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DOGE's government cuts may hurt business, companies warn investors

washingtonpost.com

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Re: DOGE's government cuts may hurt business, companies warn investors

#21

Post by belorn »

I thought the old teaching said that during a recession when governments want to save money, the best strategy is to increase spending in order to increase the circulation of money and stimulate the economy, and when there is a economic boom and governments can afford to increase spending, they should do the opposite in order to save money for when a recession occur. This was the somewhat paradoxical strategy that I got taught in school during my teenage years.

I don't know how true this actually is.

Re: DOGE's government cuts may hurt business, companies warn investors

#22

Post by xyst »

trescenzi wrote: post #7
xpe wrote: post #6

I'm looking for predictive economic models out in the open. I want to see the underlying assumptions and experiment. I'm not even picky about the kind of model: it could be a relatively simple linear regression model, a systems dynamics model, a complex simulation, or anything in-between. I just want models to a focal point of discussion rather than some poorly-explained textual interpretation. I know... I'm asking f…

I mean there’s some fed ones. Two are - GDPNow if you want shorter term: https://www.atlantafed.org/cqer/research/gdpnow - DSGE if you want longer term: https://www.newyorkfed.org/research/policy/dsge#/overview

GDP is such a deeply flawed metric of measuring human welfare.

It’s an aggregate measure and doesn’t tell the distribution of wealth amongst nation.

Also, it’s a metric that was sort of useful in the 1950s and during wartime when this country manufactured goods. Now it’s all unclear in this modern economy. It doesn’t take into proper account of services, quality of care, quality of life.

It doesn’t even take into account _losses_ that may occur. Such as a natural disaster. Sure, in a post disaster GDP goes up because region is rebuilding. But the losses due to disaster are not figured into GDP.

It’s a broken metric. Stop using this as an indicator of economic health and human welfare.

edit; never heard of DSGE but yet again looks like yet another flawed “model” that assumes a level of “equilibrium” and seems to have been birthed out of the pseudoscience known as neoclassical (and orthodox) economics.

Re: DOGE's government cuts may hurt business, companies warn investors

#24

Post by tormeh »

belorn wrote: post #21

I thought the old teaching said that during a recession when governments want to save money, the best strategy is to increase spending in order to increase the circulation of money and stimulate the economy, and when there is a economic boom and governments can afford to increase spending, they should do the opposite in order to save money for when a recession occur. This was the somewhat paradoxical strategy that I…

This is Keybesian counter-cyclic policy. It makes sense but is hard to do in practical politics.

Re: DOGE's government cuts may hurt business, companies warn investors

#26

Post by dwattttt »

xpe wrote: post #17
carlgreene wrote: post #11

Earlier quoted context omitted.

I think my concern here would be people weighting their ideas/opinions far too much on mathematical models that may, or may not represent the complex economic reality. We already see this with people arguing with near 100% confidence of X happening because of Y and Z…in a vacuum. I want to see something similar to what you’re asking, don’t get me wrong. But the underbelly of that is a broken clock being right twice a…

The solution to a bad model is more models :). I'm joking but serious. "All models are wrong, but some are useful."

Although also responsive, the solution to incorrectly applying models _isn't_ to get more models, it's to understand the mistakes being made in applying them.

Re: DOGE's government cuts may hurt business, companies warn investors

#27

Post by jongjong »

exe34 wrote: post #20
jongjong wrote: post #14

Well of course they're going to hurt zombie companies, that's the whole point. That's literally why everyone voted for Elon Musk's DOGE. Every company is another company's competitor and it's not fair that some companies have to compete against other companies whose profit margins are padded by taxpayer dollars... To some degree it's like being forced to subsidize one's own competitor.

so space x and Tesla are going to part with enough shares to pay back all the money they got from the public (and the growth that said money funded)?

For SpaceX, we can deduct the amount they saved which would have gone to NASA. For Tesla, we can look at foreign gov subsidies which went to foreign car companies like BYD, Toyota, etc... because it wouldn't make sense to target just Tesla... Given that governments of all nations play a key role in propping up their national auto companies.

Re: DOGE's government cuts may hurt business, companies warn investors

#28

Post by ty6853 »

tormeh wrote: post #24
belorn wrote: post #21

I thought the old teaching said that during a recession when governments want to save money, the best strategy is to increase spending in order to increase the circulation of money and stimulate the economy, and when there is a economic boom and governments can afford to increase spending, they should do the opposite in order to save money for when a recession occur. This was the somewhat paradoxical strategy that I…

This is Keybesian counter-cyclic policy. It makes sense but is hard to do in practical politics.

Which is why the federal reserve was ostensibly decoupled from politics and democratic election, and designed in secret on Jackyll island so the public would not poison it.

Unfortunately as you say if you try to time the market, or centrally plan interest, you generally get it wrong and end up even worse than a floating market.

It didn't take long before we saw the effects of the great depression.

Re: DOGE's government cuts may hurt business, companies warn investors

#30

Post by techpineapple »

throway456aef wrote: post #18

Crash the economy on the backs of a majority of workers (federal workers are large portion democrats) who didn't vote for you so interests rates / inflation goes down.

I’d be curious to see a breakdown, aren’t a lot of federal jobs in red states? Besides I’m more interested in the second order impacts, what happens when those people stop spending in their communities?
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