Home > Government intervention, Keynesian Economics > Stimulus doesn’t work

Stimulus doesn’t work


Few counties, for example, received more road money per capita than Marshall County, Tenn., about 90 minutes south of Nashville. Obama’s stimulus is paying the salaries of dozens of workers there, but local officials said the unemployment rate continues to rise and is expected to top 20 percent soon”

That’s because the Keynesian notion of stimulus doesn’t work. It is based upon the naive idea that all government spending is good. We know that is a false premise. Politicians will spend on what will increase their own power, which often comes into conflict with what is in the social good. Which do you think will win out? Which salaries do you think the Stimulus is paying for? If you say Government workers you are correct!
Remember Keynesian stimulus, increase in G in the C+I+G+NX equation, is suppost to work no matter what it is spent on. Keynes himself said all you had to do is bury some money and let the public dig it up; the whole notion of digging a ditch and then filling it back in. So why isn’t it working? Simple answer, Governments are not benevolent. I’d encourage you to read up on Public Choice Theory, like my example of a Tulluck Lottery a few days past.

H/T Liberal Rapture

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  1. kenoshamarge
    January 26, 2010 at 07:23

    I am not an economist. I admit that I don’t understand economics on a grand scale. I do understand economics enough to know that you cannot continue to spend more than you take in and you cannot “spend” yourself out of debt.

    I don’t see a chance in hell that the pinheads in Washington D.C. will “ever” do what is needed to balance the budget and get us back on a path of fiscal responsibility.
    1. It might anger voters that think government spending is bad except when it’s spent on them or their issues.
    2. Corrupt politicians will continue to throw billions to the folks that fund their election and re-election campaigns and don’t even try to tell me that’s Mom and Pop with their $10-$20.00 donations.

    Americans, many of them, most of them, have seen the error of their ways and are trying to get out of debt. Government has not and I suspect will not. The few voice of reason will be voice crying in the wilderness. And the spenders, in both major political parties will continue to throw borrowed money in all directions like confetti on New Year’s Eve. IMHO.

    • January 26, 2010 at 19:39

      LoL, the irony here is that by not being a “proper trained” economist, ie Keynesian, you have a better grasp of the reality of the situation, than the ivory tower academics thinking that spending is the way to go. I’m going to post a Econ Rap link here in a min, it’s real geeky, but informative at the same time.

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