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.

And on the seventh day, Donald Boudreaux rested....

George Mason University economics professor Donald Boudreaux has gone on a tear. The last few days on his Cafe Hayek blog have included some of the best posts I've ever read.

First, he has to correct Harold Meyerson's assertion that American manufacturing is declining. It isn't. We're combining parts from all over the world with our parts. That's what we do at my Jukt Micronics gig. If you're so inclined, you can go here to read an ancient post of mine about Harold Meyerson. Before this blog was two months old, I already knew I'd be needing a "Harold Meyerson" post label.

Professor Boudreaux then went to bed, but apparently slept fitfully. Perhaps he knew that there were still some mercantilist rent-seekers who hadn't been properly bitch-slapped. We will never know what motivated him, and it's not our place to ask the great man why, but The Professor got up early the next morning and explained to the English-speaking world that if you "protect" some of your citizen-manufacturers, all you're doing is making their products more expensive than they should be. This, in the long run, helps a small number of your wealthy citizen-manufacturers, but it hurts most of your citizen-citizens.

Later that afternoon, someone defiled Professor Boudreaux's comment field with disturbing news about what Beijing was doing to protect Chinese manufacturers. The Professor took off his academic robe, placed his chalk in the tray at the bottom of the board, and delivered a Karate Kid Crane Kick to the commenter. (I've added the commenter and his family to the prayer list at Broadway Baptist Church, and wish him a speedy recovery.)

Finally, before embarking on a much-deserved Sabbath day of rest, The Professor explains why there's no such thing as a free subsidy. Whether it's cotton, soybeans, corn, tobacco, or those things for which you can trade in a Clunker, someone is paying for every subsidy. And that would be you.

The posts about the Whole Foods boycotts are the dessert.

Brilliant, brilliant stuff. I want to go to George Mason U., and follow The Professor around while he teaches the multitudes. Maybe spend some time fishing on the Sea Of Galilee with him. Hold his coat while he heals some lepers. And then when Obama has him arrested for heresy, deny three times that I ever knew him. Then retire to my home village to write The Gospel of Saint Don.

It could happen.

Why The Rush On Trade?

Harold Meyerson, of The Washington Post, is wondering why Congress is in a rush to draft another trade bill. This Trade Agreement is going to be with Peru.

I can already detect everyone's eyeballs slowly fogging up with a glaze worthy of a 5 pound Bundt cake, just at the thought of reading something about a Peruvian Free-Trade bill. Read what he's got to say, and then try to get back with me....

Harold Meyerson - Why the Rush on Trade? - washingtonpost.com

Adam Smith wrote a book in the 1770's called "The Wealth of Nations". It became one of the founding documents in the history of Economics. Smith discovered that nations grow wealthy through trade, not through hanging onto their gold. We've known this almost everywhere for more than 200 years, except maybe at The Washington Post.

Let's assume that Harold Meyerson is running a Groblet factory, called "Meyerson Groblets, Inc".

All Groblets require three components: a Groblet frame, a Widget and a Sprocket. Mr. Meyerson can make the Groblet frames and the Widgets on his own, using material that can be found by digging around in the Meyerson yard. He also has employees who are great at all aspects of Widget manufacturing. Their parents and grandparents all made Widgets, which were always used on Meyerson Groblets.

Sprockets are different. Sprockets are made of a rare substance not found anywhere near the Meyerson back yard. Mr. Meyerson has always outsourced his Sprocket manufacturing to a factory in a neighboring city. This factory supplies Sprockets to almost every Groblet factory in the nation. They have the raw material for Sprockets in good supply, and the workers there just seem to have a way with Sprockets. We'll call this company "Sprocket USA".

But then a Peruvian company opens. They make great Sprockets. And they're cheaper. "Sprocket USA's" customers, including the Canadian, Mexican, and Haitian ones, all start buying their Sprockets from Peru.

Canada, Mexico, and Haiti have no Trade Barriers in place preventing them from purchasing Peruvian Sprockets.

So sales at "Sprocket USA" start to suffer. "Sprocket USA's" owner goes to Trent Lott and Nancy Pelosi, and bribes lobbies them to put protective tariffs in place against Peruvian Sprockets. Trent and Nancy not only do that, but they also put regulations in place stating that only a certain small percentage of our nation's Sprockets can come from Peru. That should take care of the problem, right?

For a moment, yes. Now all American Groblet factories, including Harold Meyerson's, have to buy Sprockets from "Sprocket USA".

But then American Groblet sales start to decline. The Canadian, Mexican, and Haitian Groblets are cheaper, since they don't come with artificially overpriced Sprockets.
After some investigation, Mr. Meyerson discovers that he too needs to bribe lobby Trent and Nancy, this time to keep out all foreign made Groblets.

Keeping out the Foreign Sprockets wasn't enough. It seems that his foreign competitors in the Groblet Industry can get their vital Sprockets cheaper from Peru, while he's stuck sourcing his from "Sprocket USA" at a much higher price.

Mr. Meyerson spends days and days trying to explain the difference between Groblets and Sprockets in Washington. Donations are made. Contributions change hands. Justice, Human Decency, Workers Rights, Apple Pie, and Motherhood are invoked. Trent and Nancy will do the same thing for all American Groblet companies that they did for Sprocket companies, right?

Unfortunately, Trent and Nancy don't need any more bribes lobbying. They've already gotten enough money from the Sprocket, Ethanol, and Sugar industries. The Fair Groblet Trade Bill languishes in a committee and then dies a quiet death.

Eventually, so does "Meyerson, Inc."

You can't protect one thing without hurting something else. It's called The Law of Unintended Consequences.

This is similar to what happened in the late 70's/early 80's, when the Steel Industry bribed lobbied Congress to keep out Foreign Steel, but Congress forgot to keep out products manufactured with Foreign Steel. Steel Manufacturing (where we did have a competitive advantage) took a nose dive, and we lost far more jobs in the steel manufacturing industry than we saved in the steel mill industry.

Here's an excerpt from the Meyerson's Washington Post article....

The Bush administration, of course, supports trade deals with just about anyone, as it has made clear by promoting an accord with Colombia, where murdering a union activist entitles the killer to a get-out-of-jail-free card.

A lot of the journalists writing on this subject like to bring up Bolivia, Columbia, and Peru, with their reputations for corruption and drug-trafficking. Yes, those countries have huge problems. But what's more likely to solve them? An open Free Market with the U.S., or isolating their people inside their borders with no market for legit products? And I realize that two wrongs don't make a right, but our American tobacco kills far more of them than their cocaine kills of us.
A truly just and loving God would use that one fact as a reason to keep our products out of every other nation in the world.

Back to the point. Trent and Nancy will never be able to legislate as perfectly as the market. They aren't fast enough, or accurate enough. The more they legislate, the more they're going to screw things up. And Lord Have Mercy, they could screw up a brass donkey.

Trent and Nancy, by even the most conservative estimates, cost us $400,000 for every job saved in the United States Sugar industry. The liberal estimate is that they cost you $826,000 per job saved in the Sugar industry. That's how much you're overpaying for sugar. Three jobs are lost in the candy factories for every job saved on the Sugar plantations.

Irony warning: The conservative estimates on this issue are usually made by liberals; the liberal estimates are usually made by conservatives.....

So what will these people do, those who used to work for Sprocket USA, or for Big Sugar, if Trent and Nancy don't keep out their competitors?

No one has any idea. Some retrain. Some retire. And unfortunately, some never make the change.

When the buggy whip factories shut down because of Henry Ford, those displaced workers didn't starve.

When Bill Gates almost single-handedly, selfishly destroyed tens of thousands of American jobs in the American typewriter industry, we somehow absorbed the losses. Far more of us have been helped than were harmed.

So, as Mr. Meyerson asked, "why the rush on a trade bill?" It's because the future won't be divided between the "haves" and the "have-nots". The next big split isn't between the rich and the poor.

It's between the fast and the slow. One million people a month are leaving poverty in China because of free trade and Globalization. We're better off because of it.

We just need Harold, Trent, and Nancy to get out of the way.