I watched glen beck this evening for my dose of daily magic.

This evening as I engaged in some channel surfing, I noticed glen beck had his chalk board out and even more astounding what he was saying was actually true. So I had to listen, he was explaining a recession and the remedy for a recession which is stimulus (government spending).

Well the truth did not last long before beck resorted to magic. beck explained that our current recession is caused by a lack of demand. And the solution for that lack of demand is government created demand (spending). It was all reasonable until he got to, "but we have debt". And because we have debt that old magic stepped in with a vengance and magically doubled the size of our recession.

He went on to say that we should just let the economy crumble and collapse. And yes, lots of people would loose their jobs. But we then, without reason other than we exceptional people. we would magically recover instantaneously and we would magically be better than we were before, stronger than we were before.

As an example, he cited the recession of 1920-1921 which lasted about 18 months. It was a steep but relatively brief recession. This is what beck did not say. All recessions are not equal. The recession of 1920-1921 was caused not by a crisis of confidence but because of supply shocks. It was an economic adjustment caused by the end of WWI. After WWI there was and adjustment period. Unemployment reached 8 percent because of all the young men being discharged from the military and winding up unemployed.

The Great Depression and the Depression/recession we are experiencing was not caused by a supply shock/adjustment but a financial collapse and resulting lack of confidence. When no one else has confidence in the organsof the economy, the government needs to step in and fill in demand. until calm and confidence can be reestablished in markets.

Well listening to beck was good for about a minute this evening. I was impressed for all of a minute. But he just could not help himself. He had to go back to that magical thinking that characterizes so much of the thinking on the right. Things just don't happen in the economy because of wishful thinking. Things happen in the economy for reasons. Just because we have debt does not automatically double the depth of a recession. And just because the economy collapses does not mean it will magically recover. There must be factors and reasons for an economic recovery. The economy does not recover just because the people in the economy are good people.

 

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When I want magic, I listen to Obama; there's nothing more magical than believing that violating the Constitution, and spending out of control, and more government socialism and interference will get us out of the recession.

 

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Where has he violated the constitution? He was a professor in constitutional law for God's sake!

 

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Big government = violation of Constitution. It doesn't say "socialism" any where in the Constitution.

 

And what specifically has Obama done to socialize government in his 12 months in office?

 

It doesn't say government must be small either. If something isn't in the constitution that makes it fair game, until an amendment is added.

 

The Consititution says nothing about the size of government. It just defines the structure and powers of government. It is also clear the founding fathers intended that the founding documents should change as needs changed. That is why they included a process to change the Consititution with the admendment process.

 

I'm not sure that's a sound argument. First of all the Constitution was written to *increase* the power of the federal government, because the federal government was too weak under the Articles of Confederation. So, in that sense, the Constitution is 100% opposed to absolute minimalist central government, as that had already been tried and failed.

Second, The Constitution doesn't say "capitalism" either, nor reference "balancing the budget", and that doesn't make those concepts antithetical to the purposes of the Constitution. In fact the founders were certainly not capitalists, and not socialists either, as the modern senses of those words are philosophical positions that did not form until later in the 19th century.

That said, I do note that Thomas Jefferson once wrote:

He had doubts whether the Constitution permitted the federal government to enforce communal ownership (of course, as property law has always been the province of the States), but he definitely seemed to support, at least in theory, communal ownership as morally and economically healthy in some circumstances (and I don't recall him singing the praises of private ownership). That is really *the* core tenet of socialism and communism, rather than government subsidies and spending, which are secondary.

He also wrote:

Which suggests a dislike of the commerce that is uncapitalistic as we tend to use the term (in Jefferson's day, a "capitalist" was simply a person who owned commercial property or held equity in a business venture, and the modern usage was derived from that).

It's important to remember though, that economic theory barely existed back then. You had Thomas Malthus, Adam Smith, J.S. Mill, Jean-Baptiste Say and (later) David Ricardo and not many other people of note, and no detailed literature on the issue of the best ownership structure to promote progress. Smith and Ricardo, moreover, were writing from the perspective of an industrial economy, which the U.S. would not be for a century. We were still a nation of farmers. [Edit: In fact they probably couldn't have put forth a coherent capitalist view of the economy, as they were still rooted in what we now consider to be wrong-headed views of "value", even though they did advance the philosophy of economics greatly. To the extent they had pursued the then popular (if recognized to be incomplete) "labor theory of value" they might have come to similar conclusions to Marx, who considered the labor theory fundamental.]

 

Norsefire, you seem to imply that Glen Beck is more reasonable than Obama.

Surely this isn't right?

 

Thanks Panaemoni, that was a very excellent post.

For those not familar with the Labor Theory of Value, below is a link to provide further information:

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

 

Glenn Beck is a lifelong drunk, who was fired from CNN prior to accepting his job at Fox.

 

Not true.

 

Entirely true. He's also a liar. Remember his trip on The View, anybody..?

 

Joepistole... you say everything happens for a reason. If you truly believe this then why is your remedy for the recession to instill confidence in people who lost it for a reason? Shouldn't we figure out the reason for this loss of confidence and fix it at its source?

 

That was a bit of drunk luck then, perhaps.


I've always said that if you're being paid to talk for a living, you can't be telling the truth all the time. I'm sure there are some rare exceptions out there.

 

Let me clarify, I said magic does not happen. And too much of what the Republicans are pushing these days relies too much on magic happening. Every proposal ends with an unstated "and thing magic happens". There is no basis for a reasoned person to get from point A to point B in most if not all of their proposals.

We know the reason of the loss of confidence and resulting loss of aggregate demand. It was the proliferation of these financial bombs across the country. That caused fear and money stopped moving. The way to reinstill confidence in the markets is to sustain aggregate demand (that means government spending).

In good times or relatively good times, we would then pay down our debt and eliminate our deficits...see Clintion administration. Unfortunately, the George II administration and his merry band of Republicans spent opened up the federal treasury to their financial backers for the last eight years and they had a wonderful party at the taxpayers expense. That now puts the country in a much more difficult position.

 

So you believe that loss of confidence (in what exactly? the stock market?) results in a loss of demand on the whole. I don't see the demand for food or medicine or drugs going down to any dangerous lows. Could it be that the only parts of the economy that got hurt were the ones that aren't really needed in the first place?

By financial bombs you mean the bail out on wallstreet and the auto industries right?

So let me get this straight... to reinstill the confidence of people, the best course of action is for the government to spend tax dollars on the the markets that nobody seems to really need in the first place (in contrast to the demand of certain markets being invulnerable to any recessions - hence being a need) to create an illusion that they are still in high demand. Is this correct?

 

His middle name is JUDAS.

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I take it by your comments you have never been a businessman or an investor, and I don't have time for an economics lesson as I have an appointment for dinner in a few minutes.

By financial bombs I am talking about the debt securities that were rated as invesment grade but were really junk and carried on the books of insititutions (banks) as assets with premium values (over valued) and to the insurance policies that were sold with these debt instruments that were in essence fraudlent.

If you know anything about banks you know it all about assets. When these instruments blew up it caused a liquidity crisis in the banks. If the banks fail, the government goes in takes them over and pays depositors up to the limit of insurance - which is not much. That means if you are a business with a several hundred million on deposit, you just lost several hundred million overnight. You had better hope you had some extra insurance on your deposits. But you know what, people like Buffet saw this coming and stop writing that kind of insurance policy. So good luck finding that kind of insurance.

We could have had a major run on the banks without the bailout bill. And the government could have wound up owning most if not all of the banks in the country. On top of that all the businesses who had deposits in those banks would have been caught in a liquidity trap, because their deposits vanished overnight. That would have made it very difficult to make things like payroll and paying suppliers. They would have laid people off and gone bankrupt. All those newly unemployed would be on unemployment further stressing the deficit and national debt. Are you getting the picture? It would not have been a very nice place.

Now in that kind of environment, would you want to invest what money you have in anything? You don't know what the tax law is going to be? You don't know what laws are going to survive or change.

There is a lot of uncertianty our there right now. Was the stimulus sufficient? Will the economy do a double dip? Is the government capable of effective governance? Given the past, can the governement do the things that need to be done to bring the economy into recovery? These are all open questions that would and does cause people with money to sit on it.

If investors can be convinced that the economy will continue, that there will be some stability in the markets and government investors will eventually return to the market place and make the necessary investments to make the economy move.

 

How the fuck can you watch Glenn Beck? I can only managed a few seconds before I get a skull cracking headache, shit if I was to watch just 1 minute my head would explode from the shear amount of histrionic illogic!

"Glenn Beck Disorder" eem I right???

Histrionic personality disorder (HPD) is defined by the American Psychiatric Association as a personality disorder characterized by a pattern of excessive emotionality and attention-seeking...