Paul Krugman: Scholar or political hack?

[Ziggurat]

So people who don't buy your arguments are lying?

No, SG. You're lying about what my argument is. You have twice now claimed that I'm arguing that your case rests on one example. I have explicitly refuted that claim twice, and you cannot point to anything I actually wrote to back up your claim. Whether or not you believe my argument, you don't get to substitute your strawman for it. That is the lie, not the lack of agreement.

You really don't get basic logic. You keep stumbling on the most basic points.

You can believe your argument does not have those false underlying premises, but that doesn't change the fact it does have those underlying false premises.

No, it doesn't. Only your straw man does. But your straw man doesn't resemble my argument. I've already pointed out why.

Yes, more stimulus, it's not a difficult concept.

The difficulty of a concept is not the same thing as the accuracy of that concept.

It helped in '09 but it's not been enough and there have been problems getting the money actually spent.

And will that problem get easier or harder if you try to spend more?

I agree that spending aspect needs to be addressed but simply throwing up your hands and saying it can't be done isn't an answer, just as putting more money in the hands of the rich isn't an answer.

Indeed, just putting more money in the hands of the rich isn't the answer.

But that's exactly what the stimulus did.

I'm not surprised you'd be repeating a thought stopping talking point. Clearly investing in alternative energy is a good idea.

On what basis? On the basis of economic stimulus? Not a chance in hell. You can try to justify it on other grounds if you want, but the economics aren't favorable at all.

Tell me, did I see you complaining about the 12 billion in cash that literally disappeared in Iraq?

Did you see me advocating that? In fact, did you ever see me advocating anything to do with Iraq on the basis of economic benefits? No, you did not. Logic fail again.

 

[Skeptic Ginger]

So, cutting to the substance in your thread, we could compare the Solyndra failure with the GM success. Got anything else?

I didn't ask if you advocated for the wasteful Iraq cronyism, I asked if you condemned it at the time?

 

[Ziggurat]

So, cutting to the substance in your thread, we could compare the Solyndra failure with the GM success. Got anything else?

GM's success? Well, they're still afloat, if that's what you mean. Throw enough money at any company and that will be true. But the fact that they're still afloat doesn't mean that the bailout was a success.
http://money.cnn.com/2012/02/16/news/companies/gm_bailout/index.htm
As of February, we were still $25 billion short. That article claims GM stock price would need to double for taxpayers to recoup their losses, but the stock price has actually declined since February.

I didn't ask if you advocated for the wasteful Iraq cronyism, I asked if you condemned it at the time?

Why is that even relevant?

Solyndra is one of the direct results of a policy YOU are arguing for, on economic grounds. It was economic stimulus targeted at exactly the sector you think should be targeted. The same cannot be said about Iraq and me: not only did I never advocate for this particular program (I don't even remember what I knew about it at the time), nothing about my Iraq war position was predicated on economic benefits. The comparison has no relevance to our discussion here. It's an attempt at a tu quoque, and a poor one at that.

 

[stevea]

I'm a little surprised no one has mentioned Harvard economist Greg Mankiw. He avoids much of the political polarization associated with Krugman or eve the less ideologial spin of Sowell, whom I rather like, and he's positioned as a Keynesian with skepticism.

It was interesting that in academia there is a divide among the most prestigious economics departments. I don't recall the whole list Krugman cited but U of Chicago vs UC Berkeley were on opposite sides of the isle.

Are we talking about the freshwater/saltwater schools ? Krugman made around of TV interviews in May and said essentially the same on all. It's his now tired refain that we need much more stimulus now, and that the massive debt accumulation is not a problem for entirely hand-wavey reasons. In his CNN interview, when specifically asked his explanation was that a nation like the US w/ sovereign currency can tolerate much higher debt loads (translation: we will inflate away the debt as well as your savings in the future).

I believe, as I think Krugman was saying, that political ideology is particularly prevalent and distorts the conclusions regarding the evidence in the science of economics. You don't see the same thing, for example, in the science of medicine or astronomy. Krugman challenged anyone to provide the evidence that austerity was the way out of a recession.

If that is what Krugman actually said (which interview GS?) then it's a silly strawman; no one rational has ever suggested that austerity addressed recession. This is however typical of much of Krugman's mis-characterizations of dissenting ideas; it avoids having to answer the hard questions.

It is thought by many that tax cuts are far more stimulative than government spending and avoids the sort of inefficient market issues we see with GM or Solyndra. It is also believed by more than a few that the massive debt causes long-term decline in growth. Keynes' quip about "long run ... dead" doesn't answer that concern if you interest include future decades or generations.

As for evidence base theories - Keynesian-ism is certainly not the poster child for the scientific method. Keynes developed his theories ad hoc and as a result several decades of effort went into revision, retrenchment, rationalization, ex post facto collection of correlate data to support it; resulting in several flavors of neo-Keynesianism that we today call 'Keynesianism'. This is quite different from the early Chicago School, or some even currently at MIT where empirical data was drove the macroE hypotheses.

At the same time there are dozens of historical examples that government spending when the problem is lack of demand as it is now does indeed result in an economic turnaround.

Then naming a dozen should be easy for you.

In addition and as a separate note, Krugman said the Republics were totally dishonest in that if Romney is elected they will spend like Bush did and simply let the deficit grow with their 'no tax increases on the rich' ideological folly.

"Republics" ? Grow up!

I seriously doubt Krugman actually presented the ideas as you state them. I have no party affiliation and don't particularly care for Romney, however even a politically biased journalist like Krugman is unlikely to try to resurrect tired "Romney=Bush=evil=liar" trope. Tell me in which interview did he say this ? Even Krugman recognizes taxing the rich doesn't solve a deficit problem; it's a political side-show topic which is why he has carefully avoided making any such statements in the past. I think you heard what you wanted to hear - not what was said.

----

Yes, more stimulus, it's not a difficult concept. It helped in '09 but it's not been enough and there have been problems getting the money actually spent. I agree that spending aspect needs to be addressed but simply throwing up your hands and saying it can't be done isn't an answer, just as putting more money in the hands of the rich isn't an answer.

Why isn't it the answer ?

A little light reading from Mankiw,
http://www.economics.harvard.edu/faculty/mankiw/files/Is Govt Spending Too Easy.pdf

The main points are these. The neo-Keynesian supporters believe that government spending results in a GDP multiplier around 1.4x or alternatively the current Whitehouse pegged the multiplier for the stimulus at 1.57 (however we expect that is politico-optimism). However some Keynesian schoolers studying that empirical data SGinger sometimes praises believe that tax-decreases have a multiplier around 3x !. So if the govenment spends a dollar it increases the GDP by an addiional 57 cents beyond the direct spending. If the Keynesian researchers are right - then if the govenment reduces tax by the same $1, it results in an additional $2 of GDP growth.

Who are these renegade empirico-Keynesians who belive tax cuts are better than stimulus ? None other than Christina D. Romer and her husband David Romer, econo-profs at UC Berkeley. Christina was of course the former Chair of the Obama admin Council of Economic Advisers. (fwiw Mankiw was best-man at their wedding).

So the looming questions you neo-Keynesians MUST answer are these -

Why are you choosing the less effective "least bang for the buck" method of addressing the recessions; why stimulate for a 40-57 cent/$ gain rather than tax less for a $2/$1 gain ? I think there is, at issue, the socialist agenda of making everyone dependent on government, and a socialist predilection toward central planning.

Do we really want to increase GDP by creating useless product ? Keynes wrote that setting bottles of pound notes into disused coal mines would immediately cure unemployment and increase GDP. Following this idea the Obama-ites placed wads of dollar bills into any half-baked green-energy plan. I am not solely blaming Obama - The grain-ethanol expenditures were equally incompetent. Keynes was not delivering a prescription but a joke, but it does point up the gross inefficiency of government vs private spending. We can end unemployment by hiring everyone to stay home and watch TV, this does improve nominal GDP, but it doesn't mean there isn't any useful product increase.

HOW WILL IT ALL END? The Great-Depression/WW2 events were primarily a US phenomena, and it resulted in a massive increase in government size. Is that really what we want ? What is the LT impact of all this debt accumulation ? Can it any in any way other than inflation ?


The other bit that Keynesians ignore is the work of Robert Lucas, Jr. (Nobel economist) on rational expectation. Yes the Fed, as Krugman said on CNN, can manage interest rates very to keep debt payment low, so long as their is demand for those bonds. The market for those bonds evaporates when there is rational expectation that they will not be repaid at a premium to cost. Recently the Fed has been purchasing ~60% of bonds issued
http://www.moneynews.com/Headline/fed-debt-Treasury/2012/03/28/id/434106
this has the impact of keeping market supply low, prices high and interest rates low; however it seems unsustainable. Once there is a market consensus that these bonds are worth less than the price, the Fed will be unable to prop up the price. I think we are about one good sneeze away from disaster. Of course the problem is greatly exacerbated by deficits whether they come from inefficient gov't stimlus or tax cuts. At least in the case of tax cuts we expect growth to be dictated by economic individual need at efficient market prices; rather than centrally planned spending on boondoggles.

==

No, the rational expectation today is that US bankruptcy law is a meaningless protection to investors of companies like GM or big banks. The security of the asset will not be based on law but on ad-hoc plans of the Whitehouse (Bush and/or Obama). The expectation is that if you are a more prudent manager of companies- like Ford or Toyota or JPMorgan - that you will be punished by the government giving your competition a bailout. The expectation is that certain favored political money-bundlers will have their pie-in-the-sky green energy investments well funded regardless of the economic potential. The expectation is that government will stimulate with a QE#n, whenever the econ slow enough or political enough to matter. It seems there is no consensus expectation about what tax rates will be next year, what the federal budget will be, or what onerous rules and regulations will be imposed.

All of these expectations and manufactured uncertainty have real and negative consequences the economy, productivity and investment.

With ~3.3% inflation people still invest in 10yr bonds yielding 1.6% before tax; what does that say about investor risk tolerance ? They'd rather lose 2+% of value than take a chance with these highly uncertain and rapidly changing federal policies creating turmoil in private markets. Private markets can't grow with that sort of fear on the air.

 

[Skeptic Ginger]

Quite a bit to reply to Stevea. I'll try a chip at a time.

Krugman never said debt didn't matter. He said it does. But now is not the time to address it because stalling the recovery is worse than debt. He said one addresses the debt a little down the road.

As for the divide, some economists make the argument it is a structural problem. (People will have to look it up, the explanation is longer than I want to spend the time on.) Krugman presented a convincing case structure was not the problem. I suspect there is some structural issues with a transition to the global economy, but the facts support the case we still manufacture plenty in the US, but just with workers who are more productive, i.e. less of them.

But the rewards haven't gone to the more productive workers, instead the rewards have gone to greedier and greedier owners. That might fit with some people's ideology, but it shuts down demand.

I'll have to read your link before commenting further but tell me just how the super rich stimulate demand? Whereas giving money to the middle class means that money will be spent and recycled through the economy.

 

[Kaosium]

Hrm, here's something Krugman ought to re-read:

(...)

So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself—nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance. In every dark hour of our national life a leadership of frankness and vigor has met with that understanding and support of the people themselves which is essential to victory. I am convinced that you will again give that support to leadership in these critical days.

In such a spirit on my part and on yours we face our common difficulties. They concern, thank God, only material things. Values have shrunken to fantastic levels; taxes have risen; our ability to pay has fallen; government of all kinds is faced by serious curtailment of income; the means of exchange are frozen in the currents of trade; the withered leaves of industrial enterprise lie on every side; farmers find no markets for their produce; the savings of many years in thousands of families are gone.

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Yet our distress comes from no failure of substance. We are stricken by no plague of locusts. Compared with the perils which our forefathers conquered because they believed and were not afraid, we have still much to be thankful for. Nature still offers her bounty and human efforts have multiplied it. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.
The money changers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary profit.

Happiness lies not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. The joy and moral stimulation of work no longer must be forgotten in the mad chase of evanescent profits. These dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellow men.(...)

Krugman needs to read that speech again, thinking about it laterally and not literally. It's no wonder he (seems to) take the price of gold as a personal affront, at some level he must realize it's a (sustained and dedicated!) vote of absolutely no confidence in the wares he's been hawking.

 

[Skeptic Ginger]

Hrm, here's something Krugman ought to re-read:



Krugman needs to read that speech again, thinking about it laterally and not literally. It's no wonder he (seems to) take the price of gold as a personal affront, at some level he must realize it's a (sustained and dedicated!) vote of absolutely no confidence in the wares he's been hawking.

I don't believe I am interpreting that speech the way you are. I would guess that Krugman, like myself, condemns the lack of regulation and lack of prosecution of the massive bank fraud (that occurred in the private sector, mind you).

That is a separate issue from the government spending (increasing demand) to stimulate the economy which has an oversupply at the moment because demand is suppressed due to unemployment and low wages. The debt the government would incur needs to be addressed once the economy recovers. Government debt is not what is causing the recession, personal/private debt is, and that is private debt among the 99%. The supposed "job creators", the 1%, apparently have all kinds of excess cash in their coffers.

 

[Ziggurat]

I don't believe I am interpreting that speech the way you are. I would guess that Krugman, like myself, condemns the lack of regulation and lack of prosecution of the massive bank fraud (that occurred in the private sector, mind you).

I haven't seen the film, but I just read through their study guide PDF. And I'm struck by the fact that nowhere in that study guide are Freddie Mac or Fannie Mae discussed. In fact, the only mention of either is the note that Rahm Emanuel was on the board of Freddie Mac, but that's it - one wouldn't even know from this study guide what Freddie Mac even was. That's not a good sign, considering how central these two GSE's were to the entire mortgage market.

That is a separate issue from the government spending (increasing demand) to stimulate the economy which has an oversupply at the moment because demand is suppressed due to unemployment and low wages. The debt the government would incur needs to be addressed once the economy recovers. Government debt is not what is causing the recession, personal/private debt is, and that is private debt among the 99%. The supposed "job creators", the 1%, apparently have all kinds of excess cash in their coffers.

If they've got all this cash in their coffers, why aren't they spending more of it? Their demand is also suppressed. You had the facts, but you couldn't piece them together. So why is their demand suppressed?

 

[Skeptic Ginger]

Who are you referring to as "they" and "their" in your last paragraph, Zig? Are you asking why the rich are not spending? Are you asking why the demand is down for goods the rich could produce?

 

[Ziggurat]

Who are you referring to as "they" and "their" in your last paragraph, Zig? Are you asking why the rich are not spending? Are you asking why the demand is down for goods the rich could produce?

Yes, I'm asking why the rich are not spending. And no, I'm asking for why demand is down for the goods the rich could demand. They've got all this cash. Why aren't they spending it? Why are they sitting on it instead?

 

[Skeptic Ginger]

Yes, I'm asking why the rich are not spending. And no, I'm asking for why demand is down for the goods the rich could demand. They've got all this cash. Why aren't they spending it? Why are they sitting on it instead?

I can't believe you're asking this. The rich are holding their cash. The poor can't afford to hold their cash. They're sitting on it because they have more than they need to spend.

Is equity on paper in stocks and bonds doing anything to stimulate the economy? Is gold under your mattress doing anything to stimulate the economy?

If 1% of the population owns 3-4 vehicles per capita, how many vehicles is that? If 99% of the population owns 1 car each, how many cars need be manufactured for that? How much money recirculates through the economy to maintain those vehicles?

Where do you get the idea that wealth concentrated in very few hands does anything to move an economic recovery to the positive?

 

[Ziggurat]

I can't believe you're asking this. The rich are holding their cash. The poor can't afford to hold their cash. They're sitting on it because they have more than they need to spend.

I can't believe you don't know the difference between cash and wealth. Cash is a bad investment. So why are the rich holding lots of cash?

Is equity on paper in stocks and bonds doing anything to stimulate the economy?

You said cash, SG. Stocks and bonds aren't cash.

If 1% of the population owns 3-4 vehicles per capita, how many vehicles is that?

Cars aren't what rich people spend most of their money on. They spend much more of it on capital investments. But they aren't doing that. Why?

You can't even figure out the right questions to ask. You're hung up on your own class warfare rhetoric.

Where do you get the idea that wealth concentrated in very few hands does anything to move an economic recovery to the positive?

Where do you get the idea that this is what I'm suggesting? I'm suggesting exactly the opposite: that the flow of money, not its concentration, is what will get the economy moving. You bemoan that concentration, yet never once have you pondered why it's not flowing, or what might make it flow again.

 

[Roger Ramjets]

translation: we will inflate away the debt as well as your savings in the future.

You know what your 'savings' will be worth if the economy collapses? Zip. This idea that you should be able to salt your money away forever without it losing any of its value is silly. Everything else erodes over time, so why should money be any different?

People need to keep working to produce food etc., no matter what the state of the economy. If they stop working then everybody gets poorer, and eventually they all starve to death - even if they have bank vaults full of money! Government debt is caused by borrowing money from the people instead of taxing them. In the end it works out the same, but most people prefer inflation to taxes. Some people argue that there is a third alternative - weaker government. But the logical conclusion of that policy is anarchy (which is not sustainable).

The true value of your 'savings' is only what you can get for it when you go to use it. If the economy crashes then there won't be anything worth spending it on. A viable economy means your money is worth more, even with inflation. So don't complain that keeping the economy running is 'eroding' your savings, when the alternatives are worse.

no one rational has ever suggested that austerity addressed recession. This is however typical of much of Krugman's mis-characterizations of dissenting ideas; it avoids having to answer the hard questions.

Funny, I though 'Austerity' was exactly what Europe used to address the recession (yet the much reviled US 'stimulus' policy seems to be working better). If what the dissenters who insist on 'answering the hard questions' are calling for isn't austerity, what is it?

It is thought by many that tax cuts are far more stimulative than government spending and avoids the sort of inefficient market issues we see with GM or Solyndra. It is also believed by more than a few that the massive debt causes long-term decline in growth.

It is thought by many that an omnipotent god rules the universe and grants personal wishes. So perhaps we should just pray for the economy to improve? Just because many think it, doesn't mean it's true.

General Motors (and associated industries) are in a much better position with government support. Nobody else had the ability to stop them going under, and the knock-on effects of GM failing would have been disastrous. I bet that in the long run it will prove to be a positive.

Solyndra is just only company out of many that the government invested in. Whilst its demise due to Chinese competition was unforeseen, it is quite normal to have a high failure rate when developing new technologies. Usually it would only be private investors losing out, but in this depressed economy private investors were too scared to take the risk. Anybody who points to Solyndra as an example of government inefficiency without showing that private investors would not done have the same if the economy wasn't so bad, is just showing their bias.

 

[Skeptic Ginger]

I can't believe you don't know the difference between cash and wealth. Cash is a bad investment. So why are the rich holding lots of cash?

You said cash, SG. Stocks and bonds aren't cash.

Cars aren't what rich people spend most of their money on. They spend much more of it on capital investments. But they aren't doing that. Why?

You can't even figure out the right questions to ask. You're hung up on your own class warfare rhetoric.

Where do you get the idea that this is what I'm suggesting? I'm suggesting exactly the opposite: that the flow of money, not its concentration, is what will get the economy moving. You bemoan that concentration, yet never once have you pondered why it's not flowing, or what might make it flow again.

What is this, some attempt at bait and switch. Could you stick to the issue?

The economy lacks demand. It's a simple free market fact. If the little people can't spend because they are strapped for cash, the government can remedy the situation by spending on things that pay the little people.

You don't seem to be nearly as upset about government spending on things that pay the rich, like oil company subsidies and wasting billions on useless war efforts. But the idea the government can stimulate the economy by spending on teacher, fire and police salaries, rebuilding bridges and highways, subsidizing education, and providing a safety net for the poor seems to get your hackles up in a nanosecond.


How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

 

[theprestige]

How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

 

[KoihimeNakamura]

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

Does it matter?

 

[Skeptic Ginger]

I think he's suggesting that not only do you have no earthly clue why the rich are hoarding their cash, but it's never even occurred to you to ask that question, let alone try to find an answer.

So: Why are the rich hoarding their cash, instead of spending (investing) it?

And yet the absurd premise, I don't know, continues.

That's the thing about being rich: The richer you are, the more you can demand. You can demand not just necessities, but luxuries as well. You can demand commodities in bulk. You can demand investment products--shares in Facebook, a piece of some government-subsidized oil well, a green energy R&D lab. You can demand all kinds of things to spend your surplus cash on.

But the rich aren't demanding. The rich aren't buying. They're hoarding. Why?

They aren't buying because the 1% has already bought all they can possibly use.

I don't get why you and Zig can't understand a single individual can only consume so much.

The economy cannot be sustained by 1% of the population buying everything they want to buy. We need the 99% earning enough they have sufficient purchasing power to sustain the economy.

It's free market basics 101.

 

[Ziggurat]

What is this, some attempt at bait and switch. Could you stick to the issue?

I am. You continue to fail to grasp the facts, even when you state them yourself.

The economy lacks demand. It's a simple free market fact.

Yes. The poor and middle class are spending less because they have less. But by your own admission, the rich don't have less. And yet, they are ALSO spending less. Why? You are apparently actively determined to avoid this question.

You don't seem to be nearly as upset about government spending on things that pay the rich, like oil company subsidies and wasting billions on useless war efforts.

Not true. I'm quite upset by wasteful government spending that favors the rich. That's why I opposed the bailout, and why I opposed the stimulus. Because that's what it actually did: funnel a lot of money to the well-connected.

But the idea the government can stimulate the economy by spending on teacher, fire and police salaries, rebuilding bridges and highways, subsidizing education, and providing a safety net for the poor seems to get your hackles up in a nanosecond.

Strawman much? Oh, and almost none of the stimulus went to infrastructure. In addition, the stimulus money wasn't spent according to need (as you're trying to apply), but largely according to political power, and wastefully at that.

How can you suggest I don't know why the cash is not flowing. It's not flowing because the rich are hoarding it.

But why? They've always had cash, but they didn't hoard it before. Why are they doing so now? Your refusal to even think about this question is baffling.

 

[Ziggurat]

I don't get why you and Zig can't understand a single individual can only consume so much.

If that consumption is personal, yes. But that's not how most of the rich spend most of their money. They tend to spend their money on things which are not personal consumption, but which are still consumption. For example, if a rich person builds a factory, a lot of stuff gets consumed in the process. And unlike consumer spending, that consumption provides direct future benefits.

It's free market basics 101.

Yes it is. And yet, you continue to fail to grasp it, because you refuse to even consider the question in any depth beyond your tired class warfare cliches.

 

[Kestrel]

If that consumption is personal, yes. But that's not how most of the rich spend most of their money. They tend to spend their money on things which are not personal consumption, but which are still consumption. For example, if a rich person builds a factory, a lot of stuff gets consumed in the process. And unlike consumer spending, that consumption provides direct future benefits.

Rich people tend to park their money in Wall Street hedge funds that provide few if any economic benefits to the rest of society. Some funnel their money into offshore bank accounts to avoid taxes. Or invest it in politicians who return the favor in the form of special tax breaks that only apply to rich people.

The economy is sluggish right now because consumer demand is low. Consumer demand is down because too many people are out of work and too many homeowners have mortgages that are underwater.