Political Roundtable - Part VI

[Zonkerbl]

So, it is your contention that the economists who have created these budgets for decades have all always advised to never give subsidies to any industry, and every politician has gone against the advice of every economist on their staff to dole out subsidies? That surely is not the case. Surely, economists weigh the cost/benefit of subsidizing an industry and sometimes say that for the sake of jobs, potential tech, benefit to society and/or profit, that artificially inflating an industry or entity is worth the possible blowback. I've heard economists touting backing green energy, or housing, or various industries on TV, so I know that not to be the case.

Yes, it is absolutely the case. Every, single, time.

"Economists on tv." You've disputed your own statement for me. Like I said, "THAT AIN'T NO ECONOMIST!!!"

Are you saying economists were unanimously against bailing out the auto industry?

Economists will unanimously tell you that bailing out the auto industry sets a dangerous precedent, encouraging them to believe that they can continue to ignore certain market signals (e.g. for more fuel efficient cars) because the U.S. government will be forced to bail them out when things go sour. That precisely for this reason governments should stay out of the business of bailing industries out except in extreme situations, which unfortunately the 2009 Great Recession was.

If any economists did in fact advocate for bailing out the auto industry (Krugman might have, I don't remember) it was only with extreme reluctance, going as it does against everything the economics profession has learned about such things.

[Zonkerbl]

On a completely unrelated note:

http://en.wikipedia.org/wiki/How_to_Lie_with_Statistics

[Ruzious]

Yes, it is absolutely the case. Every, single, time.

"Economists on tv." You've disputed your own statement for me. Like I said, "THAT AIN'T NO ECONOMIST!!!"

Are you saying economists were unanimously against bailing out the auto industry?

Economists will unanimously tell you that bailing out the auto industry sets a dangerous precedent, encouraging them to believe that they can continue to ignore certain market signals (e.g. for more fuel efficient cars) because the U.S. government will be forced to bail them out when things go sour. That precisely for this reason governments should stay out of the business of bailing industries out except in extreme situations, which unfortunately the 2009 Great Recession was.

If any economists did in fact advocate for bailing out the auto industry (Krugman might have, I don't remember) it was only with extreme reluctance, going as it does against everything the economics profession has learned about such things.

I'm surprised at the unanimity. My father used to work for the House Ways and Means Committee back in the day, and they had serveral economists there that he worked with. One "joke" he used to say was - If they put all the econsomists in the world together - hand in hand - they still wouldn't reach a conclusion. Hey, it was his joke - I didn't say it was funny. Don't put the sins of the father upon the son.

[hands11]

Actually the "they" are Republicans, Democrats and Independents.

And "they" were just talking about specific investments as described before in the thread

And you as an economist would recognize the different types of investments and which are most beneficial.

Absolutely not. ABSOLUTELY NOT. I am not nearly that arrogant, and any economist who claims he/she can would be the butt of "delicate crystal balls" jokes from now til doomsday.

I cite the progress made in DNA research as prima facie evidence that picking "green energy" as the next "transformational technology" is completely bogus, not as evidence of my ability to pick winners better than the president.

The market is a process that involves the experiments of thousands of different people. The market determines which of these experiments are successful or not. If it was POSSIBLE for some ivory tower economist to predict which of those experiments would succeed then the Commies, who did precisely that for seventy years, would have whipped our asses good and proper. The fact that precisely the OPPOSITE happened is PROOF that the market is smarter than I am, by a very good margin.

Then we are in VIOLENT agreement - and you are right, the market is smarter than you AND me.

So there will be failures. Period. And some politicians will try to use those failures to rant about government waste and cut back on investment to feed their agenda and propaganda machine.

Its our jobs to understand the bigger picture and not support, call out or punish those who knowing try to mislead the American public by using information in this way.

What pisses me off as much as the people that does that is the fact the Dems don't come out and frame the conversation correctly by explaining it just like you did.

[dckingsfan]

So, it is your contention that the economists who have created these budgets for decades have all always advised to never give subsidies to any industry, and every politician has gone against the advice of every economist on their staff to dole out subsidies? That surely is not the case. Surely, economists weigh the cost/benefit of subsidizing an industry and sometimes say that for the sake of jobs, potential tech, benefit to society and/or profit, that artificially inflating an industry or entity is worth the possible blowback. I've heard economists touting backing green energy, or housing, or various industries on TV, so I know that not to be the case.

Yes, it is absolutely the case. Every, single, time.

"Economists on tv." You've disputed your own statement for me. Like I said, "THAT AIN'T NO ECONOMIST!!!"

Are you saying economists were unanimously against bailing out the auto industry?

Bailing out the Auto industry instead of letting them restructure in our courts (in the normal way) was a terrible precedent. Especially when the administration chose who would lose their equity. There are many good reasons for bankruptcy and many more good reasons that bankruptcy doesn't go through the executive branch which bypasses rule of law.

[barelyawake]

"I can believe an economist said R&D for green technology should be subsidized. I very much doubt that the subsidies for "green investment" in the EPACT (resulting in Solyndra and etc.) were put there at an economist's suggestion, I rather expect that some lobbyist asked for it. Am I wrong?"

Two hundred economists wrote the recommendation for the stimulus bill (with full knowledge of the widely publicized green energy investments inside). I'm quite certain that Krugman argued for much more spending on green investment. And I'm unsure where you are drawing the line between R&D and subsidy -- because oil subsidies (for instance) are categorized as R&D (as are most energy subsidies).

[dckingsfan]

Sorry, didn't see Zonker's response...

[dckingsfan]

"I can believe an economist said R&D for green technology should be subsidized. I very much doubt that the subsidies for "green investment" in the EPACT (resulting in Solyndra and etc.) were put there at an economist's suggestion, I rather expect that some lobbyist asked for it. Am I wrong?"

Two hundred economists wrote the recommendation for the stimulus bill (with full knowledge of the widely publicized green energy investments inside). I'm quite certain that Krugman argued for much more spending on green investment. And I'm unsure where you are drawing the line between R&D and subsidy -- because oil subsidies (for instance) are categorized as R&D (as are most energy subsidies).

That was a big bill... and even most Senators didn't understand the extent of the giveaways. But I don't want to defend those that defended the stimulus bill. It was a bad bill and it came about at the wrong time. My biggest beef with this administration was the poor execution of the stimulus bill, the poor timing and execution of ACA and the extra layers of rules - most of which aren't helpful at this time.

[Ruzious]

Yes, it is absolutely the case. Every, single, time.

"Economists on tv." You've disputed your own statement for me. Like I said, "THAT AIN'T NO ECONOMIST!!!"

Are you saying economists were unanimously against bailing out the auto industry?

Bailing out the Auto industry instead of letting them restructure in our courts (in the normal way) was a terrible precedent. Especially when the administration chose who would lose their equity. There are many good reasons for bankruptcy and many more good reasons that bankruptcy doesn't go through the executive branch which bypasses rule of law.

Zonk made a good point about it being an emergency situation. And I think Ford actually went through the bankruptcy process before being given the bailout. The results of that bailout were excellent, because jobs were saved, and the federal government got paid back by Ford.

[dobrojim]

actually I think Ford was the one of the big 3 that didn't take any money.

point remains that it was money well spent though.

edit - more complicated than I remembered. But I stand corrected

http://www.forbes.com/sites/joannmuller/2012/08/29/automakers-report-card-who-still-owes-taxpayers-money-the-answer-might-surprise-you/

[Zonkerbl]

Are you saying economists were unanimously against bailing out the auto industry?

Economists will unanimously tell you that bailing out the auto industry sets a dangerous precedent, encouraging them to believe that they can continue to ignore certain market signals (e.g. for more fuel efficient cars) because the U.S. government will be forced to bail them out when things go sour. That precisely for this reason governments should stay out of the business of bailing industries out except in extreme situations, which unfortunately the 2009 Great Recession was.

If any economists did in fact advocate for bailing out the auto industry (Krugman might have, I don't remember) it was only with extreme reluctance, going as it does against everything the economics profession has learned about such things.

I'm surprised at the unanimity. My father used to work for the House Ways and Means Committee back in the day, and they had serveral economists there that he worked with. One "joke" he used to say was - If they put all the econsomists in the world together - hand in hand - they still wouldn't reach a conclusion. Hey, it was his joke - I didn't say it was funny. Don't put the sins of the father upon the son.

All economists should agree, more or less, on micro questions, and the "credible commitment problem" is a micro (game theory) question that only has one correct answer. Well, in a sense. Turns out some game theory questions have an infinite number of solutions, but the motivations behind the solutions are easy to explain.

Macro questions are much, much trickier. If the economy is at full capacity (full employment + what they call "100% capacity" of capital, which is, strangely enough, somewhere around 92%) the economy behaves in one, very predictable way, but if it isn't, it behaves in a completely different way.

If people expect certain policy changes to happen, they will behave one way, if they don't, something completely different happens.

If people have confidence in a certain asset, the market for that asset behaves a certain way, but if they lose confidence, it goes in the tank -- even if NOTHING OTHER THAN CONSUMER PERCEPTION CHANGES.

It's a very frustrating field if you consider yourself a scientist. I chose to be a social scientist because I want to understand why people behave the way they do. I have learned a great deal and I can predict things other people can't, so I'm not completely useless. But I'm a microeconomist -- all the phenomena I try to explain are small and easy to describe mathematically. That's not true for the macro economy.

[Zonkerbl]

"I can believe an economist said R&D for green technology should be subsidized. I very much doubt that the subsidies for "green investment" in the EPACT (resulting in Solyndra and etc.) were put there at an economist's suggestion, I rather expect that some lobbyist asked for it. Am I wrong?"

Two hundred economists wrote the recommendation for the stimulus bill (with full knowledge of the widely publicized green energy investments inside). I'm quite certain that Krugman argued for much more spending on green investment. And I'm unsure where you are drawing the line between R&D and subsidy -- because oil subsidies (for instance) are categorized as R&D (as are most energy subsidies).

Look. Let me explain to you what working as an economist for the government is like. It's a politically biased environment. When I started at Commerce they asked me to investigate what would happen if the goals in the President's Advanced Energy Initiative were met. They didn't ask me to opine on whether I thought they would be met (not really my call anyway, since I'm not an engineer), just what would be the economic consequences. They liked the answer I came up with for cellulosic ethanol and it got published. They asked me a lot of questions like that, and a lot of times they didn't like the answer so nothing got out. I've had lots of interesting work censored like that. You don't have control over how the political appointees use your work.

My bosses ask my advice on things and I use my tools to provide advice. Does the boss always take my advice? No. Sometimes all you can do is try to minimize the damage the political actor does. If my political master makes a political decision to ignore my advice and do something that contradicts one of the fundamental findings of economics, that has been proven mathematically since the 1930s, is that my fault? The only leverage I would have in that situation, basically, is to resign. So far nothing has quite made me mad enough to do that, although I've come close.

You make it sound like economists are responsible for the legislation. The only person responsible for the legislation that gets passed is the person who passes it. Yes, there are economists in the CEA, but they're not writing the legislation, just commenting on it from the peanut gallery. You have no idea -- none! -- about what the economists' comments on the legislation was, because that's considered "pre-deliberative" and exempt from FOIA, so the public never hears about it.

I guess what I'm saying is you're talking out of your butt.

[dckingsfan]

actually I think Ford was the one of the big 3 that didn't take any money.

point remains that it was money well spent though.

edit - more complicated than I remembered. But I stand corrected

http://www.forbes.com/sites/joannmuller/2012/08/29/automakers-report-card-who-still-owes-taxpayers-money-the-answer-might-surprise-you/

The precedent that was set was who did and didn't lose their equity based upon government influence. That is the precedent that is dangerous. And the government would have come out far ahead of where it is now if the UAW didn't get preferential treatment in bankruptcy beyond what they would have received as normal creditors and employees in a typical bankruptcy case.

Basically, the UAW was made more whole than those who owned stock in the company. And that isn't a precedent you normally want to send.

Another example is the City of Detroit where the Administration is wisely staying out of the fray and forcing the process to go through bankruptcy reorganization. Why? If the Administration again sided on the side of unions, those that purchase municipal bonds would know that they aren't protected in the process. Then the cost of municipal bonds would rise - which would be bad for municipalities across the US.

[barelyawake]

Sigh. Right, no one has ever heard Krugman's opinion on green energy, because it's not like he writes a column, blog and is on tv continually. I'm guessing his opinion and talking out of my ass...

http://www.nytimes.com/2010/04/11/magaz ... wanted=all

Tell me how backing a pollution tax, advocating against oil subsidies, and advocating for green energy tech research isn't "picking a winner?"

And I didn't "make it sound like" they wrote the legislation. What I made it sound like is the President went around the country highlighting how investing in green tech was a part of the stimulus. That was one of the main selling points (not some portion snuck in under the radar). And that stimulus package many economists agreed with.

And, btw, the argument was not whether it was better to bail out the auto industry or not. The argument was whether all economists in unison agreed that we shouldn't -- and that certainly is not the case.

I'm certainly not an economist. And obviously there are certain principles which you believe must be held to without wavering. It is only my contention that, in practice, not every economist agrees with always following said principles. At least, not as I have seen.

[dckingsfan]

And speaking of bad precedents, The Morgan Shakedown is not a good precedent either. The conversation went something like this...

So... looks like Bear Stearns is going under and it is going to cost us a bundle to bail them out, actually it may cause a huge run that we can't control. We need you guys to buy them out.

OK, but the potential civil liabilities are huge if you don't cover us.

We got it covered (fingers crossed behind the back).

What bank in their right mind will bail another bank out now? Just let them go under... which is not a smart precedent. What are they thinking?

[popper]

And speaking of bad precedents, The Morgan Shakedown is not a good precedent either. The conversation went something like this...

So... looks like Bear Stearns is going under and it is going to cost us a bundle to bail them out, actually it may cause a huge run that we can't control. We need you guys to buy them out.

OK, but the potential civil liabilities are huge if you don't cover us.

We got it covered (fingers crossed behind the back).

What bank in their right mind will bail another bank out now? Just let them go under... which is not a smart precedent. What are they thinking?

Exactly right. Interesting conversation - Somehow we've evolved to a point where the political class can raid the federal treasury at will to reward friends, punish enemies and fund myriad causes, large and small. I don't think authority for that type of behavior can be found in the constitution, at least not the copy I have.

A significant number of Americans cannot even name the VP much less read and appreciate the law of the land. As a result, the law will continue to give way until it becomes little more than clay constantly re-molded, without consent from the governed, by those in power to achieve and maintain even more power. It's human nature I guess.

[hands11]

Sigh. Right, no one has ever heard Krugman's opinion on green energy, because it's not like he writes a column, blog and is on tv continually. I'm guessing his opinion and talking out of my ass...

http://www.nytimes.com/2010/04/11/magaz ... wanted=all

Tell me how backing a pollution tax, advocating against oil subsidies, and advocating for green energy tech research isn't "picking a winner?"

And I didn't "make it sound like" they wrote the legislation. What I made it sound like is the President went around the country highlighting how investing in green tech was a part of the stimulus. That was one of the main selling points (not some portion snuck in under the radar). And that stimulus package many economists agreed with.

And, btw, the argument was not whether it was better to bail out the auto industry or not. The argument was whether all economists in unison agreed that we shouldn't -- and that certainly is not the case.

I'm certainly not an economist. And obviously there are certain principles which you believe must be held to without wavering. It is only my contention that, in practice, not every economist agrees with always following said principles. At least, not as I have seen.

Oil is not a start up if you haven't noticed. They recorded record profit for any company in history. They can pay their own way from here.

What government can help do is get technologies seeded and then they can help get them implemented so they can reach economy of scales and market acceptance. My brother just bought a Chevy Volt that way. He will be driving to and from work for pennies on the dollar now. And he will tell others and his friends will experience it first hand. His friend had one first. Now he does. I somehow doubt that would be the case if GM went bankrupt.

Solar is taking off. Natural gas is fueling power plants and buses. Wind is expanding. Oil and Coal are yesterdays news. Still important for now but I doubt they made any Star Trek episodes with advanced cultures using those sources.

Why would we not want to be self powered with cleaner, cheaper power if we can instead of spending Trillion and death on a war like Iraq which was all about oil. Count that as an oil subsidy. In money and blood.

You know what that two trillion could have done for the economy if invested in green renowable energy? And I don't think we would have our oceans polluted so we have to eat tonic fish.

Why on earth would anyone not want our government to promote what is in our countries best interest for the future generations. We need clean water, air and land and we need power. So do what best gives you all of it. How is electing and oil man president and invading Iraq ok. Not once but twice. Where was the outrage from the right over that. Just pissed away trillions of dollar doing it. And nothing. Not a peep.

[hands11]

Gas dropped to 3.36

Obama is kicking rss.

http://gasbuddy.com/gb_retail_price_chart.aspx

Where are all those republicans on Fox that blamed him for the high priced gas. I'll have to tune in to catch them headlining the lower gas prices and giving him props. Be right back.

[Induveca]

Gas dropped to 3.36

Obama is kicking rss.

http://gasbuddy.com/gb_retail_price_chart.aspx

Where are all those republicans on Fox that blamed him for the high priced gas. I'll have to tune in to catch them headlining the lower gas prices and giving him props. Be right back.

Wow! It's essentially the same price drop equivalent in Canada and much of Western Europe. Can't POSSIBLY be OPEC policies, new Iranian president, sluggish first world economies, Libya, Syria, international instability caused by the US financial standoffs.....it's all the magic of Obama.

I suspect many French supporters of President Hollande are mistakenly singing his praises as they fill up on petrol, oblivious that it was actually Obama who saved them their hard earned euros.

[dobrojim]

caught a segment on All In last night by Salon writer Eric Stern.
http://www.salon.com/2013/10/18/inside_the_fox_news_lie_machine_i_fact_checked_sean_hannity_on_obamacare/

he was watching Hannity do a program on how Obamacare is destroying
Amurica. Feeling that what was being said on the program didn't comport
with the law as he understood it, and he was quite well informed about the
law having worked professionally in this area, he did some research. Hannity had
interviewed 3 couples. In each case Stern found that Hannity's show
grossly misrepresented the situation. One couple claimed they cut
back hiring due to O'care's employer mandate. Turned out their
business only had 4 employees so it wasn't subject to the provision.

A second couple claimed O'care caused them to have to pay greatly
increased premiums but Stern discovered they hadn't gone on the
website which they opposed in principle. Stern went on the exchange
and found a plan that would cost them about 60% of what they had
been paying which was high due to pre-existing conditions. He found the
third couple on the program also could potentially save 60%.

Fox basically did a Dick Cheney by getting people who were already
misinformed (likely because they watched Fox) to come on and
'verify' the misinformation that they had previously been receiving.
Cheney leaked stories, more like fairy tales, to the NYT then cited those
same stories in press appearances to bolster the case for war against
Iraq.

Would a real journalist have presented these stories without vetting?
There's the report, you decide.

http://www.msnbc.com/all-in/watch/fact-checker-finds-hannity-wanting-55306819837