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A way to boost the economy w/ little spending

blackhawk1331
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2/12/2011 1:10:53 PM
Posted: 5 years ago
The government has invested tons of money in eradicating different invasive species. They've also invested tons of money in fixing the economy. Why don't they combine the two? Not all species that are invasive need to go. Species such as pheasant are relatively harmless. Species like the Boa Constrictors, on the other hand, do need to go. So here's a solution. Put a bounty on the head of each invasive species. It doesn't have to be large, just two or four dollars. Then, people can go hunting for Boa's, and get paid well to do it. They can also fish for Snake Head fish, and Asian Carp. Another example would be Zebra mussels. They, however, are so prominent and tiny, they would be paid on per bushel. That still wouldn't be hard to make a good living off of. I don't know how much money goes into elimination of these species, or into the economy yearly, so I will use $1million for each. Some of these species are so highly populated that numbers aren't available. That made me realize that the initial cost of paying people for this would be well over $2 million dollars. In the long run, though, the invasive creatures will disappear, people will have money, and the native species will be safer. At that point, the $2 million a year can be saved and put towards lowering the deficit.

Opinions please.
Because you said it was a waste, numb nuts. - Drafter

So fvck you. :) - TV

Use prima facie correctly or not at all. - Noumena
askbob
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2/12/2011 1:13:55 PM
Posted: 5 years ago
sources backing up what you're saying?
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SuperRobotWars
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2/12/2011 1:28:22 PM
Posted: 5 years ago
I am quite certain they spend that money on eradicating destructive foreign species
http://scholar.google.com...
http://www.brighthub.com...
http://www.issg.org...
and I am also quite certain that gets handled on the local level.
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TheAtheistAllegiance
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2/12/2011 2:59:26 PM
Posted: 5 years ago
There's fraud and abuse within welfare, Medicare, and other social programs. The federal government can hire people to maintain stricter oversight so that less people can milk the system. The money saved by catching and preventing fraud might completely pay for the jobs, which would act as a dual purpose program: Job creation and deficit reduction.

Other proposals might include long-term payoffs, such as infrastructure investment. It's estimated that in between 17 and 34 thousand jobs are created with every billion dollars placed into infrastructure development; discounting diminishing marginal utility, and assuming that 25 thousand jobs are created for every billion spent, it would only require $400 billion -- half of the stimulus -- to indirectly employ ten million people over the span of maybe a decade or so. However, the impact is much tougher to measure in this case, but if these numbers are at least somewhat accurate, it can be said that infrastructure investment is a relatively cheap way to boost the economy without spending that much money.
juvanya
Posts: 613
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2/12/2011 6:28:01 PM
Posted: 5 years ago
At 2/12/2011 1:10:53 PM, blackhawk1331 wrote:
The government has invested tons of money in eradicating different invasive species. They've also invested tons of money in fixing the economy. Why don't they combine the two? Not all species that are invasive need to go. Species such as pheasant are relatively harmless. Species like the Boa Constrictors, on the other hand, do need to go. So here's a solution. Put a bounty on the head of each invasive species. It doesn't have to be large, just two or four dollars. Then, people can go hunting for Boa's, and get paid well to do it. They can also fish for Snake Head fish, and Asian Carp. Another example would be Zebra mussels. They, however, are so prominent and tiny, they would be paid on per bushel. That still wouldn't be hard to make a good living off of. I don't know how much money goes into elimination of these species, or into the economy yearly, so I will use $1million for each. Some of these species are so highly populated that numbers aren't available. That made me realize that the initial cost of paying people for this would be well over $2 million dollars. In the long run, though, the invasive creatures will disappear, people will have money, and the native species will be safer. At that point, the $2 million a year can be saved and put towards lowering the deficit.

Opinions please.

You cant eliminate a species with $1 million.
blackhawk1331
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2/12/2011 6:31:50 PM
Posted: 5 years ago
At 2/12/2011 6:28:01 PM, juvanya wrote:
At 2/12/2011 1:10:53 PM, blackhawk1331 wrote:
The government has invested tons of money in eradicating different invasive species. They've also invested tons of money in fixing the economy. Why don't they combine the two? Not all species that are invasive need to go. Species such as pheasant are relatively harmless. Species like the Boa Constrictors, on the other hand, do need to go. So here's a solution. Put a bounty on the head of each invasive species. It doesn't have to be large, just two or four dollars. Then, people can go hunting for Boa's, and get paid well to do it. They can also fish for Snake Head fish, and Asian Carp. Another example would be Zebra mussels. They, however, are so prominent and tiny, they would be paid on per bushel. That still wouldn't be hard to make a good living off of. I don't know how much money goes into elimination of these species, or into the economy yearly, so I will use $1million for each. Some of these species are so highly populated that numbers aren't available. That made me realize that the initial cost of paying people for this would be well over $2 million dollars. In the long run, though, the invasive creatures will disappear, people will have money, and the native species will be safer. At that point, the $2 million a year can be saved and put towards lowering the deficit.

Opinions please.

You cant eliminate a species with $1 million.

First of all, that's a number I made up. As, I said, I don't know the actual number. Second, it was representing yearly spending. Third, no sh!t you can't eliminate a species with that. That's why they're still here.
Because you said it was a waste, numb nuts. - Drafter

So fvck you. :) - TV

Use prima facie correctly or not at all. - Noumena
blackhawk1331
Posts: 4,932
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2/12/2011 6:47:24 PM
Posted: 5 years ago
At 2/12/2011 1:13:55 PM, askbob wrote:
sources backing up what you're saying?

Are you serious? Whatever, Im just gonna give the google search results page. There are too many options to choose.

Zebra Mussel:
http://www.google.com...

Asian Carp:
http://www.google.com...

Boa Constrictor:
http://www.google.com...

Snakeheads:
http://www.google.com...

There is also a chance that piranhas and Bull Sharks, are moving in. I only heard of each one once, and I'm not sure, but I can look if you really want me to.
Because you said it was a waste, numb nuts. - Drafter

So fvck you. :) - TV

Use prima facie correctly or not at all. - Noumena
juvanya
Posts: 613
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2/12/2011 7:37:49 PM
Posted: 5 years ago
At 2/12/2011 6:31:50 PM, blackhawk1331 wrote:
At 2/12/2011 6:28:01 PM, juvanya wrote:
At 2/12/2011 1:10:53 PM, blackhawk1331 wrote:
The government has invested tons of money in eradicating different invasive species. They've also invested tons of money in fixing the economy. Why don't they combine the two? Not all species that are invasive need to go. Species such as pheasant are relatively harmless. Species like the Boa Constrictors, on the other hand, do need to go. So here's a solution. Put a bounty on the head of each invasive species. It doesn't have to be large, just two or four dollars. Then, people can go hunting for Boa's, and get paid well to do it. They can also fish for Snake Head fish, and Asian Carp. Another example would be Zebra mussels. They, however, are so prominent and tiny, they would be paid on per bushel. That still wouldn't be hard to make a good living off of. I don't know how much money goes into elimination of these species, or into the economy yearly, so I will use $1million for each. Some of these species are so highly populated that numbers aren't available. That made me realize that the initial cost of paying people for this would be well over $2 million dollars. In the long run, though, the invasive creatures will disappear, people will have money, and the native species will be safer. At that point, the $2 million a year can be saved and put towards lowering the deficit.

Opinions please.

You cant eliminate a species with $1 million.

First of all, that's a number I made up. As, I said, I don't know the actual number. Second, it was representing yearly spending. Third, no sh!t you can't eliminate a species with that. That's why they're still here.

It would take billions of money stolen from people. The economic boost is a complete and utter fallacy.
TheAtheistAllegiance
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2/12/2011 7:46:39 PM
Posted: 5 years ago
At 2/12/2011 7:37:49 PM, juvanya wrote:

It would take billions of money stolen from people. The economic boost is a complete and utter fallacy.

No it's not -- if the economy is in recession, then people typically aren't investing nor spending their money, and the banks are unwilling to lend. Either deficit spending or redistribution of that money into employment initiatives will essentially place money into poor people's hands, who will then spend the money, thus spurring production and investment. This is otherwise known as an economic boost.
Sieben
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2/12/2011 7:52:13 PM
Posted: 5 years ago
At 2/12/2011 7:46:39 PM, TheAtheistAllegiance wrote:
At 2/12/2011 7:37:49 PM, juvanya wrote:

It would take billions of money stolen from people. The economic boost is a complete and utter fallacy.

No it's not -- if the economy is in recession, then people typically aren't investing nor spending their money, and the banks are unwilling to lend. Either deficit spending or redistribution of that money into employment initiatives will essentially place money into poor people's hands, who will then spend the money, thus spurring production and investment. This is otherwise known as an economic boost.

The implicit assumption is that there's all these idle resources sitting around right? Because there's no point in just lending infinity dollars if its not going to get capital moving.

So instead of asking why there are idle resources, TAA just wants to move them. He doesn't ask why they are idle. It is because there are no positive NPV projects for them to be involved with.

At that point, it makes sense to ask why there is no opportunity cost to sitting on resources.

Especially we should conclude that forcing capital into unprofitable arrangements can only cause economic destruction.
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blackhawk1331
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2/13/2011 11:42:02 AM
Posted: 5 years ago
At 2/12/2011 7:52:13 PM, Sieben wrote:
The implicit assumption is that there's all these idle resources sitting around right? Because there's no point in just lending infinity dollars if its not going to get capital moving.

I don't think the government cares about spending fake money considering we're in debt over $4.5 trillion.
Because you said it was a waste, numb nuts. - Drafter

So fvck you. :) - TV

Use prima facie correctly or not at all. - Noumena
PARADIGM_L0ST
Posts: 6,958
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2/13/2011 12:06:45 PM
Posted: 5 years ago
At 2/12/2011 1:10:53 PM, blackhawk1331 wrote:
The government has invested tons of money in eradicating different invasive species. They've also invested tons of money in fixing the economy. Why don't they combine the two? Not all species that are invasive need to go. Species such as pheasant are relatively harmless. Species like the Boa Constrictors, on the other hand, do need to go. So here's a solution. Put a bounty on the head of each invasive species. It doesn't have to be large, just two or four dollars. Then, people can go hunting for Boa's, and get paid well to do it. They can also fish for Snake Head fish, and Asian Carp. Another example would be Zebra mussels. They, however, are so prominent and tiny, they would be paid on per bushel. That still wouldn't be hard to make a good living off of. I don't know how much money goes into elimination of these species, or into the economy yearly, so I will use $1million for each. Some of these species are so highly populated that numbers aren't available. That made me realize that the initial cost of paying people for this would be well over $2 million dollars. In the long run, though, the invasive creatures will disappear, people will have money, and the native species will be safer. At that point, the $2 million a year can be saved and put towards lowering the deficit.

Opinions please.:

Because you're potentially creating racketeering. This would incentivize people to have Asian carp farms and a boa constrictor ring. You turn it over to the government for large sums of money, when really you caught it in the pond in your backyard.

Secondly, I don;t think you quite understand how difficult this is to do. Constrictors really are only invading Florida, particularly the Everglades. They're doing quite well there which is terrible for the native habitat. Have you ever been to the Everglades? You can't just walk around all day herding snakes like cattle. We're talking huge swathes of inhospitable marsh. Good luck finding all of them -- not gonna happen.

With Asian Carp it's even worse. You can't just sit there and fish them out of existence. They populate far more quickly than you could fish them. Consider where they are invading -- the Great Lakes and their tributaries. What has to be done is a kind of corralling. Net off certain areas, eradicate the species in that area, and do the same thing. It's a painstakingly slow process, but it's the only method even remotely feasible.
"Have you ever considered suicide? If not, please do." -- Mouthwash (to Inferno)
TheAtheistAllegiance
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2/13/2011 1:09:34 PM
Posted: 5 years ago
At 2/12/2011 7:52:13 PM, Sieben wrote:

The implicit assumption is that there's all these idle resources sitting around right? Because there's no point in just lending infinity dollars if its not going to get capital moving.

So instead of asking why there are idle resources, TAA just wants to move them. He doesn't ask why they are idle. It is because there are no positive NPV projects for them to be involved with.

At that point, it makes sense to ask why there is no opportunity cost to sitting on resources.

Especially we should conclude that forcing capital into unprofitable arrangements can only cause economic destruction.

In this recession, the reason nothing is profitable is because confidence and sales are weak. Redistribute money into the lower tax brackets -- empower demand -- and production/investment will follow suit.
Sieben
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2/13/2011 2:44:56 PM
Posted: 5 years ago
At 2/13/2011 1:09:34 PM, TheAtheistAllegiance wrote:

In this recession, the reason nothing is profitable
There are plenty of profitable projects. Just not in America. Why?

is because confidence and sales are weak.
Symptom of horribad financial infrastructure. Your remedy is even worse because we already KNOW that moving capital is unprofitable, but you want to do it anyway.

Redistribute money into the lower tax brackets -- empower demand -- and production/investment will follow suit.
Because the people who have money now... aren't using it? What? Its just sitting in bank accounts?
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TheAtheistAllegiance
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2/13/2011 3:07:52 PM
Posted: 5 years ago
At 2/13/2011 2:44:56 PM, Sieben wrote:

There are plenty of profitable projects. Just not in America. Why?

I didn't mean that literally.

Symptom of horribad financial infrastructure. Your remedy is even worse because we already KNOW that moving capital is unprofitable, but you want to do it anyway.

Moving capital is unprofitable because there is no demand. Create demand, and you essentially create profitability.

Because the people who have money now... aren't using it? What? Its just sitting in bank accounts?

They aren't spending it; the money might be sitting in bank accounts, commodities, derivatives, whatever. The problem is that not enough of the money is not in the hands of the spending block, which creates the imbalance that results in lackluster growth and unemployment.
Sieben
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2/13/2011 3:53:53 PM
Posted: 5 years ago
At 2/13/2011 3:07:52 PM, TheAtheistAllegiance wrote:

I didn't mean that literally.

So there will always be X amount of profitable projects. How do you know when its "enough"?

Symptom of horribad financial infrastructure. Your remedy is even worse because we already KNOW that moving capital is unprofitable, but you want to do it anyway.

Moving capital is unprofitable because there is no demand. Create demand, and you essentially create profitability.

You mean purchasing power. Demand is infinite.

How do you know what the optimal volume of goods and services is?

They aren't spending it; the money might be sitting in bank accounts, commodities, derivatives, whatever. The problem is that not enough of the money is not in the hands of the spending block, which creates the imbalance that results in lackluster growth and unemployment.

So whats the optimal level of spending? You know what speculation/forecasting is? Its the reason that walmart doesn't try to empty its shelves every night.
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TheAtheistAllegiance
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2/13/2011 6:53:36 PM
Posted: 5 years ago
At 2/13/2011 3:53:53 PM, Sieben wrote:

So there will always be X amount of profitable projects. How do you know when its "enough"?

When investment is fueling a long-term growth rate that's high enough to sustain full employment.

You mean purchasing power. Demand is infinite.

How do you know what the optimal volume of goods and services is?

Full employment and stable prices.

So whats the optimal level of spending? You know what speculation/forecasting is? Its the reason that walmart doesn't try to empty its shelves every night.

Full employment and stable prices.
Sieben
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2/13/2011 6:57:21 PM
Posted: 5 years ago
At 2/13/2011 6:53:36 PM, TheAtheistAllegiance wrote:

When investment is fueling a long-term growth rate that's high enough to sustain full employment.

Digging holes in the ground is employment. But of course you would never support a stimulus to dig holes because its economically destructive.

You mean purchasing power. Demand is infinite.

How do you know what the optimal volume of goods and services is?

Full employment and stable prices.

That isn't a volume of goods or services. That's just a happenstance outcome.

So whats the optimal level of spending? You know what speculation/forecasting is? Its the reason that walmart doesn't try to empty its shelves every night.

Full employment and stable prices.

fapfapfapfapfapfapfapfap

But of course you didn't answer my point about speculation/forecasting. Good job. Be lazier.
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TheAtheistAllegiance
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2/13/2011 10:05:58 PM
Posted: 5 years ago
At 2/13/2011 6:57:21 PM, Sieben wrote:

Digging holes in the ground is employment. But of course you would never support a stimulus to dig holes because its economically destructive.

In other words, it would not sustain long-term employment.

That isn't a volume of goods or services. That's just a happenstance outcome.

That's an outcome that typically generates a large volume of goods and services per capita.

fapfapfapfapfapfapfapfap

But of course you didn't answer my point about speculation/forecasting. Good job. Be lazier.

What does speculation have to do with anything I didn't already address? If a business is forecasting that sales will further fall, then it's because there's a lack of confidence in the market's ability to produce demand.
Sieben
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2/13/2011 10:11:21 PM
Posted: 5 years ago
At 2/13/2011 10:05:58 PM, TheAtheistAllegiance wrote:
At 2/13/2011 6:57:21 PM, Sieben wrote:

Digging holes in the ground is employment. But of course you would never support a stimulus to dig holes because its economically destructive.

In other words, it would not sustain long-term employment.

Yes it would. You can employ people to dig holes indefinitely. You can even have a whole industry invested in hole digging. More powerful shoves, holes to hold the dirt from other holes... its unlimited economic potential!

That isn't a volume of goods or services. That's just a happenstance outcome.

That's an outcome that typically generates a large volume of goods and services per capita.

fapfapfapfapfapfapfapfap

But of course you didn't answer my point about speculation/forecasting. Good job. Be lazier.

What does speculation have to do with anything I didn't already address? If a business is forecasting that sales will further fall, then it's because there's a lack of confidence in the market's ability to produce demand.

Did you not follow the walmart example? There will ALWAYS be idle resources in a healthy economy because tomorrow exists. Walmart does not empty its shelves every day because it forecasts that they can move more goods in future days. Similarly, people who hold on to cash do so because they forecast that they can make better use of the cash in the future. They're doing the most economic thing. What's the problem?
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djsherin
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2/14/2011 3:31:42 AM
Posted: 5 years ago
At 2/12/2011 7:46:39 PM, TheAtheistAllegiance wrote:
At 2/12/2011 7:37:49 PM, juvanya wrote:

It would take billions of money stolen from people. The economic boost is a complete and utter fallacy.

No it's not -- if the economy is in recession, then people typically aren't investing nor spending their money, and the banks are unwilling to lend. Either deficit spending or redistribution of that money into employment initiatives will essentially place money into poor people's hands, who will then spend the money, thus spurring production and investment. This is otherwise known as an economic boost.

Recessions see certain industries contract. These are the industries artificially stimulated during the boom. Their contraction is a necessary realignment process if society is to direct resources to their most highly valued uses. Taking "idle" resources and giving them to one group of people artificially boosts their purchasing power at the expense of another group's purchasing power thus artificially altering the structure of production again and without addressing (and in fact leaving in tact) the first malinvestment that caused the economy to contract in the first place. Resources are only further directed from their most highly valued uses.

(Resources may be idle for a wide variety of reasons... regime uncertainty, existing tax/legal/regulatory structure that makes it unprofitable to make use of those resources, uncertainty of market conditions [which is always present and thus it makes perfect sense that even, when not in a recession, some resources will lie idle], a transitory period of shifting resources from one [less profitable/unprofitable] sector of the economy to another [more profitable] sector, etc.)
TheAtheistAllegiance
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2/14/2011 12:53:46 PM
Posted: 5 years ago
At 2/13/2011 10:11:21 PM, Sieben wrote:

Yes it would. You can employ people to dig holes indefinitely. You can even have a whole industry invested in hole digging. More powerful shoves, holes to hold the dirt from other holes... its unlimited economic potential!

No, because digging holes does not create wealth. Without any resources being injected back into the economy, the state will eventually run out of money.

Did you not follow the walmart example? There will ALWAYS be idle resources in a healthy economy because tomorrow exists. Walmart does not empty its shelves every day because it forecasts that they can move more goods in future days. Similarly, people who hold on to cash do so because they forecast that they can make better use of the cash in the future. They're doing the most economic thing. What's the problem?

The problem arises when there's an imbalance between spending and saving, which results in economic stagnation and unemployment. It's not economically beneficial when demand is so weak that firms end up sitting on too many resources for too long.
TheAtheistAllegiance
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2/14/2011 1:05:53 PM
Posted: 5 years ago
At 2/14/2011 3:31:42 AM, djsherin wrote:

Recessions see certain industries contract. These are the industries artificially stimulated during the boom. Their contraction is a necessary realignment process if society is to direct resources to their most highly valued uses. Taking "idle" resources and giving them to one group of people artificially boosts their purchasing power at the expense of another group's purchasing power thus artificially altering the structure of production again and without addressing (and in fact leaving in tact) the first malinvestment that caused the economy to contract in the first place. Resources are only further directed from their most highly valued uses.

That's only if resources are specifically being redistributed back into the contracting industries, possibly being in the form of bailouts. Even so, it might be preferable to slow a rapid contraction in order to limit the impact of externalities, which you didn't take into account. However, I only recommend stimulating demand in order to make the employment of idle resources profitable, so that the economy can quickly return to a healthy rate of growth and employment. This greatly benefits healthy industries that were only harmed by economic shock-waves, while it does very little to benefit the inflationary industries. So, realignment is minimally affected.

(Resources may be idle for a wide variety of reasons... regime uncertainty, existing tax/legal/regulatory structure that makes it unprofitable to make use of those resources, uncertainty of market conditions [which is always present and thus it makes perfect sense that even, when not in a recession, some resources will lie idle], a transitory period of shifting resources from one [less profitable/unprofitable] sector of the economy to another [more profitable] sector, etc.)

I didn't elaborate on idle resources very much, but I have mentioned in previous posts that I'm looking for a balance between spending and saving that results in full employment. So, I'm not recommending that there be NO idle resources laying around.
Sieben
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2/14/2011 2:32:32 PM
Posted: 5 years ago
At 2/14/2011 12:53:46 PM, TheAtheistAllegiance wrote:

No, because digging holes does not create wealth.
How do you know that :I

Without any resources being injected back into the economy, the state will eventually run out of money.

They can just print more money.

The problem arises when there's an imbalance between spending and saving, which results in economic stagnation and unemployment. It's not economically beneficial when demand is so weak that firms end up sitting on too many resources for too long.

Lol. Another "not enough" argument.

When should I eat food? When you're hungry enough.
When should I invade iraq? When there's enough reason to.
When does supply and demand become "imbalanced"? When they aren't balanced enough.

Try again please.
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djsherin
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2/14/2011 5:54:05 PM
Posted: 5 years ago
At 2/14/2011 1:05:53 PM, TheAtheistAllegiance wrote:
At 2/14/2011 3:31:42 AM, djsherin wrote:

Recessions see certain industries contract. These are the industries artificially stimulated during the boom. Their contraction is a necessary realignment process if society is to direct resources to their most highly valued uses. Taking "idle" resources and giving them to one group of people artificially boosts their purchasing power at the expense of another group's purchasing power thus artificially altering the structure of production again and without addressing (and in fact leaving in tact) the first malinvestment that caused the economy to contract in the first place. Resources are only further directed from their most highly valued uses.

That's only if resources are specifically being redistributed back into the contracting industries, possibly being in the form of bailouts. Even so, it might be preferable to slow a rapid contraction in order to limit the impact of externalities, which you didn't take into account. However, I only recommend stimulating demand in order to make the employment of idle resources profitable, so that the economy can quickly return to a healthy rate of growth and employment. This greatly benefits healthy industries that were only harmed by economic shock-waves, while it does very little to benefit the inflationary industries. So, realignment is minimally affected.

The point about externalities affecting "healthy" industries doesn't change anything. If those industries see their sales hurt because they were in some way connected to the industries that were direct beneficiaries of malinvestment, the "healthy" companies are likewise malinvested to some degree, meaning they aren't as healthy as one might think. When the recession hits, whatever portion of the "healthy" industries' demand is lost due to the contraction of the directly malinvested industries is demand that is only sustainable due to malinvestment. To replace this lost portion of demand would simply be to prop up demand for the "healthy" industries at malinvested levels, which is an inefficient use of resources. Demand needs to contract by however much it was supported by malinvestment so that it can realigned and shift to better uses for society.

In short what I'm saying is that there's no dividing line between the industries that were first the source of malinvestment and the so called externalities of malinvestment. They are all malinvestments or they are all externalities of the central bank's policy. Either way, propping up demand in any of these industries is inefficient and undesirable.

Let's say a Company A is the recipient of loans with artificially low interest rates (through credit expansion, malinvestment). Company A expands itself and by doing so forms a permanent (for the foreseeable future) interaction with a perfectly healthy company, B. And let's say this interaction would not have come about were it not for Company A having received an artificially low interest loan. Though Company B is healthy up to this point, it has formed an interaction with a company that is based on malinvestment. Whatever portion of sales it gets from Company A is a portion that is only sustainable with malinvestment, thus it is undesirable. When the malinvestment in A is exposed and the company company goes bankrupt, it's true that B is hurt, but to continue propping up B's demand would be to waste resources. Likewise, B's pain may cause C to be damaged a bit as well but such is the nature of malinvestment. For the economy to fit what consumers actually want and to maximize total utility to society, all levels of malinvestment need to be cleared to the extent that the market is able to clear them.

Attempts to prop up demand only further the malinvestments in the economy, preventing the necessary restructuring and also creating problems that the market will try to correct at some later point. Intervention feeds on itself. Full employment and restructuring take time, so yes there will be a period of reduced economic activity, but given alternatives, this is a desirable course of action.

(Resources may be idle for a wide variety of reasons... regime uncertainty, existing tax/legal/regulatory structure that makes it unprofitable to make use of those resources, uncertainty of market conditions [which is always present and thus it makes perfect sense that even, when not in a recession, some resources will lie idle], a transitory period of shifting resources from one [less profitable/unprofitable] sector of the economy to another [more profitable] sector, etc.)

I didn't elaborate on idle resources very much, but I have mentioned in previous posts that I'm looking for a balance between spending and saving that results in full employment. So, I'm not recommending that there be NO idle resources laying around.

But what is the balance and how is it supposed to be determined? If conditions in the market are changing, would it not make sense that this balance (assuming it could be determined) should be in flux?
TheAtheistAllegiance
Posts: 1,251
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2/14/2011 7:49:35 PM
Posted: 5 years ago
At 2/14/2011 2:32:32 PM, Sieben wrote:

How do you know that :I

They can just print more money.

Don't turn this into another 8,000 character argument. Anyways, digging holes does not directly produce any good or service. I'm not taking into account the market side-effects that would result from the increase in demand. And by money, I mean resources, but you already know that.

Lol. Another "not enough" argument.

When should I eat food? When you're hungry enough.
When should I invade iraq? When there's enough reason to.
When does supply and demand become "imbalanced"? When they aren't balanced enough.

Try again please.

When you're hungry*
When Iraq attacks the US*
When full employment and stable prices are sustained*
TheAtheistAllegiance
Posts: 1,251
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2/14/2011 8:10:21 PM
Posted: 5 years ago
At 2/14/2011 5:54:05 PM, djsherin wrote:

The point about externalities affecting "healthy" industries doesn't change anything. If those industries see their sales hurt because they were in some way connected to the industries that were direct beneficiaries of malinvestment, the "healthy" companies are likewise malinvested to some degree, meaning they aren't as healthy as one might think. When the recession hits, whatever portion of the "healthy" industries' demand is lost due to the contraction of the directly malinvested industries is demand that is only sustainable due to malinvestment. To replace this lost portion of demand would simply be to prop up demand for the "healthy" industries at malinvested levels, which is an inefficient use of resources. Demand needs to contract by however much it was supported by malinvestment so that it can realigned and shift to better uses for society.

In short what I'm saying is that there's no dividing line between the industries that were first the source of malinvestment and the so called externalities of malinvestment. They are all malinvestments or they are all externalities of the central bank's policy. Either way, propping up demand in any of these industries is inefficient and undesirable.

Let's say a Company A is the recipient of loans with artificially low interest rates (through credit expansion, malinvestment). Company A expands itself and by doing so forms a permanent (for the foreseeable future) interaction with a perfectly healthy company, B. And let's say this interaction would not have come about were it not for Company A having received an artificially low interest loan. Though Company B is healthy up to this point, it has formed an interaction with a company that is based on malinvestment. Whatever portion of sales it gets from Company A is a portion that is only sustainable with malinvestment, thus it is undesirable. When the malinvestment in A is exposed and the company company goes bankrupt, it's true that B is hurt, but to continue propping up B's demand would be to waste resources. Likewise, B's pain may cause C to be damaged a bit as well but such is the nature of malinvestment. For the economy to fit what consumers actually want and to maximize total utility to society, all levels of malinvestment need to be cleared to the extent that the market is able to clear them.

Attempts to prop up demand only further the malinvestments in the economy, preventing the necessary restructuring and also creating problems that the market will try to correct at some later point. Intervention feeds on itself. Full employment and restructuring take time, so yes there will be a period of reduced economic activity, but given alternatives, this is a desirable course of action.

Wow Charles, you could have just said that healthy firms aren't really healthy. However, you're not taking into account that demand actually falls below healthy levels during recession. As the first few unhealthy industries collapse, fear and unemployment result, and the domino-effect is set in motion. As demand plummets to abysmal depths, healthy companies go under, and before you know it, there is 10-20% unemployment and a negative growth rate.

But what is the balance and how is it supposed to be determined? If conditions in the market are changing, would it not make sense that this balance (assuming it could be determined) should be in flux?

To an extent, but extended periods of severe unemployment and stagnant growth need be addressed, which the market doesn't always do in an acceptable amount of time.
Sieben
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2/14/2011 8:44:44 PM
Posted: 5 years ago
At 2/14/2011 7:49:35 PM, TheAtheistAllegiance wrote:
At 2/14/2011 2:32:32 PM, Sieben wrote:

How do you know that :I

They can just print more money.

Don't turn this into another 8,000 character argument. Anyways, digging holes does not directly produce any good or service.
Oh. What about people who like holes? What if instead of digging holes we send around these government employees to knit millions of sweaters?

I'm not taking into account the market side-effects that would result from the increase in demand.
Well so you'd get an increase in consumption of low end consumer goods, and a decrease in whatever the taxees were going to spend it on (prolly investment in capital infrastructure). No machines for you :(

And by money, I mean resources, but you already know that.

The government doesn't run out of appropriation power. Seriously why can't they just have people dig holes and pay them a new $100 bill every day.

Lol. Another "not enough" argument.

When should I eat food? When you're hungry enough.
When should I invade iraq? When there's enough reason to.
When does supply and demand become "imbalanced"? When they aren't balanced enough.

Try again please.

When you're hungry*
That's what I said you'd say.

When Iraq attacks the US*
No. If Saddam peed in the president's cereal that could be construed as an attack, but you wouldn't start a war over it. You mean when its "serious enough"? Yeah!

When full employment and stable prices are sustained*
Imposing values on the economy...
Things that are so interesting:

http://www.debate.org...
http://www.debate.org...
djsherin
Posts: 343
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2/14/2011 11:01:07 PM
Posted: 5 years ago
At 2/14/2011 8:10:21 PM, TheAtheistAllegiance wrote:
Wow Charles, you could have just said that healthy firms aren't really healthy. However, you're not taking into account that demand actually falls below healthy levels during recession. As the first few unhealthy industries collapse, fear and unemployment result, and the domino-effect is set in motion. As demand plummets to abysmal depths, healthy companies go under, and before you know it, there is 10-20% unemployment and a negative growth rate.

Lol, I did kinda pull a Charles ;) Sorry bout that.

What are healthy levels of demand though? If demand (for specific goods) falls due to the collapse of malinvestments, that should be expected. Even more so it's desirable and necessary in order to restructure the economy to so that producers are producing what consumers want at prices consumers are willing to pay. Resources, including labor, have to be shifted around to other uses. The price system (and by extension, all its consequences) is the best conveyor of information with regards to where resources should shift... obviously there isn't some sign that says x units of tin and y tractors need to be transfered to industries a, b, and c. Any distortions of price signals (bailouts, stimulus, price controls, monetary pumping, etc.) will only hinder the necessary readjustment process.

Yes there will be pain (though this is in proportion to the intervention the recession is trying to correct, which may be the intervention during a previous recession that spurred malinvestment for this recession), but there's no reason to believe it will stagnate for long.

But what is the balance and how is it supposed to be determined? If conditions in the market are changing, would it not make sense that this balance (assuming it could be determined) should be in flux?

To an extent, but extended periods of severe unemployment and stagnant growth need be addressed, which the market doesn't always do in an acceptable amount of time.

What is an acceptable amount of time?
When markets are allowed to work, they tend to clear malinvestments fairly quickly, but more importantly, they put resources to their most highly valued uses and get the economy producing what consumers value most.