Trying to put this thread back on track, why am I not brimming with optimism about the coming ministrations of the Obama administration? Bob Higgs sums it up nicely:

On the stock markets, corporate share prices have fallen precipitously. Unemployment is rising. Housing construction has declined greatly, and home builders are going bankrupt. Many homeowners are losing their homes to foreclosure or tax sale. Many banks and other financial firms are in trouble, and some have already gone under. Loans are harder to get than they used to be, especially for the least creditworthy borrowers. At the Fed, the central bankers are baffled, sensing their powerlessness to prevent further economic contraction. The president is discredited and eager to leave office, passing responsibility for dealing with all the economic problems along to his successor. Congress has earned the public’s hostility, and the legislators’ popularity, like the president’s, has sunk to an extraordinarily low level. Desperately, blindly seeking something, anything, anyone to stop the downward spiral, the electorate has chosen a new president, giving him a wide margin of victory. Awaiting his inauguration, the future chief executive promises to clean house and turn the country around, but the public does not have a clear vision of what is coming.

Yes, in the circumstances just sketched, the year 1932 was drawing to a close, much as the year 2008 is drawing to a close. Should we expect next year’s events to resemble those of 1933? Devoutly may we hope they will not.

If they do, we are all in for a great deal of unnecessary trouble. But when did that bleak prospect ever give pause to a new gang of looters and world-savers? People might act to preclude a repetition of the drawn-out wretchedness after 1932 if they understood what happened then and why, but, sad to say, their understanding of that episode is by and large a tissue of myths and mistaken ideas. In our present fix, then, we may be excused if we conclude with Hegel that “the only thing we learn from history is that we learn nothing from history.”

Little comfort may be drawn from Mark Twain’s observation that “history doesn’t repeat itself, but it does rhyme.” Given what I see on the horizon, I expect that our political and economic future will have more rhyme than reason, and that 2009 will have more similarities with 1933 than a well-informed friend of humanity would wish to see.

Oh, right. Thanks for illustrating that it doesn't.

if I have learned anything from history books and newspapers, it's that we should be rooting like hell for World War 3 to begin so that we may start repairing the economy.

well played

This one caught my eye. Labels aside, what is so bad about gov't "investment" (in quotes because I know you're going to rail on it) in projects like infrastructure that benefit the general public during economic crisis? It's better than starving to death. Can the free market do it better? I suppose, but I don't see any Hoover Dams being built by the private sector.

How does building, say, a bridge to nowhere stop starvation?

Hiring people that would otherwise have to do actually productive things to make a living to instead dig ditches, or build pyramids, or unneeded "infrastructure" makes everyone poorer. Not only is the productivity of those workers, not to mention the other resources, lost to make work and boondoggles, but the money to pay for the makework and boondoggles must be taxed away from productive activities or printed, which amounts to the same thing.

What does that tell you about Hoover Dam?

Wow he uses a lot of words to say very little. I get your general sentiment and I won't dismiss it...but any blanket comparison of our economic world today with 70+ years ago is going to be pretty flawed.

To answer you both, I assume (although I don't know for sure) that the Hoover Dam was a net positive investment as opposed to say digging a hole to China. It's still there and generating electricity so after 60 or 70 years I figure we got our money back. At the time it was being put together the people who built it were happy to get a check. The ones who fell in and became part of the dam notsomuch but they needed the work enough to take the risk.

What do Keynesians say about tax policy during a recession? Is raising them or lowering them better at leaning against the fall in aggregate demand?

This is another reason to be slightly worried about Obama, since now is the worst time to be raising taxes.

Do Keynesians EVER raise taxes?

Because you have the uncanny ability to see more than an inch in front of your nose.

Seems so weird to me to see Max being so badly misjudged in this thread. I dont know if part of it is his fault for communication problems or something but it is just bizarre.

I agree Max is definitely one of my favorite posters.

What has Obama done that makes you think he is smarter than Clinton? This topic started with someone saying that Obama was smarter than Clinton, so its pretty dishonest to paint this as racist white guys claiming that Clinton is smarter than the black guy.

This is a silly debate obviously, since no one can say for sure, which is kind of the point. What I would say though is that there is a lot more evidence of Clinton's smarts and brilliance than Obama's at this point. Clinton is also older and served two terms, so we have more to go on with him.

Saying that you think that Obama is maybe smarter by a significant margin than Clinton who was a Rhodes Scholar and is considered by numerous people to be brilliant is pretty ridiculous given what we currently know.

The problem with government programs is we are always looking at just one side of the equation. We see results but we forget about the taxes and the fact that free choices would've lead to something else. With expensive programs like NASA or the Hoover Dam we see great benefits today. But with the time value of money, massive amounts invested and the fact that people want other things more like cures for diseases how can we just assert it was worth it? We dont have an alternative universe with faster technological progress or a cure for cancer.

You may have missed this

"First, As a constitutional law professor, I came away impressed — dazzled, really — by the analytic intelligence and sophistication of these questions and answers."

I think an average person on the street who thinks that Clinton is smarter is likely to be doing so for racial reasons. I personally think that Obama is smarter only because of the NY times article that I posted before. That is way more impressive than being a rhodes scholar. (I think editor of HLR is more impressive also)

Lol, I get accused of leveling??? All I am saying is that the entire field of modern economics may not be so wrong as to be obviously so to people who have not learned it at an expert level. I could replace economics with pretty much any other subject that uses modern math and it would still be true.

I give you credit for realizing your error, but what struck me the most was how quickly you claimed that something (which you didn't really understand) enforced Austrian economics and falsified a branch of mainstream econ.

I mean, you must have only barely skimmed the definition of what gauge theory is (if even that) and already were willing to claim it as a triumph of the Austrians. I'm not picking on you for making a mistake, everybody does that, but it was as though you read the paper knowing it would confirm Austrian economics and couldn't wait to stick it to monetarists or whoever else in mainstream econ.

Oh and this has all been a huge hijack. All I wanted to know is would people have been making some of the extreme claims that the US is lilkely to collapse in 20 years in the 60s, 70s and 80s? (This has nothing to do with a post by Boro about academic economics that I only skimmed) And if you wouldn't have been making those claims before, what is fundamentally different about now, we have similar economic policies and still fight wars in other countries seemingly at random. I am confused because quality of life greatly improve in the 70s and 80s and people here are saying that it may dip soon.

Until Nancy Pelosi said taxes shouldn't be raised in 2009, the fears were well founded. Now, not so much since Obama can't get anything done without her support.

Jimbo

So for some reason raising taxes from 30 to 36 (or whatever) will cause the country to collapse?

[And I don't think others will agree with you that we are safe if we just keep taxes exactly how they are now]

No, but saying 39% and Wink Wink meaning 45 to 60% sure did. Much as his "tax cuts for 95% of all Americans" was misleading. I don't blame him, hell it was a political campaign but knowing better scared the bejesus out of me.

Safer, not entirely safe, after all we do have a democrat as President of the US as well as controlling the House and Senate, that should scare even you. A guy in the top 99.9% of all scientists should be able to do the math. Your comparison to the 60's, 70's and 80's didn't have that to overcome.

Jimbo

Max Raker,

I think the sudden difference now is the change of the US from a creditor nation to a debtor nation. While the problems were there before, we now have a compounding issue working against the US dollar. It's realistic that the currency might collapse now. I don't think that was the case in the 80s.

Regardless, in the 80s and early 90s, I was still a Reagan war-hawk. I've changed, so I'm not exactly sure what the AC/Austrians were saying back then.