54 of 66 people found the following review helpful
A careful and academic use of applied economics,
This review is from: Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain Our Future (Hardcover)
Dr. John Lott is one of the best economists of his generation and has extensively published in academic and general audience outlets. In "Debacle" he and Grover Norquist walk the fine line between academic data and arguments, and general presentation. The book begins with a discussion of the financial crises and then moves into an analysis of the recovery, the stimulus, and new regulations.
Norquist and Lott are no fans of Obama, and no doubt supporters of Obama will focus on this. However, fundamentally this is a book of reason and facts. Hopefully this book will raise the level of discussion in the recession/recovery debate. One nice feature of the book is that Norquist and Lott provide much information that is not available elsewhere, or at least not well known. For example, some know of the 92 Boston Fed study on discrimination in mortgage lending that led to changes at Fannie and Freddie, but Norquist and Lott point out the data problems in this study. In so doing they trace the problems of the financial crisis back to 92 and the subsequent reactions of the Clinton and Bush administrations to increase overall home ownership. That's a much more compelling story than "Wall St. suddenly got greedy."
Norquist and Lott argue why the stimulus package was unlikely to work. Here they rely on well worked out arguments from economics made in the 60s, 70s, and 80s that pointed out the fallacies of Keynesian thinking. Governments are budget constrained and stimulus money is not wealth created out of nothing. Increased spending comes from taxes, debt (taxes on future generation), and unexpected inflation (taxes on net creditors). Keynesian thinking assumes that nothing is lost in this transfer of wealth (ie. the higher tax rates do not change behavior), and that the recipients spend the money better than those who earned it. As Milton Friedman and many others have shown. It just doesn't work this way. Norquist and Lott make a strong empirical case that rejects the the Keynesian view, and they present the information in easy to read graphics.
Finally, Norquist and Lott spend one chapter going through the heavy regulatory burden that the Obama administration has created. As recent work in economics has shown, these mostly hidden costs greatly explain why the recession of 1929 extended to become the Great Depression. It is likely that these burdens will continue to haunt the US economy long after there's an administration change in Washington.
There is much in this book and critics should not be too quick to dismiss it. Norquist and Lott do a good service in showing where stimulus money is spent, where it was not, how the US economy fared against others through the recession and recovery, and a host of other interesting facts and observations.
The book is well written and deserving of a serious read. No doubt others will challenge some of the conclusions, but the ball is now on the other side of the court to empirically make their case and not just assert it.
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Initial post: Mar 21, 2012 12:13:35 PM PDT
Reluctant Badger says:
This book is slickly written with every trick of the propaganda trade, not "well written"! For complete review see: http://quantiger.wordpress.com/2012/03/20
Introduction - Contains only appeals to emotion. Neither the incident of Obama turning his back on John Lott, nor the health care rubbish has anything to do with the supposed point of the book. The intro is calculated to rile and deceive, complete with garbage citation for the health care rant.
The intro caps things off by praising Canada? Excuse me? Canada is a high-top-marginal-tax rate, national health care system nation. If you are paying attention, that is AGAINST Grover's rantings against taxes and health care.
Chapter 1 - Does not go after Obama for failing to prosecute the criminals who crashed our banking system. (Yeah. That would be inconvenient, because they crashed banking due to deregulation.) And who presided over the gutting of the SEC that made it possible? Bush. Bush is barely mentioned. It's a lie to say the book criticizes Bush. Tries to pin it on Clinton. I agree Clinton's deregulation was terrible, but he didn't gut the SEC like Bush did, and this book is anti-regulation.
Doesn't come right out and say it, but it makes it sound like ACORN (code for poor and black people) and liberals crashed the banking system by forcing bad mortgages. NONSENSE! If you look at Fannie and Freddie's limits, they are nearly $1.5 million! Those JUMBO LOANS on homes did NOT go to the poor! Those junk securities were FILLED with homes bought and sold rapidly by high rollers, many of them attorneys.
This chapter is a big lie. Period.
Chapter 2 - In the 1970's and 1980's we weren't suffering from the syndromes today that we have not seen since the 1920's. These kinds of financial system shenanigans were prevented by Glass-Steagall, which is gone.
With 15 years of financial system deregulation that put us in a similar over-leverage situation to 1929, with outrageous criminal malfeasance in the financial world being protected by Obama's administration, and another 15 years of declining productivity ahead of us due to age demographics, with globalization removing the limits on availability of capital that used to keep the USA uniquely rich - how can they possibly suggest that those 1970's and 1980's recessions are the proper comparison?
If you allow me to claim an apple is like a walrus, I can prove vegetables are carnivorous and good swimmers.
Chapter 3 - (My complete review at Quantiger.wordpress.com goes into more detail about the real problems with the stimulus and what we should be doing.)
P 44 - "Spending almost a trillion dollars on various stimulus projects means moving a lot of resources from private sector, eliminating the jobs many people currently have."
That is not even close to correct and coming from an economist it is unconscionable.
What matters is what utility value will get created for the money created! In theory, a government can create money out of thin air hand over fist - and it will keep its value - if you are creating REAL utility value that is NEW. (Please note that this is the problem with the real estate bubble. Prices went up, but when a home's price rises and no NEW utility value is created, there is more money chasing the SAME utility value. Dear god. This is basic.)
Money creation happens all the time. It's what banking does whenever it gives a loan. In our capitalist system, having that decision in private hands, where the private bank gets burned if it makes a mistake has worked better than government allocation. But that only works when the bankers are honest! Any sure thing is a con.
On page 66, same kind of rubbish. It states that what makes the pie bigger is low marginal tax rates.
First - This is just completely false. The pie grows because the money supply grows, to the extent the money supply grows together with real utility value.
Second - It's a propaganda tactic. Give some things that sound reasonable, then into that cookie batter, the book folds in its propaganda manure, expecting the reader to swallow it because the cookie tastes sweet.
Chapter 4 - I agree, this president is a lousy economist. I submit that the previous one was no better. But John Lott proves in this book that he is no better an economist. This book is no less partisan, and we have seen how they distort things and the methodical nature of the propaganda methods in this book.
I think this president has acted as servant to criminal bankers. But they don't go after him for that! Why?
They use of Canada as a comparison again is hilarious! It is RIDICULOUS! Canada DISPROVES the anti-tax, anti-health care agenda! Dear god.
The same thing goes for Europe. France? They must think their readers are absolute fools.
THE BIGGEST LIE: Page 109 - "Think how much more freedom the average family of 4 would have, if they got to spend that $70K." Oh, boy. That's a whopper.
That implies that the average family of 4 would somehow get $70,000 for free, from the government.
The median income for a family of 4 varies by state but the median for the nation is about $67,000. (http://www.census.gov/hhes/www/income/da
Now, exactly how is a tax cut on a family making $67,000 going to net them $70,000? What, are John Lott and Grover Norquist now socialists in favor of give-aways?
Chapter 5 - Same old garbage about health care again. Totally ignores the massive studies and international comparisons. Bottom line? America has the least health care for our money of ANY NATION ON EARTH. Deal with it.
Page 126. They make wild claims about regulation being the problem. And yet other nations in Europe (and Canada - their favorite comparison for a better nation) have comparable levels. And THIS BOOK SAYS THEY ARE GETTING BETTER!
The claim that "regulation is bad" is shown to be a lie by the simple fact that the financial industry responded to deregulation by creating a huge bubble and then crashing. The SEC is still gutted. Honesty is the foundation of finance. And these two are still ranting about regulation?
News flash. When the cops are gone, guess what? The criminals run wild. They have taken over the White House as a near puppet from the way it looks to me.
Reality is that regulations need to be looked at. But some need drastic shoring up.
The idiotic ideas in this book are why the SEC was gutted. And THAT IS the major reason why the 2008 crash happened.
Chapter 6 - Republican 12 Point program (I'm ashamed to be associated with the word "Republican" now. And I voted for Reagan!)
1. Never raise taxes.
I think this is derived from Ayn Rand's economic pornography. Ayn Rand has as much relationship to economics as pornography has to raising children properly.
It's part of the "drown government in a bathtub" idea. I've seen government drowning in a bathtub. Russia in the 1990's. It's not pretty.
2. Keep focus on spending not the deficit.
What a devious way to sneak anything you want past the voters. If you can cut spending, but still keep the deficit high, what does that do? Where does it go?
Grover's "drowning government in a bathtub" - again.
3. Fed tax code change - Flat tax. End the estate tax.
Flat tax? The only tax system more regressive than a flat tax would charge MORE tax the less you made!
Estate taxation. How clever, calling it "death tax". You didn't even come up with that.
Guys, the inheriting children of the wealthy are deservedly legendary for their wasteful spending. And please note that even as we speak, the truly wealthy are already free of estate taxes.
What we need is restoration of estate taxes on the truly rich. Those are the fairest taxes of all. The dead don't need them. The kids can do some work for themselves instead of expect to become royalty.
America is about rewarding hard work and talent, right? So what on earth are these two doing arguing for the right of children to be lazy and live off the hard work and talent of others? Excuse me? How could anyone swallow this?
4. Cut corporate income tax.
This is silly. It's just more of the same anti-tax fundamentalism.
Look at other nations. Their total tax burden is what matters. And yes, we can be competitive. EU is competitive in many areas because of subsidies, generally larger than ours. Shall we socialize our industry more to compete by subsidizing them more? (viz. Boeing vs. Airbus.)
Other nations do the same thing with tax earnings. They require that companies and individuals pay the difference between what they paid in the other jurisdiction and theirs. (Is this a Grover thing? He might actually be unaware of how things normally work.)
Please note that the Irish miracle has long-since crashed. That used to be cited by the anti-taxers as proof that the lower taxes went the better things got. No. Those ideas are garbage.
Guys, even the Laffer curve has a sweetspot of maximum benefit to taxes. And that's an academic's ivory tower wet dream. The Laffer curve was presented by Reagan's treasury secretary, Stockman.
5. No VAT
VAT is a tax system used to introduce fair taxation into societies not used to paying them, or that dislike taxation too much.
That we are talking about VAT at all should be a signal that the USA is in trouble.
6. Add Warren Buffet line
Juvenile. I suspect Grover put this line in, thinking it was sharp commentary.
7. Never repeat debacle of 1982 or 1990
"Taxes bad" "Grover's ideas good".
Republican good. Democrat bad.
The "Debacle" was 2008. That is what this anti-government garbage created.
8. Reduce government spending
You mean DON'T be like Canada, France or Germany, the nations this book praised? Don't emulate those successful nations?
You mean emulate Zimbabwe, Congo, and dive below Uzbekistan in our aspirations?
Dear god. What matters is what we spend it on. Does it create value? Is it improving efficiency? Is it improving cost effectiveness? These two are against everything.
9. Reduce regulations
Again, you mean don't act like Canada, Germany and France which the book holds up as shining examples?
You mean act like Uzbekistan, the Russian Federation, Zimbabwe, Congo or Liberia? Those are low regulation paradises compared to the USA.
Guys, you want a place without much government, then go! It ain't fun. I've been there. These two obviously haven't.
10. Remember states, towns, cities and counties
11. Balanced budget amendment. Because we need constitutional protection against government domineering in America.
We were on that track in 2000! Then the republicans DESTROYED the balanced budget and GAVE AWAY THE MONEY.
This is just another way these anti-tax nuts want to use to wreck government. They actually think that the way we operated in 1812 could work today.
12. Wear bifocals.
This one is just weird. I blame Grover, although maybe a propagandist ghost-writer could have come up with this one, the idea being to close by saying that the glasses the target reader was probably wearing is a great thing.
The gist is: "Fight team fight!" as far as I can tell.
Yes. Fight. Fight against the moronic rubbish proposed in this book. Do that.
In reply to an earlier post on Jul 22, 2012 1:24:11 AM PDT
[Deleted by the author on Jul 22, 2012 1:24:27 AM PDT]
In reply to an earlier post on Feb 3, 2013 6:19:39 AM PST
This is an excellent, completely on point demonstration of how absolutely insanely ignorant Norquist and Lott are. As a Canadian, I am stunned by their thought processes. Canada is one of the most taxed countries in the world! We have free health care for every citizen. The more money you earn, the more tax you pay. We have different levels of tax brackets and it does not matter if you are at the higher end or lower end, you pay the same percentage. We do not get to factor in our mortgage in any way when it comes to filing our personal income taxes. Our regulation standards are much stricter concerning basically everything! And all I can say is that I am happy to pay more as long as money is being spent properly. We do not believe if you are not wealthy it's because of your own laziness. That thinking is absurd. I am happy to pay more so fellow Canadians can live on a more equal level and better themselves and their positions in life. Am I happy that if a factory closes down some people can get free education so they can find another job? Yes! I am happy with our quality of life. I am grateful to live in Canada.But please do your own research on the countries being set as examples in this book because we are the opposite of what Norquist and Lott stand for. Americans should be insulted that they are clearly lying to them. Where America needs to cut spending is controversial, but I do not believe you really do not need the countless military bases all over the world. What does America manufacture anymore? Apparently they are not fit to produce Apple products, but are capable of making every kind of weapons known to man. Norquist and Lott are part do the problem with the demise of the middle class. We used to have 3 paper plants that employed hundreds, were unionized and the workers could raise a family comfortably. You didn't need a University education. Only one is still operating. They provided generations of families good paying jobs. Due to both progress, less demand and yes, purchasing product from other countries for less money. Not because of unions or paying benefits. On one hand Obama is vilified by conservatives as a socialist. Canada works with both socialist and capitalist ideals and systems and yes, the US does as well. Who puts in your sidewalks? Where does your library get books from? Who pays the librarians? Who takes care of your parks and playgrounds? Who assures you don't eat rotten meat? The authors are not even part of the 1%. They are in that special fraction of the 1%, the richest people in America and they are on a mission not just to stay there, but to become even wealthier, no matter what the cost to the rest of the country. I vacation, travel, have friends and family in the States. It's a country I love and to watch her struggle is heartbreaking. The division has to end. A handful of talking head propagandists are ruining the country. And I've seen their multi-million dollar houses with my own eyes in Palm Beach. They are not of the people or educated. They just talk and spread lies, twist the truth and leave out facts. They may entertain you, but they are not on your side. Know the difference.
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