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c1
Feb. 25th, 2009 06:12 am (UTC)
Cost-benefit analysis, please!
I don't dispute volcanoes need monitoring, but in a stimulus bill, I'd rather see things that will affect We The People, instead of "We the few, the proud, the volcanologists".

Yes, a volcano blowing its top near a metropolitan area will have catastrophic effects. Is it likely this week? Probably not.
Volcanoes, fault lines, and other geological formations, weather, and whatnot do indeed need monitoring. But does that money belong in a stimulus bill, or in a general spending bill? My vote says the latter: the stimulus bill got pushed through in much the same way as the USA PATRIOT act, which is to say, without any oversight to speak of.
I think everyone I know would have preferred a bunch of oversight during the crafting of that bill.

With the track record of the past eight years, and knowing many of the same offenders are still on Capitol Hill, is Congress really all that trustworthy with the public dime? Do we need another pork fest from the same people that coddled such exemplary companies such as Kellog Brown and Root, Blackwater Security, and Halliburton? (Yeah, I hear your argument already: but don't worry, we'll have a new set of names to blame.)

I'm looking for a job just like the other 7.* percent of the US, but at the same time, I'm not gung-ho about mortgaging my future to the taxman "just like that": I'd like a bit more debate before those blank cheques go flying out the doors. Obama's taking a step in the right direction by including Iraq in the annual budget process, but we need more of that kind of thinking, not less.

Blowing money out the door willy-nilly only makes us beholden to the countries that buy our debt, and sooner or later, people like the Chinese are going to realize they've got concerns of their own to think about.
cos
Feb. 25th, 2009 07:56 am (UTC)
Re: Cost-benefit analysis, please!
"but in a stimulus bill, I'd rather see things that will affect We The People, instead of ..."

Whoa! Hold on there. Do you have any idea what "a stimulus bill" is?
c1
Feb. 25th, 2009 02:45 pm (UTC)
Re: Cost-benefit analysis, please!
Not sure what you're asking: apart from the commonly accepted definitions...? (As in "if the American taxpayer is being expected to foot this bill, shouldn't the benefit be to the taxpayer at large?")

Having a sense of where you stand politically, I don't think you're asking the cynical question.
cos
Feb. 25th, 2009 06:00 pm (UTC)
Re: Cost-benefit analysis, please!
I'm asking, quite simply, do you have any idea what a "stimulus bill" is? What's it for? What is it supposed to do?

Because your assertion that because this is a stimulus bill, that makes it somehow more important to ensure that there's no spending in it (even relatively miniscule amounts like this) that might be going to an interest you see as narrow rather than broad - is utter nonsense. In fact, such considerations are signficantly more important in normal spending bills; the fact that this is a stimulus bill makes them a side issue. Not a non-issue, certainly, but not as important as they'd normally be.

What you're saying is the exact opposite of what someone who understood what a stimulus bill is would say. However, it's the sort of thing we've heard an awful lot from ideological opponents of the stimulus bill who want to hide their ideological opposition or their lack of understanding (Congressional Republicans, conservative news pundits, Fox news), and also something we've heard a lot from lots of people without specific ideological opposition to stimulus who've heard it from other sources and, not understanding what a stimulus bill is, have been understandably misled.
brynndragon
Feb. 25th, 2009 03:04 pm (UTC)
Re: Cost-benefit analysis, please!
What you're telling me is I should have linked to this article, because you want it spelled out for you how exactly this is beneficial to Americans. Because otherwise it sounds like you're arguing that folks in Alaska and Washington and Hawaii don't count as We the People, and having the next Katrina be named Kilauea or St. Helens or Redoubt is just fine by you. Or else you're arguing that geologists don't need jobs like everyone else.
lionofgod
Feb. 25th, 2009 05:00 pm (UTC)
Re: Cost-benefit analysis, please!
Well, I've got some sympathy with her on this one, although I'd have phrased it a little differently. We should *totally* be spending tax dollars on volcano monitoring; this is critically important stuff. However, lacking any details, that is what I would consider routine spending; it's stuff we ought to be doing this week, next year, next decade, at about the same level. Now, if the stimulus bill is putting in a big one-time push-- say, ordering a bunch of new equipment, installing a bunch of sensors along fault lines, etc-- that will have long-term benefits but major short term costs, that's an entirely appropriate choice. But maintenance activity shouldn't be part of a stimulus bill.

And, frankly, the stimulus bill *is* being used to fund worthy but non-stimulus activities, from what I've heard. That endangered-mouse preservation thing that the Republicans have been harping on in annoying and nonsensical ways? Unless they're actually doing *active* preservation-- breed-and-release programs, for example-- that's *not* stimulus. That's just environmental protection. It's probably not adding much in the way of jobs or spending; purchasing land for preservation purposes is worthy, but unless you're doing it in massive quantities, it's not even going to help real-estate prices. (And I'm dubious that improving real-estate prices is a worthy stimulus goal, but I suspect washington disagrees.)

I don't blame Obama for this. The Congresscritters have demonstrated in the past a willingness to turn a blind eye to large-scale and long-term responsibility in favor of pet projects and short-term political benefit, and it seems like they have (unsurprisingly) used the stimulus plan to do some pushing of their own agendas. I'm not anti-stimulus, but honestly, I have not been tremendously impressed so far with the way Congress is treating this issue.

If I heard anyone on *any* side of the issue saying that Congress' responsibility is to treat this money as the trust of the American people that it is, and use it in ways that they best think will help improve the economy both in the short and long term, and then *acting* on that statement... I'd be much happier. Instead, we get speeches and foot-dragging refusal to work towards an improved bill from the Republicans--whose sound bites I have no especial inclination to believe anyway-- and lots of rah-rah spending-is-good from the Democrats, who aren't addressing the realistic concerns that not all spending is created equal.

At least from what I've heard. I'll be honest, I'm cynical enough about all of this to have not paid close attention. Maybe I'm judging them too harshly. If you happen to have pointers to articles that have real answers to why this bill is a good choice in detail and not in broad concept, or references that demonstrate that Congressional delegates are acting with ethics and honor and a sense of responsibility, well, I'm happy to read them.

I just haven't found one that I'd trust yet.
cos
Feb. 25th, 2009 06:09 pm (UTC)
Re: Cost-benefit analysis, please!
You seem to be skimming the surface of the news coverage without any understanding of the underlying concepts.

First of all, that "mouse preservation" thing is a ridiculous scam: There's absolutely no such mouse preservation funding in the legislation. Republicans repeated it over and over, the news reports on it, some news reports actually look into the claim and report that it's "misleading" or "false" and some don't, and people who see the reports that leave that out repeat it, and the cycle continues. It's a fabrication.

Factual errors aside, though, you seem to have bought into the Republican idiocy that spending on some things that don't "sound like" stimulus is less worthy, which misses the point: all of the things being spent on are just side effects. The spending itself is the stimulus. If the bulk of the money were spent to hire people to sit in empty rooms 8 hours a day, and to hire other people to build totally useless structures and then knock them down, that would be just as effective an economic stimulus.

Given that we're spending all this money, it's to our benefit to spend it on things that will benefit us. But that's not the stimulus, that's the bonus.

There are in fact different "levels" of stimulus, spending that's more worthy or less worthy, but it has nothing to do with what you're talking about. Rather, the relevant measure is the Keynesian multiplier, which estimates how much short term GDP boost we'd get for each $1 of spending of a particular type.

We get high Keynesian multipliers (more than 1.0 x) for spending that directly builds stuff or hires people. We get the lowest Keynesian multipliers for tax cuts for people who are less prone to consume more. So, the parts of the stimulus bill that are funding "non-stimulus activities" are some of the tax cuts that were put in to get Republican support. They're not actually "non-stimulus activities", they're just "low-stimulus activities": $1 of tax cuts for rich people might get us $0.25 worth of short term GDP boost, while the same $1 spent on volcano monitoring (which gives scientists jobs, and thus has a high multiplier) would likely give us something like $1.50 of short term GDP boost.
lionofgod
Feb. 25th, 2009 08:56 pm (UTC)
Re: Cost-benefit analysis, please!
Yes, I've been skimming the coverage.

On mice: Yes, I know the "We're spending money on *mice*" bit is bull. (My understanding was that there was some smidge of a smidge of funding going to a conservation project that happened as a subset of its mission to do preservation of endangered local species including mice.) Sorry, I was trying to use it as shorthand for general conservation work: whether or not I'd consider that a good use of stimulus spending depends heavily on the details. I was *extremely* annoyed with the BS being thrown around by the Republicans on that, and I'm sorry if it sounded like I was repeating it.

As far as stimulus goes:

1) Yes, the spending is the point. I get that. Check. I am not complaining about the stimulus bill's existence, and am more concerned about it potentially being too small than too big; however, I am not an economist, and will let them figure that out. I just hope it's being figured out by economists, not politicians.

2) If we *are* going to be spending taxpayer money, I think Congress has an ethical obligation to do so well; to go for those bonuses as well as the stimulus. Well here means several possible things. One is long-term benefit; that's the easiest one for me personally to see, and covers things like upgrading our infrastructure, improving education, etc. One is short-term direct benefit; things like getting people employed. A third is the economic benefit you're talking about: short-term benefits that are harder for the layperson to understand. And a fourth is societal/environmental/etc improvement: things that have no obvious economic benefit, but some person thinks may make the world "better". My concern is that I have not been hearing nearly enough from congresspeople of any party making a good case for the elements of the spending bill having been considered using *any* of these metrics (or any others) and being selected as being an efficient use of the country's money according to *some* rationale, rather than "This benefits my district and my cause". I'm not saying nothing in there is good or worthwhile, to say the least; I am bothered by the lack of interest I've seen from my politicians in doing their best for the country. My cinicism is definitely showing here.

3) When I say something belongs in a regular budget and not a stimulus bill, I don't mean that as "This is not stimulating". I mean that it's *dishonest*, or at least has real potential to be. I want regular, predictable expenditures included in the official budget, not in separate spending bills. (See previous note about "Whether this actually applies to volcano monitoring depends on what's being described here.") Of course, I'd also like to go back to the days of non-omnibus bills and forbid congress from voting on any bill that the members haven't read every word of personally. I realize this is not ever going to happen, but dammit, I want my government to consider comprehensibility and accountability to be important. Eit.

Right now, I consider the worst part of this bill to be the buy-American pieces; the fact that we're risking trade wars as a side effect of political posturing some congressional delegates insisted on including doesn't make me confident that the other components should be trusted as good ideas.
cos
Feb. 25th, 2009 09:05 pm (UTC)
Re: Cost-benefit analysis, please!
I guess you're just not looking, then. You're hearing the gripes of people with axes to grind, and basing your entire reality on that.

Edit: I mistakenly thought you were c1. Changing the text.

Regardless, ct's earlier statement is still fundamentally illogical. c1 wrote, "but in a stimulus bill, I'd rather see things that will affect We The People, instead of ..." when in fact, this being a stimulus bill means that's less of a key consideration than it would otherwise be, because in a stimulus bill, that's a discussion of side effects (however important they are) rather than of the key purpose of the bill.

I'm not saying these things aren't important, I'm saying that the fact that this is a stimulus bill not only doesn't make them more important, it in fact makes other things more important. c1 had it exactly backwards.

----- [that's the main point I'm making; the portion below is a tangent, and what I wrote above stands regardless of what I'm saying below.] -----

Your outlook still shows, and is still flawed, when you present a whole bunch of measures of importance as if they're equal. Because this is a stimulus bill, the right way to look at it is this:
- First, figure out how much to spend, and in what broad categories based on Keynesian multipliers and political requirements (such as tax cuts to appease a few Republicans)
- Now, given the amount, find things to spend it on, until you've "filled up" the bill.

Given that, it makes no sense whatsoever to criticize individual spending items as worthy or not worthy, because none of them are supposed to stand on their own. The only kind of criticism that makes sense is to compare two possible bits of spending, one that's in the bill and one that's not in the bill, and to make the case that it'd be better for us to include the one that was left out, instead of the one that was in. You can then compare the relative merits of the two and make your case about which one is better, to argue for a substitution.

Edited at 2009-02-25 09:08 pm (UTC)
lionofgod
Feb. 25th, 2009 10:37 pm (UTC)
Re: Cost-benefit analysis, please!
OK. I think we are mostly in agreement. Perhaps I have been hearing just the gripes, because i haven't heard *anyone* say this:

"- First, figure out how much to spend, and in what broad categories based on Keynesian multipliers and political requirements (such as tax cuts to appease a few Republicans)"

has actually been *done*. Mostly that bit where thought is put into what broad categories of spending will have the most impact. That's what I want to hear my politicians are doing, and what I haven't gotten the impression of from *any* side of the debate.

I wasn't in any way meaning to suggest that my categories of importance were equal; I don't actually happen to think they are. (Which is of more importance depends on the circumstance, but being a stimulus bill, one would think effective stimulus *ought* to be the priority.) I just want to know that the people spending my money are using *some* reasoned criteria for deciding what we're spending that money on, because then I at least have some metric other than "am I getting any personal benefit?" for evaluating the worth and effectiveness of what we're doing. It doesn't need to be perfect, and I don't have to agree with every dollar, but I haven't heard even the democrats defending the spending bill saying a word about "When designing this bill, we tried to put the most money in places where it would have the most impact on X."

...I think that's my big gripe, really. I got the impression from Obama and several of his appointees that they wanted to pass the stimulus bill because they had some reason to think it would be effective and useful for the country's economy. And I got the impression from Congress that they wanted to modify/pass/not pass the stimulus bill because of the political impact of their changes to it on their next local election, which both disappoints and angers me; it seems likely to result in our shooting ourselves in the foot in so many ways. It may be illusory, but the Senators and Representatives (...and governors, and many callers..) I've caught on NPR have been focused on "We'll save you money on your tax bill!" and "We're going to pay for your health care!" and "Just think of the debt we're passing on to our children!" And none of them have really talked about how they're trying to fix the economy using the bill.

Perhaps I should chalk my complaints up to cynicism + not wanting to hear the usual sound bites + being too busy this month to get my news except from politicians' media interviews and headlines. Thanks for taking the time to talk about what this is at least *intended* to be.
cos
Feb. 25th, 2009 10:57 pm (UTC)
Re: Cost-benefit analysis, please!
>> Which is of more importance depends on the circumstance, but being a stimulus bill, one would think effective stimulus *ought* to be the priority. <<

... as long as you realize that "effective stimulus" has little to do with the other kinds of considerations you mentioned. "Effective stimulus" is government spending that, broadly speaking, buys stuff, builds stuff, or hires people (or prevents layoffs, which is equivalent).

Talking about "how they're going to fix the economy using this bill", however, doesn't follow. I don't get what you're saying with that. Remember that the point of the bill is a short term GDP boost to bring us out of recession. All of the "effective stimulus" - be it health care, education, research, construction, police, etc. - does that. The more interesting questions are, given that we're going to spend X amount of money to get that short term GDP boost, what shall we spend it on? What benefits do we most want out of that money. It makes sense that members of Congress (and Obama) talk about these a lot, and have prioritized some things with long term benefit such as education and infrastructure. But what does that have to do with "talking about how they're going to fix the economy using this bill?"

P.S.
Congress did dilute the stimulus bill with some ineffective stimulus in the form of tax cuts going to businesses or people who already have enough money for their regular needs (and thus a lower propensity to spend most of it in the short term). That was very openly done for political reasons: to appease some Republicans. And given what happened in the Senate, it turns out to have been necessary for the bill to pass. Blame Susan Collins, Ben Nelson, and John McCain for that.
lionofgod
Feb. 26th, 2009 12:02 am (UTC)
Re: Cost-benefit analysis, please!
>>... as long as you realize that "effective stimulus" has little to do with the other kinds of considerations you mentioned. "Effective stimulus" is government spending that, broadly speaking, buys stuff, builds stuff, or hires people (or prevents layoffs, which is equivalent).

You yourself said that not all spending has an equal impact. If we can get a small amount of GDP boost by spending N dollars on project A, and a large amount by spending those same N dollars on project B, then I'd like some reassurance that the people in charge either picked project B, or had some good reason that they thought A was a better choice (say, because B's effect would wear off in a month, and A would have significant long-term impact.)

My imprecision about how to fix the economy was because I know that we are in a recession, and that this sucks, but do not actually grok how boosting the GDP would improve the job market, or add credit liquidity, or change any of the other little things that add up to the big picture, except inasmuch as we're only boosting the GDP by improving said small things that then add up. I'm not saying it won't; I'm saying I *know* I don't have enough of an economics education to make useful statements about what's effective. I'd just be greatly reassured to hear even very broad and vague statements that connect what we're spending, what benefits we're going to get just by spending the money, and what benefits we're going to get by applying said money to *this particular thing*, to indicate that the people with the staff who are actually making the decisions have thought about the issues and are trying to make good choices. I'd like it even more if they'd explain their priorities and their reasoning, but that's too much to ask of a few sentences in an interview, which is all I'd catch right now anyway.
cos
Feb. 26th, 2009 12:08 am (UTC)
Re: Cost-benefit analysis, please!
>> "You yourself said that not all spending has an equal impact." <<

I did, but I think you may have misunderstood me. Broadly speaking, spending to buy stuff, build stuff, or hire people (or prevent layoffs) is the kind with positive Keynesian multiplier. It's completely irrelevant what the stuff is, or who's being hired (or retained). So when you compare project A to project B, in terms of Keynesian multiplier, they're all equivalent. The differences between them are in other considerations; in terms of short term stimulus to get us out of a recession, those differences don't matter.

When I referred to broad categories of stimulus, I was comparing, for example, direct government spending (effective stimulus) vs tax cuts (varies from almost as effective to extremely inefficient, depending on who the cuts are targeted at and their propensity to spend). You could also add "debt payment" as another broad category that has close to no stimulative value.

I was not referring to differences between, say, direct government spending on one scientific project vs. another. In terms of stimulus, that difference is completely irrelevant.
cos
Feb. 26th, 2009 12:19 am (UTC)
Keynesian stimulus
To answer your second question:

I can't write a complete intro to Keynesian stimulus in an LJ comment, but the basic idea is more or less this:

1. Our economy has a capacity for a certain level of economic activity, based on the resources currently available. Resources are things like labor, expertise, capital, etc. We have a factory, so it has the capacity to produce things people value. We have people with expertise, so they know how to do things. And so on.

2. In a recession, the economy is operating far below its capacity. We can measure current economic activity reasonably well (GDP - it has flaws, but it's the measurement we use), and we can measure our resources, so we can estimate the economy's capacity, and hence, we can estimate the gap: how far below its potential the economy is currently performing.

3. When the economy is performing near its potential, most resources are being used; when we're in a recession, a lot of resources that could be used are sitting idle. That's the main problem we face. For example, people who could be working, are unemployed. Our goal is to close the gap.

4. In a recession, private capital sits idle. Keynes' prescription was that government can temporarily spend in and boost spending to make up the difference. This will bring economic activity back to somewhere near its potential, and then private spending will step back in.

One key idea to keep in mind is the role of money: It has no inherent value to make us happy; its value is in its ability to "grease the wheels" - to catalyze economic activity. The exchange of money allows people to trade indirectly, rather than bartering for their direct needs and desires, which enables a lot more trade, and trade is where wealth is created. If you make something and sell it to someone, presumably they paid you because they value that thing more than they value the money they gave up, and you sold it because you value the money more than the thing you made, so both of you are now wealthier.

So, the key to getting value out of money is monetary velocity: Getting that money circulating more quickly means more value is created because more trade is being catalyzed. That's spending. So, in a recession, when money (like other resources) is sitting idle, the Government boosts its velocity by deliberately spending a lot, and that boosts the velocity of money in the economy and with it, the creation of goods and services that people value, aka GDP.
c1
Feb. 25th, 2009 05:30 pm (UTC)
Re: Cost-benefit analysis, please!
I think you missed the first line of my comment: "I don't dispute volcanoes need monitoring, but in a stimulus bill, I'd rather see things that will affect We The People, instead of "We the few, the proud, the volcanologists"."

But as lionofgod wrote, the stimulus bill seems to be used as a means to address routine things, not tackle the emergency needs of the current economic situation. Put metaphorically, it's like calling the fire department when you have a flooded cellar, when really, a plumber would be the more appropriate choice.

Basic, long term science belongs in the annual budget where it gets scrutinized (and deep down, you want this kind of scrutiny, because it's the only thing that will keep On Pandas and People from being named a viable text from which to teach science) along with everything else in a more deliberative fashion.

Obama is not Ben Stein. I don't see a need to worry that $ology will go underfunded-- certainly not on the scale we saw with King Bush.
cos
Feb. 25th, 2009 06:12 pm (UTC)
Re: Cost-benefit analysis, please!
Your metaphor here is fundumentally flaws by a complete lack of understanding of fiscal stimulus. In order to translate your metaphor into something matching reality, we'd have to pretend that the mere act of calling the fire department was inherently beneficial in a particular situation regardless of the emergency they were being asked to respond to. When we were in such a situation, even if we didn't have an emergency, we'd look for some excuse to call them; the better the excuse, the better, of course, but it's still just an excuse.

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