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"The Broken Window Fallacy": Why Government Stimulus Spending Will Keep The Unemployment Rate High

Tyler Durden's picture


In our busy days, it is all too easy to fall into the trap of hearing (and believing) the latest headline and its associated spin. For some reason, three minute videos can quickly and easily remove these 'spins' without the need for a PhD. In today's 3:06 un-spin, the broken-window-fallacy is addressed as the seen versus unseen impact of the idiocy of a broken-window's (or war, or destroying homes, or...) positive impact on an economy is explained in cartoon style. The sad fact is that this fallacy remains at the core of mainstream policy-making and as the video notes, the government's 'creation' of jobs via public works programs (or any number of stimulus-driven enterprises) it does so at the expense of the tax-payer via higher taxes or inflation and that 'spending' which would have otherwise gone to new fridges or iPads is removed and this does nothing to significantly improve aggregate demand (should there be such an amorphous thing) and in fact (as we recently noted here and here) leaves us more and more dependent on the state for corporate profit margins leaving any organic growth a dim and distant memory.



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Tue, 04/03/2012 - 17:34 | 2314654 DoChenRollingBearing
DoChenRollingBearing's picture

Other than PMs (and Pb and delivery systems), spare parts are all that's left...

"Bearings We Sell In Peru"


NO .gov help down there!

Tue, 04/03/2012 - 18:00 | 2314731 margaris
margaris's picture

I remember another fine example of "the window fallacy" seen in the movie the fifth element.

its the scene with Zorg, his fine robot army, and also the calamitous cherry at the end, lol...

Tue, 04/03/2012 - 18:09 | 2314754 Manthong
Manthong's picture

Great movie and scene.. Zorg's pet looks like Janet Napolitano.

But we need to update this tired window parable…

Time to go all Krugman on every big screen television in the country by slinging a ball bearing right through the center the displays.

                    THAT will get this economy moving.


Tue, 04/03/2012 - 18:12 | 2314766 johnu1978
johnu1978's picture

I've been unemployed for over three years now, I gave up looking for work over a year ago, I don't see a point in it anymore.


Primitive Skills Classes - Wild Edible Tours

Tue, 04/03/2012 - 20:23 | 2315091 Atomizer
Tue, 04/03/2012 - 20:25 | 2315092 flacon
flacon's picture

Cash For Clunkers in action. Men destroy a Volvo because the government made them do it:


Volvo Cash for Clunkers Engine Disabling


Tue, 04/03/2012 - 20:30 | 2315097 Thomas
Thomas's picture

International Nomenclature Committee has ruled on Bastiat's Broken Fallacy and has decided to give it the more contemporary name, "Krugman's Dumber than Dirt Fallacy".

Wed, 04/04/2012 - 02:04 | 2315533 AldousHuxley
AldousHuxley's picture

stimulus construction projects are nothing new in human history.


Olympics = non-profit multi-year construction projects every 4 years around the world.


Religion had cathedrals and church building projects in Europe that took 100+ years.


Egyptians had pyramid building projects to keep slaves working and not doing Occupy Nile Street protests due to lack of jobs.


Rich get richer by not spending their governing bodies come up with schemes to have them spend on something that creates jobs and keep the restless laborers occupied instead of overthrowing the status power quo.


Wed, 04/04/2012 - 04:46 | 2315621 tabasco71
tabasco71's picture

You forgot 'war'.

Wed, 04/04/2012 - 03:45 | 2315600 Element
Element's picture

It's an enduring reproach and curious enigma that Pelosi's trenchant mental-illness and cognitive degeneracy into routine delusional blundering is constantly being misinterpreted and misread as evidence of a prodigious and indispensable capacity to lead the lesser-lights within the US Congress.

Tue, 04/03/2012 - 23:18 | 2315360 A Nanny Moose
A Nanny Moose's picture

Beat me to it. The farmer looking guy in the hat sounded just like Zorg.

Tue, 04/03/2012 - 19:20 | 2314962 donsluck
donsluck's picture

It's faulty logic to equate public works projects with destructive behavior. With public works (not war spending) society has chosen to join to together to produce something most people need or want. It is not practical for highways to be built through individual payments, and for-profit highways are eventually more expensive (due to the profit) and favor the rich.

The trails through our greatest National Parks are a testimonial to what good beautiful works are possible if we join together to build them.

The never ending wars we currently persue are what destroy capital, as well as lives and civilizations.

Tue, 04/03/2012 - 19:22 | 2314967 Freewheelin Franklin
Freewheelin Franklin's picture

Who has chosen?

Tue, 04/03/2012 - 19:26 | 2314975 skipjack
skipjack's picture

While wars may destroy capital, so do unnecessary and pointless "bridges to nowhere".


All "public works" are is a way to funnel Bennie Bux to unions, which will then support Obummer and all other Dimmocruds in the next election.


The stupid, it burns...

Tue, 04/03/2012 - 19:31 | 2314986 spankthebernank
spankthebernank's picture

Swing and a miss for you on the point of the video Donny boy!

Tue, 04/03/2012 - 19:47 | 2315011 nmewn
nmewn's picture

"The trails through our greatest National Parks are a testimonial to what good beautiful works are possible if we join together to build them."

I've always found it fascinating that "progressives" seek to improve on nature by paving it over and adding ADA ramps to it.

Prolly just me though.

Tue, 04/03/2012 - 21:53 | 2315220 Bobbyrib
Bobbyrib's picture

As opposed to replacing it with condos and highways. Both parties in this country have allowed it to become overdeveloped.

Tue, 04/03/2012 - 22:22 | 2315270 nmewn
nmewn's picture

I was talking about National Parks regarding preservation of nature. But yes, your point is well taken with me.

I have a good friend (a liberal...not a "progressive") from high school who lives in a little house on the beach surrounded by condos. I'm talkin twelve stories. A little beach house, passed down through the family. Developers have hooked up with the city and tried all sorts of nefarious devices over the years to root him out...all they see is green...all he see's is sand ;-)

Tue, 04/03/2012 - 19:58 | 2315036 piceridu
piceridu's picture



"With public works (not war spending) society has chosen to join to together to produce something most people need or want." Your belief that "society has chosen is flawed my friend. Society didn't chose shit. Cronyism and corruption chose. We need the Department of Transportation, Caltrans or any other black hole bureaucracy like we need the DMV...reasonable people can chose for themselves and the "greater good usually means what's "greater good" for usurious banks, government crony employees, lobbyist...please be careful how you use "society"...looks and sounds a lot like soci-alism.
Tue, 04/03/2012 - 19:58 | 2315037 blunderdog
blunderdog's picture

Although you're correct in theory, in practice it hasn't often worked that way.

The only effective use of government spending is to accomplish works which will not be performed any other way.  There are myriad examples of places where this has been done, but the glassy-eyed zealots will never acknowledge that things like the phone system and the Internet COULD have any value.

"No, no, all the government can do is move money around."

Perhaps there's a clear reason for such willful blindness.  Perhaps it's just bad education.  In any case, once you encounter a bald assertion which contradicts what you *know* to be true, you may as well quit the conversation.  It's no longer a discussion--it's become a war of near-religious passion.

Wed, 04/04/2012 - 02:31 | 2315550 xtop23
xtop23's picture

It always amazes me how the pro big government supporters hold up the internet as a paragon of why central planning works.

The net is great and has been a boon to the world in more ways than one.

I would only respond by saying this;

 There is no way of knowing whether or not something infinitely better might not have come into existence with that capital were it allocated by the market instead of a bean counter on Pennsylvania Ave. and that there are MANY more examples of misallocation by central planning than examples of money well spent.

Wed, 04/04/2012 - 13:10 | 2316899 blunderdog
blunderdog's picture

Yeah, but you'd think if it were really true that government can't ever do anything or accomplish positive infrastructure construction, the incredibly obvious examples (Internet for one) would have been created by someone else in some other setting.

There's nothing "amazing" about the fact that there are examples of government sponsored and/or required work that have been very successful.

What's "amazing" is that there are people whose ideology prevents them from acknowledging that fact.

(Not to dwell, but you're making really unwarranted assumptions about what I believe.  I'm not a "pro big government supporter" at all.  I'm just not crazy enough to deny obvious historical events.)

Tue, 04/03/2012 - 20:00 | 2315045 oddjob
oddjob's picture

You don't build a park, you protect it from corporate greed, Co$t on that, Zero.

Tue, 04/03/2012 - 20:09 | 2315060 Maos Dog
Maos Dog's picture

National parks... NATIONAL PARKS!!!!!! Don't get me started..........

Here's a recent story about how your money is spent at national parks:

At carlsbad caverns, there is a long winding trail down to the bottom of the cave, which is a great beautiful walk. Truly a wonder of the world. The way back up is through an elevator.

The elevator is run by 4 PARK RANGERS!!!!!

One directs people into the elecator, one stands around guarding, one is in the elevator who's job it is to press the UP button this is ALL he does all day, and antother park ranger at the top.

4 salaries, with full benefits and pensions, to RUN A FUCKING ELEVATOR

Needless to say this kind of ruined my trip there.  


Tue, 04/03/2012 - 21:04 | 2315158 geekgrrl
geekgrrl's picture

Compared to the millions of people needlessly employed in "intelligence" and "security" in this country, you want to pick on the park rangers?

My experience has been the opposite of yours. I've been to a decent number of National Parks and they always seem sparsely staffed to me. I've seen case after case after case where mouth breathing epsilon parents with their seven kids decide that even through the sign says "don't climb on the tree (or cacti, or mosses, or whatever)," either they are illiterate (certainly a possibility) or just don't care what damage their little terrors do to some truly incredible one-of-a-kind places.

Just my opinion, but when I look at places where taxpayer money is really being pissed away, hands down it is the banks / National Security State, and they're going to bleed us dry. Or at least try.

Tue, 04/03/2012 - 22:12 | 2315252 kekekekekekeke
kekekekekekeke's picture

fucking seriously.

Tue, 04/03/2012 - 23:45 | 2315401 StychoKiller
StychoKiller's picture

Nothing sez you BOTH can't be right! :>D

Wed, 04/04/2012 - 00:27 | 2315459 dark pools of soros
dark pools of soros's picture

When one can't see the real causes of their blights, any perceived irritations will be cause for complain

Tue, 04/03/2012 - 21:55 | 2315224 Bobbyrib
Bobbyrib's picture

What's the matter? You have something against pork? /sarcasm.

Tue, 04/03/2012 - 20:30 | 2315103 Stuck on Zero
Stuck on Zero's picture

I agree about there being a logic to public works ... if the money is actually spent on public works.  To be properly spent the project 1) needs to be of long term benefit in terms of necessary infrastructure, 2) it also must be put out to bid with no strings other than job performance attached, and 3) there must be a revenue source to pay back the funds.  Public works usually come at a much cheaper price than simply doling out welfare.  Welfare destroys the very fabric of a society.  Unfortunately our current government thinks public works is a honeypot for political payoffs.


Wed, 04/04/2012 - 02:10 | 2315536 Carp Flounderson
Carp Flounderson's picture

For articles like this on zerohedge, i typically look for comments with the most negative votes to find the ones which make the most sense.  Congrats.

Wed, 04/04/2012 - 02:20 | 2315545 xtop23
xtop23's picture

If you want to see a perfect example of the broken window fallacy you have only to go to YouTube and watch Peter Schiff's testimony before a congressional panel.

The female PhD that is sitting next to him, goes into a lengthy diatribe of this video's contents almost verbatim.

I only remember her testimony because Peter proceeds to tear her a new one almost immediately.

Tue, 04/03/2012 - 17:34 | 2314658 Kreditanstalt
Kreditanstalt's picture

Failed to mention that little more than the cost of a window is lost; granted, nothing is created but spending is merely moved in such a way as to favor the glazier over others.

Tue, 04/03/2012 - 17:46 | 2314688 Seer
Seer's picture

And, it's highly likely that it's the glazier's lobby that's behind it all... (even the hooligan [if not a direct govt "informant"].

Tue, 04/03/2012 - 17:49 | 2314697 Fluffybunny
Fluffybunny's picture

"Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy: something that forces firms to replace capital, even if that something seemingly makes them poorer, can stimulate spending and raise employment. Indeed, in the absence of effective policy, that’s how recovery eventually happens"

- Paul Krugman (September 3rd 2011)

Tue, 04/03/2012 - 18:14 | 2314773 r00t61
r00t61's picture

Then Dr. PK should walk the walk and demolish his own house.  That will create aggregate demand. 

And instead of writing a useless column, he should go around demolishing other things.  Houses, cars, parks, department stores, pizza parlors, and traffic cameras. 

If he would do any of these things, I would at least know that he believed in what he wrote.

That he doesn't just proves that he's another GOSPLAN shill, a useful idiot trotted out by the Party to give an air of legitimacy to their absurd propositions.

Tue, 04/03/2012 - 20:02 | 2315049 nmewn
nmewn's picture

"Then Dr. PK should walk the walk and demolish his own house.  That will create aggregate demand." 

lol...which one...the one in St.Croix or the one in Manhattan?

Tue, 04/03/2012 - 23:36 | 2315386 TMT
TMT's picture

PK should demolish his own house only while he is home. Two birds, one stone.

Tue, 04/03/2012 - 18:43 | 2314854 scatterbrains
scatterbrains's picture

It's even worse tha this as now the tax payers have to pay for ever expanding prisons to house these hoodies after they're caught. Although at the federal level they've adjusted for this effect by just refusing to prosecute crooks.

Tue, 04/03/2012 - 20:29 | 2315098 island
island's picture

@Kreditanstalt -- Precisely.

In the broken window scenario - the money could go to a glazier, or a roll of duct tape, or some boards to cover over the window, etc. 

And, in fact, a certain amount of destruction - whether quick or slow (think depreciating or decaying assets) - is part of what generates demand.  

If one ONLY has destruction, that is a different story, because there is nothing produced, so no money circulates (nobody has money to spend).




Tue, 04/03/2012 - 17:34 | 2314662 penexpers
penexpers's picture

Worst Italian accent ever...

Tue, 04/03/2012 - 17:45 | 2314684 mr. mirbach
mr. mirbach's picture

As if the dad burn farmer's accent was a dead-on protrayal....

Tue, 04/03/2012 - 17:46 | 2314690 penexpers
penexpers's picture

You are correct. Equally as shitty.

Tue, 04/03/2012 - 17:38 | 2314670 MacedonianGlory
MacedonianGlory's picture

Creative destruction

Tue, 04/03/2012 - 17:38 | 2314672 Alcoholic Nativ...
Alcoholic Native American's picture

"more and more dependent on the state for corporate profit margins"

lol, will somebody please think of the corporate profit margins.  

Tue, 04/03/2012 - 17:42 | 2314679 Hopeless for Change
Hopeless for Change's picture

Yes, progressive liberals, Keynes was only right to a point.  And we have that point in sight...

Tue, 04/03/2012 - 17:50 | 2314686 bob_dabolina
bob_dabolina's picture


I have Nancy Pelosi right here saying Unemployment benefits are the BEST way to create jobs. The vid. is less than 1 minute.

"It would be impossible to think of a situation where we would have a country that would say we're not going to have unemployment benefits"

This cunt must not realize that this country started without any benefits other than having opportunity. How many people came to Ellis Island and were thinking about UE benefits? How many from the Mayflower? NONE. This country was at it's pinnacle prior to UEB's.

Tue, 04/03/2012 - 17:55 | 2314710 Seer
Seer's picture

And here all along I thought that the world's economic system could be saved if we all just bought iCrap!

Tue, 04/03/2012 - 17:57 | 2314722 Alcoholic Nativ...
Alcoholic Native American's picture

Free loading Christoff Columbus was sucking off the crown tit his whole life.  

Just give me a few more months!  I swear I'll find a continent!

Tue, 04/03/2012 - 18:12 | 2314768 bob_dabolina
bob_dabolina's picture

Yea, because Columbus came over on the Mayflower right?

Tue, 04/03/2012 - 18:19 | 2314786 crawldaddy
crawldaddy's picture

almost 50% of those on the mayflower didnt even last the winter.  Learn some history.

Tue, 04/03/2012 - 18:24 | 2314801 bob_dabolina
bob_dabolina's picture

50% did survive and they helped to start the country known as the U.S.

The Norwegians (Vikings) actually touched North America before Columbus.

Tue, 04/03/2012 - 18:50 | 2314877 francis_sawyer
francis_sawyer's picture

"Was it over when the Germans bombed Pearl Harbor"?

Tue, 04/03/2012 - 20:19 | 2315078 nmewn
nmewn's picture

Clearly, this calls for something completely desperate & futile...and we're just the ones to do it!

Tue, 04/03/2012 - 21:14 | 2315170 rosiescenario
rosiescenario's picture

.no, it began with the Poles bombing the Japs.....

Tue, 04/03/2012 - 23:10 | 2315349 dark pools of soros
dark pools of soros's picture

does it matter who touched it first or who's been fucking it ever since?

Tue, 04/03/2012 - 18:17 | 2314781 crawldaddy
crawldaddy's picture

bullshit yourself. Learn some freaking history. 

UE is just a backstop that employees PAID INTO to be there to help them in a time of need.


You sir are an idiot of the highest order.

Tue, 04/03/2012 - 18:34 | 2314815 bob_dabolina
bob_dabolina's picture

You can work 3 months (1 quarter) and receive UE benefits for 99 weeks (99 weeks is almost TWO YEARS)

That's a nice backstop.

Furthermore, you can get section 8 (free housing), free cell phone (assurance), free food (SNAP (a.k.a food stamps), WIC, and SS disability.

That's a lot of "free" shit for producing next to nothing.

Tue, 04/03/2012 - 20:40 | 2315122 Jendrzejczyk
Jendrzejczyk's picture

Actually, your SUI ( state unemployment insurance ) depends on your employer's past claims. In most states, SUI is paid solely by the employer and has a ceiling for each employee.

The case can be made that your employer could pay you more if he/she didn't have to pay SUI, and therefore it comes out of your pocket in the long run.


Tue, 04/03/2012 - 21:12 | 2315169 Kanonfodder
Kanonfodder's picture

UE is just a backstop that employers PAID INTO to be there to help them in a time of need.


There, fixed it for you

Tue, 04/03/2012 - 17:46 | 2314687 blunderdog
blunderdog's picture

I guess we really do need this sort of thing around here.

Tue, 04/03/2012 - 17:55 | 2314709 Death and Gravity
Death and Gravity's picture

Stimulus will keep the UER high, because it pumps money into government pet projects, which are really superficial to the populations needs, because it is given on a basis, not of reasonable constructive intention the common man, but of the sponsors of the legislators (also distorted by their general level of incompetence and madness); this happens at the same time as it robs capital from the natural distribution that this would otherwise result in.

Thus, it's like digging holes in a lake (which only a fool would do).

Tue, 04/03/2012 - 17:56 | 2314719 Seer
Seer's picture

"Thus, it's like digging holes in a lake (which only a fool would do)."

You can bury bodies deeper that way, so it's not really as foolish as you'd think... (yes, sarcasm!)

Tue, 04/03/2012 - 17:56 | 2314713 michael_engineer
michael_engineer's picture

On the upslope of the Hubbert curve it kind of made sense to think of disaster capitalism in a positive way.  Broken stuff got fixed and generated GDP (but the disaster capitalism train of thought worked best if it wasn't YOUR stuff getting broken).  The negative affects of the disasters were masked by them happening on the upslope of the Hubbert curve where overall positive growth made the system as a whole bigger and better, even in spite of disaster setbacks in some places.   But on the downslope of the curve, disaster setbacks may not get fixed at all as there is little surplus if any to take from other needs.

Tue, 04/03/2012 - 17:56 | 2314715 BobPaulson
BobPaulson's picture

I'm glad they pointed to the elephant in the room "defence spending" during the video. That's the broken window fallacy on steroids.

Tue, 04/03/2012 - 17:59 | 2314730 Alcoholic Nativ...
Alcoholic Native American's picture

+ 1 cost plus contract

Tue, 04/03/2012 - 17:56 | 2314720 junkyardjack
junkyardjack's picture

The government can hire everyone, just have the Fed print up more dollars to pay as salary, who needs taxes? Fixed bitchez!

Tue, 04/03/2012 - 17:58 | 2314726 Seer
Seer's picture

We need taxes so that all those important tax-preparers have work to do!

The absurdity should all be clear.  And, it should be no surprise given that all money is basically worthless- Ah, the BIG game of Ponzopoly!

Tue, 04/03/2012 - 17:58 | 2314723 mr. mirbach
mr. mirbach's picture

Somebody should do a 3 minute video on the Fallacy of Too Big To Fail or the Fallacy of Financial Regulation....


Anybody else got a suggestion for a "Fallacy of" video?

Tue, 04/03/2012 - 18:03 | 2314745 Seer
Seer's picture

Yes, "the fallacy of the necessity of growth" (sorry, it's a trite more than 3 minutes, which will be troublesome for the ADD-challenged):

Tue, 04/03/2012 - 18:20 | 2314788 riphowardkatz
riphowardkatz's picture

Fallacy that deflation is inherently bad.

Tue, 04/03/2012 - 22:12 | 2315255 dwdollar
dwdollar's picture

The fallacy that government fixes anything.

Truly fixing something would negate the purpose of government to exist in the first place.

Tue, 04/03/2012 - 18:23 | 2314797 mr. mirbach
mr. mirbach's picture

This video is good too:


Tue, 04/03/2012 - 17:59 | 2314729 gagbja
gagbja's picture


Sorry to disagree, public spending is generating not only wealth but of welfare. Another problem is the spending of public money to partisan interests only.

Advocates of no government intervention have quickly caught the public money that has allowed consolidate their business being to blame for the origin of the crisis.

Please fewer lessons of liberalism and more consistency.


Tue, 04/03/2012 - 18:00 | 2314733 sgt_doom
sgt_doom's picture

Obviously, if the activities over the past several decades, and especially concentrated over this past decade, has been to offshore production assets (jobs, factories, production facilities via US aid programs, etc.) while also offshoring capital assets (investment), and restructuring the jobs base downwards while decimating the tax base through tax evasion and avoidance, any flimsy stimulus spending won't work.

Only a stimulus program which attacks the problem: providing jobs and new industries, or brings back viable old offshored ones, will suffice.

This reminds me of the way that very intelligent fellow, Van Jones, attacks the problem, playing the fool for Wall Street and being so easily duped.

   G  A  M  E       O  V  E  R

 Mr. Jones attacks several of those thousand points of confusion (student debt, etc.), but ignores the actual problem, of which debt peonage is simply part of their overall strategy.
What Van Jones, and so many others do, is to play their strategy --- thus acknowledging that they own the game.
Repeating that same meme, that same talking point (theirs), that once Obama was elected "we" stopped paying attention, etc., thusly ignoring Obama's 100% neocon administration.
"We," kemosabe????  Plenty of us out here noted each and every single one of the myriad neocon appointments of Obama --- many of them we've been fighing against our entire lives!
Van Jones is not only playing the fool by playing their game, and acting as an apologist for Obama, but still promotes the Wall Street agenda by his promotion of cap-and-trade (I'm tired of citing GAO reports and European organization reports detailing what a financial fraud that is, and why Greenpeace, Representatives Kucinich, Defazio and every sane and saavy citizen is against it ---- see Blythe Masters/JP Morgan Chase/carbon derivatives and the origin of carbon permits from the Reagan Administration).
Today, radical action is required.  My personal solution?
Round up every single member of the Rockefeller family, the Morgan family, the Koch family, any surviving members of the Harriman family, etc., and exterminate them all so not a one will ever walk this earth again!  This will bring justice to the murders of President Kennedy, Rev. Martin Luther King, Malcolm X, Bobby Kennedy, Sen. Paul Wellstone and his family, and countless others.  (Sure, some of those super-rich family members may be innocent, but as Gen. Colin "Americal" Powell said, that's called "collateral damage.")
Their endless plutocratic programs with their endless astroturf operations to drive everyone in to debt slavery, while enriching themselves, has simply become to insane to ignore.
For example:  how much time on the airwaves, and in print, is wasted on that moronic, nonapplicable, "stand your ground" nonsense discussion, which comes to us via the Koch brothers and their A.L.E.C.; and through one of their lackeys, Jeb Bush?

They define the game --- their game!
It is time to end their game once and for all.

Tue, 04/03/2012 - 18:10 | 2314764 mr. mirbach
mr. mirbach's picture

You missed a few: 










But why not add Krugman, Greenspan, Benanke, Dimond, Fuld, Mozillo, Paulson, Geithner, Gensler, Blankfien, Buffet, Soros.....

Tue, 04/03/2012 - 18:12 | 2314765 Seer
Seer's picture

We can blame whoever we want, whatever "systems," but the bottom line is this: if ANYTHING is based on perpetual growth IT WILL FAIL, eventually.

One could argue that this disastrous track was laid when the Phoenicians "invented" interest: the concept as applied to cattle "growth" seems pretty valid, but we, as humans, always manage to distort things until they are no longer recognizable.

You are merely pointing out the black spots of the decay.  The conditions for the decay was always there, and would always appear.

Tue, 04/03/2012 - 18:01 | 2314736 Caviar Emptor
Caviar Emptor's picture

Here at the Institute For Biflationary Policy we think that high unemployment acts as a good brake on inflation. If we don't let failed banks go under, then we need to let people go under. Otherwise the rest of us suffer with high prices

Tue, 04/03/2012 - 18:01 | 2314737 Caviar Emptor
Caviar Emptor's picture


Tue, 04/03/2012 - 18:09 | 2314760 riphowardkatz
riphowardkatz's picture

it is way worse than this and would have been a much better presentation if they would have had the baker buying a new piece of machinery to create more bread for less money. Every one in the economy then has more money to buy suits, or machinery or take risks with.

In addition, reducing unemployment is the worst goal and through inflation Government can temporarily(and for a long time) reduce unemployment significantly,see China.

We need more wealth. We do not necessarily need lower unemployment.  

Tue, 04/03/2012 - 19:21 | 2314964 Seer
Seer's picture

And then somewhere along the line you'd have to subtract out all the externalized costs from producing all that "wealth-producing" machinery.

Tue, 04/03/2012 - 19:28 | 2314982 riphowardkatz
riphowardkatz's picture

Except history shows the more wealth created the less polution and environmental destruction. So no you wouldn't.


Tue, 04/03/2012 - 18:15 | 2314775 crawldaddy
crawldaddy's picture

bullshit article. Not all tax rates and payers are the same and equal. Much of the problems right now is too much of the money is flowing into to few hands. Taxes, fees, pitchforks, whatever works is what is needed to get the majority of the money to the majority of the people.  

Tue, 04/03/2012 - 18:19 | 2314784 riphowardkatz
riphowardkatz's picture

money does not create wealth. getting the majority of the money to the majority of the people would do nothing. 

The money needs to stay in the hands and be handled by the producers. Government mandated wealth redistribution to both poor and rich and in between  needs to  stop before anything changes. If the people of the USA wake up and realize that stealing is both immoral and impractical the problems we have will resolve themselves in months.

Tue, 04/03/2012 - 18:27 | 2314806 crawldaddy
crawldaddy's picture

getting the majority of the money to the majority of the people would do nothing...LOL...  yeah except bring about the biggest expansion in the nations prosperity, as is the case throughout history when a societies middle class is healthy and growing.

Tue, 04/03/2012 - 18:30 | 2314818 riphowardkatz
riphowardkatz's picture

money does not create wealth producers do. if you had ever created wealth you would realize that. 

also I never said that producers create jobs, they create wealth. 

You have a lot of learning to do. The concepts aren't that hard though, with some actual though I think you will be able to figure it out.

Tue, 04/03/2012 - 18:41 | 2314853 riphowardkatz
riphowardkatz's picture

I would also point out that you often mix up cause and effect. Its easy to do just try and think more clearly and verify that you understand what the effect is and what the cause is. When things happen close together like middle class is strong you might think that is the cause of wealth. You would be wrong. Wealth is generated by the producers and the wealth they create is then enjoyed by a large number of people creating a middle class.

Tue, 04/03/2012 - 19:35 | 2314994 Acet
Acet's picture

Actually your own point about "Producers" suffers from the same falacy of confusing cause and effect.

Consider a person that owns a company, does he own the company because he is a producer or is he a producer because he owns a company?

Could it be that some people have the means of production (biggest amongst those being capital) and yet are not inherently producers while others are inherently producers but do not have adequate means of production.

The argument of the poster before you is that money needs to go to the middle classes to strengthen the economy. In a Producer Theory this would be consistent with a scenario where most of those that current have the means of production are not really inherently producers (they are producers because they have the means of production in their hands but they are inneficient at it) while those who would be the best producers (let's call them natural born producers) do not have the means of production. Under this scenario, moving the means of production into the hands of natural born producers would increase the efficiency of production overall.

Given the historically low social mobility in today's American society, the high level of subsidy dependency of US companies, the economic dominance of parasitical companies and the low efficiency of most of the US' industries, I would say that it should be seriously considered that indeed most of today's Producers are only so because they have cornered access to the capital needed for production and that natural born producers are unable to become Producers since the traditional paths that bring the, to the means of production are broken.

Tue, 04/03/2012 - 21:40 | 2315204 riphowardkatz
riphowardkatz's picture

If this was a  verbosity contest you would win hands down.

There are producers who do not own companies and parasites that do.  The only way the parasites exist is through wealth redistribution carried out at the point of the governments gun. 

Crawl daddy and you like to fantaisze about a government that can magically know who to take wealth from and who to redistribute it to, keep dreaming comrade, in the mean time people who are a lot smarter than you will use your dreams to continue to divert wealth to themselves subverting your goal of enriching the middle class and instead creating two classes uber-rich and poor. 

In addition there are tons of examples of people with very little wealth created tons of it. James J Hill, Henry Ford, Thomas Edison, Henry Singleton, David Einhorn, Walt Disney, Roeckefeller, Vanderbilt, Steve Jobs the list goes on and on and on. 

Why do you losers insist on making stuff up about people being born into wealth? Is it to justify your own lack of ability, ingenuity, hard work, focus, dedication. Help me out? 

Tue, 04/03/2012 - 18:27 | 2314792 crawldaddy
crawldaddy's picture

oh jesus christ, not another one who falls for some bumper sticker slogan ideology like " Job creators".  Christ where do you people come from, it cant be from college.

Jobs are created via demand for a product or service PERIOD.  Jobs aren't some fucking gift handed down by some lord to us serfs.

NO PERSON in this country made their fortune without the help of the governemnt. Via the roads, infrastructure, laws, policing, trade deals, etc etc etc

Grow up.


Tue, 04/03/2012 - 18:33 | 2314830 riphowardkatz
riphowardkatz's picture

There never was a question of Government or No Government. Quit making stuff up to make yourself feel smart, it isn't working.

The question is what is the proper roll of government. I can guarantee you the proper roll IS NOT to 1. make money 2. take money from some and redistribute to others.

Also who claimed anything about JOB CREATORS? Man again with the making stuff up. Your strawmen are exactly that.  Producers are WEALTH creators. They are the opposite of what you want more of which are PARASITES. 

Tue, 04/03/2012 - 19:51 | 2315019 knightowl77
knightowl77's picture

the government exists because of the taxes we pay....we paid for those roads and services etc etc....we do not owe the government for our success anymore than I owe Walmart for the groceries I paid for....


The government exists for and because of we the taxpayer, not the freeloader....think of something other than what your marxist college professor told you

Tue, 04/03/2012 - 20:36 | 2315110 Maos Dog
Maos Dog's picture


With all due respect, you just articulated the second greatest fallacy of keynesian economics:

"Jobs are created via demand for a product or service PERIOD.  Jobs aren't some fucking gift handed down by some lord to us serfs."

Keynesians believe and their models assume that products "appear" on shelves due to changes in demand. This is not true. The products must be produced first, which means that a capitalist made a prediction on demand, raised risk capital, built a factory, and employed people, before the demand for a product existed in the first place. This is how all new products and all new models of existing products appear in the marketplace.


Tue, 04/03/2012 - 23:59 | 2315421 StychoKiller
StychoKiller's picture

"If Congress can employ money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may appoint teachers in every State, county and parish and pay them out of their public treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may assume the provision of the poor; they may undertake the regulation of all roads other than post-roads; in short, every thing, from the highest object of state legislation down to the most minute object of police, would be thrown under the power of Congress... Were the power of Congress to be established in the latitude contended for, it would subvert the very foundations, and transmute the very nature of the limited Government established by the people of America." - James Madison

Tue, 04/03/2012 - 18:25 | 2314793 crawldaddy
crawldaddy's picture

most of the wealth of this country was done so via the government. Learn your history and learn the history of the wealthiest families in this nation.  They were all helped greatly via the government.  

Tue, 04/03/2012 - 18:37 | 2314836 riphowardkatz
riphowardkatz's picture

gee China has a pretty big government and so did Russia and so did Britain. they created a ton of wealth. 

BTW Who is claiming that government isnt important? Keep making stuff up to prove your argument. It really is sad. 

Tue, 04/03/2012 - 19:56 | 2315031 knightowl77
knightowl77's picture

so by your logic  "most of the wealth of this country was done so via the government" - if you are poor or not wealthy then it is because the government has not helped you? the government helps some and holds others back by way of puntitive taxes and regulations....or as BHO does picking winners and losers....


Most of the wealth of this country was created IN SPITE OF the GOVERNMENT, not because of it....

Tue, 04/03/2012 - 18:26 | 2314804 adr
adr's picture

Well, I'm off to Walmart to sell my product to hopefully keep enough money coming in to keep my company afloat. There isn't enough retail left outside Walmart to keep everyone employed. If Walmart buys our product we will be able to show a lot of revenue but the profit will not be that great. As a private company it is the profit that keeps us in business, because we can't just print off more shares to sell to a zero interest loaned megabank looking for a nice stock to scam. Walmart will likely make $20 million if they sell through the order, after all is said and done we might pull in $3 million profit. Enough to keep the doors open for about 5 months.

That is the truth of our economy. The small private company makes nothing, while the rich mega corporation takes it all. It isn't really worth trying to run a company dependent on actual production and sales for its livelihood. The opportunity for profit is not there.

Sure you can get rich if you can get a government loan and skim off the top. But you need to be in the "Green" industry for that. Or you can try to take your company public and use inventory as a scam to fake revenue, cashing out and letting the market devour the cadaver of the business you built.  Either way you aren't trying to run an honest business, you are just looking to run a scam. 

The truth is that it is all a scam, a mirage, it isn't real. Real business is dead.

That is why the Obama administration is trying to repeal regulations and make it easier for small corporations to go public. There isn't enough real business left to keep the Wall Street Ponzi going. There isn't enough new blood to pay off the guys who got in early. The scam must continue at all cost or the entire Wall Street Casino comes tumbling down. There won't be any gamblers left.

The real problem is that there are no gamblers left. If you try and start a business today, you're pretty much dead before you start unless you have an angel investor looking to take you to the casino and enter a bet. He's not trying to build a product to sell to consumers, he's trying to sell a story to gamblers. If the gamblers buy the story they'll place their bets and the bookie will make off with the cash.

Social Media was the last gambit. Is there something you can think of that will be next?

Wed, 04/04/2012 - 02:51 | 2315570 Clowns on Acid
Clowns on Acid's picture

ADR - "That is why the Obama administration is trying to repeal regulations and make it easier for small corporations to go public."

No he is must be a troll. Alomost had me fooled with you Walmart story.


Wed, 04/04/2012 - 03:37 | 2315595 takinthehighway
takinthehighway's picture

Nice catch.

Tue, 04/03/2012 - 18:26 | 2314807 robertocarlos
robertocarlos's picture

Canada might not buy 65 F-35 fighter jets. We can't afford them.

Tue, 04/03/2012 - 18:27 | 2314811 crawldaddy
crawldaddy's picture

they are garbage anyway

Tue, 04/03/2012 - 18:52 | 2314883 riphowardkatz
riphowardkatz's picture

because the crawldaddy says so!

Tue, 04/03/2012 - 18:38 | 2314839 Dre4dwolf
Dre4dwolf's picture

How about the broken bonds fallacy.

Everyone should avoid buying government bonds.

Think about it.


You lend the Govt money.

The government owes you money + interest.


The government gets its money from you through taxes.


Thus, the more you lend to the government, the more the government will have to take from you in taxes in order to pay you/other people.


By buying bonds, you are giving the government the bullets with which to shoot you later <.<

Wed, 04/04/2012 - 02:41 | 2315566 Non Passaran
Non Passaran's picture

1. But they say bonds are used for useful infrastructure projects :-)
2. You're of course right, which is why there's no option and the system is rigged and ultimately someone somewhere must buy bonds.

Tue, 04/03/2012 - 18:40 | 2314847 New_Meat
New_Meat's picture

+Hazlett  -- Ned

Tue, 04/03/2012 - 18:40 | 2314849 Curt W
Curt W's picture

They could throw out the 2000 page tax code and rewrite it on one page, and wind up with the same revenue.  But 10,000 tax accountants, 8000 tax lawyers, and 40,000 IRS employees would all be out of a job.  Not to mention the judges who hear 3 year long tax fights with Buffett.

Thu, 04/05/2012 - 22:46 | 2314981 Sathington Willougby
Sathington Willougby's picture

All for securing the fact that nothing productive gets done with capital.  

Misallocation of resources, the panacea of central planning.


Wed, 04/04/2012 - 02:39 | 2315560 Non Passaran
Non Passaran's picture

Makes me think - maybe the vid should have featured the White House instead of a bakery?

Tue, 04/03/2012 - 19:10 | 2314931 Teamtc321
Teamtc321's picture

"By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

Read more:

Tue, 04/03/2012 - 19:26 | 2314972 Sathington Willougby
Sathington Willougby's picture

HA HA FUCK YOU "Journalists".

You made this fatuous monster with your frenemy fuck system.!

Fuck DC. 


Tue, 04/03/2012 - 20:00 | 2315043 Caviar Emptor
Caviar Emptor's picture

It'll all trickle down soon enough. Don't worry your pretty little heads over it. Should it really be a goal to employ everybody? With enough fiat we could solve tha problem fast. 

Tue, 04/03/2012 - 20:20 | 2315077 kill switch
kill switch's picture

Try this in full screen mode


Tue, 04/03/2012 - 20:32 | 2315106 jack stephan
jack stephan's picture

Patient: "There's a crazy man with a scalpel in ER! He's demanding to see a quack!"
Dr Nick: "Hi everybody. Now tell Dr. Nick where is the trouble?"
Grampa: "I'm edgy, I got ants in my pants, I'm discombobulated, get me a calmative!"
Dr Nick: "Slow down sir, you're going to give yourself skin failure."

Tue, 04/03/2012 - 20:37 | 2315111 THE DORK OF CORK
THE DORK OF CORK's picture

Nothing wrong with spending to reverse bank credit "investments" effect on the physical economy which has formed most of the physical envoirment around us.

There is such a thing as the commons you know.

The enlightened French light rail investment programme comes to mind as bank credit typically burned future oil to build the Burbs with the car serving as the credit / oil fueled vehicle.

Light rail to the centre of urban areas is the antithesis of normal bank oil /credit "investments"

Although I guess Dirigisme is a dirty French word around these parts.


Tue, 04/03/2012 - 20:37 | 2315115 highwaytoserfdom
highwaytoserfdom's picture

I'm old and as I said as a kid " NO SH#T DICK TRACY".   

Tue, 04/03/2012 - 20:37 | 2315117 q99x2
q99x2's picture

The broken window fallacy is not without exception. If instead of a broken bakery window it was all of DC that was broken (it already is) and removed from the US. It would stimulate the economy like nothing else. In the case where the damage is already done it does make sense to repair it or get rid of it..

What's up with Fukushimo? Why haven't they buried that mess under a half mile of sand yet? Instead they keep waiting for a stronger earthquake. Maybe there is something like unknown subatomic particles from space interrupting synaptic transmissions within human brains at this time. I just forgot why I wrote this.

Tue, 04/03/2012 - 20:52 | 2315139 dumpster
dumpster's picture

have a dig a hole jobs program

every one sign up for a $25.00 shovel..$   with tracking usage device $   for ten hours of hole digging  10X  X  $   $$$$

20 hours 30 hours 40 hours  $$$$,, yadda .. stop at 50 hours  .. instant check on debit card administered by JC Morgan $$

jobs would never stop   ass  lol  holes would then have to be filled .  $$$$

2% unemployment rate as some would want to be on paid leave ..pensions paid after 20 years of hole digging .

upward mobility .. as one person would supervise 20..  next level  managment level would supervise ten of those who supervise the 20.. third level supervision of 5 of those who supervise ten of 20  on up to president of the united states

He would report from vacation monthly on progress of all holes

tax at a Flat 20 percent level so all are treated equal.  

all would be provided a home at 500 month rent

food stamps for all..

dumpsters owns the shovel business .. pays a kickback to politicans of 2.50 per shovel   .. president get 2.00 ..


but wait that sounds a lot like the current state of affairs





Tue, 04/03/2012 - 21:19 | 2315173 rosiescenario
rosiescenario's picture

"... leaving any organic growth a dim and distant memory..."


What a quaint concept.


Inorganic (if you will) growth has been with us a long time....the railroads were built with it and the auto industry, too, in that without roads (publicly paid for) no one would have bought cars.

Tue, 04/03/2012 - 22:51 | 2315320 lenitivelea
lenitivelea's picture

I believe the term you're looking for is "Cash for Clunkers Fallacy."

Wed, 04/04/2012 - 00:30 | 2315464 goforgin
goforgin's picture

More brainwashing propaganda, What next Laffter curve? 


If Robin Hood steals $20 billion from Bill Gates and gives $2,000 to 10,000,000 human beings, that would translate to a real economic stimulus. The alternative is Bill Gates puts a new garage in his mansion. That is why the Broken Window Fallacy is nothing short of bullshit economics that ZH morons espouse day in and day out. FUCKING PROPAGANDA.

Wed, 04/04/2012 - 01:43 | 2315524 Bastiat009
Bastiat009's picture

So what you're saying is that the people involved in the building of Gates' new garage are now out of work (and there is no new garage). So maybe you give them the money you took from Gates, but there is still no garage.

I do believe that it is better to reward people for having created wealth than stealing people for political expedient.

Wed, 04/04/2012 - 02:03 | 2315526 the tower
the tower's picture

The problem is that Robin Hood gives the $2000 (x 10,000,000) to the banks, not to 10,000,000 human beings.

Wed, 04/04/2012 - 02:19 | 2315540 the tower
the tower's picture

... and the 10,000,000 would buy iPads and iPhones with them, so all would end up in the hands of one company again...

The problem is that there is no diversity anymore, only multinationals, so whatever you do, any trickle down gushes back up in in a very short time...

1. Small and medium sized companies have a lot of "overhead" which translates into having a lot of people do something (work) to create a product. Outcome: product is not cheap, but people have work > trickle up system, rich don't get rich fast by doing nothing but have to invest.

Overall effect on society: stable, wealth is spread, saving makes sense, no need for continuous fiat money as we don't need to live on credit.

2. Multinationals eliminate overhead, few people do something to create a product. Outcome: product is cheaper, but few people profit from it > trickle down system, rich get rich faster and faster, and feel no need to invest.

Overall effect on society: highly fluctuating, wealth is concentrated, high need for fiat money and debt.

Take a pick, which one do you want?

Wed, 04/04/2012 - 02:36 | 2315557 Non Passaran
Non Passaran's picture

Who buys all those poducts when everyone is poor?
Without consumption the rich can't get richer unless the economy runs on funny money.

Wed, 04/04/2012 - 03:03 | 2315580 the tower
the tower's picture

That's exacly what I pointed out: we are all getting poor because multinationals don't need people to do the work, they run on funny money.

Wed, 04/04/2012 - 03:10 | 2315585 the tower
the tower's picture

I use Apple as an example as they are the ultimate multinational:

- Compared to the amount of units sold they need few people to produce: no work.

- Price is relatively high due to "added value": high profits for a few.

- Lots of money in the bank: little or no trickle back.

- Stocks sore: lots of speculative funny money.


One thing that isn't mentioned often: multinationals have banking licences, meaning they can get all that cheap (practically free) money to compete with companies that do have overhead and have to borrow money to invest and grow.

It's a no-brainer: we are on the fast track to global domination of banks and multinationals, who know/respect no borders or  boundaries , and could not care less for local markets and economies.

Wed, 04/04/2012 - 02:42 | 2315567 Clowns on Acid
Clowns on Acid's picture

Hey asswuipe - Obozo already tried that with 1st time home owners and cash rebate for autos, and it didn't work.

He didn't steal from Gates, but he did steal from taxpayers and savers.....dipshiite.


Wed, 04/04/2012 - 01:44 | 2315520 Dingleberry
Dingleberry's picture

We have already lived thru the broken window fallacies of the RE bubble and stock bubbles, and soon to be bond bubbles. They were all allowed by low interest rates and/or tacit or implicit gov backstops.  With predictable results.  And it is why we are still (4 years later) asking "when is the recovery going to start"?  It is not that the money from government or private sector doesn't put people to work. Both do.  It is the efficiency and proper allocation of capital that comes from it. That is the difference.  E.g., you now have entire subdivisions in FL or AZ empty. Wanna build more just to put "people to work"? Which in turn causes dislocations down the line economically, like suppliers, commodity and labor prices, etc.  I mean, now that we are building houses en mass again, wood will go up, suppliers will add staff, etc.  And another disaster will result because it is not economically viable.  Alternatively, capital can be viewed as precious, and can (and should) be spent sparingly, with deliberate forethought, and have a much better chance of generating long-lasting, real economic growth by producing goods and services that people actually want. Government has a role in the economy. Adam Smith even knew that. But government was never supposed to BE the economy. And of PARAMOUNT importance, it was never supposed to be owned/bribed by those businesses it regulates, like it is now.     

Wed, 04/04/2012 - 02:17 | 2315542 non_anon
non_anon's picture

yes, the broken window theory has been brocken since when? Let's move on to the next fallacy!

Wed, 04/04/2012 - 07:05 | 2315587 CTG_Sweden
CTG_Sweden's picture


The way public spending can create more jobs in America is by funding this by printing money rather than raising taxes. And that is exactly what has been done in your country so far. And so far this has not resulted in a significantly increased inflation rate. In any case I reckon that America would have been in more trouble by now if the Fed had not printed money that could cover the budget deficit.


I also think that it is obvious that the US has an oversupply of labour. Over the past 30 years, less saving and more spending, the housing boom and money printing has hidden this fact to a substantial extent. But when the US reaches the point when people have no money left, there is still a lingering over supply of housing and the Federal Reserve can not print at the current rate without causing hyperinflation, well then you have a problem. At that point I think the US will be forced to raise tariffs drastically. Due to the large US trade deficit and the potential economies of scale within the US, I don´t think that will harm your country significantly. I suspect that this is how your politicians, lobbyists that control the politicians and big media owners intend to solve your economic problems once you can´t print money any longer.


However, I suspect that there will still be a significant over supply of labour in the US in the future. The demand for labour has decreased due to robots and computers at the same time as the supply of labour has increased drastically. The trend towards more efficient production of goods and services will probably continue in the future. It seems possible that even soldiers in the future to some extent will be replaced by robots. Therefore, I think that North America and Western Europe should reduce the over supply of labour and try to see to that people save more so that they can invest in companies that produce goods and services by using robots and computers rather than humans. By doing that people can work less and instead get the incomes they need from dividends. That is probably the only realistic way to counterbalance the reduced need for labour caused by robots and computers. Otherwise you will just wind up with a labour force which nobody needs and doesn´t have any incomes. If you don´t want these people to starve to death, riot or at least vote for politicians that want to give these people generous subsidies you got to reduce the over supply of labour and see to that the general public saves more money.


Wed, 04/04/2012 - 07:23 | 2315708 Sandmann
Sandmann's picture

Democracies cannot have an Oversupply of Indigenous Labour only an Excess Supply of Foreign Imported Labour. That is the nature of the National Economy, it is there to serve the needs and interests of the National Population. Any external trade is simply to improve the Welfare of the Population not to diminish it.

CTG_Sweden forgets that the US is a War Economy with huge Keynesian Demand created after 9/11 for Weapons funded by deficit-financing just as the Vietnam War was funded by deficit-financing and devaluation of the gold-backed Dollar. The effect was to provide Dollars to Asia and facilitate economic development whereas western Europe burned itself out by financing its own war and required Marshall Aid to gain Dollars to recover. The US Government has systematically liberated itself from the US Constitution by waging war without raising taxes or seeking Congressional Approval - hence the War Powers Act 1973 and the repeated attempts to circumvent it as with Obama over Libya.

So, it is ridiculous to speak of an Oversupply of Labour when the huge spending by US Government is producing capital-intensive Weaponry rather than generating economic growth through SMEs which would require stronger action on the Cartels created by Corporations and Private Equity Conglomerates like KKR and Blackstone and Carlyle and TPG and Bain Capital. They are overriding the Market and hollowing out proper employment for US Workers by financialising the economic system.

Wed, 04/04/2012 - 09:07 | 2315949 CTG_Sweden
CTG_Sweden's picture



"Democracies cannot have an Oversupply of Indigenous Labour only an Excess Supply of Foreign Imported Labour. That is the nature of the National Economy, it is there to serve the needs and interests of the National Population. Any external trade is simply to improve the Welfare of the Population not to diminish it.

CTG_Sweden forgets that the US is a War Economy with huge Keynesian Demand created after 9/11 for Weapons funded by deficit-financing just as the Vietnam War was funded by deficit-financing and devaluation of the gold-backed Dollar. The effect was to provide Dollars to Asia and facilitate economic development whereas western Europe burned itself out by financing its own war and required Marshall Aid to gain Dollars to recover. The US Government has systematically liberated itself from the US Constitution by waging war without raising taxes or seeking Congressional Approval - hence the War Powers Act 1973 and the repeated attempts to circumvent it as with Obama over Libya.

So, it is ridiculous to speak of an Oversupply of Labour when the huge spending by US Government is producing capital-intensive Weaponry rather than generating economic growth through SMEs which would require stronger action on the Cartels created by Corporations and Private Equity Conglomerates like KKR and Blackstone and Carlyle and TPG and Bain Capital. They are overriding the Market and hollowing out proper employment for US Workers by financialising the economic system."



My comments:

Maybe I should have said "excess supply of labour instead" rather than "over supply of labour".

As regards the excessive spending on the US defense I assume that federal investments in broadband in residential areas would have been a better investment for the American society. If people have 100 Mbit/s broadband at home some people (such as university professors) can work at home most of the time and kids can get educated over the Internet rather than in school buildings. If you people don´t have to travel to work and school they save money and the US does not have to import as much oil.

On the other hand I think that US high tech industries have benefited from excessive government spending on weapons. Orders from NASA have probably also boosted high tech industries in the US. But sending soldiers abroad is not high tech.

Wed, 04/04/2012 - 11:09 | 2316428 Sandmann
Sandmann's picture

But sending soldiers abroad is not high tech.


Then you have not seen the US Army or US Marine Corps which must be the most high-technology fighting force on the planet moved in a logistics chain that is probably one of the most advanced on the planet. However the US Army is about the same size as France with its Gendarmerie included and is actually not a large deployment of manpower.

Thu, 04/05/2012 - 18:59 | 2320767 CTG_Sweden
CTG_Sweden's picture



"Then you have not seen the US Army or US Marine Corps which must be the most high-technology fighting force on the planet moved in a logistics chain that is probably one of the most advanced on the planet. However the US Army is about the same size as France with its Gendarmerie included and is actually not a large deployment of manpower."


My comments:

I think you understand what I mean. American high-tech does not benefit from spending on human soldiers.

Wed, 04/04/2012 - 04:52 | 2315625 Sandmann
Sandmann's picture

We all know how the Cult of Rational Man and Scientific Socialism thinks Collective Action solves all problems - it certainly permits only Collective Agreement without Dissent - but it is The Planner Cult. There is no problem that cannot be fixed. Clearly the "Fix" has increased the scale of the Problem and rendered any "Fix" impossible. If the Gambler is on a losing streak it doesn't improve if he doubles his stake repeatedly, but it does keep him at the tables with onlookers in suspense.

Wed, 04/04/2012 - 08:20 | 2315836 scragbaker a ca...
scragbaker a cape cod clamdigger's picture

You are assuming that the baker, or anyone else today can charge enough in the market to cover expenses AND provide a PROFIT, so that there is some extra money that can be spent on other goods and services - NOT IN THIS SHITTY ECONOMY !  EVERYONE that I know is working harder today than they were a few years ago for much less and for the most part - PROFIT IS A THING OF THE PAST !   Most of us are "JUST FLOATING THE BOAT" and we do not have much extra money (profit) these days to spend towards helping to stimulate the economy.   

Wed, 04/04/2012 - 08:37 | 2315882 Apocalicious
Apocalicious's picture

leaves us more and more dependent on the state for corporate profit margins leaving any organic growth a dim and distant memory.


There, fixed it for ya.

Thu, 04/05/2012 - 16:40 | 2320414 El Viejo
El Viejo's picture


Do NOT follow this link or you will be banned from the site!