Are you familiar with the Laffer Curve?

 

Yes, and the Laffer Curve is utter b.s. In fact, the "theory" of the Laffer Curve was used to justify the Bush tax cuts. Did the deficit decrease or increase after those?

 

According to the CBO, the deficit has/will increase $2.5 trillion over the course of 10 years due to the Bush tax cuts which were voted through using reconciliation and not accounted for on the overall balance sheet.  That would be more than 2.5 times the cost of either of the Health Care bills which the CBO estimates will reduce the deficit.

And this is why the Laffer Curve is total bs.  It has no content, but is claimed to make any number of points all by itself.  The "size of government" and "ratio of government to non-government" are irrelevant... and the Laffer Curve is simply an aluminum pole around which to wrap political value judgments.

Also a tax break or tax credit is the same thing as a subsidy. The only difference is that the tax credit taxes money away from the income side, and the subsidy is a minus on the expenditure side.

Wrong.

 

The "size of government" and "ratio of government to non-government" are irrelevant.

Wrong.

 

The Laffer Curve itself is not BS, but I agree that it tends to get coopted and misapplied in support of simplistic conservative arguments. The <a href="http://en.wikipedia.org/wiki/Laffer_Curve">Laffer Curve</a> model simply states that there is *some* tax rate that is neither 0% nor 100% at which revenue is maximized. In other words, at 0%, no revenue is generated; at 100%, the revenue generated is zero because no one will do anything if someone else will get 100% of the earnings.

Right.

Well, I guess that settles it then.

Also a tax break or tax credit is the same thing as a subsidy.  The only difference is that the tax credit taxes money away from the income side, and the subsidy is a minus on the expenditure side.

Wrong.

 

I think I know why your "politics" disagrees with this line of thinking, but for the purposes of THIS conversation involving the State's budget (not private wealth).... you will need to elaborate.

Are you familiar with the Laffer Curve?

 

I never thought this thread would tie in to the Cleveland area NMSF thread- but economist Art Laffer is actually a Hawken alum!  And yes, I'm familiar with the curve and his own critique about how its been misapplied in recent years.

 

Anyway, I don't think I've seen much evidence that GOP state government is really any more pro business or pro growth than Dems.  Maybe on environmental regs, not sure.  But without that clear hook, it makes it a lot harder to overlook what are, IMHO, the state GOP's appalling social views.

 

Certainly one thing we could do to make Ohio more competitive is for all residents to agree to a 10% wage cut.  That way our labor force would look more like high growth North Carolina's :)

^NC also has the advantage of being one of two states that don't force their political subdivisions to collectively bargain with their municipal employees.

They also don't have 60 political subdivisions per metro area, but who's counting.

Also a tax break or tax credit is the same thing as a subsidy. The only difference is that the tax credit taxes money away from the income side, and the subsidy is a minus on the expenditure side.

Wrong.

 

I think I know why your "politics" disagrees with this line of thinking, but for the purposes of THIS conversation involving the State's budget (not private wealth).... you will need to elaborate.

 

The very fact that you would even expect someone to explain their position shows that you are an elitist know-it-all who understands nothing about the powerfully fragile capitalist system and you hate America.

Santa Claus draws my disdain as well...

Santa Claus draws my disdain as well...

 

Seriously, are you killing puppies right now?

An example of where the Laffer Curve's theory *was* proven correct was with the <em>Kennedy</em> tax cuts, which dropped the top individual income tax rates from 90%+ (!!!) to 71%.  It's fairly safe to say that a 90% tax rate--even as a marginal tax rate--is on the right-hand side of the Laffer Curve.  Government revenue *and* the private economy both climbed after the Kennedy tax cuts.

 

Fine, perhaps I spoke too strongly.  But it's pretty obvious that we have been talking about the public policy arguments stemming out of the theory of the Laffer Curve, rather than a discussion of how the economic model itself works.  In addition, I'd be surprised if people were actually paying the 90% rate throughout the period that that was the top tax bracket.  I don't have any way of proving this obviously, but I suspect that the tax cuts were designed in part to give people a better reason to disclose their wealth honestly.  The AMT was created in the late 60s (I think) basically to make sure that people were paying something in taxes.

 

Studies have convincingly suggested this.  (I hesitate to say "shown," but at some point circumstantial evidence becomes convincing enough for all but the most dogmatic philosophy majors.)  The Laffer Curve was, in fact, in part premised around this view: the 100%-tax-rate scenario includes the assumption that people will still do *something* to attempt to better their lot in life; they will simply do everything possible to hide that from the government that would take 100% of it.  The same basically applies at 90%, too.

 

But you hit the nail on the head, and the question is begged. 

 

Of course, the Laffer Curve itself does not supply an answer as to what that revenue-maximizing tax rate <em>is</em>. 

 

In addition, as a slightly less ideological point, the Laffer Curve is <em>not</em> a relationship between tax rates and <em>private sector economic growth</em>; it is a relationship between tax rates and government revenue.  In other words, the argument goes that it's better to have a $15 trillion economy including a $2 trillion government than a $14 trillion economy including a $3 trillion government.  The Laffer Curve does not directly describe the relationship that would support this argument, because this involves movement all within the left half of the Laffer Curve.

 

What does this theory tell us?  Well, it doesn't tell us what the optimal tax rate is, as you pointed out (not that an economic theory should be able to answer a social/political question anyway).  So what does it do?  It describes a relationship between the size of the private economy and the expenditure on government.  This ratio is so devoid of content as to make it meaningless.

 

No.  I specifically stated that this is *not* what it does.  It describes a relationship between tax rates and government revenue, not tax rates and the private economy nor government revenue and the private economy.

 

Why should be concerned about the aggregate size of government versus non-government economy?  The only thing that helps us understand what programs are worth spending public money on is the effectiveness of the program.

 

This is also not quite true, but is orthogonal to the discussion of the Laffer Curve model.  A program could be very effective at what it does and still not be worthwhile (e.g., a program that was highly effective at having people dig fence post holes and fill them in again).  Likewise, just because one could generate a list of twenty good programs does not mean that all twenty are worth pursuing, because the cumulative effect of that level of spending becomes a marginally increasing drag on other economic activity.  In other words, if you come up with $10 trillion worth of good ideas for programs (and models that somehow allowed one to run them efficiently), that doesn't mean you should enact them all, because a government of that size would crush the rest of the economy.  Part of the art of governing is learning what good ideas have to be left on the table for budgetary reasons.

A program could be very effective at what it does and still not be worthwhile (e.g., a program that was highly effective at having people dig fence post holes and fill them in again). Likewise, just because one could generate a list of twenty good programs does not mean that all twenty are worth pursuing, because the cumulative effect of that level of spending becomes a marginally increasing drag on other economic activity.

 

None of this is fact, these are all theoretical assertions and predictions.  Drags on the economy can flow from the public and private sectors alike, and absolutely no one believes it's productive or successful to dig and fill post holes.  The success lies in the accompanying transfer payments, which stimulated consumer spending at a time when the chaotic implosion of the private sector had almost eliminated it. 

A program could be very effective at what it does and still not be worthwhile (e.g., a program that was highly effective at having people dig fence post holes and fill them in again). Likewise, just because one could generate a list of twenty good programs does not mean that all twenty are worth pursuing, because the cumulative effect of that level of spending becomes a marginally increasing drag on other economic activity.

 

None of this is fact, these are all theoretical assertions and predictions. Drags on the economy can flow from the public and private sectors alike, and absolutely no one believes it's productive or successful to dig and fill post holes. The success lies in the accompanying transfer payments, which stimulated consumer spending at a time when the chaotic implosion of the private sector had almost eliminated it.

 

What data are you reading?  The data I've seen strongly suggest that the stimulus didn't stimulate much spending at all.  Much of it went to pay off existing debts, i.e., to save the politically powerful consumer lending industry.

We may largely agree regarding the current stimulus program.  I didn't think we were talking about that, I thought we were talking about the Laffer Curve's validity.  And I thought you were referring to actual depression-era "ditch digging" programs. 

I would be tempted to move to Washington or another no-income-tax state after I retire.

We may largely agree regarding the current stimulus program. I didn't think we were talking about that, I thought we were talking about the Laffer Curve's validity. And I thought you were referring to actual depression-era "ditch digging" programs.

 

I don't think there was actually a "ditch digging" program in the Depression; that image entered the popular lexicon from economic literature as a time, as economists argued as to whether there would be any gain in the real economy from paying people to perform such menial and unproductive labor, just based on the mere fact that they were getting paid to do something.  It became a signature image, and gradually seeped its way out into politics.  However, keep in mind that the <em>actual</em> projects to come out of the Depression were more along the lines of the Hoover Dam and the lesser works of the TVA, rural electrification, etc.  In other words, there was much more to them than mere transfer payments.

 

The Great Society programs were substantially more heavily oriented towards transfer payments than the New Deal-era programs were.

probably the closest thing to a "ditch digging program" was the CCC. http://en.wikipedia.org/wiki/Civilian_Conservation_Corps

A transfer payment may or may not be accompanied by a Hoover Dam.  Regardless, it still has to come from somewhere and it still goes out the same way.  Straight transfer payments are far cheaper than a Hoover Dam, really.  No materials to buy.  And it still has the same effect on the economy, that of consumer spending.     

And it still has the same effect on the economy, that of consumer spending.

 

Well, that's the real question.  That's the theory of Keynesian economics, which is still alive (particularly in political circles); its two most credentialed public defenders today are Joseph Stiglitz and Paul Krugman.  However, most other schools of economic thought--classical, Chicago School, and Austrian School--don't particularly think much of that theory.  The relative failures (both in practical terms and in political terms) of TARP and the stimulus package are likely to give Keynesian economics a setback for a while, but it reliably hangs around because it's politically useful for the Democrats to prevent it from dying out entirely.  It's the only major school of economic thought that would justify what the Democrats perennially want to do.

It's the school of economic thought that explains the behavior of every govenrment on the planet.  They all do this.  The Chicago and Austrian schools seem more divorced from the reality outside their beliefs, and seem based on ideas a lot less current than Keynes.  I mean, how many sciences have a "classical" branch that anyone takes seriously?

It's the school of economic thought that <em>explains</em> the behavior of most modern governments because they <em>choose</em> to believe Keynesian economics because it suits their political purposes to do so.  That does not make Keynesian economics correct; it makes it politically popular among the ruling class.  The two are unrelated.  As to how many sciences have a "classical" branch that anyone takes seriously: well, some have to preface it with "neo-" for PR reasons, but the basic concepts popularized by Adam Smith and others of that time period are still alive and well.  "Classical" in this case basically just means "pre-Keynesian," since the Chicago and Austrian schools came later.

 

Keynesian economics will not be judged by how many politicians claim to believe in it.  It will be judged by the effectiveness of the programs those politicians enact on the basis of those beliefs, i.e., whether or not it <em>works</em>.  It was already dealt a great blow in the 70s.  I think that we're in the opening stages of another such blow.  I have absolutely no confidence in the bailouts and stimulus to bring the economy back on track, and I think it's far more likely that they're impeding recovery rather than aiding it--and I think that the Keynesian-motivated programs of the late Bush Jr. and Obama administrations are going to get a great deal of the blame for it, and justifiably so.

OK so which aspects of the past are embraced by "classical" or "neo-classical" economics?  I can't think of many economic realities faced by Adam Smith (horses, slavery, whale oil) that are currently relevant.  You and I and Keynes come from a different world than Adam Smith.  And I don't know where Keynes ever suggested bailing out Wall Street.  I don't know what school that fits into, if any.  That's like a reverse transfer payment... perhaps unprecedented.

The Laffer Curve has more application to real-world problems that Keynesian ideas.  The fact that people actually try to argue in favor of Keynes is astounding, no legitimate economist takes it seriously.  It's like the creationists arguing against Evolution.

 

If you want the status quo for Ohio, then by all means, vote for Strickland.  He's done a great job peddling it in his first four years.  We're still losing jobs and population while other states are booming.  If you truly believe that Ohio's problems are bigger than anything the government can do, then the state is doomed no matter we vote for.

So Strickland represents the status quo even after Voinovich and Taft, and even though Ohio's main legislative accomplishment for the aughts was to slash taxes.

So Strickland represents the status quo even after Voinovich and Taft, and even though Ohio's main legislative accomplishment for the aughts was to slash taxes.

 

Taft was a joke, he did nothing.  Ohio's not going to thrive again until there it is led by true fiscal conservatives.

Taft was the one who cut the taxes.  Drastically.

 

Ohio's current budget mess is not because the economy just got up and left-- it didn't-- it's because Ohio voluntarily reduced its tax collections by a substantial margin.  This policy has been phasing in over the past few years and I believe it's done this year.  Ohio now has some of the lowest business taxes in the entire nation.  And while there still is an income tax, that too was reduced a great deal.

Taft was a joke, he did nothing.  Ohio's not going to thrive again until there it is led by true fiscal conservatives.

 

This circles back nicely to my original question... what would a "true fiscal conservative" do differently from Strickland?  Are we talking about slashing state aid to local school budgets or the public universities?  Paving fewer roads?  Eliminating tax breaks to lure businesses to Ohio or to subsidize their expansions?  And is Ohio's tax rate really what's holding the state back?  You can shift the burden around to create new winner and losers, but does Ohio really spend more per household than other states?

 

I don't think state government is totally impotent, but I do think it's an uphill battle to fight the sun belt's lower wages and sunshine.  The flip side of that is that I'd guess that state policy doesn't have nearly as much to do with the growth of the sun belt as a lot people think.

 

 

 

 

Taft was the one who cut the taxes. Drastically.

 

Ohio's current budget mess is not because the economy just got up and left-- it didn't-- it's because Ohio voluntarily reduced its tax collections by a substantial margin. This policy has been phasing in over the past few years and I believe it's done this year. Ohio now has some of the lowest business taxes in the entire nation. And while there still is an income tax, that too was reduced a great deal.

 

You say this like it's a bad thing.

And it still has the same effect on the economy, that of consumer spending.

 

Well, that's the real question.  That's the theory of Keynesian economics, which is still alive (particularly in political circles); its two most credentialed public defenders today are Joseph Stiglitz and Paul Krugman.  However, most other schools of economic thought--classical, Chicago School, and Austrian School--don't particularly think much of that theory.  The relative failures (both in practical terms and in political terms) of TARP and the stimulus package are likely to give Keynesian economics a setback for a while, but it reliably hangs around because it's politically useful for the Democrats to prevent it from dying out entirely.  It's the only major school of economic thought that would justify what the Democrats perennially want to do.

 

How is TARP based on Keynes' theory?  By the way, do you want to reference your data that shows that the stimulus didn't stimulate anything?

 

Does monetarism or the Chicago or Austrian schools justify any other political party's goals?  Maybe just a bit?

 

It's the school of economic thought that <em>explains</em> the behavior of most modern governments because they <em>choose</em> to believe Keynesian economics because it suits their political purposes to do so.  That does not make Keynesian economics correct; it makes it politically popular among the ruling class.

 

I have absolutely no confidence in the bailouts and stimulus to bring the economy back on track, and I think it's far more likely that they're impeding recovery rather than aiding it--and I think that the Keynesian-motivated programs of the late Bush Jr. and Obama administrations are going to get a great deal of the blame for it, and justifiably so.

 

Your example of "digging holes to fill them up again" is pretty weak and absurd.  You've failed to explain with any nod toward reality why anyone should be concerned with the aggregate amount of government spending simply as a number.

 

What is recovery?  Because I'd say that for the vast majority of Americans, recovery is a decrease in unemployment.  And Keynes' theories say a lot about how to deal with unemployment.  That's why they should and are being used right now.

 

Your whole argument seems to be based on the notion that government spending crowds out private investment.  But the whole point of the Keynesian program is to have the government prime economic activity when the private sector isn't doing it.  It's absurd to say that a government that is able to sell debt at incredibly low interest rates is crowding out private investments- the private investors are buying Treasuries because there is a guaranteed return on them!  They aren't investing in other things because they don't want to take the risk.

 

 

We have a thread for those that want to speculate as to the ways you could label the recent federal stimulus or TARP as failures.  Ohio doesn't have any money to stimulate the economy with even if we wanted to... so it really isn't relevant to the conversation of who should be our next governor.

Thank you Hts.

And it still has the same effect on the economy, that of consumer spending.

 

Well, that's the real question. That's the theory of Keynesian economics, which is still alive (particularly in political circles); its two most credentialed public defenders today are Joseph Stiglitz and Paul Krugman. However, most other schools of economic thought--classical, Chicago School, and Austrian School--don't particularly think much of that theory. The relative failures (both in practical terms and in political terms) of TARP and the stimulus package are likely to give Keynesian economics a setback for a while, but it reliably hangs around because it's politically useful for the Democrats to prevent it from dying out entirely. It's the only major school of economic thought that would justify what the Democrats perennially want to do.

 

How is TARP based on Keynes' theory?

 

It is based off the notion that the government has to be the buyer of last resort in order to support wages, prices, and spending levels at some predetermined "good" level.

 

Does monetarism or the Chicago or Austrian schools justify any other political party's goals? Maybe just a bit?

 

Not really.  The Austrian School conceivably supports the Libertarian Party agenda, but even there, there are differences.  The Chicago School might support the economic and fiscal policy prescriptions of some factions of the Republican Party, but I hardly think the party is unified around its precepts the way the Democrats have embraced Keynes.

 

It's the school of economic thought that <em>explains</em> the behavior of most modern governments because they <em>choose</em> to believe Keynesian economics because it suits their political purposes to do so. That does not make Keynesian economics correct; it makes it politically popular among the ruling class.

 

I have absolutely no confidence in the bailouts and stimulus to bring the economy back on track, and I think it's far more likely that they're impeding recovery rather than aiding it--and I think that the Keynesian-motivated programs of the late Bush Jr. and Obama administrations are going to get a great deal of the blame for it, and justifiably so.

 

Your example of "digging holes to fill them up again" is pretty weak and absurd. You've failed to explain with any nod toward reality why anyone should be concerned with the aggregate amount of government spending simply as a number.

 

What is recovery? Because I'd say that for the vast majority of Americans, recovery is a decrease in unemployment. And Keynes' theories say a lot about how to deal with unemployment. That's why they should and are being used right now.

 

And how's that working out?  Unemployment has increased since the stimulus was enacted, leaving Democrats and other defenders of the stimulus trying to make the case of "well, it would have been even worse without it," when the Democrats' own worst-case projection charts from before the stimulus was enacted have been eclipsed by the actual unemployment rate since they succeeded in passing it.

 

Keynes' theories may have a lot to say about unemployment--it just generally happens to be wrong.

 

Your whole argument seems to be based on the notion that government spending crowds out private investment. But the whole point of the Keynesian program is to have the government prime economic activity when the private sector isn't doing it.

 

Yes, and Keynesian fiscal policy has generally failed to do this.

Wrong thread but the Austrian School is da best. http://mises.org do it.

I tend towards Chicago School myself, because I've generally found its predictive power the strongest when I've needed to make predictions as to economic trends for my own personal finances (the management of which I self-direct).  That said, I think they all have their flaws, because economics remains a social science, and social sciences will never have the degree of exactitude of the natural sciences (and even those are less precise than high school textbooks lead one to believe).  I do think it's fair to say that Keynesianism is the least successful of the lot, however.  The only time it ever worked was conveniently because the rest of the world's industrial capacity--the productive capital that could have competed with us--was in the process of being flattened by WWII.

It's more than just taxes.  For instance, if Ohio wants to compete with the South/West, another big step would to become a right-to-work state.

 

I think the weather situation is just a tiny piece of why business has left or avoided Ohio.  There are things within our control that we can do!

Right-to-work is a no brainer. Good point.

How is TARP based on Keynes' theory?

 

It is based off the notion that the government has to be the buyer of last resort in order to support wages, prices, and spending levels at some predetermined "good" level.

 

TARP has nothing to do with the government stimulating consumer demand, which is the essence of Keynesianism and the point of the stimulus.  You're simply wrong about connecting TARP with Keynesianism.

 

Not really.  The Austrian School conceivably supports the Libertarian Party agenda, but even there, there are differences.  The Chicago School might support the economic and fiscal policy prescriptions of some factions of the Republican Party, but I hardly think the party is unified around its precepts the way the Democrats have embraced Keynes.

 

Well, that's not an answer.  A real rebuttal would be something like, "Here is a quote from the Democratic platform that quotes Keynes' theories as the basis of their approach..."etc.

 

And Keynes' theories say a lot about how to deal with unemployment.  That's why they should and are being used right now.

 

And how's that working out?  Unemployment has increased since the stimulus was enacted, leaving Democrats and other defenders of the stimulus trying to make the case of "well, it would have been even worse without it," when the Democrats' own worst-case projection charts from before the stimulus was enacted have been eclipsed by the actual unemployment rate since they succeeded in passing it.

 

Right, after the largest financial crisis in seventy years, everything is supposed to get fixed in a year.  That's reasonable.

 

 

 

 

 

It's more than just taxes. For instance, if Ohio wants to compete with the South/West, another big step would to become a right-to-work state.

 

Well Vegas was the fastest growing City in the Country and they are heavily unionized.  It's strange to me that during the years from 1994-2006, when the GOP ruled all branches of Ohio's government, that they didn't implement any anti-union legislation.  I wonder why.  They certainly could have tried to fix how public sector unions are regulated by the state.

Not really.  The Austrian School conceivably supports the Libertarian Party agenda, but even there, there are differences.  The Chicago School might support the economic and fiscal policy prescriptions of some factions of the Republican Party, but I hardly think the party is unified around its precepts the way the Democrats have embraced Keynes.

 

Well, that's not an answer.  A real rebuttal would be something like, "Here is a quote from the Democratic platform that quotes Keynes' theories as the basis of their approach..."etc.

 

Are you seriously going here?  First, economic theories can motivate a particular fiscal program without ever being expressly stated.  It doesn't mean that the theory isn't being put to the test.  Second, the entire point of the stimulus program was the Keynesian notion that government spending can alleviate or reverse a recession.  Third, Obama himself defended the stimulus against charges of it leading to excessive spending by saying that the entire point of it was to spend the money--a quintessentially Keynesian argument.  What more do you want?!

 

And how's that working out?  Unemployment has increased since the stimulus was enacted, leaving Democrats and other defenders of the stimulus trying to make the case of "well, it would have been even worse without it," when the Democrats' own worst-case projection charts from before the stimulus was enacted have been eclipsed by the actual unemployment rate since they succeeded in passing it.

 

Right, after the largest financial crisis in seventy years, everything is supposed to get fixed in a year.  That's reasonable.

 

Not that everything is supposed to get fixed in a year.  However, first, the banks that took the reckless risks that brought on the crisis should be <em>gone</em>, not announcing record profits.  Second, just increasing unemployment checks, pumping a ton of money into state government coffers and public employees' pockets, etc. doesn't "fix" anything.  It simply forestalls the essential, if painful, market corrective, which means a rise in unemployment until prices (including the cost of labor, i.e., wages) fall into line with what the real (non-bubble) economy can support.  The coldness of that proposition is obviously why it isn't politically popular--but the failure of the stimulus in anything more than conjectural senses ("Well, things would be even worse without it!  Trust us!") shows why it was nevertheless what needed to happen, and what will still ultimately happen even <em>with</em> the stimulus, after the debt well runs dry.

Taft and Kasich are different people.  Punishing Kasich for Taft's ineffectiveness and corruption issues isn't really fair.

It's more than just taxes.  For instance, if Ohio wants to compete with the South/West, another big step would to become a right-to-work state.

 

I think the weather situation is just a tiny piece of why business has left or avoided Ohio.  There are things within our control that we can do!

 

Right to work definitely sounds like an issue that distinguishes Ohio from much of the sun belt (though unions might be one reason why Ohio's wages are significantly higher than every booming southern states' except for Georgia's).  I note that unionization policy is unrelated to "fiscal conservatism" though, so I'm still not particularly swayed by any GOP candidate who claims that state tax policy and reducing state spending is what's going to change Ohio's future and that they will really chart a different course from Strickland.

It's more than just taxes. For instance, if Ohio wants to compete with the South/West, another big step would to become a right-to-work state.

 

I think the weather situation is just a tiny piece of why business has left or avoided Ohio. There are things within our control that we can do!

 

Right to work definitely sounds like an issue that distinguishes Ohio from much of the sun belt (though unions might be one reason why Ohio's wages are significantly higher than every booming southern states' except for Georgia's).   I note that unionization policy is unrelated to "fiscal conservatism" though, so I'm still not particularly swayed by any GOP candidate who claims that state tax policy and reducing state spending is what's going to change Ohio's future and that they will really chart a different course from Strickland.

 

Do you not believe that the pie can grow?  I think that there are things that we can do to encourage it to grow, and things that we can do to limit its growth.  I think that Kasich's ideas are better to promote growth than anything I've seen from Strickland.

 

I suspect that you see things differently and there's very little that I or anyone else could say that would change your mind.  That's fine.

Clevelander17:  I don't think that that was what StrapHanger meant.  He's just saying that being in favor of "right to work" and being in favor of "fiscal conservatism" are two different things.  They may be correlated, but that's about it.  One could be one without the other, with the possible exception of the concepts as applied to public sector unions, where the two ideals might overlap.

Clevelander17: I don't think that that was what StrapHanger meant. He's just saying that being in favor of "right to work" and being in favor of "fiscal conservatism" are two different things. They may be correlated, but that's about it. One could be one without the other, with the possible exception of the concepts as applied to public sector unions, where the two ideals might overlap.

 

They usually go hand-in-hand.  Does anyone really believe that Strickland is going to let a bill get by him that makes Ohio right-to-work?

Clevelander17: I don't think that that was what StrapHanger meant. He's just saying that being in favor of "right to work" and being in favor of "fiscal conservatism" are two different things. They may be correlated, but that's about it. One could be one without the other, with the possible exception of the concepts as applied to public sector unions, where the two ideals might overlap.

 

Yup- thanks.  I'm just pushing back on fiscal constraint as a significant advantage of Kasich over Strickland, because I haven't heard anything convincing that Kasich would do differently regarding state spending.  Maybe shifting some spending around on the margins, but probably not slashing it.  I have no way of verifying it, but Strickland's camp brags about the state's employee roll being 5,000 people smaller today than when Strickland took office, and under Strickland the corporate tax was reconfigured in a meaningful way (no idea if in a smart way), so it doesn't sound to me like Strickland's a fiscal wreck.

 

Right to work is an entirely separate issue, and I don't know enough about it to have a strong opinion.  Though I'm not sure how much better things will be for the bulk of current residents if the state aggressively chased low-skill employment by dangling low, non-union wages.  I'm opened minded though.

 

 

Are you seriously going here?  First, economic theories can motivate a particular fiscal program without ever being expressly stated.  It doesn't mean that the theory isn't being put to the test.  Second, the entire point of the stimulus program was the Keynesian notion that government spending can alleviate or reverse a recession.  Third, Obama himself defended the stimulus against charges of it leading to excessive spending by saying that the entire point of it was to spend the money--a quintessentially Keynesian argument.  What more do you want?!

 

First, you said the Democrats are more in the bag with Keynesians than Republicans are with Chicago or Austrian School or whatever.  Second, you didn't offer any objective supporting evidence to strengthen your opinion.  Third, your statement remains simply hearsay until you prove otherwise that the Democrats are more in line with Keynesians than the Republicans are with Chicago or Austria.

 

Bottom line: I agree that stimulus was Keynesian in its conception.  But the idea that the Democrats are more in step to a particular economic school than Republicans is silly, and on your end (as on mine, conversely) unsubstantiated.

 

Not that everything is supposed to get fixed in a year.  However, first, the banks that took the reckless risks that brought on the crisis should be <em>gone</em>, not announcing record profits.  Second, just increasing unemployment checks, pumping a ton of money into state government coffers and public employees' pockets, etc. doesn't "fix" anything.  It simply forestalls the essential, if painful, market corrective, which means a rise in unemployment until prices (including the cost of labor, i.e., wages) fall into line with what the real (non-bubble) economy can support. 

 

First, a great many of of those banks are in fact gone, and once again, TARP has nothing to do with Keynes.  Second, support to states do in fact "fix" things because of the massive decline in tax receipts.  It makes perfect sense that the federal government, which can issue cheaper and more flexible debt than the states to deal with the ancillary crises from the housing bubble, would do it.  It's quite similar to when individuals take out loans to pay for things to be used in the present based on future expected income.

 

Also the market corrective is happening.  The government isn't building houses to keep those jobs.  You're confusing the idea of the government directly propping up an industry (like with GM and Chrysler, also not a part of the stimulus) with the government making intelligent countercyclical investments.

 

The coldness of that proposition is obviously why it isn't politically popular--but the failure of the stimulus in anything more than conjectural senses ("Well, things would be even worse without it!  Trust us!") shows why it was nevertheless what needed to happen, and what will still ultimately happen even <em>with</em> the stimulus, after the debt well runs dry.

 

It's not the coldness that's politically unpopular, its that people like people who try and fix things more than they like people who say that we can't do anything about it. 

 

I like your conjecture as to the failure of the stimulus.  Since there's no proven method to link the amount of unemployment to the amount of fiscal stimulus, the best any reasonable person can do is guess as to how effective or ineffective it has been.  There are plenty of folks who are disappointed with the stimulus, and a lot of them think it was too small.

 

By the way, how much GDP will be lost when the essential, painful market corrective comes to pass, as you inevitably say it will.  Will it be equal to  the amount of GDP that has been created by the stimulus?  If so, then obviously the stimulus has done something, since it has forstalled the market corrective for a given period of time.

 

You can't have it both ways.  Keynesian economics can't do nothing by cannibalizing private investment while at the same time forstalling the inevitable market corrective.

Ooooh- look what I found (speaking of Laffer):

 

http://www.alec.org/am/pdf/tax/09RSPS/states/09ohio.pdf

 

I love this:

Economic Performance Rank (1=best 50=worst)

A historical measure based on a state’s performance (equally weighted average) in the three important performance variables shown below [personal income per capita growth; absolute domestic migration; non-farm employment growth]. These variables are highly influenced by state policy.

 

That's a bold assertion there- but this group (ALEC) seems to have some pretty specific views about government...

Kasich leads Strickland in new poll, 42-37%

 

By William Hershey | Tuesday, March 23, 2010, 02:58 PM

 

Republican challenger John Kasich leads incumbent Democratic Gov. Ted Strickland, 42-37 percent among Ohio voters in a poll released on Tuesday, March 23 by Public Policy Polling of Raleigh, N.C.

 

more: http://www.daytondailynews.com/blogs/content/shared-gen/blogs/dayton/ohiopolitics/entries/2010/03/23/kasich_leads_strickland_in_new.html?cxtype=feedbot

As I've said earlier, I think Strickland will win, in part because the GOP is going to win so big in the Congressional races.  He's perceived as a moderate and that allows people to comfortably split their ticket.

 

The NRA is almost certain to endorse Strickland as his Congressional record regarding gun ownership rights is quite a bit better than Kasich's.  That won't be insignificant.