Haven - cutting welfare

pnakasone wrote:
The catch has always been that the government can not look like it is doing nothing to help the economy when things go south. Many actions the government takes at such times are more to buy time for the public calm down enough for the system to re-balance it self.

Yes of course, definitely that as well.
That´s part of the whole "worse if it isn´t done" thing.

kzt wrote:And typically they instead screw it all up, like FDR prolonging the Great Depression by 7 years.

It always amazes me how people can actually believe that kind of rubbish.

That´s the epitome of "lies, damned lies and statistics".

In case you didn´t know, the exact same statistics have been used to prove that the absence of Roosevelt´s actions would have prolonged the great depression by far more.

And not taking action would have been vastly more damaging than even taking the outright WRONG action. And while Roosevelt´s policies were nowhere near perfect or great, they were not BAD.

It would have been really easy to do something worse, but doing something better would have been hard simply because the understanding of economics at the time lacked even more than it does today.

darrell wrote:Without the government stimulus, home prices would have dropped about 15%, a minor ouch. Because of the government assistance provided by fanny and freddy, the drop in home prices was delayed, was 3 times bigger, and created the recession of 2,008

Sheesh, talk about lack of understanding. That´s oversimplified to the point where it has little connection to reality or truth.

It didn´t cause a crash because it was "government assistance", it caused a crash because it was badly handled.

And of course, because once the crash started to hit, the banks were idiots about it.
Then president shrubbery added his own unique brand of "genius" to the mix and made it twice as bad.

And that´s still not even a third of the mix that created that mess.

darrell wrote:Not true. Milton Freedman Won a Nobel prize when he proved that it is not true!

Wow, really? And here i thought it was "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy."

Fancy that...

darrell wrote:Government bailouts and stimulus are like putting a band aid on an infected cut. it temporarily makes it look better but the infection just get worse.

Eventually the infection bursts, and it is 10 times worse than if you had let it heal naturally.

Except untreated infections tend to kill the patient.

Thank you ever so much for that stupidly open goal of a comparison.

darrell wrote:Under a true free market system, about 2,003-2,004, there would have been a correction, and most homes would have lost 10% to 20% of their value.

Anyone who believes that "a true free market system" is the automatic cure for everything is a moron. History have long since proven that ideal to not only be unattainable, but outright wrong as postulated.

A free market system does NOT autocorrect, in reality it has a much stronger tendency to make things worse.

That´s because of the interaction between excessive greed(some of those with plenty of money will HURT everyone else without hesitation just to get a little more for themselves(and in a true free market system, there are no rules at all to stop them, you think hostile take-overs and corporate raiding is bad, a TRUE free market system makes that several magnitudes worse)) and the fact that people do not act rationally in economics, as psychological research in the last 30 years have proven beyond any doubt.

"a true free market system" is in fact one of the best ways to end up with a nasty dystopia of a world. Because in a TRUE free market system, big corporations and big money RULES with near zero opposition.

Last time we had a situation close to a "a true free market system" was during the industrial revolution, and i strongly suggest you investigate exactly what the conditions for common people were then.

The often so wrongly called "dark ages" was a wonderful dream to live in in comparison.

Oh and you might want to remember that THAT situation is what created socialism and by extension communism, because people became fed up with the exploitation.

darrell wrote:It took WW2, when 25% of the population was in the army, to heal the depression 25% unemplyment rate.

25% in the army?

Even if that had been true, it has nothing at all to do with the recovery.

USA borrowed from itself and conducted the biggest economic stimulus package ever, to pay for war production.

Then they got a crapload of technology knowledge from UK for almost no cost(before this, USA was a primitive backwater for technology and anything that could be called hightech was the exception rather than the norm).

THEN, after the war, USA "collected" a huge chunk of the Germans smartest people, and added a vast hoard of technology taken.

And following that, the Marshall plan, which essentially had USA taking another loan from itself to keep the industry running until economics actually warranted its existance.
Oh it wasn´t a bad thing, everyone benefitted from it after all, but it is possibly the most epic showcase of government intervention SUCCESSFULLY boosting the economy.

And that was also followed by 30-70 years of payments for lend lease shipments, despite the fact that USA had already gotten far more of value out of those transactions than the LL shipments were worth.

If for example USSR had demanded full MARKET VALUE for the alloy metals/ore shipped to USA, that alone would cut something like a quarter of the total LL "debts" USA demanded paid in full.

If UK had demanded full value for all its patents that were pretty much raped, UK would have owned about half of business in Silicon valley today. Because the US hightech industry could never have happened as it did without the free lunch it got from the UK tech.

Tenshinai wrote:

darrell wrote:Without the government stimulus, home prices would have dropped about 15%, a minor ouch. Because of the government assistance provided by fanny and freddy, the drop in home prices was delayed, was 3 times bigger, and created the recession of 2,008

Sheesh, talk about lack of understanding. That´s oversimplified to the point where it has little connection to reality or truth.

It didn´t cause a crash because it was "government assistance", it caused a crash because it was badly handled.

And of course, because once the crash started to hit, the banks were idiots about it.
Then president shrubbery added his own unique brand of "genius" to the mix and made it twice as bad.

And that´s still not even a third of the mix that created that mess.

darrell wrote:Not true. Milton Freedman Won a Nobel prize when he proved that it is not true!

Wow, really? And here i thought it was "for his achievements in the fields of consumption analysis, monetary history and theory and for his demonstration of the complexity of stabilization policy."

Fancy that...

darrell wrote:Government bailouts and stimulus are like putting a band aid on an infected cut. it temporarily makes it look better but the infection just get worse.

Eventually the infection bursts, and it is 10 times worse than if you had let it heal naturally.

Except untreated infections tend to kill the patient.

Thank you ever so much for that stupidly open goal of a comparison.

darrell wrote:Under a true free market system, about 2,003-2,004, there would have been a correction, and most homes would have lost 10% to 20% of their value.

Anyone who believes that "a true free market system" is the automatic cure for everything is a moron. History have long since proven that ideal to not only be unattainable, but outright wrong as postulated.

A free market system does NOT autocorrect, in reality it has a much stronger tendency to make things worse.

That´s because of the interaction between excessive greed(some of those with plenty of money will HURT everyone else without hesitation just to get a little more for themselves(and in a true free market system, there are no rules at all to stop them, you think hostile take-overs and corporate raiding is bad, a TRUE free market system makes that several magnitudes worse)) and the fact that people do not act rationally in economics, as psychological research in the last 30 years have proven beyond any doubt.

"a true free market system" is in fact one of the best ways to end up with a nasty dystopia of a world. Because in a TRUE free market system, big corporations and big money RULES with near zero opposition.

Last time we had a situation close to a "a true free market system" was during the industrial revolution, and i strongly suggest you investigate exactly what the conditions for common people were then.

The often so wrongly called "dark ages" was a wonderful dream to live in in comparison.

Oh and you might want to remember that THAT situation is what created socialism and by extension communism, because people became fed up with the exploitation.

darrell wrote:It took WW2, when 25% of the population was in the army, to heal the depression 25% unemplyment rate.

25% in the army?

Even if that had been true, it has nothing at all to do with the recovery.

USA borrowed from itself and conducted the biggest economic stimulus package ever, to pay for war production.

Then they got a crapload of technology knowledge from UK for almost no cost(before this, USA was a primitive backwater for technology and anything that could be called hightech was the exception rather than the norm).

THEN, after the war, USA "collected" a huge chunk of the Germans smartest people, and added a vast hoard of technology taken.

And following that, the Marshall plan, which essentially had USA taking another loan from itself to keep the industry running until economics actually warranted its existance.
Oh it wasn´t a bad thing, everyone benefitted from it after all, but it is possibly the most epic showcase of government intervention SUCCESSFULLY boosting the economy.

And that was also followed by 30-70 years of payments for lend lease shipments, despite the fact that USA had already gotten far more of value out of those transactions than the LL shipments were worth.

If for example USSR had demanded full MARKET VALUE for the alloy metals/ore shipped to USA, that alone would cut something like a quarter of the total LL "debts" USA demanded paid in full.

If UK had demanded full value for all its patents that were pretty much raped, UK would have owned about half of business in Silicon valley today. Because the US hightech industry could never have happened as it did without the free lunch it got from the UK tech.

What do you think consumption analysis is? In simple terms, consumption analysis is comparison of goods sold. Milton freedman won the nobel prize for proving the following:

anytime a government tries to fix the economy by giving stimulus payments, it huts the the natural use or "consumption" of goods, which hurts the economy. Bushe's "stimulus" payments didn't fix the economy.

anytime a government tries to fix the economy by bailing out a company, it huts the the natural use or "consumption" of goods, which hurts the economy. bailing out GM or the big banks didn't fix the economy.

anytime a government mandates a company do something, which is what most government regulations are, it huts the ability of a company to manufacture goods, hurting the natural use or "consumption" of goods, which reduces the GDP and hurts the economy.

anytime a government tries to fix the economy by price fixing, it huts the the natural use or "consumption" of goods, which hurts the economy. This is what FDR's policies did, mandating higher wages and prices of goods.

A. If a government fixes a price above the free market price, fewer people will buy the product, meaning there will be surplusses and fewer goods bought.

B. If a government fixes the price below the free market price, fewer companies will produce the product, and those that produce the product won't produce as much, meaning there will be shortages and fewer goods purchased.

C. This includes wages. for example, every time the minimum wage is increased, companies react by laying off workers, increasing unemployment.

Anytime a government mandates anything in the economy, it hurts the economy. When Ronald Regan reduced government regulations on businesses in addition to taxes, it started both the longest and the best economic growth since the US's founding in 1776.

Government regulations may be a good idea for other reasons, such as safety, but in improving that other reason it still has a negative effect on the economy.

Tenshinai wrote:

kzt wrote:And typically they instead screw it all up, like FDR prolonging the Great Depression by 7 years.

It always amazes me how people can actually believe that kind of rubbish.

That´s the epitome of "lies, damned lies and statistics".

In case you didn´t know, the exact same statistics have been used to prove that the absence of Roosevelt´s actions would have prolonged the great depression by far more.

And not taking action would have been vastly more damaging than even taking the outright WRONG action. And while Roosevelt´s policies were nowhere near perfect or great, they were not BAD.

It would have been really easy to do something worse, but doing something better would have been hard simply because the understanding of economics at the time lacked even more than it does today.

Slightly off-topic here but another side effect of FDR's policies was that most of the modern warships used by the USN in the first year or so of the Pacific War were built in the Nineteen Thirties using National Industrial Recovery Act Money. If he had not done that think how much worse off the USN would have been as Carl Vinson's Two Ocean Navy programme was only just kicking in.

One ever present problem is conflict between short term benefits/costs and long term benefits/costs. People have almost consistently chosen short term gains over long term ones especially during economic down turns.


The problem I have with most economists is that many of them have no real understanding of peoples motivations. As an example in universe Housemen could not understand why Grayson and Masada could not simply work together to the benefit of both.

pnakasone wrote:One ever present problem is conflict between short term benefits/costs and long term benefits/costs. People have almost consistently chosen short term gains over long term ones especially during economic down turns.


The problem I have with most economists is that many of them have no real understanding of peoples motivations. As an example in universe Housemen could not understand why Grayson and Masada could not simply work together to the benefit of both.

Indeed, the issue with the absence of the rational economic man.

darrell wrote:What do you think consumption analysis is? In simple terms, consumption analysis is comparison of goods sold. Milton freedman won the nobel prize for proving the following

First of all i think you need to realise that economics is NOT a hard science. Essentially you CANNOT truly prove anything about it, and theoretics is only worth as much as it can be applied. However, even completely theoretical work can still hold great value.

Friedman was awarded for the analysis, not for any supposed end result of that analysis.

And once you went from theory to practice, Friedman starts loosing glamour very quickly.
Many things he proclaimed or was convinced of was in fact bullshit.

https://en.wikipedia.org/wiki/Socio-eco ... ted_States
However, in recent years several large studies have found that vertical intergenerational mobility is lower, not higher, in the US than in comparable countries.

Where do you find the most socioeconomic mobility? Oh right, the less capitalist ones, like found in say, Scandinavia.

*Ooops* says mr Friedman(well he would if he wasn´t dead and would admit that he was wrong, which he usually didn´t).

Then his constant insistence on somehow making the state apart from the rest of the economy, often in terms suggesting a parasite, completely ignoring that is not how it works.

Even dictators ripping their nations off left right and center interact "better" with their nations than Friedman supposed.

The almighty free market myth. It has been debunked so many times it´s just sad anyone actually still believes it exists.

Friedman generally sucked at making real world economic predictions. Guess why.
Because his work dealt with theory, not reality. And some of those theories were not even based on reality.

He also had an inherent distrust in governments that had no correlation to reality, making him repeatedly and doggedly reject successes by government interference, either excusing them or just pretending they never happened.

And as one article wrote about him when he died: "And while he opposed rent control, public education and Social Security, he promoted government vouchers to help people buy housing, education and medical care."
Basically rejecting his own theory when it was for real.

The EXTREMELY failed idea that self-interest will always lead to the best possible outcome in economics... This one is just a total headscratcher, it´s simply amazing that anyone can consider this for real.

The basic thing you need to realise is that Friedman did his analysis in opposition to Keynes rather than as something starting from neutral.

Something often avoided however is to mention the fact that Keynesian economics was actually never adhered to, yet is blamed for failures that were failures in implementation rather than in theory.
This all by itself means parts of Friedman´s assumptions and supposed facts are simply wrong.

And if nothing else, the fact that Friedman style economics was what led to the disaster that Russia was under Jeltsin, very blatantly tells us that it is just as flawed as what it was written to oppose.

And everyone KNOWS that you can´t just make the claims you did. There is still an ongoing debate as to whether ANYTHING Friedman stated was true at all, not to mention if anything of what he based the analysis on was true OR even relevant.

Seriously, i have a professor in national economics as my cousin in law, i´ve heard just about every variation on your delusions that you can think of.

As another article states about him:
"To be sure, as with all historical analysis, there is always room for discussion, but Friedman’s arguments rest upon one interpretation of ‘facts’ that are usually incomplete or a blatant misrepresentation of what actually happened."

darrell wrote:anytime a government tries to fix the economy by giving stimulus payments, it huts the the natural use or "consumption" of goods, which hurts the economy.

That is so stupidly monolithic statement that i´m not even sure i WANT to bother refuting it as the insanity it is.

darrell wrote:Bushe's "stimulus" payments didn't fix the economy.

Well duh, and where did he place the money eh?
Oh right, most of it was channeled towards the richest 30% or so. Right, the people who don´t actually need it get extra money, so tell me again why exactly it is a surprise that they DONT spend more?

If you want so to add money to an economy in such a way that the economy as a whole improves, you put the money in the hands of people that will actually use it NOW, not have it add to their offshore bank account.

darrell wrote:anytime a government tries to fix the economy by bailing out a company, it huts the the natural use or "consumption" of goods, which hurts the economy. bailing out GM or the big banks didn't fix the economy.

Right... Do you even understand that THAT is NOT the same thing Friedman was arguing about with his analysis?

Not to mention how you seem just spout the basic phrases and don´t seem to have the slightest understanding of them.

Bailing out a crashing company does not hurt "natural consumption". It does some OTHER negative things, but that is not one of them.
Seriously, if you have to argue so hotly about something, could you not at least PLEASE learn what you are arguing about?

And in regards to USA, in case you didn´t realise, bailing out GM and the big banks was not supposed to "fix the economy", it was supposed to make sure the economy didn´t cease to exist completely or cause a crash that was magnitudes WORSE.

I personally detest that kind of actions, but it was very VERY necessary. It could have been done far better, but not doing it would have ended up with an economic disaster that makes either the "great depression" or the more recent crash look like children playing in the sandbox compared to global nuclear war.

The OBVIOUS basic way of doing it better would have been to bail them out in return for equal value shares in the companies.
But oh noes, can´t do that because ideological blinders says government mustn´t own or run businesses.

Which as has been very clearly shown here in the last 20 years is just a bullshit excuse, because companies and businesses privatized did NOT end up working better, in fact more often than not, they ended up LESS functional.

darrell wrote:anytime a government mandates a company do something, which is what most government regulations are, it huts the ability of a company to manufacture goods, hurting the natural use or "consumption" of goods, which reduces the GDP and hurts the economy.

darrell wrote:anytime a government tries to fix the economy by price fixing, it huts the the natural use or "consumption" of goods, which hurts the economy. This is what FDR's policies did, mandating higher wages and prices of goods.

And again with your blatant lack of understanding, i mean seriously?

FDRs policies essentially loaned from the future to kickstart the economy at the time.
Was it effective? Reasonably yes.
Was it perfect? Hardly.
Were all policies a good idea? Hell NO!

They still greatly raised economic activity, which is the very basis of getting things working. Which by itself makes your whining about "natural consumption" completely irrelevant, because the artificial consumption raised economic activity more in 2 years than what natural consumption could ever have managed by itself in 10 years, quite possibly much more still.

darrell wrote:A. If a government fixes a price above the free market price, fewer people will buy the product, meaning there will be surplusses and fewer goods bought.

*sigh*

Only true under specific conditions.
Just take a look at the extreme taxes on tobacco here, compare when the taxes were raised and how that affected consumption.
More often than not, it didn´t, or at least nowhere near actual total cost. Instead, people spent more on the same goods instead.

This is also not an isolated matter, just one where it´s blatantly obvious. Just one more nail in the coffin of "the rational economic man".

darrell wrote:B. If a government fixes the price below the free market price, fewer companies will produce the product, and those that produce the product won't produce as much, meaning there will be shortages and fewer goods purchased.

Completely untrue and utter bullshit.
As can be seen in the real world by how the memory production companies have repeatedly in the last 15 years maintained high production even to the point where they were selling them at a loss.
In part due to S. Korean and Taiwanese government fiddling(because Samsung(among a few others) is a fricking giant of a corporation).

darrell wrote:C. This includes wages. for example, every time the minimum wage is increased, companies react by laying off workers, increasing unemployment.

Again, another complete lie.

Lets see, how about we take as an example how some companies and regions here in Sweden are trialling 30 hour workweeks(instead of the otherwise standard 40 hour week), some even with workers retaining FULL wages. Ie, effectively an increase of 33%!

The results in the last decade? Mixed but none at all leading to layoffs, and in some places, it has even resulted in positive effects, especially in jobs where there´s a lot of straining work, like nursing jobs.

darrell wrote:When Ronald Regan reduced government regulations on businesses in addition to taxes, it started both the longest and the best economic growth since the US's founding in 1776.

AHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHHAAHAAHAH!!!!!

Right, now i know you´re either trolling me or you´re completely and utterly ignorant.

That statement is so far from the truth that it´s not even ridiculous or funny.

Reaganomics started the epic decline of US economics and the nearly chronic insolvency of the US state.

Clinton managed to get things back in the black at least to some extent for a while but it´s uncertain if that would have held even without president shrubbery coming along and making SURE USA ended up crashing and burning.

darrell wrote:Anytime a government mandates anything in the economy, it hurts the economy.

Yeah right, you keep believing that. Anyone praising Reaganomics cannot be taken serious anyway.

And then there is statistics and spin.
I recently saw an editorial that said that the "Affordable Care Act" had improved the economy. The thread of the piece was that, with the lowering of gasoline prices, much of the rise in spending (and money being put into the economy) was from the money being spent on health care---which was helping more people and the health care money was being spent in the US and pushing the economy up.
Ah......... except that the costs of so many of the medical products and procedures AND the insurance (which the Government has gotten classified as a "tax" not a bill insurance) costs for most of the population have gone up. Way up. So while, more money IS being spent on healthcare, it is NOT, as the article and many politicians continualy imply, that more people are getting more health care...it is that the same health care is costing more money. At the same time people are being REQUIRED to buy either the Government offered plans or the "new" and "now conforming to the new Government regulations for health care" plans instead of -in a great many cases- significanlty lower cost plans that had previously met their needs. When the Government changed the rules (and the regulations) the providers (both insurance companies and health care providers) had to change. That has lead to much higher costs because the "products" however you define them (in either insurance or actual health care) have to meet certain regulated tests through the regulations. Then there is the inevitable taking the opportunity by various individuals and companies to raise prices purely from a perspective of profit.
So, we are spending more now on the same things and it is getting worse all the time. And in this set of regulations under Affordable Care Act and all the compliance decisions that are pouring out from it, it keeps getting more complicated and expensive. And, guess what-- all of this does NOT operate under "free market". We are REQUIRED by the Government to buy into this system and there is dam little that can be found in the way of "competition" because to be in compliance with the Affordable Care Act, you are forced to deal with the "approved" or comforming plans--and NOBODY has any insentive to charge less that the "minimum" for goods and services.
Just delightfull. Welcome to Haven---empty your pockets.

darrell wrote:

kzt"quote="pnakasone wrote:The catch has always been that the government can not look like it is doing nothing to help the economy when things go south. Many actions the government takes at such times are more to buy time for the public calm down enough for the system to re-balance it self.

And typically they instead screw it all up, like FDR prolonging the Great Depression by 7 years.

quote: prolonging the Great Depression by 7 years.
"So he came up with a recovery package that would be unimaginable today, allowing businesses in every industry to collude without the threat of antitrust prosecution and workers to demand salaries about 25 percent above where they ought to have been, given market forces. The economy was poised for a beautiful recovery, but that recovery was stalled by these misguided policies."

Just two words: minimum wage.

prolonging the Great Depression by 7 years.
Cole and Ohanian calculate that NIRA and its aftermath account for 60 percent of the weak recovery. Without the policies, they contend that the Depression would have ended in 1936 instead of the year when they believe the slump actually ended: 1943.

It took WW2, when 25% of the population was in the army, to heal the depression 25% unemplyment rate.

prolonging the Great Depression by 7 years.
"The fact that the Depression dragged on for years convinced generations of economists and policy-makers that capitalism could not be trusted to recover from depressions and that significant government intervention was required to achieve good outcomes," Cole said. "Ironically, our work shows that the recovery would have been very rapid had the government not intervened."[/quote]


Note the entire US Military during WWII never exceeded 10% of the population. The US military reached just under 12.78 million in 1944 verses a US population of 132 Million in 1940.