€urosclerosis: It looks like that Socialist government didn’t help France too much

From The Wall Street Journal:

France Says It Will Miss Budget Deficit Targets

Government Eyes More Savings, Fewer Tax Increases
By William Horobin | September 11, 2013, 9:53 a.m. ET

PARIS—France’s government said Wednesday it will miss its deficit targets this year and next due to a weaker-than-expected economic recovery.

Finance Minister Pierre Moscovici said at a news conference that the public budget deficit will be 4.1% of economic output this year instead of 3.7%, and 3.6% in 2014 rather than 2.9%.

Mr. Moscovici said the new deficit targets will help economic growth by not inflicting austerity on the economy, which the government forecasts will grow only 0.1% this year. He said growth will accelerate to 0.9% next year, while the government was previously banking on 1.2%.

Mr. Moscovici said the government is shifting its focus toward spending cuts from tax increases. It is now targeting €15 billion ($19.90 billion) in extra savings and about €3 billion in tax increases in next year’s budget, having previously said it would target €14 billion in savings and around €6 billion in tax increases.

A little more at the link.

But, after a year under Socialist President François Hollande, and the French government’s stimulative policies, the economy will grow by about 0.1% this year. France will back off, slightly, to spend a bit less and cut back on planned tax increases, but it’s pretty obvious that what the Socialists said was the way out of the economic doldrums was not the way out. Monsieur Hollande and his policies have produced virtually no growth at all, and saddled the government with more debt.

We tried it here, as well, and what did we get: a new normal where the official unemployment rate is slowly dropping not due to enough jobs being created but due to people dropping out of the workforce, and thus not being counted as unemployed, and our economy is growing, and growing faster than France’s, but still far too slowly:


Source: tradingeconomics.com

Our second quarter GDP growth was a modest 2.5% over the second quarter of 2012, but that followed 0.1% in the fourth quarter of 2012 and 1.1% in the first quarter of this year.

Well, there really is a new normal arising, but it’s not the new normal that most people talk about. The new normal has to be our country living within the means justified by our production. If we continue to import money to live better than we have earned, it has to collapse eventually.

39 Comments

  1. Okay, here we go Mr. Editor. I can’t believe you quoted:

    Our second quarter GDP growth was a modest 2.5% over the second quarter of 2012, but that followed 0.1% in the fourth quarter of 2012 and 1.1% in the first quarter of this year.

    AS AN ECONOMIST! I must object. GDP has not grown by more than 1.8% in the last five years. Now my math may be wrong, and I’m not the guy the media quotes, but by my numbers the economy is in stagnation ( which is better than contraction which I figured it would be). At best growth, if you could call it that is around 0.9% (currently). And I do not have the means to prove my theory here but it is what it is. If you can show me any sector (other than government) which has expanded over the last five years (without government money) then I will drink 5 Wild Turkey’s in a row (I’d do that anyway). Again, DO NOT BELIEVE THE GOVERNMENT NUMBERS! They lie! They keep changing the rules for calculating GDP, COL, inflation etc., etc. If you change the rules in the middle of the game…THE FIX IS IN! I know the leftists will tell you I’m wrong….I’m not. I use a “standard” created in 1962 by a great economist, which was used for years until it became “inconvenient” due to energy and food costs.

    Plus, I’m smarter than Pho, Perry and the fuckin’ government!

  2. But, after a year under Socialist President François Hollande, and the French government’s stimulative policies, the economy will grow by about 0.1% this year.

    Uh-huh

    http://distilledmagazine.com/french-stimulus/

    —–
    So what is the government’s solu­tion to this rut? Pres­i­dent François Hol­lande has pro­posed a gov­ern­ment stim­u­lus of 12 bil­lion euros (about 15.5 bil­lion dol­lars) to be spent in the energy, dig­i­tal, aero­space, and health sectors.

    Since WWII, it has been clear that gov­ern­ment spend­ing and invest­ment is an effec­tive way to stim­u­late aggre­gate demand and help break out of a liq­uid­ity cri­sis, such as the one that France is cur­rently suf­fer­ing. With low con­sumer spend­ing and with­out a sig­nif­i­cant struc­tural deficit, stim­u­lus is a clear pre­scrip­tion for France’s ail­ing econ­omy. That said, 12 bil­lion euros frankly is not much. This pack­age, even rel­a­tive to France’s smaller econ­omy, is about 10.6 per­cent the size of the Amer­i­can stim­u­lus, a plan that has since been widely panned for being too small. This plan is hardly a bold step for­ward in spending.
    —–

    You don’t actually look at facts, do you, Dana? All you think is “French = Socialist” therefore “Socialist – huge stimulus spending”.

    Let’s emphasise those numbers again – with a GDP of 2.6 trillion $US, France spent
    15.5 billion $US in stimulus – about 0.6%. With a GDP of 16.62 trillion $US, the US spent 831 billion $US, about 5%. And as we see, the US is now recovering.

    Tell us again what an “economic expert” you are if you simply repeat platitudes without looking at numbers….

  3. Since WWII, it has been clear that gov­ern­ment spend­ing and invest­ment is an effec­tive way to stim­u­late aggre­gate demand and help break out of a liq­uid­ity cri­sis, such as the one that France is cur­rently suf­fer­ing.

    BULLLLLLSHITTT! Government does not “spend” nor “invest”. Government takes money from Party 1 and after fucking its value, gives it to Party 2. That ain’t spending, it’s waste. That ain’t investment, it’s theft.

    How about I take your money and give it to Yorkshire? Would you go for that? Of course not because you know it’s bullshit. But for some reason dumbasses like you think if the government takes your money and gives it to Yorkshire it’s okay. Man, are you dumbasses!

  4. BULLLLLLSHITTT! Government does not “spend” nor “invest”. Government takes money from Party 1 and after fucking its value, gives it to Party 2. That ain’t spending, it’s waste. That ain’t investment, it’s theft.

    You’ve fucked up again on the economics, Hoagie:

    http://www.asymptosis.com/small-government-spurs-growth-economists-say-no.html

    —-
    The details on government size and growth:

    They found 41 studies that analyzed the correlation between growth and “Government consumption or ‘size’’. Here’s the breakdown for those 41 studies.

    Bigger government correlates with slower growth: 29%
    Bigger government correlates with faster growth: 17%
    Bigger government has an inconclusive correlation with growth: 54%

    They comment on the high percentage of inconclusive findings overall (35.8%), saying “our sample undoubtedly suffers from file drawer bias or publication bias in that significant findings are likely to be more prominent in our sample than in the excluded papers (Begg 1994).” In other words, there are a lot of inconclusive studies out there than never got published, which would push that already-high 54% number even higher.
    [...]
    “At the same time, it has been increasingly recognized in growth studies that the way in expenditures are financed matters too. For example, Kneller et al. (1999) define a range of taxation and expenditure variables and explicitly take account of the budget constraint. By means of a panel of 22 OECD countries, 1970-95, they find – firstly – that distortionary taxation reduces growth, while not-distortionary taxation does not, while – secondly – productive government expenditure enhances growth, but non-productive expenditure does not.
    —-

    So tell us what a great economist you are, Hoagie, when you can’t even be bothered paying attention to the figures

  5. All that you had to do was follow the Phoenician’s link and google the author: Sarang Shah is just another dyed-in-the-wool lib, or so one would guess by glancing over his blog.

    The trouble with Mr Shah’s thesis is simple: he claims that governments are not spending enough, but if governments engaging in stimulative deficit spending was really the path to prosperity, every government would be rich and every economy booming, because virtually every government in the developed world has been doing that, for decades. We know the theories; how has it been working out in real life?

  6. “Government Eyes More Savings, Fewer Tax Increases”

    Fewer tax increases, that’s insane. We need to tax the living shit out of everyone especially the 2%. Let’s start with a 99% tax on entertainers like movie and TV stars, producers, directors, singers and artists. Then hit those overpaid football and baseball players and all sports figures. Followed by taxing the hell out of political pundits, talking heads and a 100% tax on lobbyists, bankers and anyone on Wall Street who earns more than Warren Buffets secretary. Then we can talk.

  7. Uh, Pho, with all due respect, just because you found something on Google doesn’t mean it isn’t completely full of shit. As proof, I merely give you our old friend, Blu. I mean, we KNOW 9/11 was an inside job because some nut on an Internet video said so, correct?

  8. Because the topic article is from the WSJ it’s unlikely our Editor failed to notice Vladimir Putin’s Op/Ed in the same newspaper. Putin’s message to the American people has generated strong comment on TV since late yesterday, both pro and con.

    Now, as interesting as France’s budget targets may be, it’s a sure bet Putin’s unprecedented direct address to Americans concerning Obama’s threat to launch a military attack on Syria trumps general interest elementary instruction in macro economics. Just Sayin’

  9. Eric says:
    Thursday, 12 September 2013 at 11:18

    Uh, Pho, with all due respect, just because you found something on Google doesn’t mean it isn’t completely full of shit. As proof, I merely give you our old friend, Blu. I mean, we KNOW 9/11 was an inside job because some nut on an Internet video said so, correct?”

    If you bother to read trough to the link, the first things you notice is that the NZ Troll’s response is a non-sequitur and that the linked to text admits the premise that big government spending sometimes stifles economic growth …

    ” [conservatives sometimes make the assertion that]… progressives who argue for higher taxes and government spending are either foolish or churlish or both: they’re actually hurting poor people by denying them the benefits of economic growth.

    This argument is powerful because part of it is undeniably true, at least in the long term….”

    What the author quibbles with, is an unstated implication which he “deduces” as an affirmative premiss and then attributes to some generic conservatives.

    “The actual flaw lies in the other [inferred] part of the argument: that small government contributes to this growth and prosperity. It may be true, to some extent, in developing countries. “

    If big government, then stifled growth for the poor.
    Not stifled growth for the poor, then not big government.
    Therefore not-big government [ambiguously] read as [implying] small government

    I suppose you could formulate this supposedly implied premiss categorically through a contraposition; or some series of conversions and obversions, but it seems too laborious to bother with extracting.

    In any event the blogger’s gripe is that small government per se, except in developing countries, is not necessarily so much a boon to growth across all social strata, as effective government spending which does not steal otherwise available resources.

    Libertarians usually argue for smaller government on principle. Their concern not particularly being to provide comfort for the insistently morally dysfunctional.

    Conservatives on the other hand, attack bloated government as a symptom of morally and socially misappropriated individual life efforts which can also be shown to have negative effects in the aggregate, and even on the sub-moral utilitarian’s own starting premises.

    That of course, i.e., granting the Utilitarian Garbage his predicates, is tantamount to granting the Devil his premisses while disputing his conclusions.

    At best you will wind up arguing in circles.

    You boys are being trolled … again.

  10. “You boys are being trolled … again.”

    And that DNW is why I try not to talk economics or business with any leftist, troll or no. They simply can’t understand that every single dollar taxed and spent by government would have been spent or allocated somewhere else by market dictates and they find it inconceivable that One may actually allocate one’s money better than government. IOW, the “stimulus” they all tout is just a redirection of assets from one thing to another. The resources would have been used anyway just not where government put it but rather where it would have done the most good. Unless they’re just printing money like hell they are stealing resources to spend the way they want (usually to buy someone’s vote) rather than some other way.

  11. The light at the end of his rope wrote:

    Because the topic article is from the WSJ it’s unlikely our Editor failed to notice Vladimir Putin’s Op/Ed in the same newspaper. Putin’s message to the American people has generated strong comment on TV since late yesterday, both pro and con.

    I had heard about the article, but it was in The New York Times, not the JOURNAL. Patterico has a discussion on it. Here’s President Putin’s money line:

    No one doubts that poison gas was used in Syria. But there is every reason to believe it was used not by the Syrian Army, but by opposition forces, to provoke intervention by their powerful foreign patrons, who would be siding with the fundamentalists. Reports that militants are preparing another attack — this time against Israel — cannot be ignored.

    Mr Putin gave President Obama backing-off-room, but with this, he has rubbed our President’s nose in it. He managed to keep the US from launching a military strike (of who knows how much effectiveness), thus preserving Syria’s assets, but he also set the stage for undermining any authorization from the Security Council by telling us it is Russia’s position that the chemical weapons were used by the rebels, not the government.

    There are a lot of possibilities here, and not many of them look to be that good.

    • The Syrian government says that it will turn over control of its chemical weapons to the international community; will that really happen?
    • If it does happen, how long will it take, and how will those international agents be configured?
    • If it does happen, will those weapons be destroyed or remain in Syria?
    • Let’s say that the chemical weapons are taken by the UN, and then somehow there is another chemical attack; President Putin’s claim that it was the rebels all along is “proved,” even though it could be an SVR false flag operation.
  12. Uh, Pho, with all due respect, just because you found something on Google doesn’t mean it isn’t completely full of shit.

    You really are a fool, you know.

    If you bothered looking, you’d see the research was from a paper published here.

    Now, compare this to Hoagie who never gives cites and is usually shown to be wrong with regards the actual research whenever he stands on his status as “an economist”.

    Another brainfart from Dunning-Kruger Boy.

  13. Now, compare this to Hoagie who never gives cites and is usually shown to be wrong with regards the actual research whenever he stands on his status as “an economist”.

    Hoagie’s a millionaire. You stack books for a living.

    NOW, tell us who has a real world understanding of economics … ??

  14. Now, compare this to Hoagie who never gives cites and is usually shown to be wrong with regards the actual research whenever he stands on his status as “an economist”.

    Okay, my final response for a while since I plan on going back to my system of skipping your posts rather than degenerate each thread.

    First of I don’t “never give cites”, I infrequently give cites. The reason for that is because I post here to discuss the opinions of you guys, not Wiki, not Google, not cites all over the net, your opinions. I’m looking for original thought, if I wanted to research cites like you do I’d read a text book. I’m looking for “real world” applications of economics and business not your cites from people who never had real world experience. They’re teachers Pho, not doers. People who agree with them have little or no real world experience and are only looking for personal validation on their opinions.

    Secondly, you somehow equate cherry picking your “cites” to support your position as somehow showing me to be wrong as an economist. I could spend time showing you cites from fellow Austrian School economists from Freidman to Hayak and Sowell but that means nothing. Results mean something and so far capitalism and freedom win hands down over socialism and dependency. You may not like the fact that the historical success of The West is based on property rights, the Rule of Law, individual Freedom and a thousand other geopolitical and economic truths but tuff, it’s a fact. People produce more, invent more, grow greater and grow wealthier when they are as free a possible from overbearing government.

    Your demeanor on this site is one of arrogance, condescension and narcissism and persons like that when put in a position of authority over others have historically murdered millions …..because you’re alwaysright and everyone else is always wrong. In other words they’re dumbasses.

  15. The reason for that is because I post here to discuss the opinions of you guys, not Wiki, not Google, not cites all over the net, your opinions. I’m looking for original thought
    [...]
    Results mean something and so far capitalism and freedom win hands down over socialism and dependency

    Bwahahahahahah!

    Now, ask for a cracker.

  16. Bwahahahahahah!

    Now, ask for a cracker.

    Sounds like someone is cracking up …

    Hoagie just wiped the floor with you, and that’s the best you can say in response?

  17. Eric, at the risk of repeating myself, you’re a fool.

    Hoagie pats himself about asking for “original thought”, and then turns around and squawks unthinking platitudes. If you’re not laughing at him, you’re just as wingnutty.

  18. Hoagie’s a millionaire. You stack books for a living.

    NOW, tell us who has a real world understanding of economics … ??

    Once again, you’re a fool.

    Passing over the simple fact that I don’t stack books for a living, this shows Hoagie knows more about *business* than I do.

    That you people continually confuse the two and equate business expertise with any knowledge of macroeconomics especially says it all about how ignorant you are.

    http://krugman.blogs.nytimes.com/2012/01/10/businessmen-and-economics/

    —–
    A brief thought on something I’ll try to expand on later. Leaving aside all the questions about what Mitt Romney did or didn’t do at Bain — and about his self-aggrandizing double standard — there’s an even broader question: why does anyone believe that success in business qualified someone to make economic policy?

    For the fact is that running a business is nothing at all like making macro policy. The key point about macroeconomics is the pervasiveness of feedback loops due to the fact that workers are also consumers. No business sells a large fraction of its output to its own workers; even very small countries sell around two-thirds of their output to themselves, because that much is non-tradable services.

    This makes a huge difference. A businessman can slash his workforce in half, produce about the same as before, and be considered a big success; an economy that does the same plunges into depression, and ends up not being able to sell its goods. Nothing in business experience prepares one for the paradox of thrift, or even the inflationary impact of increases in the money supply (which is real when the economy isn’t in a liquidity trap.)

    And I haven’t even mentioned the fact that presidents need to work with Congress, and face far more limits on their authority than CEOs.

    The idea that what America needs now is an executive type is just foolish.
    —-

    But I assume Hoagie will now huff and puff about how owning a second car means he’s a better economist than Krugman.

    And he and you are still liars, and repellent, loathsome excuses for human beings, as shown by your repeated sexual slurs against Sandra Fluke.

  19. And there’s this:

    http://www.philosophersbeard.org/2011/10/art-of-business-and-science-of.html

    —-
    Business and economics are tied up together in lots of people’s minds. After all, they’re both about money, aren’t they? An awful lot of people seem to believe that economics is Big Business and business is small economics. (Even the generally reliable Economist magazine seems to use this definition in deciding what should go in its business or economics sections.) The failure to keep the two apart leads to some bizarre misconceptions in the popular understanding. For example the idea that countries are businesses in competition with each other, or that business is about self-serving greed and economics is the soulless science of large scale greed.

    Business is the art of commerce. Economics is the study of the production, distribution and consumption of goods and services. Just from the definitions we can immediately see one clear difference. Economics concerns systems and general principles and is therefore a theoretical subject eminently suitable for academic study in a university, while business is a practical craft that does not belong there.
    [...]
    Pernicious misconceptions arise when the agent-level perspective of business is transposed to the system level of economics, and vice versa.

    1. Business thinking is bad for the economy

    Economics is about evaluating whole systems; business is about strategic positioning with respect to local competition. In a closed system every action has further consequences that also matter. Economies are like this and these systemic effects are what economists study (using abstract models to explore counterfactual worlds). Increased employment for example can create damaging inflation; unemployment can create depressions. Economics’ claims to be a science rests on its expertise in tracing the unintended but foreseeable effects of the interaction of causally significant mechanisms through a closed system.

    In contrast, businesses are open systems. If a company doubles its workforce (or fires 50%) that company, or even that industrial sector, will not generally feel any systemic consequences. Businesses, even very large ones, operate at the wrong scale to have to worry about the systemic impacts of their choices, and hence business economists aren’t used to thinking in those terms. The art of business and the science of economics
    [...]
    2. Good business can be bad economics

    Business economics gives advice to economic agents on how to make the most of the opportunities that come their way, while economics gives advice to governments about which rules will best lead to maximising general prosperity. That is, economists note that unless properly directed by the right rules, individual profit seeking may not generate and can even undermine system-wide economic growth (the invisible hand only operates in certain circumstances).
    [...]
    In conclusion

    The present easy conflation of business and economics is bad for both. Business economics transposes the shallow zero-sum strategic orientation of business competition onto complex closed-system economic issues. That has little influence on academic economics, of course, but its seductive basis in common sense intuitions gives it a central role in how most people, and most politicians, understand the way the economy works.

    Business economics also too easily conflates success at the level of individual economic actors with the success of the whole system. Hence such self-serving arguments as ‘What’s good for Wall Street is good for America’ can be sincerely held, though that doesn’t make them any less wrong.
    —–

    But, of course, you never bother learning.

  20. Eric, at the risk of repeating myself, you’re a fool.

    Thus says the guy who thinks he knows more about economics than the guy who’s made millions in his business career. No, Pho, the only thing comical around here is your ridiculous notion that your opinions of us actually matter. Like your tired yet obsessive potshots at my writing a book. The simple fact is, if your opinions about writing actually were worth anything, you’d be in a position where such opinions were rewarded. But you aren’t. Asking you about writing is like saying “If I wanted to know about software companies, should I ask Bill Gates or the guy mopping his floors?” Well, when it comes to judging writing, you’re the guy with the mop.

  21. Like your tired yet obsessive potshots at my writing a book.

    Again, you show yourself to be a fool.

    I’m not taking potshots at you for writing a book.

    I’m taking potshots at you for your delusional belief that your insipid writing will be sold off to Hollywood for a million dollars.

    do you get it yet? I’m not sneering at you for wanting to be an author; I’m sneering at you because you are a delusional fool.

  22. Well, when it comes to judging writing, you’re the guy with the mop.

    So, have you sold off your novel to Hollywood for a million dollars yet, like you claimed you would?

  23. The Phoenician quotes someone:

    1. Business thinking is bad for the economy

    Economics is about evaluating whole systems; business is about strategic positioning with respect to local competition. In a closed system every action has further consequences that also matter. Economies are like this and these systemic effects are what economists study (using abstract models to explore counterfactual worlds). Increased employment for example can create damaging inflation; unemployment can create depressions. Economics’ claims to be a science rests on its expertise in tracing the unintended but foreseeable effects of the interaction of causally significant mechanisms through a closed system

    Emphasis mine.

    If we assume that this definition is correct, then we must also say that our friends on the left have employed a whole bunch of very poor economists, given that they have been almost completely unable to foresee the effects of their policies when put into government action.

    However, the notion that business thinking is bad economics ignores the most basic tenet of economics, that economic actors will take decisions to maximize their own economic well-being. It doesn’t matter whether you happen to believe that a businessman’s decisions to do the best for his business are bad for the economy as a whole; you still have to realize that his decisions are his decisions, and plan accordingly.

    That maxim, of course, falls right in line with so many people’s naïve notion that politicians and government can somehow plan and manage the economy for the good of all; ask how well that worked for the Soviet Union, for Cuba. Venezuela has significant oil resources, a source for, in effect, importing the wealth of other countries, and under a socialist leader like the fortunately stone-cold graveyard dead Hugo Chavez they are even short on toilet paper. China has managed to reverse course, and prosper, by unleashing capitalism in that country.

  24. The reason economics is taught in Business School and not Medical School, Law School or Art School is because the two are inseparable. Anyone, including those you cited, who believe business is not small scale economics and economics is not large scale business has no business involved in either.

    Everything we do is impacted by economics. From the time we strike our first bargain with our parents to clean our room, take out the trash and wash the dinner dishes for $5 allowance we become players in the economic game. From that point we have money to spend and economic decisions to make.

    We all make these decisions thousands of times a day. If Dana and I meet for lunch at Applebee’s we made a decision that impacted Applebee’s in a positive way and every other comparable restaurant in the area in a negative way. If the guys call to get me to the Club for drinks and I decide to stay home and watch Elementary instead I impacted the Club. I also impacted the Spaten Brewing Co. all they way over in Munich by not buying 5 or 6 Optimators.

    I do not disagree with the definition of economics and business your cite presented. I just believe it’s a very, very narrow one. Business is the practice of sound economic principles and economics is the observation of those principles and their impact through an entire system. And even that definition is limited.

    You see Pho, economics is one of those things where people disagree and neither is wrong. It usually depends on each of their goals. There are a group of economists/politicians, the Krugman’s and Bloomberg’s for example, who want to use economics to bludgeon their political rivals and demand certain outcomes from random economic players. I don’t. I believe there is no government, no bureaucracy, not politburo, no man who is remotely wise enough to determine if Dana and I should meet at Applebee’s or if I should go to the Club.

    The problem that most people like yourself have is that you often see the effects of economic decisions but seldom the effects of what didn’t happen when those decisions were made. If Dana and I didn’t go to Applebee’s the money we would have spent there would not just lay on a pile on our tables, we would have spent it somewhere else. That’s what you don’t see. Similarly, when governments tax away my money to pay for “day care”, I may have used that money to buy a boat. Day care is good, but so’s a new boat. Both have an economic effect but one expands government and the other employs boat builders, and through velocity causes me to buy a space in a marina, fuel, food etc. Once the “day care” money is spent they have to come around and tax me next year to keep it going. That ain’t velocity.

    I’d just like to say as much as I enjoy being lectured by and told I’m a dope in economics by a socialist librarian I will try my utmost to ignore it from now on. It has become breathtakingly comical to constantly be told “facts” picked from the blogosphere which are so blatantly wrong and/or self-serving they are embarrassing.

    You attempt to pick and choose your economics to suit your political. Someday perhaps you’ll understand Economics Just IS. Until then you will remain my favorite internet dumbass.

  25. More from the Phoenician’s quotation:

    The present easy conflation of business and economics is bad for both. Business economics transposes the shallow zero-sum strategic orientation of business competition onto complex closed-system economic issues. That has little influence on academic economics, of course, but its seductive basis in common sense intuitions gives it a central role in how most people, and most politicians, understand the way the economy works.

    Emphasis mine.

    The idea that business has little influence on academic economics is telling . . . and damning. It tells us, from the front side, that the great economic scholars at our universities are trying their best to ignore business concerns, but since businesses exist in the real world, the failure to take that very heavily into account means that the learned academics are going to get things very wrong.

    And from the back side, it tells us that the academic economists just don’t like business and businessmen, somehow seeing them as really beneath them intellectually and socially.

    Business economics transposes the shallow zero-sum strategic orientation of business competition onto complex closed-system economic issues.

    Whoever wrote that is really pretty dumb. Businesses strive to increase their sales and their profits, but they aren’t looking at it as a zero-sum, closed system. Yeah, McDonald’s tries to increase it’s market share by enticing the guy who’s going to buy a hamburger to buy it from them and not Burger King (that’s the zero-sum part), but is also actively working to increase the total number of people who are going to buy hamburgers; that’s one of the functions of advertising, and all of the hamburger restaurants engage in it. That’s an attempt to expand the market, is not zero-sum, and most businesses try to operate that way. The economist who thinks that “Business economics transposes the shallow zero-sum strategic orientation of business competition onto complex closed-system economic issues” doesn’t understand either economics or business.

  26. And more:

    2. Good business can be bad economics

    Business economics gives advice to economic agents on how to make the most of the opportunities that come their way, while economics gives advice to governments about which rules will best lead to maximising general prosperity. That is, economists note that unless properly directed by the right rules, individual profit seeking may not generate and can even undermine system-wide economic growth (the invisible hand only operates in certain circumstances).

    This refers back to my older comment: businesses create wealth, and the notion that government can somehow do a better job in directing businesses to create wealth has been blown apart by real world experience.

    Even if we were to take that statement at face value, the sentence “economics gives advice to governments about which rules will best lead to maximising general prosperity” is clearly wrong in practice: what we actually have are people claiming to be brilliant economists trying to give advice to politicians who have goals which are far different from “maximising general prosperity.” Governments have all sorts of forces pulling on them, and certainly in the liberal governments the greater gravity is given to those groups who are far more concerned with “fairness” and “global warming” and other things which do not “maximize” prosperity, but are a drag on it.

    And, of course, the economists and politicians so very often get it wrong. We have been told how wonderful Obaminablecare would be, and how, in the end, businesses would appreciate it because they’d have a healthier workforce, &c, &c, &c, but the real world results have been that businesses which can are cutting back employee hours, to keep them under the 30 hour “full time” definitions, and keeping their labor forces under 50 if possible, to avoid having to provide health insurance, while insurance premiums are rising in anticipation of the added costs under the PP&ACA. If this was an attempt to somehow “maximize general prosperity,” it seems to be having a very negative effect on many people’s specific prosperity. Economists who actually understood economics could easily have foreseen this — we told you so on the older site — because of the very first rule you learn in Economics 101, that individuals will behave in the manner which they believe will bring themselves the greatest economic advantage.

  27. A guy who actually learned something about economics wrote:

    The problem that most people like yourself have is that you often see the effects of economic decisions but seldom the effects of what didn’t happen when those decisions were made.

    This is hugely important. Hoagie’s example was where he and I would spend our money if we didn’t go to Applebee’s, but, for liberals, the consideration should be where he and I would spend our money if it wasn’t taken away in taxes.

    Our friends on the left want larger government and more government programs to ease life for the poor, but whenever they take a dollar from me for such purposes, they waste the majority of it not on the programs themselves but on the administration of those programs. And as charitable as our friends on the left believe themselves to be, if I spend that dollar in the private economy, more is going to go to keeping people employed.

    Of course, it could be argued that keeping a social worker employed is just as valuable as keeping a production line employee on the job, but such fails the obvious test: is the government worker, who on average is paid more than the private company employee, producing as much — if anything at all — which grows the economy? I would argue that no, the social worker does not, because, at best, all that he does is to enable someone who is a drag on the prosperity of other people to continue to be a drag on the prosperity of other people.

  28. Economists who actually understood economics could easily have foreseen this — we told you so on the older site — because of the very first rule you learn in Economics 101, that individuals will behave in the manner which they believe will bring themselves the greatest economic advantage.

    Great sentence Mr. Editor. Fact is economists do understand economics, unfortunately they understand so much which is wrong. They fail to see a couple things that have always grated on me. For one, they never seem to see all those tiny economic decisions people make every day and how those decisions in total create the dynamic. And they also seem to skip over the unseen impact of those decisions as I mentioned above.

    But the real point there is people always choose to do what brings them the greatest economic advantage. That’s why I believe economists in government are as dangerous as a plumber in an operating room. Sure, they both understand “the flow” but neither have the talent to do the deed. I particularly love when they say “unintended consequences”. May as well get out the old Homer Simpson “D’oh!”. If you drive drunk you could kill yourself, D’oh! If you tell employers they must pay 5k a year for employees over 30 hours, they cut them back to 27 hours, D’oh!

    Which is why I said Economics Just IS. Don’t fight it, let it seek it’s own level. The Soviets fought it, they lost. Venezuela fights it, they have no toilet paper. France fights it, the rich move to Belgium. I fail to see why anyone would demand we put tax money into solar power. Why? If it’s good it will rise or fall on it’s own. Do we have to subsidize McDonald’s? Wal-Mart? Coca-Cola? If people want it it thrives, if they don’t want it then move the hell on already. Why would I bail out anyone let alone GM? Or Morgan Stanley? Screw’em, someone will come in, pick up the pieces and build it better. It’s NATURE. The old die, the young are born. Why fight it? When I heard the term “Too big to fail” I knew we were dealing with people Too dumbass to listen to!

    One more thing. I know some of you (you know who you are) try to separate economics and business. Good luck on that. Economists study the abstract theory, businessmen put theory to the test by doing the impossible. I do both and let me tell you, business is a lot more fun than economics. When you make a bad decision in business you know it almost instantly. When you make a bad decision in economics you let the politicians keep making more and more in an effort to cover it up (see TARP, QE1, QE2 etc). Plus, when you make a mistake in business, you pay for it. When the “experts” screw up “we” pay for it.

  29. The problem that most people like yourself have is that you often see the effects of economic decisions but seldom the effects of what didn’t happen when those decisions were made.

    Walter Williams?

  30. Hoagie says:
    Thursday, 12 September 2013 at 13:20

    “You boys are being trolled … again.”

    And that DNW is why I try not to talk economics or business with any leftist, troll or no. They simply can’t understand that every single dollar taxed and spent by government would have been spent or allocated somewhere else by market dictates and they find it inconceivable that One may actually allocate one’s money better than government. IOW, the “stimulus” they all tout is just a redirection of assets from one thing to another. The resources would have been used anyway just not where government put it but rather where it would have done the most good. Unless they’re just printing money like hell they are stealing resources to spend the way they want (usually to buy someone’s vote) rather than some other way.”

    Well, as you know Hoagie, Phoenician in a Time of Romans almost never makes arguments that can be attributed to him personally; and on those occasions when he has attempted it, usually involving a personal attack, they have merely demonstrated his intellectual incompetency to do so, and he has fallen flat, and quite comically, right on his pug face.

    That’s why he simply cites, and then hopefully insinuates that his citation is somehow relevant and dispositive.

    That’s his tiresome recipe: “Add cite, sprinkle with invective”

    But as we have also seen, most recently in the posts above, his citations tend to constitute non-responses directed at questions not presently mooted. And when followed to the source, they often enough do as much to rebut as to support his insinuation. Unless of course, he’s quoting that bearded lady Paul Krugman … as his soft girlish hands gently stroke his own bearded, chinless face

    In fact, those with a good memory will recall that Phoenician in a Time of Romans had more or less stated he has given up on argumentation for some supposed new paradigm which he imagines he’s participating in … something involving a hive-mind-like, evolving consensus, grown out of instantaneous communication.

    No personal reasoning or critical thinking skills are thought necessary, apparently. And how comforting a delusion that is for Phoenician, since he demonstrably lacks a capacity for either of those things.

  31. I’m taking potshots at you for your delusional belief that your insipid writing will be sold off to Hollywood for a million dollars.

    The problem, my dear Pho, as I indicated above, you are simply not qualified to judge whether my writing is “Insipid” or not.

  32. do you get it yet? I’m not sneering at you for wanting to be an author; I’m sneering at you because you are a delusional fool.

    But what YOU don’t get is I simply don’t care. And why should I? It’s not like you have ever presented yourself as someone whose opinions are worthy of respect. You’re basically a disgruntled malcontent from a country so small and insignificant most people don’t even know it’s there. Its sole product of significance (other than sheep) are a series of Hobbit movies. It has no auto industry, no aircraft industry, no electronics industry, or makers of computers or cell phones. In terms of advanced technology you’re behind South Korea and India and Vietnam are probably catching up. If you tried to make a space program, you probably couldn’t figure out which end of the rocket to put the fuse. 

    In contrast, I live in the greatest country in the history of the Universe. We have sent men to the Moon and space probes to every planet in the Solar System. We invented the atomic submarine and the supersonic airplane. We beat the Evil Empire and won the Cold War. To be an American today is to be like a citizen of the Roman Empire at the peak of its power. The world devours our movies and rocks to our music. We set the trends that the rest of the world follows. When the first human being lands on Mars, that person will probably be an American. America is a country with big balls and big shoulders. Our millionaires are richer and our women more beautiful. 

    So, sneer if you want and see if I care. Does the soaring eagle notice the sniveling rat or the slimy, dirty cockroach? 

  33. Whoever wrote that is really pretty dumb.

    Uh-huh – well, let’s see…

    Dana, immediately following: Businesses strive to increase their sales and their profits, but they aren’t looking at it as a zero-sum, closed system.

    Given that the actual quote actually contrasted zero-sum business calculations with a closed-system economic perspective, it appears you’re the dumbass. You literally have no idea what the person you’re criticising ACTUALLY SAID.

  34. In contrast, I live in the greatest country in the history of the Universe

    You mean you live in America. And so does Honey Boo Boo.

    The difference between you and Honey Boo Boo is that SHE doesn’t look to her country’s accomplishments to prop up being a worthless dumbass.

    Sold your novel for a million dollars yet like you boasted you would, Eric?

  35. Pingback: Naptime again! | THE FIRST STREET JOURNAL.

  36. Sold your novel for a million dollars yet like you boasted you would, Eric?

    You know, even Honey Boo Boo is smart enough not to ask the SAME STUPID QUESTION dozens of times, over and over, obsessing over someone else’s pursuit of success as if it had some relevance to their own lives.

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