House of Eratosthenes

Rush Limbaugh takes down President Obama, along with every other pie-eyed lib who indulged this fantasy about unemployment benefits spurring economic growth.

The president’s been speaking for the last 20 minutes, 25, 30, whatever on the morality and the economics of extending emergency unemployment benefits, anything to get Obamacare off the front page and get Obamacare off the radar. Now we’ve got to extend unemployment benefits. It’s nothing more than the news agenda being recycled. It’s just flat-out amazing. If what he just said is true, we ought to just stop anybody working and put everybody on unemployment, and that’s how to get a recovery.
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The president just said that unemployment benefits actually create new jobs. Now, stop and think about that for a second. Unemployment benefits create new jobs. What is unemployment insurance? It is paying people not to work.

Let’s change the term. Let’s get rid of “unemployment insurance” and let’s call it “paying people not to work.” The president of the United States just said to resounding applause — well, I’m not sure that got applause. The only thing that’s really gotten any applause in the White House, he’s got all kinds of people standing behind him, is when he said we can’t dare have another government shutdown. That got a standing ovation. So it tells you the kind of people in the room.

Money quote:

“Voting for extending unemployment insurance helps people and creates jobs,” Obama said. “Voting against it doesn’t.”

It’s clear we’re having a difference of opinion about what a “job” is. President Obama, along with a lot of the vocal libs, are pursuing a definition that may be technically correct…to a fault. They’re being very short-sighted, I think, associating the concept of a job with some sort of activity. I suppose when you don’t have a job, that’s very appealing: You either have a job or you don’t. Who cares what the job does if you don’t have one.

But if no one’s producing anything, the people who do have jobs aren’t going to have them for long.

What sort of “jobs” does President Obama have in mind? Are these jobs that produce products and services that other people can use? If not, then I think He should present this honestly and ‘fess up that His vision is not quite so much about economic growth, but rather a flurry of activity which is not quite as useful to our own long-term prospects. And then the rest of us could make an issue out of it and discuss it. You may say I’m a dreamer, but I’m not the only one…

My general experience with arguing-with-libs-on-the-Internet is: Good luck getting them to engage this as an issue. Usually, they’ll just start over at the beginning and explain it all to you how it’s supposed to work: “See, when people receive their benefits, they use them to buy things they otherwise would not buy, and that creates activity…”

But how do we go about growing the economy, making everyone more prosperous? Isn’t it obvious that for that to happen, someone, somewhere, has to actually make a useful product? You know…do work? Product-ive work?

It’s looking more and more like we’re getting a history-playback, along with all the education that entails if we just open our eyes and pay attention to the lessons.

We’re seeing first-hand how FDR made the Great Depression drag on, and on, and on.

I think there are three things going on here. The first is the standard, tedious, yet terrifying liberal belief in the magic power of words. There are Jobs, see, and they exist somewhere out in the ether, and if we can bring an individual into mystical union with a Job, he will thus become Employed, and Employment is the font from which all good things flow. If we chant the right mumbo-jumbo and perform the correct ablutions, People will become aligned with Jobs. Which is why we saw all those clipboard-wielding census takers classed as Employed back in 2010, which contributed to the Recovery (=the arcadia that comes from an increase in the union of the two spheres, Jobs and People). The mistake conservatives always make is to assume that liberals are talking about activities which produce commodities in a system of exchange. That’s a job. Liberals don’t care about such mundane things. They’re after Jobs, the way a Gnostic chased the Pleroma. There’s a reason Leszek Kolakowski started Main Currents of Marxism with Plotinus.

The second is standard-issue liberal hypocrisy. As you said: “See, when people receive their benefits, they use them to buy things they otherwise would not buy, and that creates activity…” Which I thought was bad. Since that’s, you know, exactly the kind of mindless, soulless consumerism that inspired so many heartwrenching odes at open mic night, back during the awful Bush tyranny of 5% unemployment. You are not an individual; you are merely a consumer, endlessly spinning capitalism’s great hamster wheel for the benefit of Big Business. Right?

The third is stealth socialism. Not that Obama’s smart enough to figure this out, but there’s a small subset of leftists who embrace the ratchet effect. If we establish the legitimacy of the government giving you money to go buy goods though you’ve done nothing to earn it, we’ve established that the government is legitimately in charge of your day-to-day maintenance. And the government-cash-for-capitalist-stuff exchange is woefully inefficient. Much cheaper to have the government issue your rations directly. Which is itself less efficient than just having the government control the means of production directly…. Break it up into discrete chunks like that, phrased throughout in the language of “efficiency,” and tell me idiots like Chris Christie and Paul Ryan wouldn’t vote for it. And as an added bonus, the talk about “efficiency” allows hysterical liberals (BIRM) to decry each incremental step towards communism as heartless Republican belt-tightening.
- Severian | 01/08/2014 @ 10:54
mkfreeberg: What sort of “jobs” does President Obama have in mind? Are these jobs that produce products and services that other people can use?

Well, grocers and auto mechanics and people who sell heating oil. Those kinds of jobs.

mkfreeberg: But how do we go about growing the economy, making everyone more prosperous?

That’s an important question, of course.

Classically, the policy is to maintain the government budget in balance. So if the economy is growing, leading to increased tax receipts, cut taxes. If the economy is shrinking, causing reduced tax receipts, cut spending (or raise taxes). The problem is that this exasperates the market cycle, leading to booms and busts. Cutting taxes while the economy grows causes it to grow faster, leading to a bubble. When the bubble bursts, cutting spending (or raising taxes) accelerates the decline, leading to a dangerous, downward spiral.

During the expansion of the Bush Era, for instance, taxes were cut leading to deficits, while overstimulating the economy. Instead of spending the money through tax cuts, the U.S. might have put that money aside for a rainy day, in a “lock box.” Even if there had still been a financial shock, the U.S. would have been in a much better position to respond to the crisis.

Countercyclical policy means to run a surplus during times of plenty (seven fat cows), and run a deficit during times of famine (seven skinny cows). In a modern economy that means progressive taxes, which dampen growth as incomes rise, but reverses when the economy declines. Unemployment insurance and other safety net programs act as automatic stimuli. When there is a severe shock, this can require additional stimulus to stop the downward spiral in demand. Nevertheless, countercyclical policy can be and should be revenue neutral, with the money spent during the contraction being equal to the money saved during the expansion.

So, not only does unemployment insurance help those in need due to economic circumstances outside their control, but it also helps prop up the economy until it regains its footing. Countercyclical policy does not create growth on its own. Rather, competitive markets create wealth, and countercyclical policy merely helps mitigate the market cycle. On the other hand, prudent government spending during downturns can help build the infrastructure for the next expansion. This might include an updated information system, or training for the unemployed, for instance.

mkfreeberg: We’re seeing first-hand how FDR made the Great Depression drag on, and on, and on.

GDP growth from 1933 to 1936 was about 9%.
- Zachriel | 01/09/2014 @ 07:09
U.S. GDP Real Annual Growth Rate.
http://static.seekingalpha.com/uploads/2009/2/4/saupload_09_02_02f_gdp_since_1930.png
FDR was president from 1933-1945.
- Zachriel | 01/09/2014 @ 07:15
During the expansion of the Bush Era, for instance, taxes were cut leading to deficits…

Now there’s a cause-and-effect relationship that could stand some more skeptical inspection.

For example, are Obama-era deficits really the result of people not being taxed enough?

What is this notion of “enough”? Is that subjective, or objective?
- mkfreeberg | 01/09/2014 @ 07:25
And, here’s the nonfarm unemployment rate.

Activity ≠ prosperity.
- mkfreeberg | 01/09/2014 @ 07:28
mkfreeberg: Now there’s a cause-and-effect relationship that could stand some more skeptical inspection.

Tax receipts dropped immediately with the tax cuts, taking several years to recover.

mkfreeberg: For example, are Obama-era deficits really the result of people not being taxed enough?

Taxes have been at their lowest level in generations. The deficits were clearly tied to the recession.

mkfreeberg: What is this notion of “enough”?

A prudent policy would be to have enough revenues to pay for programs people want from their government, plus a bit for emergencies. Fiscal policy should be countercyclical, but revenue neutral over the long term.

mkfreeberg: And, here’s the nonfarm unemployment rate.

Yes, it started dropping dramatically with the New Deal, then dropped almost to zero by the end of the Roosevelt Administration. Notice that it never again exceeded the levels of previous economic busts.
- Zachriel | 01/09/2014 @ 07:38
mkfreeberg: Activity ≠ prosperity.

Of course not. However, maintaining the economy during downturns allows time for the market economy to recover.
- Zachriel | 01/09/2014 @ 07:38
Lesson learned being, if we want an end to the Obama Depression, we’d better hope for a war because the President’s policies are only going to prolong it indefinitely.

Which is exactly what experience is showing us.
- mkfreeberg | 01/09/2014 @ 07:40
mkfreeberg: Lesson learned being, if we want an end to the Obama Depression, we’d better hope for a war because the President’s policies are only going to prolong it indefinitely.

The U.S. economy is growing faster than most of its developed competitors.
- Zachriel | 01/09/2014 @ 07:53
Unemployment checks simply add to the cost of production and produce no good or service. I have subscribed to Elliott Wave International for many years and anyone else who did would have known what was coming down the road. It was cheap, easy credit that was invested in consumption and speculation rather than production. Now the money is gone but payback is a bitch. The only way the economy will move forward is when the debt is destroyed by paying it back or more likely many more foreclosures and bankruptcies. When people, companies, and governments are finally bankrupted or carry much less debt we will finally grow. Employment checks and any other FREE government largess only burdens the producers, likely adds to the debt which is simply creating more credit to be flushed down the toilet. And interest rates which run in a Kondratieff cycle, have bottomed and are on the way up so good luck with borrowing more money to keep this fiasco afloat.
- indyjonesouthere | 01/09/2014 @ 17:34
indyjonesouthere: Unemployment checks simply add to the cost of production and produce no good or service.

Not if the money is otherwise idle, in which case, they spur economic activity, albeit at the cost of wealth.

indyjonesouthere: It was cheap, easy credit that was invested in consumption and speculation rather than production.

Certainly, the Bush Administration made many missteps leading up to the financial meltdown. Once the damage is done, though, there’s nothing to do but go forward.
- Zachriel | 01/09/2014 @ 17:39
Unemployment taxes are a producer cost, the government takes its share to cover its costs of the program and what’s left makes it to the unemployed. The only idle money left in this economy is idle credit. Cheap credit began with Carter mandating banks lending to home ownership in poor areas. Clinton ramped the program to a frenzied level at Fanny and Freddie. Even Bush tried to push the credit but people were already maxed out on credit. Then came the freebee 1000 dollar checks to everyone, then green “investments” like solyndra. We have had the last three presidents stimulating with credit, now the payback is coming and it will get ugly. There is NO forward until the debt is cleared. And we just accumulate more debt.
- indyjonesouthere | 01/10/2014 @ 13:44
indyjonesouthere: Unemployment taxes are a producer cost, the government takes its share to cover its costs of the program and what’s left makes it to the unemployed.

It’s like any insurance. People pay into a pool, then the money is redistributed. When there is prolonged unemployment, some of the funds may be borrowed. Either way, there is a cost. However, the cost is countercyclical.

indyjonesouthere: The only idle money left in this economy is idle credit.

Idle money is money that is kept in more liquid assets rather than long term investment. This occurs during a recession as people pull back from the markets. If there is a severe shock, it can cause a catastrophic collapse, as was seen in the 2008 financial meltdown and its aftermath.

indyjonesouthere: There is NO forward until the debt is cleared.

As the economy has begun to recover, deficits have dropped, both in terms of the overall economy, and in absolute terms.
- Zachriel | 01/10/2014 @ 13:57
Deficits have not dropped. If you look at federal debt using the cash method it has expanded to 17plus trillion and that doesn’t include the 85 billion/mo that the fed adds using credit. If you use the accrual method the debt is well over 100 trillion. Debt is accruing, it is not declining. The latest figures from investment brokers is that they are invested 105 % in the market. They are actually borrowing money to invest. Not only that but Freddie and fanny want to ramp up loans again. The speculation has NOT ended and won’t until rates go up, then we’ll have another bust. State governments are in hock up to their eyeballs as well as city governments. We will go nowhere until debt clears, as of now debt is not decreasing.
- indyjonesouthere | 01/10/2014 @ 17:48
indyjonesouthere: Deficits have not dropped.

CNN Money: “U.S. deficit falls to $680 billion”
money.cnn.com/2013/10/30/news/economy/deficit-2013-treasury/

Fox News: US budget deficit falls 24 percent in October
foxnews.com/politics/2013/11/13/us-budget-deficit-falls-24-percent-in-october/
- Zachriel | 01/10/2014 @ 18:46
Do you know the difference between deficit and debt. Watch the debt clock…we are still going into more debt and the fed is still buying more junk from the banks for real money at a dollar for a dollar trade. The states are still going in debt and there bond selling shows it, same for the cities. They all actually think they can borrow their way to wealth. And the off budget items like social security and Medicaid/medicare are still going into the red. Social security receipts don’t even cover payments as of a year ago. And Democrats do not want to even talk changing the benefit qualifications…their only solution is MORE tax.
- indyjonesouthere | 01/10/2014 @ 19:18
indyjonesouthere: Do you know the difference between deficit and debt.

Um, yes.

indy: Deficits have not dropped.

the facts: deficits have dropped.
- Zachriel | 01/10/2014 @ 19:25
Better re-read that again. “Watch the DEBT clock….we are still going into more debt…” There isn’t a word DEFICIT in that paragraph. Again…do you know the difference between debts and a deficit? You use them interchangeably and they are not the same.
- indyjonesouthere | 01/10/2014 @ 20:36
@Indyjonesoutthere,

They’re really, really, really bad at reading comprehension. read ’em and weep (warning: it gets pretty gruesome). My theory is that they all have a particularly bad autism spectrum disorder, but I’m open to alternate theories.
- Severian | 01/11/2014 @ 07:38
indyjonesouthere: Better re-read that again.

Okay. Here it is:

Zachriel: As the economy has begun to recover, deficits have dropped, both in terms of the overall economy, and in absolute terms.

indyjonesouthere: Deficits have not dropped.

Did you mean, “Yes, you’re right. Deficits have dropped, but overall debt has continued to climb”? If so, it would make more sense to say you misspoke than to continue to defend a false statement.
- Zachriel | 01/11/2014 @ 07:46

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Does Paying People Not to Work Create Jobs?Wednesday, January 8th, 2014

Does Paying People Not to Work Create Jobs?
Wednesday, January 8th, 2014