The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Ezra Klein Admits: ‘It Won’t Work’

Posted on | July 16, 2010 | 104 Comments

“Notice that adding new jobs at a rate of 200,000 a month would take us 150 months — or 12.5 years — to get back to normalcy. So far, only April has seen more than 200,000 in non-census jobs growth — and even then, just barely.”
— Ezra Klein, July 16, 2010

Hmmm. Dow Jones Industrial Average down?  What could possibly explain this?

Stocks slumped Friday after earnings reports from two big banks disappointed investors and a survey showed that consumers are becoming more pessimistic. . . .
“It’s mostly about the poor consumer confidence numbers,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “The possibility of a double dip also starts to come to mind” for investors, he said, referring to a phrase that describes the economy falling back into recession.

Wow, who could have anticipated a double-dip recession? How could anyone have foreseen the failure of Obamanomics?

“The unfortunate truth, as sober economists freely admit, is that there is no easy cure for the financial mess caused by the collapse of the housing bubble. . . . Whatever policy Washington pursues, a quick and painless recovery is not going to happen, and the only real question is whether Democrats will delay recovery by implementing liberal policies that make a very bad situation even worse.”
— Robert Stacy McCain, Dec. 8, 2008

“No amount of presidential persuasion, nor any conceivable quantity of federal spending, can repeal the basic economic law of supply and demand. Thus, if Congress should enact this idiotic ‘stimulus’ — a neo-Keynesian pump-priming venture absurdly overbalanced to the demand side of the equation — nothing is more predictable than its failure to spur real recovery.”
— Robert Stacy McCain, Feb. 9, 2009

“Psychobabble about the ‘mood’ of consumers can’t fix the inescapable reality of the capital shortage, a shortage that will only be worsened by the deficit-driven flood of new government debt into the bond market. . . . As if Keynesian theory had not been completely discredited by the ‘stagflation’ crisis of the 1970s, just wait and see what happens now, as unprecedented government deficits siphon already scarce capital supplies away from private-sector investment.”
— Robert Stacy McCain, May 4, 2009

The problem with waiting for vindication in this regard: If liberals were capable of admitting they’re wrong about economics, they wouldn’t be liberals, would they?

UPDATE: Even the Federal Reserve admits it won’t work:

The euro rocketed to a two-month high of $1.29 and sterling jumped two cents to almost $1.54 after the Fed confessed that the US economy may not recover for five or six years. . . .
The Fed minutes warned of “significant downside risks” and a possible slide into deflation, an admission that zero interest rates, $1.75 trillion of [quantitative easing], and a fiscal deficit above 10 [percent] of GDP have so far failed to lift the economy out of a structural slump.

In other words, all those trillions of dollars of neo-Keynesian fiscal stimulus and monetary interventions have accomplished nothing, in terms of real economic growth.

“Aggregate demand! Aggregate demand!”

Idiots.

UPDATE II: A belated welcome to Instapundit readers. You can tell I’m busy off-blog when it takes me two hours to notice a ‘Lanche.

Category: Economics

Comments

104 Responses to “Ezra Klein Admits: ‘It Won’t Work’”

  1. Ezra Klein: Where are the jobs? « Blog de KingShamus
    July 17th, 2010 @ 6:12 am

    […] by KingShamus on July 17, 2010 Check out his latest missive: “Notice that adding new jobs at a rate of 200,000 a month would take us 150 months — […]

  2. Joshua Lee Friday
    July 17th, 2010 @ 5:45 pm

    THE MACROECONOMIC EFFECTS OF TAX CHANGES:
    ESTIMATES BASED ON A NEW MEASURE OF FISCAL SHOCKS by Christina Romer, Barack Obama’s chair of the Council of Economic Advisers

    “The resulting estimates indicate that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those
    obtained using broader measures of tax changes. The large effect stems in considerable part from a powerful negative effect of tax increases on investment.”
    p. 2

    “In short, tax increases appear to have a
    very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects.13”
    p.22

    “Panel (b) shows that a tax increase is followed by a large and highly significant rise in the unemployment rate.”
    p. 36

    “Our results suggest that exogenous tax increases have a strong negative effect on output.”
    p. 37

    “The strong negative relationship between tax changes and investment also helps to explain the size of our estimated overall effect on output. Recall that we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier.”
    p. 39

    “Our baseline specification suggests that an exogenous tax increase of one percent of GDP
    lowers real GDP by roughly three percent.”
    p. 43

  3. Joshua Lee Friday
    July 17th, 2010 @ 1:45 pm

    THE MACROECONOMIC EFFECTS OF TAX CHANGES:
    ESTIMATES BASED ON A NEW MEASURE OF FISCAL SHOCKS by Christina Romer, Barack Obama’s chair of the Council of Economic Advisers

    “The resulting estimates indicate that tax increases are highly contractionary. The effects are strongly significant, highly robust, and much larger than those
    obtained using broader measures of tax changes. The large effect stems in considerable part from a powerful negative effect of tax increases on investment.”
    p. 2

    “In short, tax increases appear to have a
    very large, sustained, and highly significant negative impact on output. Since most of our exogenous tax changes are in fact reductions, the more intuitive way to express this result is that tax cuts have very large and persistent positive output effects.13”
    p.22

    “Panel (b) shows that a tax increase is followed by a large and highly significant rise in the unemployment rate.”
    p. 36

    “Our results suggest that exogenous tax increases have a strong negative effect on output.”
    p. 37

    “The strong negative relationship between tax changes and investment also helps to explain the size of our estimated overall effect on output. Recall that we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier.”
    p. 39

    “Our baseline specification suggests that an exogenous tax increase of one percent of GDP
    lowers real GDP by roughly three percent.”
    p. 43

  4. A trip through the archives: the agitprop the Journolist conspiracy produced | MorallyRight.org
    July 21st, 2010 @ 5:46 am

    […] Ezra Klein Admits: 'It Won't Work' : The Other McCain […]