We’ve gotten a tremendous response following our launch of our new
politics feature, Metropolitik. Here we give you a chance to share your
ideas — whether or not they sync with ours.
Brayden:
The economist Paul Krugman might still believe the Keynsian notion that government can spend its way into economic growth, but the late Fredrick Hayek, Nouriel Rabini and Lawrence White at NYU do not believe “government needs to provide more stimulus to create jobs and prosperity” as you assert as “Reality.” In fact, they believe the opposite, that the US, like the EU, cannot spend it way out of its economic problems. Sorry siting “most influential economists” rather than naming them is not fact-checking. It’s a vague and biased argument.
MB
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Brayden,
I agreed with most of your article about Obama’s SotU address. However, the point about deficit reduction is much more complicated. Most economists actually can’t agree on what method is better – spending or cutting. The Keynesian economic theory is more palatable to politicians however, because it says we should spend and put off the pain of making tough decisions, which allows politicians to make more promises, delay entitlement cuts, and gather more votes. Spending and keeping rates low, while allowing easy access to money actually hurts responsible individual savers. Take your example of student loans; by providing easy money for decades to nearly any student pursuing higher education, we’ve created a bubble in tuition costs and allowed college tuition inflation to outpace real inflation nearly 5 times. (Google education inflation graph) This creates the scenario of students paying $100,000 of debt to come out with a leisure studies degree. Keeping rates low punishes people who save and don’t rely on bank financing. Our savings rate in banks is near 0%, encouraging us to spend (mostly on consumer items which depreciate in value) while inflation is around 2%, so in real terms we are losing our money just sitting here at our respective computers. The US has a problem of allocating resources to the wrong ventures, mostly non-productive ventures. You can spend all you want, but if you spend on the wrong things, you’re economy will end up just like a household – broke and facing foreclosure from the bank. Only this time, the bank could be China, and the US government won’t arrange a bailout for you.
Thanks for your time and writing,
EW
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Hi Brayden,
I’ve been reading your metropolitik article lately. Today’s SOTU article is pretty good, except I have to disagree with your first point. I don’t think Obama was directing that analogy to the US citizens. When he says, “Citizens could benefit if we follow their example” I was pretty sure that “We” was referring to the executive branch and congress. And surely, the citizens would benefit if they “followed their example.” US citizens are not an elite fighting force. However, is it too much to ask that congress acts (as in Obama’s analogy) for a common goal, the good of the people. They have no excuse, they chose to run for office and are elected officials. They may not be military trained, but playing well with others is something we are supposed to learn in kindergarten.
Keep on keeping on,
LC
I applaud that you’ve put the SOTU speech under a microscope, but I fear in the process you’re missing the forest by focusing (fuzzily, at that) upon a couple select trees.
For example, the “military analogy” simply cannot be taken as his calling for a totally militarized society. He specifically identifies the military’s “courage, selflessness, and teamwork”, and suggests those qualities be embraced by the rest of us. I’m sure you’d agree it’d be a good thing if we saw more of those qualities at play both socially and politically these days, as opposed to the divisiveness and raptious greed that commands so much of our discourse.
Let’s also keep in mind what kind of military adventures he inherited from his predecessor. At this point, getting our troops out of harms way is the best and most productive move available. He’s done so in Iraq, and there are signs he’ll do the same with Afghanistan.
As for the financial industry and debt reduction bits, you correctly point to how little substantively has been accomplished. You also lay responsibility for it where it belongs: on Congress. This doesn’t counter what was said in the SOTU, which simply noted what the President’s office has agreed to and managed to push through. Yes, Wall Street is still chugging along for the 1%, but the government now has a few more tools to keep it from going off the rails than it did previously. The Consumer Financial Protection Bureau holds a lot of promise now that its running properly.
Again, I applaud you’re fact-checking here, but I find your analysis bit misplaced. I nevertheless look forward to your columns and thank you for your insights.
JC
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Brayden:
I am a fan of Metro in general and your column specifically. As a member of the urban proletariat (no 1% here sadly) I find your writings to be both funny as well as politically insightful.
In today’s column you did a fact check on the President and brought up the issue of spending and I was confused by your take on that. A few points follow below –
“most influential economists agree that spending is the sure path to growth” -what do you mean by “influential”? Are you implying that economists who do not agree that spending at this time is good are somehow inferior? Who are these “influential” economists? Which school do they follow? I know a big debate right now occurs between Keynes followers and those of Hayek. Are the influential economists followers of either school? Can you provide me a list of economists that have formed a consensus on this?
Stimulus of 2009 – we borrowed approximately $7-800 billion for that stimulus ($1.2 Trillion with interest?). Putting aside the sadly erroneous claim by some Obama admin economists at the time that this will cap or drive down unemployment at 8%, what did this do for growth? The recession is considered to have ended almost two years ago right? Yet only recently in late 2011 / early 2012 do we see unemployment dip below 9%. How many jobs were created by this spending? How can we justify more?
Debt – we need to spend more to get the economy going in order to then worry about the over $15 trillion in debt our nation owes? That does not make sense to me from a budgeting perspective. A cute analogy I use is to consider someone earns $5000 per month but they spend $10,000 per month. If that person follows your advice, then they should open another two credit cards and thus increase their spending above the $10,000 or at least use them to maintain their deficit situation for longer? How will they ever get better doing this? Isn’t a more feasible response by this person to look at their expenses and start cutting? Instead of spending 5K more per month, they bring that down to parity with their current revenue stream? To put it more simply, the more we cut=the less we spend right?
“Contrary to the tea party push to “cut cut cut” – this seems too simplistic a take on that platform. The first thing to consider is that there is no “Tea Party” but hundreds of them. In addition, cutting spending is just one of the things that group advocates. They also push for tax system reform, including the elimination of tax credits and loopholes in many areas (in the hopes that this will increase govt revenue and eventually allow the lowering of marginal tax rates in the future for all Americans as there will be fewer places to “hide that taxable income”).
Thank for listening (or more accurately reading) my email!
KR
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To the Editor,
Regarding your Wed. Jan 25 issue, specifically the article by
Brayden Simms, in which he simply calls the four Republican front
runners “fact creators” and claiming “they lied” is in very poor
taste, and highly abusive. I suppose that his idol is Obama. It computes with his extreme left wing bias. Maybe Matro hired him as a provocateur attack dog. Most of the lap dog media sucks up to Obama, but Simms goes to extremes. Interesting that in his opening paragraph, he writes “For
complaints…” Obviously he knows how unpopular he is in certain
quarters.
EG
