Professor Mark J. Perry's Blog for Economics and Finance
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
17 Comments:
I'm tying to decide whether this guy is an idiot, a liar, or whether preaching to the lowest common denominator just makes him sound like one of the above.
"...preaching to the lowest common denominator..."
As a member of that class I can say this guy was preaching to me. The growth of government jobs and salaries (federal) has been breathtaking this last year. The ability to provide stimulus through tax rebates to those who didn't pay taxes is outrageous -- both Bush and Obama administrations signed off on this.
As another member of the Lowest Common Denominator class, I really appreciated Dan Mitchell's use of small words, and his slow, careful presentation.
In addition, as a member of the Old Fart Hard Of Hearing class of our society, I found that Mr. Mitchell's excellent enunciation allowed me to hear every word clearly.
Are there any complaints about the message itself? Or is it just the messenger's style that annoys some readers?
Of course, some of his characterizations are correct: tax and spend vs borrow and spend, for instance.
But the thrust of his argument was that based on evidence that the first stimulus didn't work, we should say no to a second set. I would say he provided essentially no evidence of the sort. He gave some evidence White House economists are bad predictors of the economy, punctuated by name-calling. I'd say that's neither here nor there, since their predictions of the economy weren't that far out of line from most other sources. I'm not a fan of coming even to the right conclusions based on poor arguments.
I just watched the referred "Keynesian Economics is Wrong" video. That one provides most of the evidence I was expecting in this one. He still doesn't capture the real Keynesian insight, which is that investment without consumption doesn't work very well for the economy as a whole, but he at least provided historical evidence that government spending, in the relatively large amounts available, did not produce events you could point to as positive, with the possible (unlisted) exception of World War II military spending.
I might be okay with French style stagnation, if we get French wine, six-week vacations, free medical care, and French food. Not so bad.
BTW, according to this chart
http://www.indexmundi.com/g/g.aspx?c=fr&v=67
French GDP per capita has grwon from about $23k in 2000 to $33k in 2009, a whopping 50 percent increase.
Give unto me such stagnation.
Viva la France!
You're trying to grab the tail and wag the dog... The site you're using doesn't adjust for changes in exchange rates between Euros (earned by the French) and US dollars (earned by Americans). So, your graph only looks that way to French people who earn Euros and spend all their money in the US.
France had a 7.44% increase in per capita GDP over the last 10 years.
The United States had a 9.42% increase in per capita GDP over the last 10 years.
So, if you're so hot on France's performance on per capita GDP, then you wouldn't mind a return to Bush's economic policies?
"I'm tying to decide whether this guy is an idiot, a liar..."...
Odd comment... Seemed he was direct and clear about it all...
From the Heritage Foundation: Why Government Spending Does Not Stimulate Economic Growth
by Brian M. Riedl
Senior Fellow, The Heritage Foundation
January 2009
"The growth of government jobs and salaries (federal) has been breathtaking this last year"...
Not to worry the Democrats have a solution for the costs generated by new federal jobs...
Now we know why there's so much new hiring by the federal government...
Federal Subsidy Programs Top 2,000!
Anon-
I guess the Frogs should come here for vacation. Or buy our businesses.
Juandos-
I see if you add Ag subsidy programs with Interior subsidy programs, you get more subsidies than any other category.
Those are rural subsides. I agree with you, all those subsidies should be wiped out!
Benny, You said you would be ok with French amenities. Dude, what about French women? You can have the stagantion and I'll take femalenation. Abide!
"I see if you add Ag subsidy programs with Interior subsidy programs, you get more subsidies than any other category"...
Hey pseudo benny please grab a clue...
It took me long enough (far to long in fact) to finally get one...
Let's NOT call them subsidies, let's call them what they are, bribes, slush funds, you know what I mean...
Seems like a really bad ideal to pass anymore large unpaid for bills that don't do what they are sold as doing.
Yeah, French women.
Ersatz Juandos: I am glad you have finally figured out rural subsidies. They are, in fact, bribes, kickbacks, slush. ossified pork, patronage--and the soft, smushy backbone of the Republican Party.
I am glad you dug up that link. How long until voters figure out that rural residents are parasites upon urban taxpayers?
juandos,
I suppose my comment was a little over the top, but I tend to react to smug commentary with little support. The evidence-based attack on the most recent stimulus seemed thin enough to be disingenuous, especially considering that it was the main thrust of his argument.
Thanks for the links. The idea of long-term government stimulus is clearly bankrupt, but I still think the strongest case against short term borrowing to prevent an unnecessarily deep bust is only that government lacks the will to make the borrowing short term.
"I am glad you dug up that link. How long until voters figure out that rural residents are parasites upon urban taxpayers?"...
Do a little homework pseudo benny, you have it ass-backwards...
From Forbes: America's 10 Biggest Cities: A Debt Report Card
I found the amounts owed quite staggering...
"but I still think the strongest case against short term borrowing to prevent an unnecessarily deep bust is only that government lacks the will to make the borrowing short term"...
Hey CompEng, we can't afford to borrow...
Figures on government spending and debt (last six digits are eliminated). The government's fiscal year runs Oct. 1 through Sept. 30. Total public debt subject to limit Jan. 22 - 12,245,872
From the Pew-Peterson Commission on Budget Reform, the summary:
Over the past year alone, the public debt of the United States rose sharply from 41 to 53 percent of gross domestic product (GDP). Under reasonable assumptions, the debt is projected to grow steadily, reaching 85 percent of GDP by 2018, 100 percent by 2022, and 200 percent in 2038....
juandos,
Yes, that's certainly a problem resulting from a more long-term borrow-and-spend mentality. We have certainly borrowed ourselves into a hole.
Still, If we could borrow a trillion dollars for today (even now) and then magically generate a budget surplus in the near future without taxing the hell out of the economy, it would be different.
Certainly we can't afford a second stimulus, not with our debt problems; yet China initiated a huge stimulus, one that consumed a far larger portion of its GDP than ours did. China's roaring back with double-digit growth; I don't fear any free-market worshipers complaining about that. All I hear is "praise China." Why isn't the Friedman camp warning about stagnation or a collapse of China's economy because of its huge stimulus? After all, government stimulus in an economy is an unpardonable sin, one that's not suppose to work - right?
If your ask me, I think Milton Friedman should have done a couple of turn shifts for Andrew Carnegie; then apply his economic theories with major league sports teams by doing away with refs, rules and boundaries - relying on the players' good instead. I'm sure that would work out very well.
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