Obama's Stimulus - Zero Effect on Unemployment, Doomed to Fail

[The Dark Wolf]

Commentary: Obama’s stimulus doomed to fail – amFIX - CNN.com Blogs

Interesting read. The guy is not a partisan hack, either, but rather a fairly respected and accomplished economist.

[ohio_eric]

Morici: Well, we import too much from China without selling there. One of the best-selling cars in China are Buicks, believe it or not. But they won’t buy any Buicks made in the United States. They have a 25% tariff and they require General Motors not only to make them there, but to move their suppliers there. That’s why the Midwest is melting down. Because it’s not just Buicks and cars, it’s all manner of high-end industrial products for which China’s cheap labor doesn’t provide an advantage. That’s about 50% of the trade deficit. The other half is oil. President Obama’s windmills are not going to solve that. We need dramatically higher mileage standards right now. And we need a real clunker subsidy to get the big cars off of the road. For example, replace the Tahoes with Traverses – very big car but it gets twice the gas mileage.

[noodles]

Yep. The problem is with all of the outsourcing we've done, in the name of free market, without placing restrictions that would be seen as "protectionist" by the free market folks. Yet China imposes huge tariffs, and pay their workers next to nothing, meaning that the playing field will never be even close to fair and level. The greed of a few at the top have made life impossible for those at the bottom.

[Vegetta]

I think we should just give China the ol FU and take our ball and go home.

If they wont practice fair trade then we simply need to stop importing their crap. 90% of the goods produced in china are garbage anyway.

[Drew]

Originally Posted by Vegetta

I think we should just give China the ol FU and take our ball and go home.

If they wont practice fair trade then we simply need to stop importing their crap. 90% of the goods produced in china are garbage anyway.

We COULD let the dollar collapse. Suddenly, China's $1 trillion holdings of American debt would become more-or-less worthless, the price of imported goods in America would skyrocket, and on an exchange-adjusted basis, China would lose its comparative wage advantage in one fell swoop.


...come to think of it, Bush's economic policies might not have been as bad as I initially thought.

[The Dark Wolf]

Well, as the article says, China gains an unfair advantage by artificially maintaining their currency's value as low, relative to the dollar. This gives all Chinese exports an unnatural and unfair advantage on the world marketplace, because their goods can be priced significantly lower than US exports.

[Drew]

BTW, he's right:

The stimulus money is very badly spent. We knew the tax cuts from the Bush stimulus don’t work. People are simply saving it. If you wanted stimulus to work, spend it mostly on shovel-ready projects, infrastructure, schools, hospitals, etc. But only $100 billion of the $800 billion is spent there.

Well, essentially, you have to recalibrate trade with China, one way or the other. You have to get it to unhinge its currency and stop manipulating its currency. It’s buying about $400 billion a year of U.S. dollars with yuan that it prints, basically giving them to us and then that basically keeps their currency cheap and makes those products artificially cheap in our markets.

:/

EDIT - though, he's wrong in that most economists believe the economy will eventually pick back up, and unemployment will fall. Heck, he probably believes this. He's just correct in his assessment of the stimulus. More of it really should have gone towards infastructure - partly because that WOULD have done a better job creating employment, and partly because it would have done some tangible good in the process.

[The Dark Wolf]

And, I should add, an advantage over even domestic goods here in the US. Re: Walmart.

If the US ever seriously addressed the trade deficit issue, well, Walmart shoppers, those Walmart low, low prices would be a thing of the past.

[Drew]

Originally Posted by The Dark Wolf

And, I should add, an advantage over even domestic goods here in the US. Re: Walmart.

If the US ever seriously addressed the trade deficit issue, well, Walmart shoppers, those Walmart low, low prices would be a thing of the past.

Honestly, the price of consumer staples on an inflation adjusted basis has plummeted in the last 50 years. WalMart going away isn't necessarily a bad thing, IMO.

[noodles]

Originally Posted by Drew

EDIT - though, he's wrong in that most economists believe the economy will eventually pick back up, and unemployment will fall. Heck, he probably believes this. He's just correct in his assessment of the stimulus. More of it really should have gone towards infastructure - partly because that WOULD have done a better job creating employment, and partly because it would have done some tangible good in the process.

Yes, he is right. A Republican filibuster is why the money went to tax breaks, rather than where it would actually do some good.