Rush Limbaugh's Shocking Ignorance About Growth

      The GOP has been piling on the President because he said we should hire more teachers, cops, and firemen-didn't he learn from Wisconsin Romney asks smugly.

      "He says we need more firemen, more policemen, more teachers. Did he not get the message in Wisconsin?"

       http://krugman.blogs.nytimes.com/2012/06/12/more-firemen-more-policemen-more-teachers/

        This is the tired game Romney thinks will win him the election. We ought to ask him if he didn't get the message in Ohio last November when a anti union bill even more Draconian than Walker's went down to defeat in a referendum 62-38.

       Of course we need not ask the question of course he hasn't. Libmaugh as usual was carrying Romney's water yesterday effecting to be "stunned" that Obama could suggest that government jobs could create growth. He went on and on about how hiring police, fireman, and teachers does nothing for the economy.

      This idea that hiring public servants does nothing to increase GDP is just typical Limbaugh illiteracy. However, his narrative of the Way Things Aren't actually gives me the opportunity to employ my first economic model to decide an argument-Krugman's favorite, the Hicks IS-LM.

      My use of this was inspired by Sumner's trying to write a model of his NGDP level targeting regime today. Lars Christensen's drawing of a Sumner Phillips Curve got me all excited-it's the first model I was able to follow through a whole 3 steps! LOL

      Very simple: Y=Y*+a(N-N*) where Y is real GDP or output, Y* is trend RGDP, N is NGDP and N* is expected NGDP.

       So I will answer Limbaugh's canard with the ISLM equation Y=C+I+G+X-M. Clearly this shows that an increase in government spending (G) is an increase to ouput (Y). An anti Keynesian doesn't deny this what he argues is that maybe the increased spending on G will come at the expense of one of the other variables of Y, maybe for instance,  I-actually I is probably the most likely variable the anti Keynesian will argue, that is that an increase in G is a crowding out of Y.

     But Limbaugh's claim that hiring government workers-cops, firemen, teachers, or other-doesn't raise GDP is just flat out wrong. Rush, you've done it again.