Calvin Woodward, at the AP, calls this an overstatement:

Most economists, almost unanimously, recognize that even if philosophically you're wary of government intervening in the economy, when you have the kind of problem you have right now … government is an important element of introducing some additional demand into the economy.

but it goes well beyond mere overstatement. It's an gross lie.

It's bad enough when people use consensus to argue for a proposition that ought instead to be tested by logic applied to brute fact. But this business of using counterfeit consensus is just actively vile.

Any time that the state spends money, there is some cost to the economy.

The state can tax, in which case the cost is obvious. But I put obvious in quotation marks here, because people don't seem to think past the fact that money is taken, without much thinking that the value of money per se is its purchasing power.

The state can print money, issuing new currency to fund its expenditures. The cost here comes because

where M is the total supply of money in an economy system, ν is the average frequency with which a unit of currency changes hands in the system, q is vector of the quantities of goods and services purchased in the system per unit time, and p is the corresponding vector of prices. If M is increased, and there isn't some off-setting increase in the elements of q, or a drop in ν, then elements of p must increase. If prices go up, then the purchasing power of the unit of currency goes down. Ceteris paribus, when the state issues new currency, the value of the holdings of currency that people already had is decreased. (There are some other, potentially far more costly effects than the direct loss of purchasing power, but I don't want this entry to mushroom into some huge treatise.)

In many modern states, printing money is made to look like borrowing, whereïn the ostensible borrowing is from a central bank, a special creature of the state, which prints money and uses this to make the loan to the state.

But the state may also more genuinely borrow money (especially when officials of the central bank think this better than printing more) in the financial markets. In this case, borrowing by the state shifts out the demand curve for loanable funds. Unless the supply curve for loanable funds were perfectly elastic, so that any amount of funds would be made available by lenders at the prevailing price — the rate of interest — that price will go up.

When people lose purchasing power to taxation or to an over-all increase in prices, they reduce purchases of goods and of services, and they save less, so that funds for investment are decreased, and hence investment is decreased. When the price of borrowing is increased, people borrow less for consumer purchases and less for investment. So whenever the state spends, no matter whether it taxes, inflates, or borrows, that spending takes a piece of the economy. Whether there is a net cost turns upon whether the activity funded by state spending is somehow more productive than the private activity that it has crowded-out.

As I have explained, state allocation of resources can be more productive only if private provision is hampered by transactions costs, and the effects of those transactions costs are greater than the combined effects of state transactions costs (red tape and all that) and the loss of economic coördination which results from substituting guess-work for market prices.

Okay, so this gets me to these stimulus bills in the United States legislature. Various numbers are associated with various versions, but the bill that left the House of Representatives was for about 800 billion dollars. And various commentators, both conservatives at institutions such as the Wall Street Journal and social democrats (liberals) at institutions such as NPR, have noted that only about one-eighth of the projects in that bill could be reasonably claimed to be stimulus, with the rest just being pork-barrel projects. Regardless of whether we buy-into the Keynesian hopes for about $100,000,000,000, the loss to the economy associated with about $700,000,000,000 in pork will be vastly greater.

It was claimed that a stimulus bill was necessary because the economy is tanking. The word depression is being bandied-about. And, yet, a majority in Congress and the President are pushing what will plainly be a massive hit on the economy.

To explain the behavior of these parties, we could offer various hypotheses. Many politicians are simply great fools; some politicians might believe that we are indeed on the cusp of an economic disaster, but be so greedy for the political gains associated with these projects that they just won't allow themselves to think. Other politicians might not believe the talk of economic crisis, but be knaves who participate in it, creäting a smokescreen behind which to seek much the same gains as are the fools. Finally, some of these politicians might both genuinely believe that the economic crisis is quite dire, and recognize that a stimulus like those proposed will be greatly damaging, but expect that the effects of the bill can be blamed on other things, especially upon what remains of the market economy, so that those effects become an excuse for even greater expansion of state power.

With regard to one particular politician, the President, I don't at all think that he's so great a fool as to misunderstand what a stimulus bill that is about 7/8 pork would do. He knows that he's pushing a hit on the economy. I don't know whether he is amongst the knaves who don't really believe that the economic situation is all that dire, or amongst those who want to engineer a greater crisis in order to have a greater excuse to technocratically restructure the economy. But when the President speaks of recovery as taking years rather than months, I worry that he is not merely lowering expectations to reduce future criticism, but revealing more ambitious plans.

At LiveJournal.com right now, the site reports

LiveJournal is currently down due to migration to a new server facility. The window of planned downtime is from 8 AM to NOON PST (4PM to 8PM UTC) on Tuesday, November 18, 2008.

For more information, bookmark our status site. Thanks for your patience during this time.

(The status site, meantime, is claiming Scheduled Maintenance: Feb 4, 05:00 - 07:00 UTC/GMT, though 07:00 GMT has come and gone.)

Red Hat has released Red Hat Enterprise Linux 5.3, and appears to be celebrating that release with, well, server dysfunction. The mailing lists are buzzing with anger over the slowness of the automatic up-dating routines. This morning, I spent several hours on a high-speed connection trying to down-load a disc image (and finally gave up). A few days ago I was being denied access to any downloads as if I had no active subscription. Their bugzilla tells me that my password has expired, but the link that they sent me to up-date it results in some sort of proxy error.

Barring some remarkable act of contrition on the part of Red Hat, I won't be buying any more subscriptions from them. I'll switch to something such as CentOS.

Speaking of Poe, to-day represents the bicentennial of his birth.

Spybot-Search&Destroy produced a false positive yester-day. It notified me that KHALMNPR.EXE was a Trojan horse program. In fact, KHALMNPR.EXE is a basically benign program from Logitech.

The Spybot-S&D folk know about this problem, but are not planning to effect a correction until Wednesday. If you've already let Spybot-S&D effect the ostensible repair, you should be able to reverse that using Spybot-S&D; you can also reïnstall the Logitech software.

I am still fighting the flu that I reported here on the 7th. The symptoms have varied somewhat, and have generally been less during my waking hours than when I sleep. Most days have seemed to represent gradual improvement, but this morning was very wretched. My throat was especially sore and it hurt quite a lot to swallow. I had other symptoms, typical of a flu: headache, fever, sinus and nasal congestion, and body aches.

Last night, I got some saline solution with which to flush my sinuses. Because I wanted to do that, instead of just to moisturize my nasal passages, I needed an ærosol. At the Hillcrest CVS/pharmacy, the only ærosol saline with the right sort of nozzle for spraying the stuff into one's nose was mentholated. I cannot say that I enjoyed the experience of a mentholated solution in my sinuses.

Also, the can had some blatting on it about homeopathic principles. I was especially amused by the note that, since the ostensible curatives were only present in homeopathic amounts, there would be no side effects. Indeed. I figure that, because of the hydrological cycle, if homeopathic principles were correct, then we'd all be in perfect health.

As I was buying one thing of saline to spray in my nose, it occurred to me to buy some saline for my mouse first-aid kit. Fortunately, I didn't need a special nozzle for that.

Perhaps we should demand an apology on this score from Al Gore. After all, he told us that he took the initiative in creating the Internet.[1]

[Up-Date (13 Jan): I was informed by Gaal, in a comment to this entry, that the Times had somehow fabricated this story. (The BBC presenting the story as if it were their own research, but the chances that they would have independently fabricated the same details are slim indeed. So the Times has been caught-out in one way, and the BBC in another.) Meanwhile, the BBC story has been significantly edited, so that the sentence quoted above no longer appears, and we are instead told

A recent study by American research firm Gartner suggested that IT now causes two percent of global emissions.

]

---

[1]Note that Snopes.com demonstrates that Al Gore did not claim to have invented the Internet. But what Gore did claim (and they even quote this) was

During my service in the United States Congress, I took the initiative in creating the Internet.

Snopes, which can be very much about spin rather than clarity when it is their ox that is about to be, er, stabbed with a horn, wants to claim that there's room for debate about whether his claim of creätion is justified, because the Internet is not a homogenous entity and didn't spring into being at once. Well, not much in this world is homogenous and static, but it is simply disingenuous to claim to have taken the initiative in creäting something that already existed because one pushed to fund its further development.

Here's an example of a wretched journalistic practice:

One should not begin with a news story with a lie, and then correct it. The head-line here doesn't refer to a post-war record. A head-line is often the only part of the story read, and almost always the first part of the story read. So people with no sense of history — because their educators in the school system and in the main-stream media don't impart one to them — are filled with anxiety and rage. The emotional effect lingers even after the correction is given, and some never get the correction.

The economic news has been bad, but it simply doesn't compare to that of the Great Depression — which itself shouldn't be seen as necessarily our worse down-turn. (Those who uncritically presume that it was should look into the Depression of 1837.)

---

One should, BTW, be careful to distinguish amongst different statistics:

• the number of jobs lost,
• the unemployment rate,
• the employment rate,
• changes in these rates.

Note that the article acknowledges that the unemployment rate is not at a post-war high; it has, rather, climbed faster than at any time previous in the post-war period. The unemployment rate itself was worse at the end of the kinder, gentler Administration of GHW Bush.

Second, when there is job creätion as well as job loss, people may lose jobs but spend relatively little time unemployed. (Being dismissed from a job is still a stressful experience for most people, but not necessarily equivalent to being materially impoverished.)

Finally, the unemployment rate is not simply the complement of the employment rate. The unemployment rate, which tries to measure the number people who are seeking employment and unable to find it, is a fairly junky statistic. On the one hand, it doesn't count people who would choose to work if the were offered a job, but who have just given-up hope of finding one; and it doesn't count people who are under-employed, wanting full-time jobs but only able to secure part-time employment. On the other hand, it does count people who aren't sincerely seeking employment, but are going through the motions of seeking a job so that they can continue to collect benefits from programmes that require them to seek employment. The employment rate is simply the percentage of people of working age who have jobs. It has problems — including that it counts under-employed people — but it's less junky that the unemployment rate.

Today and Tomorrow directs its readers to

Up-Date (2019:12/04): Today and Tomorrow is defunct. The original site for the trailer is also defunct, but I have linked to a copy on YouTube.