From the Comments: Keynesian Economics and the Stimulus Bill

A recent brouhaha has erupted in the comments thread of Dr. Delacroix’s post on Obama’s bad economic policies. Now, to be sure, the bad economy cannot be put on Obama’s shoulders alone. All he did was sign the stimulus act into law, after all, and I doubt John McCain would have vetoed it.

Let us also not forget about the two foreign wars that George W. Bush charged to the republic’s credit card, either. With that being said, I thought another economic chart would do readers of this blog a favor. From AEI’s blog comes this:

Ta-dah! Utter economic failure.

(h/t Steve Horwitz)

9 thoughts on “From the Comments: Keynesian Economics and the Stimulus Bill

    • The widely followed U3 unemployment rate, as shown in the figure, is the number of unemployed divided by the labor force. The labor force excludes discouraged workers. The labor force participation rate is the labor force size (employed & unemployed) divided by the population. The green dot shows what the U3 rate would be if that ratio had stayed the same since Jan. 2009.

      The U6 statistic counts discouraged workers as unemployed. That rate is currently around 15%.

      See also http://www.thefreemanonline.org/features/unemployment-what-is-it/
      The star will be real gold I trust, not fake like the Olympic “gold medals.” (-;

  1. All that chart proves is that Obama’s economic advisors underestimated the depth of the recession as did every economist at the time. Remember “we are living in unprecedented times”? Or how McCain said the economic fundamentals were fine?

    • Economics is rarely a yes or no question. It worked in the sense that the economy would have been worse off without it (compare it to European countries who have not had a stimulus). It didn’t work in the sense it was too small, not long enough and off set by states cutting their budget, which meant unemployment remained relatively high.

    • Robert,

      You have a very keen imagination, but unfortunately this is a blog that is focused on facts and logic, and not on sophomoric, superficial play games.

      It worked in the sense that the economy would have been worse off without it […]

      The graph that is sitting right in front of your face suggests otherwise, Robert.

      compare it to European countries who have not had a stimulus

      Europe’s problems are due to structural issues, Robert. Here is Paul Krugman explaining this concept in Foreign Affairs:

      […] the taxes and regulations imposed by Europe’s elaborate welfare states have made employers reluctant to create new jobs, while the relatively generous level of unemployment benefits has made workers unwilling to accept the kinds of low-wage jobs that help keep unemployment comparatively low in the United States.

      I am tired of arguing with the imaginations of Keynesians. The proof slaps them in the face and continue to ignore it. Oh the humanity!

      It didn’t work in the sense it was too small, not long enough and off set by states cutting their budget, which meant unemployment remained relatively high.

      Yes, of course the ARRA would have worked if only Washington had spent $2.1 trillion instead of $787 billion and the 50 states had had the common sense to keep spending money they don’t have so that the unemployment rate would have fallen to the level targeted by Obama’s economists in time for the 2012 election.

      I have forgotten how superficial and obstinately ignorant Leftists can be. Thanks for the rude reminder Robert!

Please keep it civil

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