Samuelson and stimulus

Back when I went to college, we all took one course in economics and the textbook was a thick brown volume by Samuelson. That text covered a lot of stuff, starting with the law of supply and demand and then the famous "multiplier effect". Samuelson stated that money spent in an economy doesn't stop with the first payment, he claimed that the recipient of the money went on to spend it, and those recipients would spend it yet another time. He claimed that a single dollar spent, would be multiplied as it rippled across the economy.
Of course Samuelson never wrote about the numerical value of the "multiplier". Was it 1.1? 2.3? or larger? We never learned that.
Now, all those college students exposed to Samuelson and his multiplier effect are grown up and running the government, and they all believe that spending is good for the economy, and the way to spend is to borrow, spend, and pay it back later.
Now I can see the multiplier effect for something like the purchase of airplanes for the Air Force. Boeing gets the contract and then turns around and orders parts. Probably 90% of the cost of a new Boeing goes into parts that Boeing buys from suppliers. This is how we got out of the Great Depression. World War II started and massive orders for everything from B17's to army bunk beds made the US economy perk right up. Paul Krugman said as much when he suggested in the NYT that an invasion of space aliens would be good for the economy. I think Krugman was speaking in jest, but you never know.
So, money given to corporations to make things probably does multiple some. But money given to individuals is different. People use money to pay down their credit cards and pay their mortgages and pay their taxes, none of which multiples at all. Sure people buy groceries and clothing, but that's a much smaller percent than Boeing shells out for parts.
Now take Obama's Porkulus, $ 1 trillion in "stimulus" money. Did it go for buying things? No, it went to state governments who used it to meet payroll and make unemployment payments as their taxes dried up and their unemployment rolls grew.
Very little multiplier effect. It did consume the credit of the United States, so we cannot borrow that much again. The Porkulus didn't work and we are still stuck in Great Depression 2.0. Obama and his friends are now reduced to saying that the Porkulus would have worked if it hard been bigger. Right. We drop $ 1 trillion into the economy and nothing happens. Do you really think $2 trillion would be much different, if we could lay out hands on $2 trillion?

Romney Campaigning in New Hampshire

The event was at the Littleton Diner, as nostalgic a piece of up country color as you can ask for. It's been there for 60 years that I know of, and looks like it will be in business for another 60. It's was raining. This picture was taken a hour before anyone arrived. By the end of the event the rain had dried up and there was a crowd filling the sidewalk.


Romney left the suit coat behind and dressed for the occasion. We don't wear suits to the Littleton diner much. Romney merely called for each voter present to tell a little bit about himself, state concerns and ask questions. It was a Republican crowd and they had a lot of concerns about jobs and the economy, very few about wedge issues. Romney spoke well and connected with the voters. Everyone agreed that Romney would make a fine president, a real improvement over the incumbent.


Parents brought children. All the local Republicans showed up, including yours truly.




Romney drew a decent crowd. There were as many voters present as press and the place was packed. It 's not a very big place, but it is the traditional place to campaign in Littleton.

My stove is web surfing when it ought to be cooking

Hewlett Packard is peddling operating system software for kitchen appliances to makers thereof. Not sure just why I as a customer would want my kitchen range to be internet enabled, but HP marketeers are hard at work, developing the concept.

Down with family vehicles

Obama is crusading against the evils of SUVs and pickup trucks, again. Does Obama think this is job creation?

Windows Sales slow as iPad Gains

Headline from the Wall St Journal. The author thinks iPad is the Windows killer. Me, I think Vista (and Windows 7 is little better) killed Windows. We stopped buying PC's when we could no longer get Windows XP on them. We buy iPads to avoid Windows 7.
Windows is a walking flapping security hole, takes forever to boot up, runs slow, eats up too damn much RAM and disk space. Which accounts for the popularity of non Windows things like iPad.

What does the Ames Straw Poll mean?

The TV newsies love it, it's a straight forward, simple opinion poll that can be easily comprehended by uneducated journalists. It pops Michelle Bachmann up to the top and drove out Tim Pawlenty. It brought in Rick Perry so we cannot say it limited the field much.
It doesn't really solve the Republican's candidate problem. Michelle Bachmann is too much into wedge issues (aka "social conservatism") to appeal to the independents. Up here in the Northwoods independents are 30% or more of the registrations and control the election. Independents are very accommodating to Tea Party ideas but either don't want to get mixed up in wedge issues, or they approve of gay marriage and are pro choice. Either way, Bachmann is unlikely to attract them. Most NH Republicans just want some one to beat Obama, and that means someone who can attract the independent vote.
So far Romney, despite some baggage, looks like a good bet. We don't know much about Perry except that he has created a lot of jobs in Texas. That sounds good. The Wall St Journal ran an uncomplimentary-to-Perry op-ed on Saturday. The Journal describes a Texas state economic development fund that made a lot of grants to contributors to the Perry campaign. Clearly the Journal wishes Perry would go back to Texas.

So what is the Tea Party

So far, the Tea Party is not a tradiditional American political party. It does not have ballot access like the Republicans and Democrats have, and it does not run candidates. The best description of the Tea Party is an effective political pressure group. This may change, but as of right now, that's how it is.
The Tea Party is most concerned about taxes and spending. Specifically the US budget is un sustainable, we cannot borrow 40% of Federal spending for ever, there isn't that much money in the world. In fact the only reason the US can still sell Treasury bonds is that investors don't think the US will default on them, and all the other places to invest (stock market!) look worse. As soon as Great Depression 2.0 clears up, treasuries will compete with other investments at a disadvantage. The Tea Party was created to oppose this flushing of the American dollar and economy down the drain. I receive constant emails urging the Tea Party members to stick to their guns, (taxes and spending) and avoid wedge issues like gay marriage and abortion.