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Letter to the editor:

We need a serious economics debate

Thu, Jul 12, 2012 (2:02 a.m.)

Regarding the opinion pieces Sunday on supply-side economics:

The key illustration was balance. I read both sides carefully. The “no” side was written by Mark Weisbrot, the co-director of the “Center for Economic and Policy Research.” Expecting a scholarly treatment, I was first disappointed by the assertions this is “a relatively easy thing to do” and it’s “so simple and basic.” Really? Then I saw words including “inflation-paranoids” and “big numbers — mainly thrown around to frighten people” and “basically free money,” and I knew that this was a political article, not a scientific one.

No inflation problem, with the Consumer Price Index running at 1.7 percent? The CPI doesn’t include energy or food. Been to a grocery store lately?

No “federal debt problem”? The treasury sells bonds to finance our debt on the open market, sort of like an auction. There are always bonds coming due and new ones sold to replace them. Then there is also the deficit, and new bonds must be sold to cover this. If a $100 bond sells for $80, there is an implied interest rate in addition to the stated interest rate. No country has complete control over this; it is a world-wide market.

In addition to our published debt, there are obligations for Social Security, government pensions and such.

No, it is not “easy” and “basic,” and people with serious credentials are not “inflation-paranoids.”

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Discussion: 54 comments so far…

  1. The letter writer is correct. Too often supposed economists are really not. They are political analysts and writers using economics to spin their political perspectives. Case in point: Paul Klugman. He's a politicist who hides behind the veil of economics to spin his political opinions.

    CarmineD

  2. My sincere apologies for spelling Mr. Krugman's name wrong in my post.

    CarmineD

  3. So people know who Carmine is impuning, Dr. Paul Krugman is a Nobel Prize winning economist while Carmine is...Carmine.

  4. "RedRocky" asserts but doesn't show links to sources to prove any of his contentions. "RedRocky" has been quite willing to prevaricate in the past he needs to back up his assertions. He can't because they will all turn out to false on the context or straightforward factual content.

    Look at this WSJ editorial from 2006 by "RedRocky"'s favorite economist:
    http://www.minneapolisfed.org/research/p...

    This part is good:
    "Myth No. 4: The U.S. government debt is big. The
    key measure here is privately held interest-bearing federal
    government debt, which includes debt held by foreign
    central banks, and does not include debt held by
    the Fed or government debt held by the government. So
    let's turn to the historical data once again.
    Privately held interest-bearing debt relative to
    income peaked during World War II, fell through the
    early 1970s, rose again through the early 1990s, and then
    fell again until 2003. Even though that number has been
    rising in recent years (except for the most recent one), it
    is still at levels similar to the early 1960s, and lower than
    levels in most of the 1980s and 1990s..."

  5. Future - "CBO says Obamacare will eliminate 800,000 jobs and the defense sequester will eliminate 1,000,000 jobs"

    Link your evidence from a CBO report. I say on face value it's pure propaganda.

    http://www.factcheck.org/2012/02/gops-jo...

    "The exaggerated Republican claim that the new health care law "kills jobs" was high on our list of the "Whoppers of 2011." But the facts haven't stopped Republicans and their allies from making the "job-killing" claim a major theme of their campaign 2012 TV ads"

  6. "So people know who Carmine is impuning, Dr. Paul Krugman is a Nobel Prize winning economist while Carmine is...Carmine."

    All of Krugman's theories have been disproved by Nobel economist winners who post date him. Krugman, a staunch supporter of John Maynard Keynes, had a brief surge to fame in 2010 when it appeared the US economy was turing around. At the time, I called it a dead cat bounce, and still do. I was right. Since, the US economy has tanked down again, much like it did when FDR used keynesian economics. Since and now, Krugman's standing has dipped along with the US economy.

    If you need more proof just look across the pond to Europe. And on our own doorsteps: Stockton, CA, San Bernadino, CA, Providence, Rhode Island, Scaranton, PA, North Las Vegas and more to come. All these localities and governments bought into the false keynesian theories, preached by Krugman, that governments can spend themselves out of recessions. Wrong. They go bankrupt before.

    CarmineD

  7. "In a 2003 article, The Economist noted that Krugman's critics argue that "his relentless partisanship is getting in the way of his argument". The Economist also wrote that the vast majority of Krugman's columns feature attacks on Republicans and almost none criticize Democrats, making him "a sort of ivory-tower folk-hero of the American left--a thinking person's Michael Moore".

    Libertarian conservative federal appeals court judge Richard Posner called Krugman "an unabashed Democratic partisan who often goes overboard in his hatred of the Republicans."

    Liberal journalist and author Michael Tomasky in The New York Review of Books stated "Many liberals would name Paul Krugman of The New York Times as perhaps the most consistent and courageous--and unapologetic--liberal partisan in American journalism." New York Magazine called Krugman "the leading exponent of a kind of liberal purism", while liberal historian Michael Kazin has opined that Krugman's account of the right succumbed to the Marxist flaw of false consciousness."

    CarmineD

  8. Here's one.

    His Nobel award disproved keynesian theories which Krugman aheres to. Krugman's award was unrelated to his views and support of keynesian economics.

    1995

    Robert Lucas, Jr.

    United States

    "for having developed and applied the hypothesis of rational expectations, and thereby having transformed macroeconomic analysis and deepened our understanding of economic policy"

    There are more. Do your research and find them.

    CarmineD

  9. Two who shared the award last year who disproved long accepted key keynesian theories also supported by Krugman.

    2011

    Thomas J. Sargent

    United States

    "for their empirical research on cause and effect in the macroeconomy"

    Christopher A. Sims

    United States

    Do your research and determine what keynesian theories and why.

    CarmineD

  10. "poor guy has been out in the sun too long."

    Never get too much. Natural source of vitamin D. Combined with outdoor work like getting your hands dirty in Mother earth, and the results are therapeutic. All should including you. Maybe that's why you are lacking.

    CarmineD

  11. Enough debate. Enough talk. Let's get something done. STOP spending. Eliminate unneeded programs and get some efficiency in essential programs. Start now with eliminating 5-10% everywhere, and for next year (starting the process now) insist that administrators cut another 5-10% unless they can explicitly explain, in simple terms but for each major expenditure class, why there cannot be more cost effectiveness. For example, for Medicaid, cut 5-10% until each administrator can assure and explain how there remains NO FRAUD, waste or abuse because of specific steps they've taken to eliminate it.

  12. Carmine, I agree. How do you feel about building up your immunities? You know, a little exposure to bacteria gets those antibodies moving. p.s. natural sunlight CONVERTS CHOLESTEROL into calcium.

  13. The airways have been inundated recently with discussion of both Keynesian and supply side economics ( AKA "trickle down economics"). These two theories deal with economic means to manage the revenue and expenditure sides of the economy and are in the realm of macroeconomic theory or national income analysis. Both purport to address GDP or "gross domestic product" as well. GDP is the total market value of goods and services produced in the economy during a given time period( say one year). Because these two methods address government revenue and/or expenditure they fall into the category of "fiscal policy". Both have their advocates and critics.

    Keynesian economics proclaims that running deficit spending ( government expenditures exceed revenues) will spark the economy and lead to recovery.On the other side of the coin supply siders maintain that reducing taxes and easing regulations will spark economic activity, and this will in turn lead to an economic boom that will end up increasing federal revenues caused by an increase in economy- wide incomes.

    In fact neither of these economic theories have been working in this current deep recession giving advocates of both approaches a dose of heart burn. And there is no guarantee that either of these methods will work, even though they both may well have unintended consequences their promoters did not envision.

    The debt is out of control because both of these methods combined have added to the federal deficit. At the same time it would be unrealistic to increase taxes when there is generally hardship throughout the nation, and folks need the cash in their pockets to survive.
    Taxing the "rich"--those earning over $250,000-- will only provide enough marginal revenue to pay for 8.5 days of federal operations.

    So for the present we remain mired in this recession, while Keynesians and supply siders each argue their cases in the public square while the markets continue to unravel this current economic crisis..

  14. Everyone, both Ds and Rs, always talk about the spending side of Keynesian economics, but they all fail to realize that Keynes also said to CUT spending in good times and pay back what was borrowed. Nobody has ever done that.

    Beyond that, Keynes formulated his ideas when the US was by far the largest exporter in the world. Today, our imports are about the same as the rest of the world combined. This has a huge impact on the ripple effect of domestic spending when a much larger percentage of money spent goes out of the country instead of circulating internally.

    Yes, when the US entered WWII it ended our unemployment virtually overnight. But our economy was already recovering before that when war orders started coming in from other nations when Hitler invaded Poland in 1939. In other words, it was the spending by other nations, and not so much the US, that got the ball rolling.

    No serious discussion of our current economic environment can hope to be reasonable without considering our trade policy and balance of trade position. Simple logic should show that it will be impossible for us to recover properly so long as we continue to send more money out of the country than we take in before we even begin to pay off our foreign-held debt.

    How can we possibly stop borrowing 40cents of every dollar spent if we spend more on imported goods than we export? This "money leak" is comparable to what programmers would call a memory leak. No matter how efficient you make your code, you eventually *WILL* run out of resources and crash.

  15. Given the topic of this letter I think it is once again time to post these two videos that present the ideas of Keynes and Hayek in a more enjoyable format. Enjoy!

    http://econstories.tv/2010/06/22/fear-th...

    http://econstories.tv/2011/04/28/fight-o...

  16. Vidi,

    As you are so fond of saying lately, please post a credible source for your statement at 1:18PM.

    If anything, Clark County has been an exemplar for why it is the Boom Times that must be looked at with caution. Instead of building up reserves and paying down debt, we increased contractual wages and benefits and took on even more debt for new projects in the (badly) mistaken belief that the housing market would continue to skyrocket.

    Even Keynes would have shuddered at those actions!

  17. "If not for Keynesian economics, Las Vegas would be a small out of place town, not what it is today!"

    Really? I opine that Charles Luciano, Meyer Lansky, and Ben Siegel would, if still alive, contradict your statement. Fortunately for you they are [dead]. They used more persuasive means than words to convert their detractors to their point of view.

    CarmineD

  18. To have an public economic debate would require the general public to be highly educated in the subject of economics. Good luck with that one.

  19. VegasEngineer,

    You have just made a very good argument for the value of public education and why it is so vital for the survival of our nation.

  20. VediVeritas, it was removed for the same reason that many of your comments are removed: a lack of respect for others as evidenced by the altering of user names in a less than flattering way, name calling, or equating others with Nazi figures or beliefs. It is fine to disagree with others, it is not okay to display the level of disrespect that you have on occasion.

  21. Carmine,
    Show you understand the full scope of the links you believe in. What educational background qualifies you to judge other than being over 60 years old? In other words, explain exactly why you think the Chicago School of economics is correct by using historical fact. Meanwhile, this study shows that economic predictions among other by Dr. Krugman were correct more often than other pundits.
    http://www.hamilton.edu/news/story/pundi...

    "Even when the students eliminated political predictions and looked only at predictions for the economy and social issues, they found that liberals still do better than conservatives at prediction. After Krugman, the most accurate pundits were Maureen Dowd of The New York Times, former Pennsylvania Governor Ed Rendell, U.S. Senator Chuck Schumer (D-NY), and former House Speaker Nancy Pelosi -- all Democrats and/or liberals. Also landing in the "Good" category, however, were conservative columnists Kathleen Parker and David Brooks, along with Bush Administration Treasury Secretary Hank Paulson. Left-leaning columnist Eugene Robinson of The Washington Post rounded out the "good" list."

  22. Mr. Schaffer:

    I provide my opinions and their bases here voluntarily and without remuneration. I owe you and others no other information about myself except that which I want to give. You and others are free to accept, reject, agree and/or disagree with me.

    CarmineD

  23. I add that the excerpts you provided in particular calling Krugman a pundit is the point of my first post here. We went full circle, thanks to you.

    CarmineD

  24. Mr. Schaffer:

    Can't admit something I know is false on its face.

    CarmineD

  25. Economics..An Intriguing thought
    Arizona has a "spousal benefit" law that states any two people who lives together in the same house for one year and have a joint checking account qualifies for "spousal benefits."
    There isn't any "sex or gender" only number. It could be roommates without any sexual identity or relationship.
    Arizona stopped paying the benefits to cut costs.
    The 9th Circuit Court said this was discriminatory against ..gays.
    The intriguing question is..without sex..only number then why not strike down all spousal benefits..
    If number is the qualifier then even if the law is upheld it still discriminates against households comprise of 4 women, 1 man or 2 men 1 woman..
    Should we just..say everyone is an individual ..and can only has collection rights of ONE?
    It would cut costs significantly and end the discussion of "marriage" once and for all
    The State would no longer recognize any marriage..All people would be single in the eyes of the law..Most people are single anyway

  26. Mark 6:32. There are varying schools of thought in Economics. Some place more "blame" or cause and effect on some things over other things. As such, one is not ignorant simply because one does not agree with YOUR INTERPRETATION of economics. p.s. I tested out of a college major in economics. I have other degrees and credentials but I subscribe to the school of thought that it's not everyone's business to accept my background as some sort of basis for determining if one should consider my posts as relevant, coherent, accurate....

  27. Blah, Blah, Blah. All you PhD's in economics are sounding a lot like blithering parrots; espousing the drivel from whatever side of the political spectrum you inhabit. None of you have a clue. You spout names and percentages and biblical references (note to moderator: this ain't church, and if biblical quotes are somehow relevant to 21st century reality, please explain) without any solutions, because you don't have any. To Roslenda 11:28 a.m.: what the hell are you trying to say? Maybe you should get a degree in coherent thought. Don't care what degrees you have or don't have, concentrate on making sense. Everyone has an opinion, and all opinions are not based on educational credentials.

  28. At the most basic level, economics is something to eat, something to cover our nakedness and warm place to sleep.
    That requires resources..wood, oil, coal, sunshine, water
    And industry..spinning and weaving, tinkering
    A person is an economic entity if he provides some small share of that for himself and a bit more to trade.
    I knew the economy was going to crash in 2008 when Krugman and all the economist were making educated noises..
    The price of resources, specifically oil was skyrocketing..in a service economy where what anyone had to trade was ..taking in each others wash..
    Resources are scarce, population is exploding Industry is dependant on abundant resources and a limited number of people with goods to trade. Too many people making pots means too many pots and reduction is resources (clay/fuel)
    The question is..what economy can we envision where labor is abundant and resources are scarce?
    A combination of welfare and skilled labor was the answer...until real manufacturing collapsed..and we had a service economy..
    What economy can anyone design that matches our resources and our labor force?
    LOL..cannabalism anyone?

  29. airwere:
    Instead of bitterly denouncing "them" ..think about what you would do if you had the power..to create an economy without changing the resource/labor we have right now...if you were the rich guys
    If I had a billion dollars I would not give it to those clowns in Washington..and I wouldn't ask any of my fellow billionaires to give DC a plug nickel more than the law allows..Trillions disappear in that town with very little corresponding "common good" so what could I do "for the common good?"

  30. airweare:
    In a Just World?
    The world remains the same..I have always marveled at the likes of Lady Pelosi..the princess who exacts tax from the peasants at the point of a sword...and tosses a bit of those taxes, a few alms to the peasants who adore her for her "charity" She ReallY Cares....
    Frankly I don't want those bozos to "care." When Pelosi and her ilk "care" it mostly means they are going to take from the government designated "rich" to give to the government selected "poor." I want the elected officials to do their dam job..according to the Constitution and the laws enacted by Congress..
    The democrats are positively medieval..and don't know a tax from a tithe..
    You envision a great "class struggle." Then it would be better to buy gold and bury it in the back yard than have paper in Swiss lockboxes..

  31. airwaeare:
    I undestand your cooments
    Outsourcing NAFTA (Clinton) Insourcing South Korea builds factories and then is granted visas to bring in South Koreans for the jobs..I read that one of those companies was given stimulus money to set up shop in Minnesota.
    Swiss Bank Accounts.can be used to hide money, but Romney declared his. I heard that a person has to pay to keep money in Swiss Bank accounts. Swiss Bank Accounts do not pay interest so about Swiss Bank Accounts..as long as they are declared..so what? IF you bury gold in your back yard, as long as you declare it on your income tax, so what?
    Taxes..It has been shown that the best way to modifiy behaviour is through taxes and regulation..cigarettes, rape kit tax on strip clubs, abortion mills..so..taxes and regulation have a depressing effect on behavior and business..
    Tariffs would be a good idea but..we are too overpopulated to manufacture things in this country..The houses are so dense now that industrial plants would be a severe strrain on the environment

  32. BTW
    It isn't rich people who are lending us money. It is the Chinese..
    We could adopt the marxist model..All the people are assigned a house, AND are assigned a job
    Everyone has the right to house, food and health care..but the government decides who gets which..
    Enjoy!

  33. Tax The Chinese..(Or did I say something no no naughty...a dirty word) .."Tax the Chinese is Tariff"...
    TARIFF..a tax on outsourced stuff