Thursday, December 3, 2009

Harold Meyerson wants another stimulus from your bathtub so he can get more water into your bathtub. Or something like that.

When Harold Meyerson, resident Obama apologist for the Washington Post, publishes an editorial, Professor Donald Boudreaux of George Mason University usually rips Meyerson into small bite-sized fragments.
I have but one goal here. In this post, I want to predict how Boudreaux will rip Meyerson's head from his body. I think I've read enough economics in the last five years to anticipate Boudreaux's moves, much like Ron Jaworski analyzes the quarterbacks on Monday Night Football.

I work in the shipping and logistics industry, and this qualifies me to comment on these issues.

Time For More Stimulus
By Harold Meyerson
Thursday, December 3, 2009

President Obama convenes a summit today to hear from a range of interested parties how he can goose the American economy to create more jobs. Yet, for weeks, virtually every White House employee with the power of speech has made clear that the president doesn't intend to increase the deficit, and that the idea of a second stimulus is a non-starter.

I expect Dr. Boudreaux to state that there is no room at the Obama table for those advocating a Free Market approach to the economic recovery. Therefore the summit is a waste of time. He will state that if every politician, union leader, protectionist, rent-seeker, and stimulus hog were to go to Disneyworld for three months, the economy would immediately show dramatic improvement.

Boosting the economy without increasing government spending on jobs is squaring a circle, however. Standing athwart the prospects for a second stimulus is the universal belief that the government has already enacted a massive stimulus program, to the tune of $787 billion, even as unemployment has risen to 10.2 percent. If that's what $787 billion produces, the thinking goes, why bother to try again?

Dr. Boudreaux will rise up from his pallet, gird up his loins, take up his sword of righteousness and ask where the money for government jobs comes from. He will explain for the nth time that taxpayers spend their own money more wisely than Nancy Pelosi and Harry Reid spend their money. Taxpayers reward businesses that have the best chance of growth, since they are supplying the best product for the best price. Dr. Boudreaux will tell us that Ms. Pelosi and Mr. Reid intend to reward contributors, constituents, and cronies.

Dr. Boudreaux will then retire to his scholarly chamber and spend the rest of his day contemplating the sinfulness of the human race.

In fact, that spending has saved or created more than 640,000 jobs, and possibly as many as 1.6 million, the Congressional Budget Office reported this week. More important, total government spending to combat the recession is far less than $787 billion.

The good doctor probably won't dignify these statistics with a response, since they are simply pulled out of someone's ass. Therefore, I must interject the following: Taking money away from taxpayers and their preferred spending projects IS THE BEST WAY TO KILL JOBS, HAROLD ! !

For one thing, most of the funds appropriated for job-creating projects in 2009 and 2010 are to be spent in this quarter and next year. So we haven't seen the full effects yet. And $146 billion of the stimulus is targeted for the years 2011-19 -- bringing the short-term total of the package down to $641 billion.

Exactly. And Porkulus II will also be backloaded. But according to Keynesian witch doctors, government is the only agency capable of quickly pumping large sums of pump-priming money into a recession. Government is the only way to get the money spent, but they never do it quickly. Do you know why?

Well, when the project fails, the thieves can claim that all the money hasn't been spent yet. (But they're always in a hurry to vote immediately, without bothering to read the bill, because of The Fierce Moral Urgency Of Robbing Peter To Pay Paul.)

Actual public spending to boost the economy is still a great deal smaller. For while the federal government has been pouring money into the economy to counter the collapse of private spending and investment, state and local governments have been taking money out of the economy in ways that deepen our decline.

A recent report from the Center on Budget and Policy Priorities assesses the 2009-10 budget shortfall for the 50 state governments at a stunning $350 billion -- a gap that the states (all but Vermont have to run balanced budgets) have addressed by slashing services, cutting jobs and raising taxes. "All these steps," the center concludes, "reduce the purchasing power of workers' families, which in turn affects local businesses."

So why not have the states continue to slash services and cut jobs? Heck, I've had to cut jobs, cut jobs, and cut more jobs. Lather, rinse, repeat. Lather, rinse, repeat. Then maybe we can CUT taxes. Let us keep more of our money. See if this helps the purchasing power of workers' families. And get their jobs back. Or some other job. Whatever consumers decide they want.
Meyerson then goes into a tiresome digression to prove that Porkulus One wasn't nearly big enough, and the states are burdened with high expenses and low tax revenue (since the states apparently increased spending during the good times just for the hell of it). I won't copy the entire thing here, but masochists can hit the link at the top of this post, where Meyerson says that we must spend more money now because elections are coming in 2010 and if the Republicans take over they're going to give the money to a different set of vultures.

Indeed, during a recession, the American system of government works like the bathtub in an old algebra problem ("old" means I had it in middle school). In it, water pours into the tub from the tap but exits the tub from a drain that isn't stopped. If you know the rates of filling and draining and the size of the tub, you can calculate the water level.

Harold, you ignorant slut.
Here is where I expect Dr. Boudreaux to execute his patented Karate Kid Crane Kick:

In the old algebra problem, water is pouring into the bathtub from an outside source. In your analogy, though, the water coming out of the tap is coming from the bathtub !! And we all know who has their lips firmly attached to the life-sustaining drain, don't we?

When I spend money, I get what I want in the exchange. When government spends my money, they get what they want in exchange. Only a fraction of it makes it back into my Meyersonian bathtub.

In an American recession, the federal government is the tap and the state and local governments are the drain. That's no way to fill a tub, and no way to fight a recession. Which is one more reason we need a big second stimulus, since our system doesn't let us plug the leaks.

No, Harold, no. We are the tap, and we are the bathtub. It's our damn bathwater. All branches of government are the leaks.
Go plug yourself.


Anonymous said...

Last year I attended a seminar in which Dr. Robert Higgs said the "stimulus" plan was like taking water from the deep end of the pool, pouring it into the shallow end, and expecting the overall water level to rise.

Meyerson must have heard that same speech and thought, "Wow! That's a great idea!"

The Whited Sepulchre said...

Yeah, I've read a lot of Meyerson's stuff via the Cafe Hayek blog.
I don't think that Meyerson's bathtub is very deep (ahem....)