T Nation

Ecuador Chooses Stimulus over Austerity

Can’t wait to hear the conservative economists make excuses to why this worked.

http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=9704#.USEcDb-cQbp

probably because it’s a developing country with a dynamic demography.

And i’m not even a conservative economist :stuck_out_tongue:

Bravo Ecuador! Correa himself has a Phd. in Economics from the U.S. And a Masters Degree from Belguim…this guy’s clearly not an idiot, and this comment below sums it up nice and tidy.

“Brilliant! Thankfully, unlike the Empirical USA (increasingly Canada, too) who are spending more on their military than the prosperity of its people …Ecuador, evidently, still has morals. Power to the People, not the warring corporate fascist thieves robbing treasuries to pay for its military committing more war crimes against and robbing resources from supposed enemies in the middle east.”

[quote]Zeppelin795 wrote:
Can’t wait to hear the conservative economists make excuses to why this worked.

Equador recovered due to massive new oil finds and a high price of oil.

http://www.worldfinance.com/markets/energy/natural-resources-propel-ecuadorian-recovery

“Ecuadorâ??s economy is almost entirely dependent on the countryâ??s oil supply. Petroleum production is the largest industry in the nation, followed distantly by exports of various fruits, and automobile manufacturing. Over half of the national export earnings are derived from the export of oil and petroleum products for agriculture, domestic use, and commerce. These exports also account for nearly 20 percent of GDP, and nearly 40 percent of government revenue.”

Same reason Norway is doing OK and Russia is doing OK and Texas is doing spectacular.

Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[quote]666Rich wrote:
Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[/quote]

Does the U.S. not have vast resources?

[quote]Jewbacca wrote:

[quote]Zeppelin795 wrote:
Can’t wait to hear the conservative economists make excuses to why this worked.

Equador recovered due to massive new oil finds and a high price of oil.

http://www.worldfinance.com/markets/energy/natural-resources-propel-ecuadorian-recovery

“Ecuadorâ??s economy is almost entirely dependent on the countryâ??s oil supply. Petroleum production is the largest industry in the nation, followed distantly by exports of various fruits, and automobile manufacturing. Over half of the national export earnings are derived from the export of oil and petroleum products for agriculture, domestic use, and commerce. These exports also account for nearly 20 percent of GDP, and nearly 40 percent of government revenue.”

Same reason Norway is doing OK and Russia is doing OK and Texas is doing spectacular.[/quote]

So is oil the only resource that pays enough? The U.S. has plenty of resources and the economy is in the shitter. If Ecuador is making good money off there oil where do the profits go? According to the President back to the public sector and that is why they are doing good. Stimulus is the best way to revive an economy after a recession. The President of Ecuador knows this and it has brought them out of there economic hard times in 3 months. The leaders of Europe believe austerity and debt are the foremost problems. And the policies they have enacted has plunged Europe into further despair. No money for the middle class=no demand=no jobs=smaller tax revenues= larger debt.

[quote]Zeppelin795 wrote:

[quote]666Rich wrote:
Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[/quote]

Does the U.S. not have vast resources?[/quote]

Oil and related industry makes up 2.6% of the USA’s GDP.

Oil and related industry makes up, what was it ---- HALF of Ecuador’s GDP.

So, yes, it’s just the price of oil that is helping Ecuador.

If the price of oil went in the crapper in countries like Ecuador would be in the toilet…the U.S. would be fine and many industries would thrive.

[quote]Zeppelin795 wrote:

[quote]666Rich wrote:
Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[/quote]

Does the U.S. not have vast resources?[/quote]

Vast resources that are still untapped.

[quote]thethirdruffian wrote:

[quote]Zeppelin795 wrote:

[quote]666Rich wrote:
Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[/quote]

Does the U.S. not have vast resources?[/quote]

Oil and related industry makes up 2.6% of the USA’s GDP.

Oil and related industry makes up, what was it ---- HALF of Ecuador’s GDP.

So, yes, it’s just the price of oil that is helping Ecuador.[/quote]
To be more accurate it’s where that profit is going. In the U.S. it would wind up in some offshore account to avoid taxation and into the coffers of the few. As Louis Brandeis would say “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”

[quote]UtahLama wrote:
If the price of oil went in the crapper in countries like Ecuador would be in the toilet…the U.S. would be fine and many industries would thrive.[/quote]

No doubt the price of oil has helped but it’s where those profits are going that makes the difference.

[quote]Zeppelin795 wrote:
As Louis Brandeis would say “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
[/quote]

Phew, good thing America isn’t a democracy or he would actually have half a point.

Stimulus works, if you want to force growth, or prevent recession/depression

But this comes at a price

Like if I were to lose my job. Then credit card debt would work to pay the bills. For a while. If I have a large credit limit, could work for a long while. It’s not a “sustainable” system tho

There is always some kind of tradeoff, just people miss it sometimes

Why not run stimulus at all times?

[quote] Stimulus is the best way to revive an economy after a recession.[/quote]Stimulus itself is just throwing money at a deeper problem. It could possibly happen that the money will be thrown well and hit the target, but if it were easy there might not be no problem.

I wouldn’t trust the President nor Congress to do this, but it could possibly work. Again, with costs

Debt is the supposed problem, and austerity is the supposed solution

I myself agree that debt is a problem, but austerity I can’t roll with. Couldn’t trust the President or Congress with that neither

So - are you saying that debt is the solution? It is humanly possible to use debt wisely, but it’s not a good thing in and of itself. I prefer regular old lowly citizens make these decisions themselves. If you have a good plan then you get into debt and do it. If you don’t like the risks/odds, then why should I?

(not talking about YOU - just saying in general)

Its as simple as that. In “free market” you pay the price and act more carefully with your money than with gov’t situations, they gamble with others money

But if the President of Ecuador did it right, then I never said its impossible

That’s my understanding anyways

[quote]Zeppelin795 wrote:

[quote]666Rich wrote:
Precisely.

I had a friend try to talk to me about Norwegian Socialism, and their corresponding standard of living. When you are a small racially homogenous country that has VAST natural resources, you will have a good economy no matter what.

[/quote]

Does the U.S. not have vast resources?[/quote]

Not as vast as what the Norwegians have. The USA has over three hundred million people. There is not as much to go around. Unless you live in Alaska.

Comparing Ecuador’s stimulus to what the Obama administration is doing is not comparing apples and oranges. Much of the US stimulus has been wasted on pork barrel giveaways or ideologically driven bullshit that we don’t need and are not helping anyone. ie Spending millions of federal stimulus dollars to put solar panels on public buildings in Seattle Washington, where they get about fifty sunny days a year, is a complete waste if we are trying to generate energy and get a return on investment. If they really needed the electricity they would have put the solar panels in San Diego where it is sunny.

http://www.ncpa.org/sub/dpd/index.php?Article_ID=17944

The reality of course is they did this purely for ideological reasons where the actual usefulness of the project or return on investment was not a consideration.

Ecuador on the other hand spent money on things that truly are investments that will pay off in the short term and in the future. For example the roads in the op video were third world dangerous. Replacing them with modern paved roads creates jobs on the road building but also pays huge dividends when the roads are completed. They make travel easier and more efficient which boosts the economy. They are safer so vehicles aren’t being damaged or destroyed which represents a savings and less people are getting injured or killed by bad roads.

To sum up, the Ecuadorian stimulus is money well spent because they don’t have money to waste on bullshit. While the US stimulus has been good money after bad because most of it is going to ideologically driven bullshit that never could get funding in the past until it was dressed up as “stimulus” in order to deal with a “crisis” which is something that never should go to waste.

[quote]countingbeans wrote:

[quote]Zeppelin795 wrote:
As Louis Brandeis would say “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
[/quote]

Phew, good thing America isn’t a democracy or he would actually have half a point. [/quote]

Wow you just demolished Louis Brandeis point with your quip remark. Since this is a democratic republic. You are such a top rated debater. Lucky for him you weren’t around during his time to make him look so stupid.

[quote]squating_bear wrote:
Stimulus works, if you want to force growth, or prevent recession/depression

But this comes at a price

Like if I were to lose my job. Then credit card debt would work to pay the bills. For a while. If I have a large credit limit, could work for a long while. It’s not a “sustainable” system tho

There is always some kind of tradeoff, just people miss it sometimes

Why not run stimulus at all times?

[quote] Stimulus is the best way to revive an economy after a recession.[/quote]Stimulus itself is just throwing money at a deeper problem. It could possibly happen that the money will be thrown well and hit the target, but if it were easy there might not be no problem.

I wouldn’t trust the President nor Congress to do this, but it could possibly work. Again, with costs

Debt is the supposed problem, and austerity is the supposed solution

I myself agree that debt is a problem, but austerity I can’t roll with. Couldn’t trust the President or Congress with that neither

So - are you saying that debt is the solution? It is humanly possible to use debt wisely, but it’s not a good thing in and of itself. I prefer regular old lowly citizens make these decisions themselves. If you have a good plan then you get into debt and do it. If you don’t like the risks/odds, then why should I?

(not talking about YOU - just saying in general)

Its as simple as that. In “free market” you pay the price and act more carefully with your money than with gov’t situations, they gamble with others money

But if the President of Ecuador did it right, then I never said its impossible

That’s my understanding anyways[/quote]

It’s not that the debt isn’t a problem but it’s not he primary one they want you to believe it is. All those folks that perpetuate this myth are the rich or those (economists and think tanks included) sponsored by the rich. Austerity is a failing theory to help an ailing economy. Just look at Europe’s decision and the outcome so far.

[quote]Sifu wrote:
Comparing Ecuador’s stimulus to what the Obama administration is doing is not comparing apples and oranges. Much of the US stimulus has been wasted on pork barrel giveaways or ideologically driven bullshit that we don’t need and are not helping anyone. ie Spending millions of federal stimulus dollars to put solar panels on public buildings in Seattle Washington, where they get about fifty sunny days a year, is a complete waste if we are trying to generate energy and get a return on investment. If they really needed the electricity they would have put the solar panels in San Diego where it is sunny.

http://www.ncpa.org/sub/dpd/index.php?Article_ID=17944

The reality of course is they did this purely for ideological reasons where the actual usefulness of the project or return on investment was not a consideration.

Ecuador on the other hand spent money on things that truly are investments that will pay off in the short term and in the future. For example the roads in the op video were third world dangerous. Replacing them with modern paved roads creates jobs on the road building but also pays huge dividends when the roads are completed. They make travel easier and more efficient which boosts the economy. They are safer so vehicles aren’t being damaged or destroyed which represents a savings and less people are getting injured or killed by bad roads.

To sum up, the Ecuadorian stimulus is money well spent because they don’t have money to waste on bullshit. While the US stimulus has been good money after bad because most of it is going to ideologically driven bullshit that never could get funding in the past until it was dressed up as “stimulus” in order to deal with a “crisis” which is something that never should go to waste. [/quote]

Not to mention that the stimulus in the U.S. wasn’t nearly big enough considering the crisis. In addition the overall theory survives intact regardless of one’s governemts choices to do with said stimulus. The theory can’t help what one does with the money just that it works provided you follow it.

[quote]Zeppelin795 wrote:

[quote]countingbeans wrote:

[quote]Zeppelin795 wrote:
As Louis Brandeis would say “We can have democracy in this country, or we can have great wealth concentrated in the hands of a few, but we can’t have both.”
[/quote]

Phew, good thing America isn’t a democracy or he would actually have half a point. [/quote]

Wow you just demolished Louis Brandeis point with your quip remark. Since this is a democratic republic. You are such a top rated debater. Lucky for him you weren’t around during his time to make him look so stupid.
[/quote]

Um no, constitional republic. Nice try though.

Please do not pass go, do not collect $200.