Why Stimulus Packages Don't Work

[phil_leotardo]

Japan?s Many Failed Stimulus Plans
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In Wednesday?s Washington Post, Amity Shlaes chronicles the failure of Japan?s attempt to stimulate its economy during the 1990s by heavy government investments in infrastructure.

The situation in Japan then was similar in some ways to that in the United States today. A dramatic market crash and a plunge in real estate prices shook what had been a confident nation. Japan turned inward; economists talked earnestly about paradigm shifts. The obsession with exporting no longer seemed to be serving the country well. Leaders cast aside their previous concerns about budget deficits. The then-Ministry of International Trade and Industry sorrowfully let it be known that there were ?areas in which Japan lags behind major developed nations.??

The projects were similar to some infrastructure plans under discussion here today. Bridges? Japan put up the longest suspension bridge in the world. Airports? Kansai International, yes, on an artificial island, but also local fields such as Ibaraki Airport near Mito. Roads? Japan built new streets and highways, including the famous New Tomei Expressway. For biotech and telecommunications, Japan poured out the subsidies.

When one plan proved insufficient, another was begun?. Between 1992 and 2000, the Japanese launched 10 stimulus packages that included public works. The Land of the Rising Sun became the Construction State. Other worthy issues, such as consistent tax reform, lagged. In fact, fiscal reform overall was postponed. After the 1995 Kobe earthquake claimed thousands of lives, the focus on infrastructure was reinforced?.

?The construction state is in some respects akin to the military-industrial complex in cold-war America (or the Soviet Union), sucking in the country?s wealth, consuming it inefficiently, growing like a cancer and bequeathing both fiscal crisis and environmental devastation,? commented Gavan McCormack, a professor at the Australian National University. The stimulus plans had the opposite effect of what was expected. Appalled at the country?s new deficits, Japanese consumers closed their wallets.

Worst, though, was the failure on jobs. Unemployment fell in many nations in the 1990s. In Japan, the ?90s were a lost decade: The unemployment rate more than doubled and surpassed the U.S. rate ? an unthinkable occurrence just a few years earlier.

Japan’s Many Failed Stimulus Plans

[tom63]

[quote]phil_leotardo wrote:
Japan?s Many Failed Stimulus Plans
Jump to Comments

In Wednesday?s Washington Post, Amity Shlaes chronicles the failure of Japan?s attempt to stimulate its economy during the 1990s by heavy government investments in infrastructure.

The situation in Japan then was similar in some ways to that in the United States today. A dramatic market crash and a plunge in real estate prices shook what had been a confident nation. Japan turned inward; economists talked earnestly about paradigm shifts. The obsession with exporting no longer seemed to be serving the country well. Leaders cast aside their previous concerns about budget deficits. The then-Ministry of International Trade and Industry sorrowfully let it be known that there were ?areas in which Japan lags behind major developed nations.??

The projects were similar to some infrastructure plans under discussion here today. Bridges? Japan put up the longest suspension bridge in the world. Airports? Kansai International, yes, on an artificial island, but also local fields such as Ibaraki Airport near Mito. Roads? Japan built new streets and highways, including the famous New Tomei Expressway. For biotech and telecommunications, Japan poured out the subsidies.

When one plan proved insufficient, another was begun?. Between 1992 and 2000, the Japanese launched 10 stimulus packages that included public works. The Land of the Rising Sun became the Construction State. Other worthy issues, such as consistent tax reform, lagged. In fact, fiscal reform overall was postponed. After the 1995 Kobe earthquake claimed thousands of lives, the focus on infrastructure was reinforced?.

?The construction state is in some respects akin to the military-industrial complex in cold-war America (or the Soviet Union), sucking in the country?s wealth, consuming it inefficiently, growing like a cancer and bequeathing both fiscal crisis and environmental devastation,? commented Gavan McCormack, a professor at the Australian National University. The stimulus plans had the opposite effect of what was expected. Appalled at the country?s new deficits, Japanese consumers closed their wallets.

Worst, though, was the failure on jobs. Unemployment fell in many nations in the 1990s. In Japan, the ?90s were a lost decade: The unemployment rate more than doubled and surpassed the U.S. rate ? an unthinkable occurrence just a few years earlier.

Japan’s Many Failed Stimulus Plans | Far Outliers [/quote]

Of course stimulus packages don’t work. What has government ever done well? Blow up Japan, get to the moon, develop the 1911{still an individual), and I don’t know what else.

I can think of the US constitution, but not much else. And the Constitution took how many years to ratify? with a whole lot of patriotic geniuses.

[Headhunter]

"You cannot legislate the poor into freedom by legislating the wealthy out of freedom.
What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

John Gault/Ayn Rand

[vroom]

Finding one way that something doesn’t work shouldn’t be taken to imply that nothing can work.

Consider Edison who remarked, “I have not failed. I’ve just found 10,000 ways that won’t work.”

What’s required is to get the consumer back into a state of mind that has them willing to spend money. Can some aspects of government spending help with that? Possibly. Can it be poorly and ineffectively done? Certainly.

[LIFTICVSMAXIMVS]

[quote]vroom wrote:
What’s required is to get the consumer back into a state of mind that has them willing to spend money.[/quote]

Ha!

I spend money nearly every day. No one needs to tell me when it is ok for me to spend and when it is not ok.

The solution is really simple. People need to save more and pay off their friggin’ debt. They don’t need to buy shit they cannot afford. They shouldn’t be paying off credit cards with other credit cards. Is this really that hard to understand?

People will spend money if they have it and there is stuff to spend it on. This “consumer confidence” mumbo-jumbo is quite hilarious to listen to. The last thing we should do is follow the example of our government. They are the cause of most of the debt.

[vroom]

[quote]LIFTICVSMAXIMVS wrote:
I spend money nearly every day. No one needs to tell me when it is ok for me to spend and when it is not ok.

The solution is really simple. People need to save more and pay off their friggin’ debt. They don’t need to buy shit they cannot afford. They shouldn’t be paying off credit cards with other credit cards. Is this really that hard to understand?

People will spend money if they have it and there is stuff to spend it on. This “consumer confidence” mumbo-jumbo is quite hilarious to listen to. The last thing we should do is follow the example of our government. They are the cause of most of the debt.[/quote]

Are you playing simple today?

The economy is in a state of massive shrinkage. While of course it would be great if everyone saved, moving to that stance in the middle of a depression/recession is only going to make the bottom much more severe.

So, yes, duh, anyone earning money spends some every day. However, many people aren’t buying cars, buying houses, buying furniture, buying appliances, buying computers, or buying anything else that they might consider a major expense.

Anyway, assuming everyone has been mismanaging their funds just because some have is a fools game. Do you think that everyone working at a major company that has just announced thousands of layoffs is being laid off because they personally were not managing their money effectively? Dream on.

In the long term, however, I’ll agree. Get the consumer to be responsible, stop borrowing so much, save, get their fiscal houses in order. It’s probably not wise to push very hard for that outcome in the middle of a worldwide economic compression – as people are already being much more careful with their money.

[LIFTICVSMAXIMVS]

Tell me exactly how buying more Chinese goods is going to get people out of debt.

Nevermind, just do whatever the government tells you to do. I am so going to profit off of a bunch of stupid fucks.

[LIFTICVSMAXIMVS]

[quote]vroom wrote:
Do you think that everyone working at a major company that has just announced thousands of layoffs is being laid off because they personally were not managing their money effectively?[/quote]

Many of the layoffs are just overreaction to speculation. It’s a giant snowball. So yes, companies in part are laying their employees off because they understand that people in debt don’t have money to spend and therefore have to cut production.

But there are also businesses out there that are over-leveraged with debt and need to cut costs as well.

[dhickey]

[quote]vroom wrote:
Are you playing simple today?

The economy is in a state of massive shrinkage. While of course it would be great if everyone saved, moving to that stance in the middle of a depression/recession is only going to make the bottom much more severe.
[/quote]
Why? What happens to savings? Maybe you put yours under your matress, but mine ends up being invested by my bank, 401k plan, and me. You’ve never read a book on economics, have you?

So, yes, duh, anyone earning money spends some every day. However, many people aren’t buying cars, buying houses, buying furniture, buying appliances, buying computers, or buying anything else that they might consider a major expense.

maybe gov’t should free up more of our money so we can buy these things. cutting taxes is stimulous. stealing money from the productive of today and tomorrow, only to give it to those that have not been as productive or use it buy political favor is not stimulous.

Anyway, assuming everyone has been mismanaging their funds just because some have is a fools game. Do you think that everyone working at a major company that has just announced thousands of layoffs is being laid off because they personally were not managing their money effectively? Dream on.

What part or % of the stimulous package addresses those that have been layed off?

[quote]
In the long term, however, I’ll agree. Get the consumer to be responsible, stop borrowing so much, save, get their fiscal houses in order. It’s probably not wise to push very hard for that outcome in the middle of a worldwide economic compression – as people are already being much more careful with their money.[/quote]
So what’s more important, long term prosperity or short term discomfort?

Recessions happen all the time. Why do we have to pretend like this is something that’s never happened before? We’ve already seen what happens when gov’t starts spending, fixing prices, and initiating central planning on our behalf during a recession. Not good.

[vroom]

[quote]dhickey wrote:
Why? What happens to savings? Maybe you put yours under your matress, but mine ends up being invested by my bank, 401k plan, and me. You’ve never read a book on economics, have you?[/quote]

LOL. Dude, I have a background in economics. These things don’t happen instantly… and in the current conditions businesses aren’t very willing to lend as they’d rather protect the money than invest it right now.

It’s the same issue I was talking about on another thread – it’s the rate of change that is the problem not the policy suggestion.

maybe gov’t should free up more of our money so we can buy these things. cutting taxes is stimulous. stealing money from the productive of today and tomorrow, only to give it to those that have not been as productive or use it buy political favor is not stimulous.

Look, like everyone else, I like low taxes. However, it isn’t a panacea as the money is great ideology will suggest. Can we get beyond the “governments steal my money and give it to others” level of rhetoric?

What part or % of the stimulous package addresses those that have been layed off?

Parts that extend medical care or monetary benefits for those that have become recently unemployed. Hey, I’m not trying to argue that the current package under consideration is great – just that stimulus efforts are an economic consideration and should be looked at as such.

[quote]So what’s more important, long term prosperity or short term discomfort?

Recessions happen all the time. Why do we have to pretend like this is something that’s never happened before? We’ve already seen what happens when gov’t starts spending, fixing prices, and initiating central planning on our behalf during a recession. Not good.
[/quote]

So, let’s make the great depression look like a picnic? How about we keep the short term to discomfort only and have long term prosperity as well? Why do people with an ideological perspective always try to force us into false choices.

Not too long ago, when Bush was busy spending a ton of money, it was argued here that the economy was huge and the debt was a small percentage of it. That particular analysis hasn’t really changed… only the underlying party doing the spending.

Anyway, if you believe this is just a recession, then you are being willfully blind. This is a credit collapse of mammoth proportions causing economic downturn worldwide. Unfortunately, one countries reduced demand is another countries reduced income…

The stimulus package is about slowing down the collapse so it happens at a reasonable pace, instead of simply imploding and wastefully destroying much more than required due to the ensuing panic that would cause.

It’s always been easier to destroy than build. We should try to preserve some of what exists prior to letting it simply burn down. We can always tear down what we don’t need later – or perhaps even repurpose it.

[orion]

[quote]vroom wrote:
dhickey wrote:

Look, like everyone else, I like low taxes. However, it isn’t a panacea as the money is great ideology will suggest. Can we get beyond the “governments steal my money and give it to others” level of rhetoric?
[/quote]

What you do not seem to get is that there is no rhetoric behind it.

The government steals my money and gives it to other people.

The inherent element of servitude is not something you can simply dismiss to be able to discuss with us how to make that servitude as bearable as possible.

I am also done with debating libertarianism on utilitarian grounds, for even if plundering and stealing actually worked it is still wrong.

[vroom]

[quote]orion wrote:
What you do not seem to get is that there is no rhetoric behind it.

The government steals my money and gives it to other people.

The inherent element of servitude is not something you can simply dismiss to be able to discuss with us how to make that servitude as bearable as possible.

I am also done with debating libertarianism on utilitarian grounds, for even if plundering and stealing actually worked it is still wrong.
[/quote]

We are not having a discussion about your pet ideologies at the moment.

Sometimes, from time to time, people actually like to focus on issues other than your view of the world. Anyway, regardless of your view of government, or the worth of it in general, economics should still apply.

[dhickey]

[quote]vroom wrote:
LOL. Dude, I have a background in economics. These things don’t happen instantly… and in the current conditions businesses aren’t very willing to lend as they’d rather protect the money than invest it right now.
[/quote]

especially those that have made bad investments in the past. The same ones we bailed out. The same ones we encouraged to make bad investments.

It’s the same issue I was talking about on another thread – it’s the rate of change that is the problem not the policy suggestion.

Yep you keep saying this and I have no idea what this means in the real world. You need to be more specific. You mean we should mortgage our future to avoid short term discomfort? That’s what we are doing.

Look, like everyone else, I like low taxes. However, it isn’t a panacea as the money is great ideology will suggest. Can we get beyond the “governments steal my money and give it to others” level of rhetoric?

What is better?

What part or % of the stimulous package addresses those that have been layed off?

Parts that extend medical care or monetary benefits for those that have become recently unemployed. Hey, I’m not trying to argue that the current package under consideration is great – just that stimulus efforts are an economic consideration and should be looked at as such.

that’s not stimulous. it does not put them back to work. we can put them back to work. we just chose not to.

So, let’s make the great depression look like a picnic? How about we keep the short term to discomfort only and have long term prosperity as well? Why do people with an ideological perspective always try to force us into false choices.

It’s not a false choice. What our gov’t is offering is a false choice. Short term discomfort and a mortgaged future.

If you want to make the great depression look like a picnic, you implement the same policy. This is exactly what we are doing. Much of the policy of the great depression never went away.

Not too long ago, when Bush was busy spending a ton of money, it was argued here that the economy was huge and the debt was a small percentage of it. That particular analysis hasn’t really changed… only the underlying party doing the spending.

It was damaging when he did it. We are now looking at the largest expansion of spending and gov’t EVER. Not good.

Anyway, if you believe this is just a recession, then you are being willfully blind. This is a credit collapse of mammoth proportions causing economic downturn worldwide. Unfortunately, one countries reduced demand is another countries reduced income…

It is damaging policy and protectionism that is making this more than a recession. I’ve put away 50k in cash, am investing in home generated power, and starting to stock pile non perishables and ammunition before I lose my job.

I am preparing for much more than a recession. Unlike you, I am aware of the harmful policy that put us in this situation. I heard a great analogy the other day. Would you trust the arsonist that just lit your house on fire to put the fire out?

The stimulus package is about slowing down the collapse so it happens at a reasonable pace, instead of simply imploding and wastefully destroying much more than required due to the ensuing panic that would cause.

I could give two shits what the intent of the bill is. Intent means absolutly nothing to me. Results are all that matter. We have not and will not get acceptable results at the cost of mortgaging my childeren’s future.

Do you have any concept of home much money we have spent in the last 6 months? Money we don’t have. This is historic. We are living in an incredibly interesting time for those who like to see economic theory in action. It’s not hard to figure out where we are headed. Like the great depression, I doubt we will learn anything from this.

It’s always been easier to destroy than build. We should try to preserve some of what exists prior to letting it simply burn down. We can always tear down what we don’t need later – or perhaps even repurpose it.

At what cost? At what fucking cost?

[ElbowStrike]

[quote]Headhunter wrote:
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom.
[/quote]
Which is why tax dollars are best spent on services and works, not simple income redistribution.

What one person receives without working for, another person must work for without receiving.

What about the overwhelming majority of the wealthy who inherited their riches in their entirety – and didn’t lift a finger to create it? Those are the people who should be paying the highest tax burden, not the ones getting bailed out in a crisis.

Paris Hilton did not “work hard” to build her wealth. The only “work” she did was swimming up her mother’s fallopian tube. Something all 6.5 billion of the other people on the planet have done.

The government cannot give to anybody anything that the government does not first take from somebody else.

That’s why we’re all taxed equally by “the government”. Everybody pays the same amount of taxes on their first $10,000, the same amount on their next $30,000 or however much, and so on, and so forth.

If you happen to make enough money to be taxed in a higher bracket, be thankful for your great fortune. Don’t whine and bitch about how “it’s not fair”! There are billions of people on this planet who would gladly take your place.

[quote]
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

John Gault/Ayn Rand[/quote]

That’s great, except absolutely no government program in the entire developed world even comes close to this alarmist fantasy scenario.

The only people who get a free ride in this world are the born-wealthy, which are the overwhelming majority of the top income-earners in Canada, the USA, and every country in the world. They are the ones claiming “it’s not fair” that they pay higher taxes.

“It’s not fair” that their taxes subsidize public education because “if they want education, they should pay for it.”

…yet their parents paid for their private prep school and college tuition.

“It’s not fair” that their taxes subsidize public transit, because they don’t use it and people should pay for their transportation.

…yet their parents bought them a brand new car on their 16th birthday, with an unlimited credit card to pay for gas.

The overwhelming majority of these so-called “hard working” wealthy are nothing but a bunch of overprivileged, bitchy little girls. They need to shut the fuck up and pay their goddamn dues.

ElbowStrike

[LIFTICVSMAXIMVS]

How is taxation not theft?

[Headhunter]

[quote]ElbowStrike wrote:
Headhunter wrote:
"You cannot legislate the poor into freedom by legislating the wealthy out of freedom.

Which is why tax dollars are best spent on services and works, not simple income redistribution.

What one person receives without working for, another person must work for without receiving.

What about the overwhelming majority of the wealthy who inherited their riches in their entirety – and didn’t lift a finger to create it? Those are the people who should be paying the highest tax burden, not the ones getting bailed out in a crisis.

Paris Hilton did not “work hard” to build her wealth. The only “work” she did was swimming up her mother’s fallopian tube. Something all 6.5 billion of the other people on the planet have done.

The government cannot give to anybody anything that the government does not first take from somebody else.

That’s why we’re all taxed equally by “the government”. Everybody pays the same amount of taxes on their first $10,000, the same amount on their next $30,000 or however much, and so on, and so forth.

If you happen to make enough money to be taxed in a higher bracket, be thankful for your great fortune. Don’t whine and bitch about how “it’s not fair”! There are billions of people on this planet who would gladly take your place.

When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is about the end of any nation. You cannot multiply wealth by dividing it."

John Gault/Ayn Rand

That’s great, except absolutely no government program in the entire developed world even comes close to this alarmist fantasy scenario.

The only people who get a free ride in this world are the born-wealthy, which are the overwhelming majority of the top income-earners in Canada, the USA, and every country in the world. They are the ones claiming “it’s not fair” that they pay higher taxes.

“It’s not fair” that their taxes subsidize public education because “if they want education, they should pay for it.”

…yet their parents paid for their private prep school and college tuition.

“It’s not fair” that their taxes subsidize public transit, because they don’t use it and people should pay for their transportation.

…yet their parents bought them a brand new car on their 16th birthday, with an unlimited credit card to pay for gas.

The overwhelming majority of these so-called “hard working” wealthy are nothing but a bunch of overprivileged, bitchy little girls. They need to shut the fuck up and pay their goddamn dues.

ElbowStrike[/quote]

What magical feat happened that created this ‘tax money’ that gets ‘redistributed’?

And if you want to punish wealthy people, then don’t expect there to be very many wealthy people. Didn’t the Soviet Union try that?

[LIFTICVSMAXIMVS]

[quote]ElbowStrike wrote:
They need to shut the fuck up and pay their goddamn dues.

[/quote]
Didn’t they “pay their dues” to get rich in the first place?

[malonetd]

[quote]ElbowStrike wrote:
Paris Hilton did not “work hard” to build her wealth. The only “work” she did was swimming up her mother’s fallopian tube. [/quote]

Who cares how she made her money? Some people are just lucky in life. I hope my future good fortunes don’t go punished.

[Headhunter]

[quote]malonetd wrote:
ElbowStrike wrote:
Paris Hilton did not “work hard” to build her wealth. The only “work” she did was swimming up her mother’s fallopian tube.

Who cares how she made her money? Some people are just lucky in life. I hope my future good fortunes don’t go punished.[/quote]

Well, they have to be. You are supposed to be your Brother’s Keeper, even if you don’t want to. You should be happy to give your earnings to the poor and unfortunate; in fact, its your moral duty and obligation to do so. The intelligent and ambitious are only here to serve the poor and misfortunate.

Those who are capable were put here to be servants to those who’re incapable.

[LIFTICVSMAXIMVS]

[quote]malonetd wrote:
ElbowStrike wrote:
Paris Hilton did not “work hard” to build her wealth. The only “work” she did was swimming up her mother’s fallopian tube.

Who cares how she made her money? Some people are just lucky in life. I hope my future good fortunes don’t go punished.[/quote]

Or better yet, your future fortunes can be left to your children or whomever you wish without them being criticized because they didn’t earn it themselves.

These people reminds me of bratty kids who become jealous of other an kid’s toy at Christmas time. They can’t have it so they wants to break it so the other kid can’t have it either.

It isn’t greed that is the problem its jealousy.