Monday, February 9, 2009

Doom and gloom alert

UPDATED & BUMPED 10:20 p.m.: There is sort of a false-dilemma fallacy that's mucking up arguments about government economic policy lately, and I'll tee it up by quoting something that Matt Cooper Twittered tonight:
Strong opening statement explaining the problem and why stimulus will help. Best line: "Tax cuts alone can't solve our economic problems."
Allow me to go long here a bit, because this is important. We just had a once-in-a-lifetime wipeout in the financial markets. If you talk to smart economists, off the record, you understand that the bursting of the real-estate bubble was not just a normal hump in the business cycle. It was more like the Mother Of All Corrections, a Drudge-siren alert that the fundamentals of our economy had gotten waaaay out of whack.

When the Good Times go away, there's no guarantee they'll ever come back. And if you've been reading Megan McArdle over the past year or so, you know that she has advanced the notion that top marginal rates are now sufficiently low that major Laffer Curve effects are not to be expected from further reductions. (Not sure I'm buying that argument, but it is worth considering.) So the question is not necessarily whether the Right is correct in saying that tax cuts will fix the economy or the Left is correct in saying that deficit spending will fix the economy. Rather, the question is, Can the economy be "fixed" at all?

That is to say, given all the economic realities -- including the graying of the workforce and the ballooning entitlement burden -- is there any government intervention that will automatically return us to the Good Times? I'm not entirely sure. There are textile-mill towns down home where the Good Times left and never came back. There are little towns all over rural America that have been shrinking toward ghost-town status for the past 15 or 20 years. Inner-city Detroit has never really recovered from the 1967 riots.

That a nation as large and wealthy as the United States might go down, never to rise again, is a remote possibility, but there is no guarantee we'll ever get back to the go-go heyday of 1987, when the Baby Boomers were age 23-41 and thus in their healthy prime working years. We have suffered a serious financial loss and, because of underlying structural problems in our economy, recovery will be difficult whatever the government does. But if government does the wrong thing, it's going to be much more difficult.

All this is to explain why we should be extremely pessimistic about the prospect of this massive neo-Keynesian intervention. Suppose a pipe-dream hypothetical: Somehow, this "stimulus" actually produces a sort of dead-cat bounce in the economy, so that unemployment is down around 5% again by 2012. Is that good? No, not really, because government will have produced that bounce by borrowing massively against the future in a society that's about to sustain a serious demographic shock.

The first Baby Boomers turn 65 in 2011, and every year after that will see more and more retirees going onto the Social Security and Medicare rolls. Even if we raise the retirement age, there is still the net drain of productive labor. The average 67-year-old can't produce goods and services as efficiently as the average 38-year-old and (due to certain legal decisions circa 1973) after 2011, we'll have a growing shortage of 38-year-olds and a growing surplus of 67-year-olds.

We are on the verge of a taxpayer shortage, you see, and what the Democrats want to do is take out a massive loan that will have to be repaid by a shrinking pool of taxpayers, who will be expected to support a burgeoning population of increasingly sickly Baby Boomer retirees.

So, even if all this deficit spending could purchase a dead-cat bounce -- and I am on record as saying it won't -- it cannot fix the underlying problems of our economy, which have nothing to do with "green energy" or other such nonsense programs run by the Department of Unicorns and Rainbows.

What we need, really, is a strong dose of Schumpeterian "creative destruction," and this neo-Keynesian approach is the exact opposite of that. No matter what government does, we may be doomed. But Obamanomics is like seeing a drowning man and tossing him a cinderblock instead of a life preserver.

Total bummer? Depends on your point of view. Back in 2003-06, when the economy was going gangbusters, you leftist bastards were all whining about "the growing gap between rich and poor." Well, congratulations: It's stopped growing, hasn't it?

If Obamanomics makes things worse (hello, "stagflation"!) then the advocates of social justice can do a happy dance because we'll all be more equal, and much, much poorer.

(Linked by Jules Crittenden, who gets the Instalanche for his Iran-blogging.)

(Linked by the Anchoress, who gives me waaaay too much credit for what was really just second-hand copyright infringement.)

(Ed Driscoll gives the linky-love, too.)

(Linked at Conservative Grapevine.)

(Linked at Maggie's Farm. BTW, I've updated this theme, with cute video.)

PREVIOUSLY: Malkin watches the Doomsayer-in-Chief's press conference so we don't have to:
"It is only government that can break the vicious cycle."
Government is the vicious cycle, sir.

UPDATE 9:21 p.m.: Back to his bogus "experts agree" argument:

Sir, experts agree your ears are too big.

UPDATE 8:55 p.m.: From his opening remarks:
I took a trip to Elkhart, Indiana today. Elkhart is a place that has lost jobs faster than anywhere else in America. In one year, the unemployment rate went from 4.7% to 15.3%. Companies that have sustained this community for years are shedding jobs at an alarming speed, and the people who’ve lost them have no idea what to do or who to turn to. They can’t pay their bills and they’ve stopped spending money. And because they’ve stopped spending money, more businesses have been forced to lay off more workers. Local TV stations have started running public service announcements that tell people where to find food banks, even as the food banks don’t have enough to meet the demand.
Folks, ask yourself why Elkhart's economy is hurting so bad. Because their No. 1 industry there is -- wait for it -- RVs. Yup, big-ass fuel-guzzling RVs that get worse gas mileage than an M1 tank. If it were up to Al Gore, driving one of those things would be punishable by the death penalty, and when gas went up to $4 a gallon, the market wasn't exactly craving those behemoths. But by the time gas prices fell back to $1.69 a gallon, the real-estate market had tanked, and nobody had the the money to buy a $70,000 motor home.

Supply. Demand. Very simple. Nothing against the good people of Elkhart, but (a) Obama's plan ain't going to do jack for your local economy, and (b) if you end up on the wrong side of the supply/demand equation, that's not the fault of the American taxpayer, is it? Cry me a river. I spent 22 years in the newspaper business, and nobody's offering to bail me out.

UPDATE: Althouse liveblogged. Loved this part:
7:14: "That wasn't just some random number that I plucked out of.... uh" -- he's thinking: can't say my ass — "out of a hat."
Allahpundit and AOSHQ are also blogging the press conference.

Michelle Malkin was liveblogging the action on the Senate floor today:
[Sen. Susan] Collins laundry-lists all the spending and concludes again: "Our effort is bipartisan, targeted, and effective."
No: It's pork-laden, out-of-control, and irresponsible.
Susan Collins (R-INO) would swallow a porcupine if you told her it was a "bipartisan compromise." Obama is scheduled to give a nationally televised press conference tonight at 8 p.m. ET, at which time he will tell us that we are doomed -- DOOMED! -- if this thing isn't passed immediately.


  1. IINM, Elkhart is where they manufactured the mobile homes that were used by FEMA and were thought to have "poisoned" the victims of Katrina who had been housed in them.

    This bad rap is probably what put them out of business.


  2. Gee, you'd think that the party of " the fundamentals of our economy are sound" would at least try to come up with some kind of solution. "It just wont work" is cute, would look great on a t-shirt, but falls short of what people are looking for.

    I rather enjoy watching the Retaliban party shoot itself in the foot.In a concerted effort to come up with something to make Conservatives feel good about themselves, your party is doing the 100 yard dash on 50 yard pier. Sure, you'll all float for a while on Rush's fat ass. But how long can you hold on?

  3. Dear Young 4-Eyes:

    You won. Why are you still so angry?

  4. wait, what did I win?
    This isn't a game. There are no winners or losers like in the Super Bowl.
    Most importantly, I am not angry.Of course in the delusional world of Retalibans any non-con is angry.
    I'm alarmed by Retaliban tactics who are willing to throw the whole country into an economic tailspin in order to score feel-good points so that your party can get back on it's feet.
    Grow up, guys.The jig is up. We all know that your petty contrarianism is a poisonous attempt to save face; if this stimulus works it puts to rest your trickle-down philosophy that puts 95% of Americans at the mercy of the wealthy.The Obama victory itself is a fatal blow to everything Retalibans hold dear, but to be willing to destroy the lives of millions of Americans in order to save your ideology is wrong, and I'm calling you out.

  5. Young - Yes, calling the 45% of Americans who did not vote for Obama "Retalibans" is not angry, it's the voice of a happy, well-adjusted person noting wryly the follies of the human race.


    Anyway, rather that answering point by point, a circular road that grows tiresome, let us enlarge the picture.

    We (ALL of us) have gotten ourselves into a hell of a fix, and no small part of it is the fact that for the past 20+ years, almost half the population at any given time seems to have no stake in the success of the country, and a genuine vested interest in failure, as long as the "wrong" person is President. I find myself doing this now, and have to expend mental energy to keep from doing it, energy MILLIONS of people on both sides are not willing to expend. 'Cause it's fun to hate, and easy to sit outside and bitch.

    To deny that many Republicans (that's what they are called) are acting toward the economy EXACTLY how many Democrats acted toward a war they help vote to send people to does a disservice to truth on all sides. "Failure is good, 'cause we can lay it on 'them'."

    I happen to think it goes back to 60's/post-60's ideals when legitimate goals of fighting racism, a bad ( but not immoral) war, and poverty quickly morphed into attacking the fundamentals of the nation and its narrative, a disgraceful philosophical diversion. But that's just me.

    Meanwhile, in the largest possible sense, the non-ideological reasons for us being where we are will either be addressed, or we will likely collapse.

    Those reasons are:

    The endless growth in entitlements and government mandates that we cannot afford.

    The dilution or removal of the 'failure mechanism' necessary in keeping financial and private institutions from making bad decisions.

    The radical upheaval in economic models brought about by the Internet and a genuinely global market.

    The deterioration of the Westphalian model of 'the nation-state weilding the ultimate authority over all', and the growth of non-state powers in econmics and, more significantly, in national and global security threats.

    These trends have very little to do with anyone named Reagan, Clinton, Bush, or Obama, and only minimal to do with the seemingly eternal Red/Blue divide. But they ARE what will dtermine yours and my lifestyle, and that of our children. And until we all start to acknowledge them as such, we will not even begin to address them.

    Of course, you are part of the Demon-rat party, so....

    See. Demon-rat. Isn't that funny? I just changed one letter. Gosh, I'm clever. And oh-so-helpful in confronting these problems.

    We all need to grow the hell up.

  6. wait, what did I win?

    Your hero won the election. It was on the news and everything.

    Most importantly, I am not angry.

    Tell that to your blood pressure.

  7. Let me clear up to those sorry few who take offense to being branded Retalibans: Rep. Sessions of Texas (R) cited the Taliban as a model for Republican opposition and insurgency tactics. In honor of him I've decided to rename your party the Retaliban party.
    So save your faux indignation for another occasion, or better yet, direct it at Jeff Sessions. Very telling that I have yet to hear of any repudiation of hi or his comments.
    Maybe you can't tell, but my tone is more of sheer delight in your futile attempts to skirt the issues.
    Anger? Who me?
    I checked my blood pressure and it's fine, thank you. I have no heroes as I am not some slavish suck-up that would vote twice for a despot like Bush.
    Ahhh. Hear that kl?
    That's the sound of me reveling at the sight of the sinking ship that is the Retaliban party.....

  8. The very real unintended consequences of that 1973 decision will largely go unnoted, as those who advocate for it rarely are able to look further than the immediate. I don't know whether it's the result of a generation of ADD or what, but it seems as though we have a nation of people who look to the immediate "fix" without looking further to see what dominoes are lined up to fall behind the fix. Never mind the immorality of the whole thing, or that it flies in the face of all the we once held dear -- if we only looked at it from a population/demographics/tax revenue angle, there would be plenty of arguments against it.

    We are not alone in this problem: we need only look to nations such as Britain, France, Denmark, Japan, Russia, etc. to see that they all face a serious taxpayer shortage. Those who embrace the government as a solution ideology are just getting there faster than we have. Britain, France, and Denmark embraced open immigration to fix that pesky taxpayer shortage, and are now finding themselves knee deep in an even bigger mess -- millions of folks who refuse to melt into the melting pot and are now demanding radical change in the ideology of the nations they newly inhabit.

    The irony of it all is that the very people who shout the loudest for this right of "choice" are also the ones who advocate for those tax-sucking social programs that so need those aborted tax payers in order to continue.....

  9. Is there now anyone out there that doubts why we have porous borders? We need to replace the 30-40 million aborted-Americans, ( a new type of abused minority; forceped, vacuumed and chopped into minority status), with at least the same number of warm bodies from somewheres. The Europeans had, ( have?), the same problem but there replacement players are moslems and won't cooperate. America's Most Wanted Mexican's aside the USA has been a beneficiary of good solid hard workers that want to break up the country and re-invite Maximillian back or something.

  10. kl said that "Young 4-Eyes" is "angry.

    Not so, kl.

    "Young 4-Eyes:" -- whose every off-pat projectile vomiting on these threads perfectly projects the psychopathology of the abjectly-indoctrinated FasciSSocialist Psychosis sufferer's morbid-ideology, who suffers also from self-and-own-culture loathing and from (former president and armed-forces commander-in-chief, George Walker) Bush and Republican Party Derangement Syndromes; -- is not "angry."

    He/it/she is mindlessly enraged.

    Absolutely standard cookie-cutter-collectivist-envy-driven and hatred-fueled and typical of every one of it/her/his-ilk that is terminally in the grip of mindless rage.

    As are the rest of America's below-room-temperature morons, every one of them too damned stupid and/or too damned greedy and/or too damned mean-spirited to either know or/or to care about being lied to -- and/or who are criminal aliens -- and/or are felons -- and/or have been dead for ages -- and/or "live" in King and/or Cook counties -- and/or are crypto-fascists.

    And who, that is, 'collective-istly,' comprise the "Democratic" party's "base."

    And, dear kl, we ain't seen nothing yet. Poor "winners," every one? Wait until 2010 and 2012, when their false fuhrer and his brown-shirts have been swept from almost every office!

    Brian Richard Allen
    Los Angeles - CalifOBAMBIcated 90028 -- and the Far Abroad

  11. druu222 said that "45%" of Americans did not vote for Obama.

    How about, dear druu -- considering that around two hundred and sixty-eight million (actual/legal) Americans, like you and me, did not "vote" for him -- revising that percentage to include the actual 86% of Americans that did not?

    Brian Richard Allen

  12. "As are the rest of America's below-room-temperature morons, every one of them too damned stupid and/or too damned greedy and/or too damned mean-spirited to either know or/or to care about being lied to -"

    Brian Richard Allen--BRA for short from here on out--
    I wonder if you realize that you are talking about yourself and your Retaliban brethren in the above cited quote?
    In any case, your post started off funny until it degenerated into the insane rantings of a Rush-baby holed up in some bunker,with your "collectivist" this and "brownshirts" that...I hope you're old enough to drink because you need something to kill that bug up your ass.

    "Wait until 2010 and 2012, when their false fuhrer and his brown-shirts have been swept from almost every office!"
    Well, nothing makes me smile more than the wishful thinking of the Retaliban Confederacy. That's right, the South shall rise again and sweep the upcoming elections with their superior solutions---oh wait! they have none! Of course, Relatibans will take the country by storm with mindless contrarianism and obstructionist good will!
    Listen BRA, that you're a third-rate boob( no pun intended) is excruciatingly apparent to all that read your tortured post. Go take a nap and when you feel better maybe you can come up with something a little more coherent than the stand-up routine you call your opinions...
    Seriously BRA, I won't forget the absolute crazy talk you have provided for our entertainment.
    Thanx for the mammaries....get it?

  13. Young 4-Eyes is engaged in mockery without substantive discussion, and Brian Richard Allen got sucked in from the other side. *ignore*

    To the OP: You comment that current economic realities include "the graying of the workforce and the ballooning entitlement burden" - and then use that as a springboard to discussing how maybe the economy can't be revived. But one of those realities is changeable. But although cutting back on entitlements should help in the long term, what does it do in the short term to the already-staggering economy? Given that you say that the stimulus won't help, and the tax cuts won't help, what about cutting back on wealth transfer payments and the like? Because as childish as Young 4-Eyes' comments are, he makes one good point: "Do nothing" isn't the answer people are looking for, whether or not that's the best answer.