Ron Paul: Stimulus Packages Will Turn Recession Into A Depression

[Whoha]

Smoot Hawley

Um, I thought the problem with Smoot-Hawley was that it kicked off reciprocal actions by furriners (aka a trade war) that worsened the depression worldwide.

-Arrian

also Keynes

In October 1930, Keynes won majority support for abandoning free trade within the Committee of Economists advising the British government. He favored an across the board 10 percent tariff on manufactured imports. Though he called it a revenue tariff (with the money going to fund public works), he wrote a few months later, “In so far as it leads to the substitution of home-produced goods for goods previously imported, it will increase employment in this country.” He thought it would also help support the value of the pound sterling. In his seminal General Theory of Employment, Interest and Money (1935) he argued for removing ideology from the discussion of trade restrictions in favor of “practical statecraft.” He advised, “The authorities should pay close attention to the state of the balance of trade. For a favourable balance, provided it is not too large, will prove extremely stimulating; whilst an unfavourable balance may soon produce a state of persistent depression.”

[Caligastia]

Oh, and I forgot to mention the long standing PR campaign of capital to persuade us all that we behave just like it, and that its behaviour is natural and not the result of convention. How much money do certain think tanks and others get to promote this idea?

This idea of capital as some mystical force is quite amusing. In reality, it's just human selfishness coming to the fore.

[Agathon]

This idea of capital as some mystical force is quite amusing. In reality, it's just human selfishness coming to the fore.

No. It's more than that. Ever heard of a gift economy?

[Kidlicious]

Victor mentioned this very phenomenon. Sometimes words mean fundamentally different things to different people. I do not believe that inflation as a matter of policy is a capitalist idea. It sounds more like government interference. But you equate capitalism with almost all the economic problems of the world, so problems are easily summed up as "Capitalism." Debating the matter is pointless, because when I talk about capitalism, I'm assuming that there are structures in place to protect all parties equally (ideal capitalism), while you assume that there are structures in place to protect the more corrupt party (cynical capitalism). But the reality is somewhere between.

Or I could just be reading waaaay too much into this.

You don't take the system as a whole, as it works in reality. The government is a part of the capitalist system. It's not outside of it working against it. The capitalists control the whold system. Sure, not everything works in their favor, but they have enough control to keep things going their way for now.

[Kidlicious]

Um, I thought the problem with Smoot-Hawley was that it kicked off reciprocal actions by furriners (aka a trade war) that worsened the depression worldwide.

-Arrian

What does it really matter? The fact is that it was the result of a failed system anyway.

[Imran Siddiqui]

No one said it helped. The problem is that the effect of the tariff was too small to bear the weight of responsibility for the depression that some people would like it to bear. It had about as much effect as a mouse trying to pleasure an elephant.

And there's the fact that a similar tariff was imposed a decade previously to no great ill effect, and that the slide started before the tariff, and so on.

It's certainly possible that the government was to blame for the depression. The Smoot-Hawley tariff was not.

It seems someone is fighting strawmen. I wasn't sure that "worsened" suddenly started to mean "responsible for".

[Agathon]

It seems someone is fighting strawmen. I wasn't sure that "worsened" suddenly started to mean "responsible for".

Yes, but when people say worsened they most often imply "significantly". There's not even proof for that.

[Victor Galis]

The reason Smoot-Hawley didn't do that much is that the last era of globalization collapsed in August 1914.

Significant protectionism should be compared to the effects of Austria's ultimatum to Serbia if somehow the disruption caused by the actual violence could be filtered out.

[Naked Gents Rut]

Did I mention that we're ****ed?

http://4.bp.blogspot.com/_djgssszshgM/SZPopHu6GEI/AAAAAAAAAzg/R5LBzirmy4s/s1600-h/budget+deficit.gif

Also, welfare reform is dead.

[Ramo]

Your graph is bull****. Whomever made it tacked on the entire stimulus to FY 2009, which obviously isn't the case (the CBO estimates that the Senate version, for instance, adds ~1.7% of the GDP to the deficit to FY 2009). If you want to play that game, there'd be a huge drop (something like 15% of GDP) due to Bush's 2001 tax cuts.

[Victor Galis]

Did I mention that we're ****ed?
Also, welfare reform is dead.

You mean we might repair the gaping hole in the safety net?

I mean, if we're going to bail out bankers with hundreds of billions with no regard for moral hazard, surely we can extend the same courtesy to people that didn't get us into this mess.

[Caligastia]

No. It's more than that. Ever heard of a gift economy?

That's related to culture, which goes back to human behaviour again. Capital is not the instigator.

[Naked Gents Rut]

Whomever made it tacked on the entire stimulus to FY 2009

Wherever did you get that idea?

[Ramo]

The numbers don't add up unless the labeling is incorrect (i.e. "without stimulus" also excludes TARP). I know this through my powers of multiplication and google.

[Naked Gents Rut]

There's a second TARP coming, you know. The most likely explanation is that the final bar includes an estimate of stimulus spending in 2009 plus an estimate of new TARP spending.