Money for nothing won't grow the economy

Jewish World Review ^ | February 2, 2009 | Jeff Jacoby

[dbz77]

Money for nothing won't grow the economy

By Jeff Jacoby

Jeff Jacoby

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http://www.JewishWorldReview.com | Commenting on my recent column about the bloated "stimulus" package making its way through Congress, one reader insisted that what matters most right now is getting money into people's hands.

"In the face of rapidly rising unemployment and idle productive capacity, any kind of federal spending will have a stimulus in the short run," he wrote. "Digging holes and filling them in would help to create jobs and consumer demand because those wielding the shovels would earn a paycheck that they could spend."

[Lorianne]

Excellent article. Thanks for posting

[ClearCase_guy]

Good article.

I will say, however, that if the government insists on throwing around billions of dollars, they ought to build a new navy. For $100B we could have 30 Zumwalt destroyers. Not long ago, that was seen as outrageously over-priced. Today, $100B is spent without a thought. Skilled jobs, with results that will be useful for decades, and which actually fulfill the mandate of what our federal government is supposed to be all about.

[PeterPrinciple]

“In the face of rapidly rising unemployment and idle productive capacity, any kind of federal spending will have a stimulus in the short run,” he wrote. “Digging holes and filling them in would help to create jobs and consumer demand because those wielding the shovels would earn a paycheck that they could spend.”

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This person needs to read “The Wealth of Nations” by Adam Smith.......................

[caseinpoint]

Many people seem to assume that without government spending through taxes or bond sales, the private sector would sit on its mattress full of money. Without government bonds competing for investment dollars, investors would be putting money into the private sector in the most promising fields. Without government taking more taxes, individuals would also be investing in what it deems most valuable and in developing new sources of wealth.

The problem for government is that private investors and taxpayers don’t have the same priorities as government, nor does it give government the power of the middle man. So government will confiscate the taxes and compete with tax-free bonds to draw money out of the private market and into its coffers where government can decide exactly how to spend it.

Wasn’t it Keynes who also asserted that it was the right of government to determine what adequate income was for individuals and then to take the excess for the public good? Or was that Galbraith?

[RWB Patriot]

“Wasn’t it Keynes who also asserted that it was the right of government to determine what adequate income was for individuals and then to take the excess for the public good? Or was that Galbraith?”

Whoever it was, the idea didn’t die with them, as I’ve already heard someone else push almost the same thing (they said the government owns the money).

[caseinpoint]

It’s been going on for quite awhile. For years Congress has fought against tax breaks on the justification that government “can’t afford them” as if it was a parent deciding on allowances for the kids.

[fightinJAG]

So true.

Paying a bunch of guys to watch a bunch of guys working on the railroad is not job creation.

A job is an act that you get paid to do because it generates wealth.