November 15, 2011 – CBO Director Doug Elmendorf admitted to Senator Sessions that in the long run the stimulus will shrink the economy. He testified at a Senate Budget Committee hearing that the stimulus will indeed “be a drag on GDP” over the next ten years.

Megan McArdle, Business and Economics editor at the Atlantic, was attending her tenth B-school reunion at Chicago and ran into econometrics specialist Steven Kaplan who had updated the Thomas Piketty and Emmanuel Saez data on top incomes through 2009.

The numbers show that income inequality fell sharply as the economy declined.

Isn’t that wonderful? Occupy demonstrators can clearly now pack up their tents and drums and go home.

Income inequality is clearly easy to cure. Simply adopt left-wing policies, ruin the economy, and sit back and watch all the boats sink, with the upper boats descending to levels much closer to their neighbors than before.

Simon Raven, writing back in 1970 in Places Where They Sing, the sixth volume of his roman fleuve, depicts the Provost of Lancaster College repeating to himself the claims of the same philosophy of fairness which Barack Obama and other Americans on the left insist on preferring even to greater productivity and the benefit of all.

“‘In conclusion,’ wrote Robert Constable, ‘it is important to face up to Professor Parkinson’s charge that a high rate of tax on earned income draws off creative and inventive energy, too much of which, he claims, is now unproductively employed in devising new methods of tax avoidance. There is some evidence to support this assertion; but the assertion itself demonstrates and strengthens precisely those attitudes of mind which modern social philosophy is concerned to discredit and destroy. For personal ability or talent must no longer be regarded as a means to personal enrichment but as a commodity, held in trust by some fortunate individual, whereby he may serve and enrich mankind. Indifferent to monetary returns, such an individual should find his satisfaction in the exercise of his skill (grateful that it releases him from the drudgery by which most men must earn their livelihood) and in the knowledge that he is providing pleasure or amenity for his fellow human beings. Such grace, I fear, is still far to seek; and it will certainly not be found in any quantity as long as influential writers like Professor Parkinson continue to regard society, not as an area of tillage to be held and harvested in common, but as a barren and bloody arena in which men mangle one another in pursuit of acclaim and gold.’

That, thought Constable as he lifted his head, is putting it a bit strong. Although there are real gladiators, the iron men of industry and commerce, for the most part the circus is occupied by perfectly decent fellows who are hoping, in return for a conscientious display of talent, to achieve a quiet independence and retire to a Sabine farm. But then again, thought Con¬stable, if society is to be truly co-operative there is no place even for such temperate self-interest as this. It’s not the economics of the thing that matter so much as the moral attitude . . . the idea that one will make a part of human society for only so long as it takes to raise enough money to opt out of that society and buy a pretty house on the hill way up above the noise and the suffering and the stink. If society were justly ordered, thought Constable for the millionth time, if wealth were fairly spread, then no ability would win enough money to escape the suffering and the stink, and all ability would therefore be used to mitigate them. This, then, must be the argument for heavy taxes on earned money – that independence, even when earned, is a crime against humanity.”

Norman Rockwell, 1943

Iowahawk explains how to feed the hungry American family in these hard times on $10 billion a day.

Seems like these days I hear a lot of whiney whiners whining about “out of control government spending” and “insane deficits” and such, trying to make hay out of a bunch of pointy-head boring finance hooey. Sure, $3.7 trillion of spending sounds like a big number. “Oh, boo-hoo, how are we going to get $3.7 trillion dollars? We’re broke, boo-hoo-hoo,” whine the whiners. What these skinflint crybabies fail to realize is that $3.7 trillion is for an entire year – which translates into only a measly $10 billion per day!

Mister, I call that a bargain. Especially since it pays for all of us – you and me, the whole American family. Like all families, we Americas have to pay for things – health, food, safety, uncle Dave America with his drinking problem. And when little Billy America wants that new quad runner they promised, do Mom and Dad America deny him? No, they get a second job at Circle K, because they know little Billy might have one of his episodes and burn down the house.

So let’s all sit down together as an American family with a calendar and make a yearly budget.

Friedrich Hayek and Ludwig von Mises

Jeffrey Tucker points out that the Austrian economists Hayek and von Mises explained long ago in the 1930s why the Keynesian policies of credit expansion being used today to try to bring about recovery would not be effective in restoring prosperity then or now.

Did you ever have the feeling that we’ve been through this before?

Think of it. Those in charge have only recently sworn — yet again! — that if we keep interest rates at zero, keep battling the symptoms of recession and unemployment with spending and jobs programs, clobber the speculators with regulations, and otherwise keep trying to revive moribund industries, all will be well. Just don’t cut government spending or let interest rates rise!

So where have we heard it all before? It was the 1930s, when the battle between F.A. Hayek and J.M. Keynes raged in the English-speaking world, not only in the academic journals but in the newspapers in London and the United States.

Hayek gave a series of lectures based on his previous works in German that tried to explain that the ruling elite and their theoretical apparatus had it all wrong.

In a thousand different ways he said the same thing: “To combat the depression by a forced credit expansion is to attempt to cure the evil by the very means which brought it about.”

Further, “because we are suffering from a misdirection of production, we want to create further misdirection — a procedure that can only lead to a much more severe crisis as soon as the credit expansion comes to an end.”…

Ludwig von Mises wrote in 1931:

Credit expansion cannot increase the supply of real goods. It merely brings about a rearrangement. It diverts capital investment away from the course prescribed by the state of economic wealth and market conditions. It causes production to pursue paths which it would not follow unless the economy were to acquire an increase in material goods. As a result, the upswing lacks a solid base. It is not real prosperity. It is illusory prosperity. It did not develop from an increase in economic wealth. Rather, it arose because the credit expansion created the illusion of such an increase. Sooner or later it must become apparent that this economic situation is built on sand.

John Hinderaker shrewdly diagnoses the source of recent liberal paralysis of will in Washington.

Many liberals believe that government policies have little impact on the economy. A number have expressed that view to me privately. They think that the private sector will produce wealth regardless of what happens in Washington, and the only question is how to split it up. I think that is what President Obama and his advisers believed when he took office. The country was in economic turmoil from which it inevitably would recover, as it always does. When it did, Obama would get the credit.

In the meantime, the administration’s mantra was “never let a crisis go to waste.” Obama saw economic decline as an opportunity to pave the way for socialized medicine, to enact a near-trillion-dollar payoff to public sector unions in the guise of “stimulus,” and to extend the government’s control over various sectors of industry.

I think Obama and his advisers were genuinely surprised, not that their policies didn’t bring about economic recovery–they couldn’t have expected that–but that recovery didn’t happen of its own accord. That is why they are so nonplussed today.

I think John is perfectly correct.

Barack Obama and the democrats in general thought the Panic of 2008 was just a bump in the economic highway, contrived by smiling liberal Fates intending to deliver them into power. A panicked public would accept the leadership of the left during a momentary crisis and find themselves soon after living in a European-style welfare state. The New Deal’s march in the direction of socialism would be completed. President Obama would join the pantheon of progressive builders of grand collective entitlements, going down in history beside Franklin Roosevelt and Lyndon Johnson. The economy would fix itself; it always does. And President Obama would receive the credit for both the recovery and for Obamacare.

But, then, the economy did not heal itself.

There comes a point in Ayn Rand’s Atlas Shrugged, after the announcement of Directive 10-289, when the efforts of capitalist heroes Dagny Taggart and Hank Rearden to keep the railway system operating and steel mills in production begin to fail.

Somebody like James Taggart, one of the leftist supporters of the regime, begs Dagny or Hank to keep the failing system afloat. The hero assures the collectivist that the burden of regulations and redistribution has made it impossible. But we want it, insists the second-hander looting collectivist. It’s your responsibility to make it work for us.

Barack Obama is no more able to understand than James Taggart the incompatibility of limitless liberal demands and a viable economy.

Member of the European Parliament from Southeast England Daniel Hannan in May 2009 explained to that body why bailouts wouldn’t work.

Too bad the fight was fixed.

Via Theo.

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Supposed Christian group that won headlines attacking Paul Ryan’s budget funded by the very secular-minded George Soros.

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Jim DeMint: Your tax dollars at work: $2 million grant to build a “culinary amphitheater,” wine tasting room, and gift shop in Richland, Washington. That makes sense, with the federal deficit where it is, everyone needs a drink.

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Cedar Falls, Iowa wants keys to residents’ homes. It’s for their safety.

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Kayleigh via Jose Guardia: Keynesianism is the equivalent of pouring your can of soda into a glass and trying to claim that, because the soda is now in the glass, you have more soda than if you had not poured it into the glass.

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Michelle Malkin: Woe is Weiner: No skillz to pay the billz. But don’t worry, he has a job offer with a higher salary. And he has a pension.

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Leopold Bloom resigns after erotic letters leak.

Nobel Prize winning economist Robert Lucas contended in his Milliman Lecture (.pdf), delivered May 19th at the University of Washington, that US economic growth has been roughly a consistent 3% per year over the last two centuries. There have been deviations from the pattern as a result of wars and financial downturns, but the American economy has consistently returned to the same trend line.

The recession which began in 2008, however, seems possibly to represent a fundamental change. Economic activity has not resumed growth. We have not returned to our customary trend line.

Instead, policies adopted by the Obama Administration and the democrat party congress elected in 2008 may have systematically reduced the American rate of economic growth to levels comparable to those of major European countries.

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You or I read all this and shudder at the terrible news, but the progressive Matthew Yglesias basically accepts Lucas’s analysis and sees this as cause for awarding Obama laurels.

[A]ccording to Lucas, is that Obama’s policies have caused us to deviate permanently to a lower, European-style growth path. The initiation of Social Security didn’t do that. Nor did its expansion in the 1950s. Nor did the creation of Medicare, Medicaid, Title I federal aid to schools or the War On Poverty. The Clean Air Act didn’t do it. Nor did the Clean Water Act or the Americans With Disabilities Act. George W Bush’s expansion of Medicare didn’t do it. Nothing about the growth of the welfare state in postwar America was able to jar America off the American-style growth path and put it on the European path. And then along came Barack Obama, the Affordable Care Act and a few other bills, and like magic we’re Sweden. Forget the economic implications of this. Think about the history! Think about all the unfair knocks Obama’s gotten from the left. A leading economic scholar thinks Obama’s domestic agenda has been far-and-away the most consequential in American history. It’s kind of a big deal.

In other words, when we look around at the ruins of the US economy, the devastated housing market, massive unemployment, a crisis forcing Americans to reduce their life-styles and expectations, a shrinking economy, the financial industry departing overseas, the possible end of the US dollar as reserve currency, and a forced American retreat from military investment and commitments, as most of America despairs, we find the American left rejoicing over the fulfillment of their hopes and dreams.

If there was ever any question as to what the left’s agenda was ultimately directed, as to exactly what its goal really was, well, now you know.

In these difficult economic times. a Congressional Research Service survey finds that at least one economic group is doing well: federal employees. More than 77,000 federal government employees throughout the country — including computer operators, more than 5,000 air traffic controllers, 22 librarians and one interior designer — receive larger salaries than the governors of the states in which they work.

Gubernatorial salaries do vary. California’s governor (naturally) gets the largest salary of any state governor, $212,179, and quaint, old-fashioned Maine pays its governor a token emolument of $70,000. Oddly enough, Colorado had the largest number, 10,875, of federal employees pulling down bigger bucks than the $90,000 received by that state’s chief executive, Bill Ritter.

The Washington Times story summarized:

703 federal workers in California earned more than [the state governor] , and all but 34 of them were in medicine.

Maine’s governor, by contrast, made the lowest salary at $70,000. CRS said 3,423 federal employees in the state made more than that, including seven pipe fitters, and three people engaged in plastic fabrication work.

For individual occupations, the CRS report did not break down the states where they worked, so it was impossible to determine where the one interior designer who made more than the governor was employed.

CRS said nationwide there were 122 park rangers, 271 environmental protection specialists, 14 chaplains and one prison guard who earned more than their governors. There were also 21 archaeologists, three sociologists, 48 social workers, four food service workers and five civil rights analysts who made more than their governors.

CRS report