And we should establish policies to move our monetary balances back to the ranges where we will be able to achieve vigorous growth.

Please note that moving monetary balances in the necessary direction will accomplish the objectives you want to accomplish by eliminating FICA taxes.

The Arthurian said...

... but the justification for it is better.