Balkinization: Does Broadband Belong in the Economic Stimulus Package?

Comments:

The broadband subsidies at issue here are emblematic of the nature of this alleged "stimulus" bill, which is designed to enact as many pet projects (pork if you will) of the new Dem majority, even though they will not create net employment or economic growth. As Rahm Emanuel pithily observed: "You don’t ever want a crisis to go to waste."

The CBO is calculating that the recession will end on its own accord by the end of this year.

Bidding, contracting and then building the desired broadband capacity will take years, if not the next decade.

Even if the broadband contracts were "shovel ready," there are hardly pools of unemployed internet technicians waiting to be put to work. The internet is still a growth area in the economy. Retraining unemployed auto workers and the like and them moving them out to rural areas would likewise take years.

Maybe 10% of this bill are made up of "shovel ready" infrastructure projects (roads, bridges, etc) for which there are workers available to do the work. However, the history of infrastructure building provides no track record of success in remedying recession:

> The New Deal infrastructure projects did not cure the double digit unemployment or pull the US out of the Great Depression.

> The Eisenhower era infrastructure building boom, including the interstate system, did not prevent the 1957-58 recession and its heavy unemployment.

> More recently, Japan paved over nearly all of its rural areas and did not emerge from a decade long recession, but did accumulate the largest per capita public debt in the industrialized world.

The reason fiscal stimulus does not lift economies out of recession is because the money the government is borrowing is taken from private sector investment capital and is used to expand government rather than build business that provides ongoing employment. In other words, fiscal stimulus is based upon the theory that the government can more efficiently conduct economic activity than the private market economy - a theory that is being resurrected from the ash heap of history where it lay interred with communism and socialism.

We can debate the merits of broadband subsidies or the hundreds of other pet projects being rammed through without debate in this bill, but do not call this monstrosity an economic stimulus.

# posted by

Bart DePalma : 4:29 PM

fiscal stimulus is based upon the theory that the government can more efficiently conduct economic activity than the private market economy

That is not true at all. It is based on the fact that a depression is self-fullfilling. As the economy slows more people lose their jobs. As more people lose their jobs, there are fewer people buying things, and thus there are more layoffs. And so on. A government stimulus is intended to reverse the process. People are hired to build roads, bridges, and so on. In return the nation gets roads and bridges, and lots of people have more money to spend.

but do not call this monstrosity an economic stimulus.

How about if we call it an "economic liberation"?

# posted by

Bartbuster : 4:46 PM

That last paragraph is borderline absurd. Under that logic, we shouldn't have built roads because of the dislocation effect on buggy sellers.

Plus, better broadband is not destroying these industries anyway but forcing them to rethink their business models.

I mean, your general post is certainly reasonable. But the copyright stuff at the end was just a bizarre and unnecessary addition.

# posted by

publius : 7:57 PM

The CBO is calculating that the recession will end on its own accord by the end of this year.

Not really. They're saying that the GDP will fall 2.2% in 2009 and only recover 1.5% of that in 2010. Along with unemployment up above 9% in 2010 (which is to say, below the 10.8% near the end of the Reagan/Bush I regime, but whether that's a tolerable situation is not quite so clear). I'd also note that structural unemployment is far higher than normal with many workers discouraged and not actively seeking jobs, so the nominal rates we're hearing are below that actual rate.

I'd also note that this is the same CBO that didn't predict the current pit we're in, so perhaps there's a little "irrational exuberance" going on there?

Bidding, contracting and then building the desired broadband capacity will take years, if not the next decade.

No big deal (in terms of stimulus) as long as we're spending the money allocated.

Even if the broadband contracts were "shovel ready," there are hardly pools of unemployed internet technicians waiting to be put to work....

"Bart", you don't know what the industry's like.

The internet is still a growth area in the economy. Retraining unemployed auto workers and the like and them moving them out to rural areas would likewise take years.

Well, maybe to Gulags would be better, eh? Where'd this ("moving them out to rural areas") come from?!?!?

Maybe 10% of this bill are made up of "shovel ready" infrastructure projects (roads, bridges, etc) for which there are workers available to do the work....

How do you arrive at this figure?

... However, the history of infrastructure building provides no track record of success in remedying recession:

> The New Deal infrastructure projects did not cure the double digit unemployment or pull the US out of the Great Depression.

If we want to hear RNC/InsHannity/Limbot "talking points", we can turn on FauxSnooze, thank you....

> The Eisenhower era infrastructure building boom, including the interstate system, did not prevent the 1957-58 recession and its heavy unemployment.

> More recently, Japan paved over nearly all of its rural areas and did not emerge from a decade long recession, but did accumulate the largest per capita public debt in the industrialized world.

"[P]aved over nearly all of its rural areas"? Beg pardon, but reality begs pardon to disagree with you.

Here's "recessions" for ya. And more pretty pic'chers.

Cheers,

# posted by

Arne Langsetmo : 8:03 PM

First of all, responding to Bart DePalma's comment:

The CBO also predicted that the whole housing downturn would be short and temporary and that there was no real risk that we would get into a recession, remember? I have a real problem accepting their forecasts, especially since other economists have generally said it will last for years more, at the very least.

The New Deal, with the most conservative (in the classical sense of the word) assumptions you can take, almost halved the unemployment, and actually did get us down to 9%. Of course, if you do what some people have done, and simply define all the jobs given by New Deal as not being real because they weren't permanent positions, then what you said is true, but I think we can agree that is just ridiculous semantics.

Also, the main reason Japan never got out of it's depression was that it never fixed the underlying problems in it's banks. You could certainly argue that we're doing the same thing, and I might even agree with that, but that's completely different from what you're saying. Some economists even think that Japan's infrastructure spending was the only thing that kept it out of '30's era depression. Even with that, Japan's situation was different, because most of their infrastructure spending was on things equivalent to Alaska's bridge to nowhere, where they were building roads and bridges that were not needed. On the other hand, our roads and bridges desperately need maintainance at least, and there is significant need for new roads in some areas, although I am not qualified to say if the stimulus bill will apply the money correctly (but again, that is not the argument you are trying to make).

Finally, your argument that "fiscal stimulus is based upon the theory that the government can more efficiently conduct economic activity than the private market economy" is just plain wrong. Fiscal stimulus is not about efficiency. Efficiency and effectiveness and entirely different things. Unfortunately, in a recession, the things that would improve the economy are often against a businesses interests, so it's just naive to expect businesses to get us out of an economic downturn if looking out for the long term means being bankrupted in the short term.

Now to respond to the original post:

I think you do raise some interesting questions. I personally think that, besides the immediate work of installing the broadband, most of the stimulative effect from this probably won't occur for years, maybe not even until we're out of the recession altogether. On the other hand, I can see the purpose of including some of these things in the bill, so that the economic recovery after the recession will proceed even faster, or if things go from bad to worse, it can help during a prolonged recession (or, in the worst case, depression). Or it could just be that people are trying to stick this in now because they now it wouldn't get passed otherwise. Some of that is inevitable, and arguably even a good thing (not something I want to get into right now, though). Either way, thanks for bringing it up, though.

I would like to say one thing, though. At one point, you say:
Massive unlicensed and uncompensated trading of motion picture and TV program files, made increasingly easy and possible with high speed broadband, threatens to harm the movie and TV industry as internet trading of sound recordings has harmed the recording industry.
There really isn't any convincing proof that internet trading has harmed the recording industry, at least that I have seen. Most, if not all, of the drops in CD sales, can be attributed to people finally finishing converting their collections to CDs. It is without a doubt true that there are people who would have bought music had they not downloaded it, but there are also people who would not have bought music by people they didn't know until they discovered them by sharing music online. I just haven't seen enough actual study done to decide whether or not internet file sharing has harmed or helped the music industry overall.

# posted by

mfoley : 8:38 PM

Mark:

1) CBO is hardly the epitome of exuberance. They are applying historical models to the current recession. It is possible that a lack of credit will extend this recession beyond the normal business cycle. However, borrowing trillions of dollars to fund a larger government will not exactly make private credit more available.

2) We agree that the problem that needs to be addressed has been and continues to be dealing with the banks' bad assets. The purpose of the first $700 billion dollar borrowing spree was to buy up the bad assets at a discount, reorganize and sell them.

Attending to the asset problem will probably be extremely costly because neither political party has shown the willingness to compel the banks and bond holders to assume most or all of the losses. We will probably grossly overpay for these assets.

However, rather than biting the bullet and starting to clean up the mess, both parties have pissed away money they need to buy the assets.

The Bushies spent away the first $350 billion buying stock in banks.

The Obamites are pissing away another $800 billion on pet Dem projects.

Based on what little we know of Geither's bank plan, it appears Obama is going to spend most if not all of the second $350 billion on other things besides the bad assets.

Thus, the US is in hock for about 1.5 Trillion dollars before doing anything about the bad assets.

Meanwhile, the Dem Congress is gearing up to spend even more money on other projects that did not make it into the stimulus bill.

Borrowing all this money is simply draining private capital from the credit markets and leaving less to deal with the bad bank assets that are the root of the problem.

3) The nominal unemployment rate (including the New Deal make work as actual employment) never dropped below the low teens during the Depression. As soon as FDR cut some of the make work jobs in 1936-37, unemployment returned back to its real rate of around 17%. Lowering unemployment requires the growth of real ongoing private employment.

# posted by

Bart DePalma : 9:44 PM

Thank you for all your comments. I will briefly respond to the two comments on my last paragraph, which are both excellent points. Publius: You absolute correct that in normal times we should applaud Schumpterian creative destruction of horse and buggy industries. But these are not normal times and the purpose of the stimulus package is to jumpstart the economy and provide jobs as soon as possible. So my point was that, given those goals, if broadband deployment results in short and intermediate term job losses (that's just an "if"; I don't claim that's true), then promoting broadband probably should not be a part of the economic stimulus bill. Also, part of broadband's destructive effect on traditional media is do to activity that is and, according to many people, should be illegal -- unlicensed file trading. So it is a complicated question whether that activity should count as favored Schumpterian creative destruction.
Mark: you make a good point about the conflicting studies on whether file trading harms the record industry. I suppose that, on balance, I conclude from all the studies that I've read that, while file trading is only a partial cause of the record industry's ills, it does greatly impair industry revenues and has already begun to do likewise to the motion picture industry.

# posted by

Neil Netanel : 9:54 PM

Your best argument is simply that bband deployment may be too slow, and might not even help much then. That's fine.

I just think you'd be better off letting the copyright point go.

#1 - there are a lot of leaps of logic to get where you go. First, bband has to built out fairly quickly. Second, people then have to use the new capacity to abandon CDs and movies they purchase elsewhere. Third, there is no offsetting revenue like iTunes or video on demand. You get my point.

#2 - I think the scales are off -- i.e., we're talking about tiny numbers versus big numbers. The amount of construction and productivity increases dwarf whatever incidental effect broadband deployment has on employment in these industries.

A lot happens on the Internets other than file sharing. The buggy analogy is actually too broad in that sense. It's more like opposing road construction because some people will drive to Canada to get prescription drugs, and won't buy them from stores at home.

Yes, that may be true. But it pales in comparison to all the other benefits.

But I appreciate the respectful tone -- and it's all a good point. Its just that the last point feels forced

# posted by

publius : 10:30 PM

It may be worthwhile to factor in the media like newspapers making a transition in these times to more online and less newsstand distribution.

I would consider, as well, parents helping children with homework. Many sites have excellent enticements for children to explore literature and history online, but bandwidth occupying graphics are prohibitively slow over the telephone company's barebones 19kbps.

Telcos large and small may benefit from extending broadband, but urban people will benefit, as well. As for the so called universal service area, the Republican FCC years ago fought rural people's rights to information access to a standstill with many rulings, and court actions to assure continued disenfranchisement for areas outside the reach of cable.

An additional beneficiary of an effort to extend broadband will be medium size businesses, as there remain many entrepreneurial outfits engaged in provision of broadband wireless.

I hope implementation is thoughtfully planned. So far, I support the idea of incorporating bandwidth for many excellent reasons.

In our times, local governments are curtailing services, a deficit which broadband can help address.

Further, broadbands' reach's extension will encourage expansion of geographically dispersed workforces, and commensurately reduce pollution from commuting by car to bricks and mortar office employment.

# posted by

JohnLopresti : 10:37 PM

3) The nominal unemployment rate (including the New Deal make work as actual employment) never dropped below the low teens during the Depression....

So "Bart" reluctantly concedes that unemployment went down under FDR. Progress of a sort....

... As soon as FDR cut some of the make work jobs in 1936-37, unemployment returned back to its real rate of around 17%....

As many people (such as Krugman) have pointed out, this is a classic scientific experiment: Take the treatment away, and see if the patient relapses. This is further proof of the efficacy of the treatment.

... Lowering unemployment requires the growth of real ongoing private employment.

Channeling Michael Steele, channelling Michael Steele: "It's not a job! It's just work...."

Cheers,

# posted by

Arne Langsetmo : 2:31 AM

Arne Langsetmo said...

... As soon as FDR cut some of the make work jobs in 1936-37, unemployment returned back to its real rate of around 17%....

As many people (such as Krugman) have pointed out, this is a classic scientific experiment: Take the treatment away, and see if the patient relapses. This is further proof of the efficacy of the treatment.

Ah, but what is the treatment supposed to accomplish?

Let us say that a doctor prescribes a regimen of pain killers to a cancer patient. If the patient is pain free when taking the pain killers, but suffers pain from the cancer when denied the pain killers, one can safely assume that the pain killers are effective in controlling the pain caused by the cancer, but not in curing the cancer itself.

The analogy holds for make work jobs or welfare. Make work jobs and welfare are efficacious in ameliorating the pain of financial loss from being unemployed, but does not provide useful ongoing jobs to get the recipients employed again.

# posted by

Bart DePalma : 8:48 AM

Little Lisa's bro continues to demonstrate that he is "shovel ready" like the stable worker whose job description is "pilot" - "pile it here, pile it there."

# posted by

Shag from Brookline : 9:03 AM

Make work jobs and welfare are efficacious in ameliorating the pain of financial loss from being unemployed, but does not provide useful ongoing jobs to get the recipients employed again.

*Stimulate demand by providing employment, albeit temporary
*Build and maintain national infrastructure
*Invest in our ability to create wealth
*A temporary job which produces lasting economic returns

Compare all that with "the bleatings of an ignorant ideologue" and what do you get? No comparison.

# posted by

mattski : 9:46 AM

mattski said...

BD: Make work jobs and welfare are efficacious in ameliorating the pain of financial loss from being unemployed, but does not provide useful ongoing jobs to get the recipients employed again.

*Stimulate demand by providing employment, albeit temporary
*Build and maintain national infrastructure
*Invest in our ability to create wealth
*A temporary job which produces lasting economic returns

Employment is an element of the production of goods and services and falls on the supply side of the equation.

Employment is created when capital is invested in creating or expanding a business that employs workers. Fiscal stimulus diverts capital from being invested in business and creating employment to expanding government. We are dealing with the same pot of money, so there is no added stimulus by moving that money to the government.

Instead, the question is whether this capital is better spent creating ongoing businesses and employment to provide consumers with goods they need OR creating temporary make work positions to provide infrastructure or welfare paying people for doing nothing.

With private business, the employment is ongoing and efficiently produces goods and services needed by the consumer as demonstrated by the consumers willingness to pay for them in a competitive market.

With government make work, the employment is temporary and produces goods desired by politicians that may or may not provide a benefit some time in the future to the consumer. For example, building additional schools when the student population is shrinking is a complete waste, while building broadband capacity in rural areas might provide a benefit to the rural consumer some time in the mid to long term future, but nothing in time to pull the country out of recession.

With government welfare, the recipient is not gainfully employed producing goods and services that benefit anyone. This is charity, not economic growth.

Government needs to divert a relatively modest level of investment capital to build and maintain necessary infrastructure that the private economy simply will not produce. However, this is a long term investment that acts as a multiplier of and not a replacement for the private economy. It is not a short term stimulus.

# posted by

Bart DePalma : 11:13 AM

Employment is created when capital is invested

If that is true, it should be easy for you to prove it. Take all your money and invest it in a restaurant that sells nothing but shit sandwiches. Invest every last penny. Get others who believe that employment is created when capital is invested to invest all their money in your restaurant. At that point you should have the finest shit sandwich restaurant in the country. In 6 months you should report back how many people are still employed in your restaurant. If it is more than 1, you win.

# posted by

Bartbuster : 11:38 AM

["Bart"]: ... As soon as FDR cut some of the make work jobs in 1936-37, unemployment returned back to its real rate of around 17%....

[Arne]: As many people (such as Krugman) have pointed out, this is a classic scientific experiment: Take the treatment away, and see if the patient relapses. This is further proof of the efficacy of the treatment.

["Bart"]: Ah, but what is the treatment supposed to accomplish?

Not to belabour the obvious, but: Get people back to work.

Contrary to the adherents of the "wise hand of the market", not all market forces are stabilising; pushing things back to a "happy (and 'efficient') equilibrium". In a depression, positive feebback sets in and things spriral out of control: Less work->less pay->less purchasing->less work, etc. There are times where it is wise to step in and nudge things back; to counteract the positive feedback with some outside stimulus to break out of the spiral.

["Bart"]: Let us say that a doctor prescribes a regimen of pain killers to a cancer patient. If the patient is pain free when taking the pain killers, but suffers pain from the cancer when denied the pain killers, one can safely assume that the pain killers are effective in controlling the pain caused by the cancer, but not in curing the cancer itself.

Let's say there's a patient in an infection, and you prescribe antibiotics to stop the bacterial infection. The patient starts to recover. So you stop the antibiotic (ever notice how they tell you to fising the whole bottle?), and all of a sudden, a raging sepsis sets in. Surely the sepsis wasn't a result of taking the antibiotic.

The analogy holds for make work jobs or welfare. Make work jobs and welfare are efficacious in ameliorating the pain of financial loss from being unemployed, but does not provide useful ongoing jobs to get the recipients employed again.

Stuff and nonsense. The jobs that are being lost today are being lost because of lack of demand (FWIW, even in industries that are not so directy affected, such as biotech, where my wife and sister work, are cutting back in preparation for a grimmer economy). If you get the economy back on an even keel again, those jobs (or many of them, and perhaps some new ones too) will reappear. This really is a treatment, not a palliative.

"Channeling Michael Steele, channeling Michael Steele!" No thanks, I'll take Krugman. And a host of others that don't have their ideological heads up their....

Cheers,

# posted by

Arne Langsetmo : 12:20 PM

"Channeling Adam Smith! Channeling Adam Smith!"

With private business, the employment is ongoing and efficiently produces goods and services needed by the consumer as demonstrated by the consumers willingness to pay for them in a competitive market.

Yes, current events have shown the utmost rationality and efficiency of the unfettered free market, highlighted by daily swings of 5-10% of the existing equity based on the infinite wisdom of computer programs. And deviations from this perfection are due to the interference of gummint, restraining the all-knowing wisdom on the "invisible hand of the market"....

Feh. It's time we load up with silver bullets and wooden stakes (just to be sure), and put this ghoul of the Invisible Hand in its grave, for keeps.

Cheers,

# posted by

Arne Langsetmo : 12:29 PM

Here are some "news items" for our friend Bart:

*If the free market were without flaws there would be no recessions and no depressions.

We are dealing with the same pot of money, so there is no added stimulus by moving that money to the government.

*During a severe recession capital investment is severely reduced because private actors choose not to invest. We call this a "loss of confidence" in the market.

the question is whether this capital is better spent creating ongoing businesses and employment to provide consumers with goods they need OR creating temporary make work positions...

*When private capital chooses not to invest then government can step into the breach and prop up demand by providing employment AND critically needed infrastructure.

*Absent public spending, the fall off in demand during a severe recession can become a self-reinforcing downward spiral. Persons of moderate intelligence are capable of grasping this sort of economic analysis.

With government make work, the employment is temporary

Isn't it remarkable that all private sector jobs are permanent! Oh wait...

# posted by

mattski : 12:32 PM

mattski said...

*If the free market were without flaws there would be no recessions and no depressions.

Nothing man does is without flaws. The question is which system offers the greatest return in goods and services. history has shown free markets have proven to be the best system yet devised.

BAD: We are dealing with the same pot of money, so there is no added stimulus by moving that money to the government.

*During a severe recession capital investment is severely reduced because private actors choose not to invest. We call this a "loss of confidence" in the market.

Such panics are historically temporary and self correcting.

The government can only do two things to restore confidence in the markets - (1) Reassure investors that it is safe to invest and avoid stoking the panic with negligent talk about a garden variety recession being the equivalent of the Great Depression, and (2) reduce the costs of doing business imposed by the government so investors are assured a larger return on investment and are more willing to invest again.

Reagan followed this advice in full and in a year and a half the economy pulled out of a far worse recession than our current dip to start a 7 year boom.

FDR talked up the economy, but increased the cost of doing business and we endured another 7 or so years of deep Depression.

Obama is talking down the economy to the point where the markets tank every time he gets on national television. He has not had time to implement policies which will increase or lessen the costs of doing business. If he chooses the FDR path, get ready for a long and deep downturn. If he chooses the Reagan path, the economy is cranking again in 2010.

This investor jumped back into the market hoping that Obama would follow the latter path. However, I have largely pulled out again with everyone else because Obama appears to be dead set to repeat the mistakes of the New Deal.

# posted by

Bart DePalma : 1:21 PM

"Make work" can include much of what is done in the legal profession. "Make work" can result in many billable hours. Subprime mortgage lending involved a lot of "make work." Successful firms expand with "make work" and then undo it when, as they say in the Middle East, the fit hit the sham. "Make work" contributes to the "creative destructionism of capitalism."

# posted by

Shag from Brookline : 1:28 PM

Arne Langsetmo said...

["Bart"]: Let us say that a doctor prescribes a regimen of pain killers to a cancer patient. If the patient is pain free when taking the pain killers, but suffers pain from the cancer when denied the pain killers, one can safely assume that the pain killers are effective in controlling the pain caused by the cancer, but not in curing the cancer itself.

Let's say there's a patient in an infection, and you prescribe antibiotics to stop the bacterial infection. The patient starts to recover. So you stop the antibiotic (ever notice how they tell you to fising the whole bottle?), and all of a sudden, a raging sepsis sets in. Surely the sepsis wasn't a result of taking the antibiotic.

Now you are offering the medical analogy to efforts to reduce government imposed costs of doing business to encourage investors to move their money back into business and the jobs they create. See Reagan's recovery from a far worse recession than we are in now. In contrast, the New Deal shows that make work government jobs do not encourage the creation of ongoing private jobs. Thus, my pain killer masking the illness analogy is more apt than your antibiotics attacking the illness analogy.

The jobs that are being lost today are being lost because of lack of demand (FWIW, even in industries that are not so directy affected, such as biotech, where my wife and sister work, are cutting back in preparation for a grimmer economy). If you get the economy back on an even keel again, those jobs (or many of them, and perhaps some new ones too) will reappear. This really is a treatment, not a palliative.

You contradict yourself. The reduction in jobs cannot be a reaction to a drop in demand when you admit that companies are proactively cutting jobs based upon an anticipation of a worsening economy.

Likewise, business cannot anticipate a growing economy based upon an expansion of government that does not affect the vast majority of the economy apart from diverting desperately needed investment capital from the credit markets. The markets gave their opinion of the Obama borrow and spend bill and Geithner bank plan outline by tanking across the world. I have pulled out of all my stocks except for the incredibly resliant Apple.

As I discussed in my response to mattski, the only thing government can do to address a confidence problem is to talk up the economy ala Reagan and FDR and tangibly reduce what government does to depress economic growth.

# posted by

Bart DePalma : 1:42 PM

The reason I use the term Democrat Party rather than Democratic Party is because this organization wants nothing to do with the public scrutiny and debate of genuine democracy.

The "stimulus bill" was completely reworked by a small group of Dem leadership without consulting their caucus or the GOP and has now doubled in size to 1434 pages.

The Dem leadership just released this monstrosity an hour ago and expects their troops to simply vote for it this afternoon without reading or debating it.

If you think you can read the entire 1434 page bill and call your Representative with your take before the vote, you can find the current iteration of the bill here.

However, the Dem leadership is reportedly still adding more to the bill so what you are reading will very likely change.

I will not hold my breath for the avalanche of criticism from you Dems who criticized as un-democratic Bush legislation that was dissected, debated and amended for months before being enacted.

# posted by

Bart DePalma : 2:08 PM

Bart:

Pelosi has the nerve to claim Republicans don't need to read the conference bill because they all voted against it the first time and will probably all vote against it again.

The leaders are NOT part of the DemocratIC Party I've respected.

# posted by

Charles : 2:39 PM

This comment has been removed by the author.

# posted by

Arne Langsetmo : 2:39 PM

Cheers, Arne (drinking too early in the day again?).

# posted by

Charles : 2:41 PM

"Bart":

[Arne]: The jobs that are being lost today are being lost because of lack of demand (FWIW, even in industries that are not so directy affected, such as biotech, where my wife and sister work, are cutting back in preparation for a grimmer economy). If you get the economy back on an even keel again, those jobs (or many of them, and perhaps some new ones too) will reappear. This really is a treatment, not a palliative.

You contradict yourself. The reduction in jobs cannot be a reaction to a drop in demand when you admit that companies are proactively cutting jobs based upon an anticipation of a worsening economy.

It's part of the "spill-over"; an amplification of market trends that tends to be disruptive, and one of the reasons that it's necessary sometimes to step in and put curbs on market fluctuations and break the positive-feedbak loop.

Really. This isn't rocket science.

Cheers,

# posted by

Arne Langsetmo : 2:46 PM

Even a broken watch is correct twice a day. How "Bart" manages perfection is beyond me. Must be an "Invisible Hand" at work... ;-)

Such panics are historically temporary and self correcting.

Tell that to the folks (around the world, even) in the '30s.

The government can only do two things to restore confidence in the markets - (1) Reassure investors that it is safe to invest and avoid stoking the panic with negligent talk about a garden variety recession being the equivalent of the Great Depression, and (2) reduce the costs of doing business imposed by the government so investors are assured a larger return on investment and are more willing to invest again.

[link added by me]

... which goes a long way to explain why "Bart" was so fond of our first Cheerleader preznit (who, coincidentally, presided over this slide down into the current pit).

While FDR did play the role of bucking up people's spirits (e.g., the Fireside Chats), his major contributions came in using the gummint to put people back to work. Of course, "Bart" and the other RW "free market" ideologues will dispute this ... well, some even went so far as to insist that FDR caused the Great Depression. Ideologues....

Cheers,

# posted by

Arne Langsetmo : 2:50 PM

Back to the "Stimulus" Bill: do you think that Obama will break his campaign promise of not signing legislation for FIVE DAYS in order to give the American People time to review and comment?

# posted by

Charles : 2:51 PM

Arne:

Thanks for cleaning up that post (you were well over the legal limit, clearly impaired and BWI, Blogging While Intoxicated).

# posted by

Charles : 2:55 PM

The reason I use the term Democrat Party rather than Democratic Party is because this organization wants nothing to do with the public scrutiny and debate of genuine democracy.

No. The Rethulicans and their coterie do it because they intend disrespect of their opponents. This is part and parcel of the Gingrich-era "word list" of appropriate language to daemonise and belittle the opponents (which, come to think of it, is what "Bart" is stating above). Either that, or a majority of the Rethuglican talking heads are simply functional illiterates and all came up with this misreading independently on their very own.

Cheers,

P.S.: To those that say that "Rethuglican" is the very same, I'll gladly agree. ;-)

# posted by

Arne Langsetmo : 2:58 PM

I came up with "BWI" on my very own (after seeing you type "Cheers" repeatedly within the same post).

# posted by

Charles : 3:10 PM

A Midwinter Night's Dream

The Dem Politboro is scheduled to publish the spending bill to stimulate the Proletariat sometime late tonight, start "debate" on the bill no one has been allowed to read at 9:00 am tomorrow morning and vote on it in the afternoon.

The Dem Politboro has made it known to the Dem Supreme Soviet that they are to vote yes on the bill they were not permitted to read and trust that the Party leadership has the best interests of the Proletariat at heart.

The Dem Bolsheviks have notified the GOP Mencheviks that their participation in the Supreme Soviet is not required.

Indeed, one has to wonder how much longer Mencheviks will be tolerated at all. Former Premier Clinton has joined Komrades Stabenow and Eshoo from the Supreme Soviet in calling for the liquidation of Menchevik talk radio to achieve fairness by silencing Trotskyites Limbaugh and Hannity.

The only Menchavik on the Politboro, Komrade Gregg, was purged today for declining to be a team player and support Premier Obama's agenda of stimulus hope and census change.

# posted by

Bart DePalma : 11:39 PM

Baghdad, your bitterness over getting your ass kicked in the last election is duly noted.

# posted by

Bartbuster : 12:02 AM

One has to wonder why anyone should bother listening to the Menche... -- uhhh, sorry, wrong cadre, the "Taliban", as they prefer to be termed -- at all, given their behaviour....

Cheers,

# posted by

Arne Langsetmo : 2:13 AM

For the record, "insurgency" does not necessarily imply actual violence. A principled, loyal opposition is a GOOD thing even in a Constitutional Republic.

# posted by

Charles : 5:06 AM

Colbert had a great piece on Sessions too.

# posted by

Charles : 5:10 AM

imo ..it's ironic those who make the observations and complaints concerning the "fearmongering on the economy" as being undesirable..then proceed in hyperbolic language with their own fearmongering about impending "socialism" surely bringing about the death of the nation ..and a complete staunching of liberty and freedom ..

blithely unaware they are using the same tactic to which they are objecting ...

priceless .. no ??

# posted by

Jkat : 7:42 AM

jkat:

Pravda, er... Newsweek assured us on this week's cover that "We Are All Socialists Now."

# posted by

Bart DePalma : 8:51 AM

Pravda, er... Newsweek assured us on this week's cover that "We Are All Socialists Now."

# posted by Bart DePalma : 8:51 AM

At least we're not all neo-cons any more.

# posted by

Bartbuster : 9:26 AM

Actually, according to Professor Tamanaha's post above, Obama is offering us "compassionate neo-conservatism."

# posted by

Bart DePalma : 10:43 AM

One day Obama is a communist, the next day he's a conservative. Baghdad, you have to stop flip flopping.

# posted by

Bartbuster : 10:52 AM

If I proposed building with taxpayer money (and on public rights of way, and to key destinations) privately owned roads on that would then prefer certain cars and fleets, would anyone think that was a good idea?

Sure, broadband belongs in the stimulus package. As long as it does it the same way the interstate highway system got built: taxpayer money buys a network that the public then owns and that everyone has equal access to.

So the question is, tell me again which of those two ways this is gonna work?

# posted by

jpk : 1:42 PM

Neil Netanel wrote: Mark: you make a good point about the conflicting studies on whether file trading harms the record industry. I suppose that, on balance, I conclude from all the studies that I've read that, while file trading is only a partial cause of the record industry's ills, it does greatly impair industry revenues and has already begun to do likewise to the motion picture industry.

I would be more than skeptical of studies showing harm resulting from filesharing as a basis to advocate legislative direction - their merit is questionable at best, and other studies show the opposite.

The entertainment industry has be claiming that the sky was falling ever since recording technology hit mainstream - which has never happened. What the industry will fail is is adapting, not lobbying. If history is any indicator, predictions of doom from filesharing are more than dubious.

Holding back from broadband investment because of an unfounded fear that record and movie industry would experience losses (like the horrific tailspin they experienced when home VCRs became popular) would be a little like having held back on earlier investment in roads because it would have deprived rail.

# posted by

John : 2:39 PM

Despite spin from the Dem media of GOP defections, the entire House GOP again voted against the Porkulus Bill, joined by the same 7 Dems and one additional Dem who voted present, undoubtably a commentary on Obama's lack of involvement in shaping the bill.

You Dems own this - lock, stock and $2 Trillion dollar deficit.

# posted by

Bart DePalma : 3:42 PM

Guess I'll have to admit to ownership of $2 trillion of national debt then.

Good thing I'm not identified with the Repub party; then I'd have to likewise cop to $5 trillion.

Where does this myth of Repub fiscal responsibility come from?

# posted by

jpk : 7:11 PM

Sen. Sherrod Brown (D-OH) will be flown back to Washington tonight on a plane provided by the White House, Brown's office said, because the vote is "official business" and there are no commercial flights available that would allow him cast his vote and then return to Ohio for his mother's funeral Saturday morning. He will fly back to Ohio immediately after he votes.

Obama is traveling to Denver and Phoenix AFTER the bill is passed. More wasteful spending of taxpayer monies.

# posted by

Charles : 7:19 PM

Back on topic, does anyone (including the Congressmen who voted for it) know whether the final conference report includes $6 billion, $7 billion, or the original $9 billion for broadband?

# posted by

Charles : 7:25 PM

jpk said...

Where does this myth of Repub fiscal responsibility come from?

Reagan and Gingrich, not the Bushes.

# posted by

Bart DePalma : 11:48 PM

jpK:

Guess I'll have to admit to ownership of $2 trillion of national debt then. Good thing I'm not identified with the Repub party; then I'd have to likewise cop to $5 trillion.

Let's see...

Bush: $5 trillion over 8 years or about $625 billion per year. That did establish the baseline for fiscal insanity before hope and change.

Obama: $1.2 Trillion (CBO before spending binge) + $500 Billion (Porkulus this year) + $350 Billion (Bank bailouts) + $6 Billion (S-CHIP this year) = $2.256 Trillion in one year appropriated in the first month with 11 more months to spend even more.

As a percentage of GDP, this is exponentially the largest borrowing and spending spree in peacetime history (far more than the New Deal), with only financing WWII (the largest war in history) getting close.

We have gone far beyond the spending insanity of the Bush years into complete fiscal pathology - and the inmates actually think this thing is too small and are calling for national health care and Porkulus II.

Forget FDR. The model here is Peronist Argentina in the 1950s.

This spree can only be paid off with crippling taxes and/or inflating the currency. Remember stagflation in the 70s and early 80s or are you too young?

# posted by

Bart DePalma : 1:24 PM

Baghdad, given the lack of concern you had for the cost of the Iraq disaster, it's tough to take you seriously now.

# posted by

Bartbuster : 2:50 PM

Iraq cost $100 billion per year. Obama is spending that in two weeks.

# posted by

Bart DePalma : 3:08 PM

The legislation raises the question: “Does the contemplated investment in broadband truly serve the needs of an immediate and short term economic stimulus?

Barrack Obama is not even asking this question. Instead, Obama claimed: “You get the argument, well, this is not a stimulus bill; this is a spending bill. What do you think a stimulus is? That’s the whole point.”

In sum, Obama is claiming that all government spending causes economic growth.

This fanciful socialist theory was reflected in the assumptions in Team Obama's January white paper entitled The Job Impact of the American Recovery and Reinvestment Plan that every 1% of GDP spent by the government would return 1.5% of GDP or provide 50% economic growth, while allowing you and I to spend 1% of the GDP we create would only return 0.99% GDP.

Of course, these socialist assumptions are laughable on their face. If we take these assumptions to their logical conclusion, the USSR by controlling their entire economy would have enjoyed 50% GDP growth per year and would have quickly outstripped the US system that allows the citizenry to keep most of the wealth they create. In reality, the USSR's economy collapsed at a small fraction of ours.

What makes these socialist assumptions even more dishonest is that paper co-author Christine Romer had written a previous study entitled What Ends Recessions, where she found that for every 1% of GDP returned in tax cuts, the economy grew 3%, while fiscal stimulus (government spending) had no track record of success. In short, Romer dumped her academic findings to adopt the foundationless socialist claims of The One.

# posted by

Bart DePalma : 11:11 AM

"Bart"'s comments on Romer are unsupported. I commented over there (at the risk of driving up traffic to his execrable blog).

This comment, of course, is patent nonsense:

Of course, these socialist assumptions are laughable on their face. If we take these assumptions to their logical conclusion, the USSR by controlling their entire economy would have enjoyed 50% GDP growth per year and would have quickly outstripped the US system...

A "straw man" and "red herring" of the first magnitude.

Don't forget to check under your bed for commies tonight, "Bart".

Cheers,

# posted by

Arne Langsetmo : 1:03 PM

On the day President Obama plans to sign the largest borrow and spend bill in human history, investors are fleeing the markets into gold out of fear of inflation.

Their appears to be very little hope in this change.

# posted by

Bart DePalma : 1:06 PM

Baghdad, no one said that cleaning up the mess you clowns created would be easy.

# posted by

Bartbuster : 8:09 PM

# posted by

Unknown : 1:16 PM