Round-up of "Stimulus" Analysis

A 40-year Wish List Wall Street Journal editorial 1-28-09


"The European Social Welfare State Bill" by Jim Manzi at National Review 1-27-09


"Japan Seeks New Ways to Boost Economy" by John Murphy WSJ 1-14-09 (How similar measures failed to "stimulate" the Japanese economy.)


"What are they buying" by Thomas Sowell Townhall.com 1-29-09


"Can Fiscal Stimulus Revive the US Economy?" by Frank Shostak on Ludwig von Mises Institute, 1-22-09

"How Not to Stimulate the Economy" by Bruce Bartlett Public Interest 1993 (A look at the results of past government stimulus attempts.) and more recently at Forbes, "Does Stimulus Stimulate?"-I disagree with Bartlett's conclusions, but he provides some interesting information and a nice synopsis of the evolution of 20th century U.Ss. monetary and fiscal policy theory.

.

Von Mises on Economic Education

[W]hat is unsatisfactory with present-day academic conditions — not only in this country but in most foreign nations — is not the fact that many teachers are blindly committed to Veblenian, Marxian, and Keynesian fallacies, and try to convince their students that no tenable objections can be raised against what they call progressive policies; the mischief is rather to be seen in the fact that the statements of these teachers are not challenged by any criticism in the academic sphere. The pseudoliberals monopolize the teaching jobs at many universities. Only men who agree with them are appointed as teachers and instructors of the social sciences, and only textbooks supporting their ideas are used. The essential question is not how to get rid of inept teachers and poor textbooks. It is how to give the students an opportunity to hear something about the ideas of economists rejecting the tenets of the interventionists, inflationists, socialists, and communists.

--Ludwig von Mises, From Planning for Freedom. Originally published in The Freeman, April 7, 1952.

.

Will's Wisdom

"If we took Congress seriously, we would be worrying all the time."

-- Will Rogers
(1879-1935) American humorist

HT Liberty Quotes

Where government steps in, private action steps out.

$13.4 billion auto rescue with TARP funds"
The Big 3 Auto companies can't sell enough cars to make a profit. People are unwilling to voluntarily give them their money in exchange for their cars. The government has decided to give them our money anyway.

“Doubling the production of alternative energy in the next three years.”-ARRP
Venture capitalists have not funded alternative energy research or production sufficiently to satisfy the environmentalists and politicians. Private investors did not judge it profitable (benefit exceeds the cost) to risk their own dollars on these projects. Since no one would risk their own money voluntarily, the government will risk our money instead.

“Making the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.” -ARRP
Doctors and clinics have not converted all of their medical records to computerized form. In their individual judgment, this was not the best use of their limited resources and time. The government is planning to spend our money to have it done anyway.

“Investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.”-ARRP
If these investments are truly profitable and the best use of scarce resources, they will be funded voluntarily. Private industry and entrepreneurs are constantly looking for ways to innovate and increase efficiency while at teh same time being held to the standard of market discipline: if people are unwilling to pay for your product, you go out of business. Government "investment" by-passes the market and uses coercion to do what people will not do by their own free will.

When government steps in, private industry steps out.
This includes bank bailouts, broadband access, mass transit and other infrastructure projects, education, art, parks and recreation, charity and health care. Government only needs to "invest" when people do not invest voluntarily. Government spending substitutes the voluntary choices of millions of individuals for the coerced choices of powerful minorities and special interests.

The summary of the American Recovery and Reinvestment Plan (passed yesterday in the House 244-188) states: "There are no earmarks in this package." That's because there doesn't need to be: it is one big pork-barrel, special-interest spending bill which extends funding to every aspect of the expanding welfare state. Wealth is transferred from the productive to the less and even the unproductive; economic exchanges are transformed from the voluntary into the involuntary.

Government is coercion. When used appropriately, it protects and preserves our individual rights. When used to promote, support or fund economic activities, it can only diminish our freedom and our wealth.

With all due respect, Mr. President...

Published 01-28-09 in the New York Times and Washington Post:

Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan's "lost decade" in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

See the signatures here.
.