The Grand Fallacy

Earlier this week, Mitt Romney criticized Obama’s “jobs plan” for being the same old same old: more teacher, more cops, more firefighters. The Left, of course, pounced, claiming that Republicans hate education, safe streets, fireproof houses, baseball and apple pie. Russ Robert’s response exposes how vapid this thinking is:

I didn’t follow the Romney narrative. But he was on to something even if he indeed did backtrack–Obama wants to grow the public sector and so does Krugman. They both want more teachers (and police and firefighters, presumably.) The current level is never optimal. More is better. It doesn’t matter if the number has grown dramatically lately. More is better. Similarly, we never spend enough on education. So if you want to spend less on education, that means you’re against education. The fact that there is little evidence that spending more actually produces more education is ignored. Spending on education is presumed to produce more education. Similarly, adding teachers and reducing class size means more education even if there is little evidence of this effect.

Precisely. We have allowed the debate to be defined this way. We even rank states by per-pupil education spending, as though spending money were the entire goal of the public education system. Oh wait, spending money is the primary goal of the public education system. That it can educate kids is a happy side effect.

The thing is that Krugman, at least, knows this is bullshit. He’s an economist, for Smith’s sake. Car makers employ far fewer workers than they used to. Does that mean our cars are worse than they were fifty years ago? Farming used to occupy the majority of Americans; now it’s about 2%. Do we have less food? Would doubling the number of Congressmen produce better legislation? Would doubling the number of lawyers produce more justice? Sometimes, you need more people. But sometimes the problem is far far deeper than just not having enough hands on deck.

The idea that the education sector can never have enough teachers is a fallacy. No one know the ideal number of teachers or the ideal class size. We do know that massive increases in the later and decreases in the former have produced no progress. The car is stalled on the side of the road and all the liberals can think of is, “put in more gas”.

They’re just not thinking any more; they’re reacting. They are falling on their old dogma because they have no ideas anymore. Obamacare was their biggest idea in the last decade and even that was stolen from Mitt Romney. And so all the Left has is this perpetual endless call for more, bigger and more powerful government. They can not imagine anything else.

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  1. Seattle Outcast

    Standard Keynesian BS that starts with the assumption that government jobs aren’t a drain on the economy but instead actually drive it. Not sure exactly how jobs existed before governments were around to create them in this model…

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  2. georgebalella

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  3. Section8

    Sorry George, but let’s get some things straight. We had a trillion dollar stimulus which still kept unemployment levels higher than the predicted level of passing such stimulus, Over half of the public sector loss was when the Democrats had complete control (not that cutting the fat was bad), but here’s the deal: Those blue states that were running around talking about how great they were and paying for the red states, well it turns out they had money at the time because they got it all from getting neck deep in debt. You can’t credit card your way to prosperity period. Just ask Greece. Anyhow, you once mentioned you have a second vacation home. Sell it and hire some people. Doesn’t matter what job it is. Just moving dirt from one part of your yard to the other will do, but contribute and put some effort into it, instead of the typical leftist mentality of charity should come from your neighbor’s pocket. The government is out of money, and we can’t pretend otherwise any longer.

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  4. Hal_10000 *

    The fact is we have cut over 600,000 public sector jobs since the recession. THAT is YOUR idea and its not working.

    This is not an idea to fix the economy. This is a necessity given the state of public finances. The curve you link to showing ever-growing government payrolls is unsustainable.

    And besides that, this post was NOT about stimulating the economy. It was about the de-facto assumption that more teachers == better education, that more money == better education. Your comment basically concedes the point: public education is not about education. It’s a jobs program!

    YOU are the ones with no ideas because you believe the BS of supply side economics.

    George, you should really read my posts. I have said repeatedly that tax cuts are not the solution, although tax reform would help.

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  5. georgebalella

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  6. georgebalella

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  7. Hal_10000 *

    What I see is a decade-long surge in govt employment that produced more permanent economic gains. You have to make up your mind, George. Was the Bush economy shit? Or was it great? You can’t claim it’s shit when you denounce Bush’s economic policies (which I did not agree with) and then call it great when you point to the surge in public employment.

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  8. Biggie G

    You can’t claim it’s shit when you denounce Bush’s economic policies (which I did not agree with) and then call it great when you point to the surge in public employment.

    You can when you’re a hack.

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  9. CM

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  10. georgebalella

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  11. Section8

    I have yet to see one of these very rich guys hand over a cent to the government. Buffett’s company still owes back taxes I believe, so he won’t even pay the taxes he owes with the current rules let alone go the extra mile. This has been going on for some time, so I ask what is the hold up with these guys? Handing over money is a slow process? So while these guys are on their self promoting PR campaigns, they obviously have no interest in blazing the path by by setting an example, which yields no evidence they really believe in what they are saying. At least not if they become part of the formula. Again, it takes no heroics to donate someone’s life, liberty or treasure.

    That aside, I do agree there is a growing gap between rich and poor, and that mainly has to do with government regulation making it more difficult for smaller companies to grow or even start up, while those larger ones with wealth can skirt the laws, make friends with Congress, get bailouts, and sure as shit lobby with this farce of a president who said he wouldn’t work with lobbyists. Please, crony capitalism is at an all time high because the influence of the government as a power player is at an all time high. Crony capitalism has been growing for decades along with the size of the government. That’s what we should be focusing on. As far as taxes, those should be raised after the government shows some commitment to real downsizing, and they should be used to pay off the debt.

    Oh, and as far as companies not creating jobs small or large? The consumer is only responsible? Really? Then everyone would be their own company and self sustaining. He’s totally leaving out investment, and risk of loss, coming up with business strategies that work. Those are absolutely required, because without them you wouldn’t have anything for a consumer to consume in the first place, and obviously not everyone is willing to take such risk. Now when the government gets involved and compounds the risk with even more pitfalls in to become a self sustaining success, when they make it more difficult to turn a profit, then some businesses will never make it to existence, some will go out of business when they didn’t have to, and hence less jobs regardless of the existence of the consumer. That is the true issue here, not taxing some rich guy. And guess what happens when only those with influence survive? Don’t be fooled by the Buffetts and Hanauers of the world. If they had any intention of sharing their wealth with the government to make a better USA, they would have done it by now and pleaded for others to follow their lead AFTER they made a true commitment. These are exactly the kind of guys who want a huge split between rich and poor, but in this case, it would be government controlled, while they keep their wealth, and the rest of us work for some government job that can’t be paid for leading to an eventual death cycle, as they key to a healthy society is that wealth is ultimately created and not distributed.

    My advice to Obama: Since he obviously believes he can set his own laws now, set a special tax that states that anyone on record saying “tax me” that makes over 1 million should have 50% of their total wealth taxed immediately. After all, much of that wealth was accumulated due to low taxes, and now they should have to show they are willing to give it back since they “believe” it was all accumulated in an unjust manner in the first place. Let’s see how that works first, then look at next steps.

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  12. Seattle Outcast

    Who the fuck is this guy. It’s like arguing with a creationist.

    I’m pretty sure it’s MooGoo. Same crappy spelling, moronic links, and run-on bullshit without pausing for a breath or logic to intervene.

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  13. ryansparx

    So where are the jobs, and middle class wealth, going to come from?

    They’ll make it all their goddamn selves if you take the jackboot off their throats and just let them. Get out of the paradigm that some benevolent massa has to come and save you, slave.

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  14. Poosh

    Can you even call it a fallacy? It just seems like total nonsense to me. A fallacy implies an error in logic. But I don’t even see an attempt to use logic here.

    I guess the government could hire people to specifically set houses alight, that would create more jobs. And boast the demand for Firemen. That would create more jobs. And all the replacements of burnt possessions would stimulate the economy when people go out to buy replacements.

    Genius.

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  15. Poosh

    Um dudes, correct me if I’m wrong, but even if Romney does get in the White House, and does magically manage to cut government spending down substantially (lol), and banks start to lend out money again …. isn’t a lot of that money newly printed money and won’t this basically just cause another recession/bubble …. …. …

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  16. gitarcarver

    Q and O has talked about the teachers issue before.

    Included in their post are two graphs. The first shows how the number of teachers has expanded dramatically and at a higher rate then school enrollment. The second graph show how even when adjusted to inflation, the costs of education has risen without any appreciable gain in student performance (and perhaps even a lowering of performance.)

    The idea of throwing money at education increases performance is not supported by facts.

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  17. tomchamberlain

    I think you hurt your cause by dismissing george’s issues outright. George is, to an extent, right. If you fire government workers but don’t provide tax cuts to give the money they would have been paid back to the people then you are hurting the economy. Because those public workers aren’t spending but the money they would have been paid isn’t being given to people who would spend it. Hence it disappears from the economy which hurts the economy.

    The real question is “Can we afford to pay those people even if firing them hurts the economy?”. George’s answer is “Yes” because we can tax the rich. So that’s the real issue here.

    In 2010 the top 1% made, in total, about $1.7 trillion a year. Of which they already pay $392 billion in Federal Income Tax. We can also assume they’re paying at least 6.7% in state income tax (it’s probably much more but that’s the mean tax rate for the 50 states). That takes another $114 billion. That leaves them with about $1.195 trillion and that’s not including all the other local taxes such as property tax, sales tax, etc… While our deficit in 2010 was $1.267 trillion

    So even if you confiscated 100% of income from the top 1% they couldn’t even cover our deficit.

    Meaning we couldn’t spend any more than we spend right now without borrowing. Since we can’t borrow forever (eventually people will stop buying our debt) that means the amount we already spend is unsustainable regardless of how much you tax the rich. So the public sector jobs being cut right now will have to be cut at some point and whatever harm it will cause the economy in the short term is inevitable. Meaning it’s better to make those cuts now and try to contain the long term harm those salaries will cause to our debt.

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  18. Poosh

    Because those public workers aren’t spending but the money they would have been paid isn’t being given to people who would spend it.

    You’re borrowing money to pay those workers in the first place. The more you borrow the more you devalue your currency, the more you f*ck everyone. The more easy money you flood into the economy, the more you bring about inflation and the more you distort the true purchasing power of your currency: the more you f*ck everyone.

    Amusingly, idiots who like to “tax the rich” … what if every government did that? It’s the rich who lend to other countries in the first place! … that’s one of the ways they get rich!

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  19. tomchamberlain

    You’re borrowing money to pay those workers in the first place. The more you borrow the more you devalue your currency, the more you f*ck everyone. The more easy money you flood into the economy, the more you bring about inflation and the more you distort the true purchasing power of your currency: the more you f*ck everyone.

    In your conclusion I pretty much agree. But in your statements I don’t think they’re entirely accurate.

    First we have to define terms. There’s printing money and there’s borrowing money. Not all borrowing money means printing money. That said, while printing money CAN devalue the currency it doesn’t necessarily do so if the money replaces currency that’s been removed from the economy.

    So, for example, say I want to start a widget business so I borrow $10,000 from the bank. My business fails and I never pay anything but interest on the loan. So the bank forecloses and liquidates my widgets for 1/10th the price. In that case $9,000 just disappeared from the economy because I built widgets for $10,000 that the bank had to sell for $1,000. IN THEORY the federal reserve could print $9,000 and not devalue the currency in this case.

    This is the theory of Keynes, that you can print money to replace destroyed money and then use it to hire tons of people without completely devaluing the currency. The problem with Keynesian economics is (a) the government doesn’t know how much money is being destroyed in a crisis, (b) they always over estimate and (c) the government’s drastic action tends to scare people who then spend even less (which creates a negative feedback cycle).

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  20. Christian Atheist

    So, for example, say I want to start a widget business so I borrow $10,000 from the bank. My business fails and I never pay anything but interest on the loan. So the bank forecloses and liquidates my widgets for 1/10th the price. In that case $9,000 just disappeared from the economy because I built widgets for $10,000 that the bank had to sell for $1,000. IN THEORY the federal reserve could print $9,000 and not devalue the currency in this case.

    Nothing has disappeared from the economy. That money the bank lent you is now in the pockets of your widget suppliers.

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  21. tomchamberlain

    Nothing has disappeared from the economy. That money the bank lent you is now in the pockets of your widget suppliers.

    I think you’re seeing money in the wrong way. Money represents effort and material. The total amount of money in an economy is representative of the total amount of effort and material. It doesn’t have intrinsic value.

    Any supplier who is selling raw materials had to put effort into obtaining those raw materials. Hence me buying those materials for widgets is just me trading their money and effort for my bank borrowed money.

    In other words the suppliers put $8,000 of money and $2,000 worth of time in to mining the material that I paid $10,000 for (the $2,000 being their profit and hence the money their time turned out to be worth). So that was already in the economy before I paid them the $10,000 I was just exchanging money for their money and effort.

    At the same time I, with my failed widget business, took their materials and my effort and devalued both. Since I put the $10,000 provided by them and put effort of my own (which is of some value) into the widgets which eventually were sold for a mere $1,000. So where there was roughly $12,000 (materials plus my effort) there is now only $1,000 meaning those materials and my effort are only worth that much in this instance. This increases the value of each dollar since total dollars = total effort + materials and that’s why we had deflation before the federal reserve was created.

    Which, in my opinion (and most Austrian leaning people’s opinions) is fair. If people’s money is going to go up or down in value (deflation and inflation) I’d rather it go up. But the Federal Reserve chooses to print money and print more than is destroyed which causes inflation (prices go up because the value of money goes down).

    But, if I can go back to my original point, IF government was capable of showing self restraint then printing money COULD be a good thing. It could re-purpose the destroyed wealth and use that to hire people while not devaluing currency. But since no government on earth has managed to show that restraint I’d just assume abolish central banks and be done with it.

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