We're hearing lots of noise these days about the need for more government stimulus spending programs. Things like hiring more government workers, including teachers and "investing" more money in public initiatives which purportedly will help the economy. Don't believe a word of it.
I believe individuals should receive subsidies and not government or other institutions. It's our money, or at least starts out that way, and we should have it spent as we elect. So even if government collects it, we individuals should decide how and where it's spent in the case of education (private or public schools,including colleges), economic activities, retirement, health care and otherwise.
Now let's discuss the need for more economic stimulus. How about stimulating the economy by cutting taxes instead of increasing government spending? That would enable We the People to keep more of our money and spend it as we see fit. In the end, we'd do a better job of "stimulating" the economy than any bureaucrat or poitician ever could.
For that matter, how about giving parents and students a voucher for the amount of money the government spends on educating them as well? And while we're at it, let's give people an amount equal to what the postal service spends per individual, same with health care and Social Security and other things the government does but we can do better. It's a simple case of MOM versus OPM, and I'm always on MOM's side.
The Real 'Stimulus' Record is a fact based editorial by Art Laffer, former adviser to President Reagan and a strong supply side economics advocate. Here's part of Laffer's commentary:
"Policy makers in Washington and other capitals around the world are
debating whether to implement another round of stimulus spending to
combat high unemployment and sputtering growth rates. But before they
leap, they should take a good hard look at how that worked the first
It worked miserably . . . . Of the 34 Organization for Economic
Cooperation and Development nations, those with the largest spending
spurts from 2007 to 2009 saw the least growth in GDP rates before and
after the stimulus. . . .
The United States was no different, with
greater spending (up 7.3%) followed by far lower growth rates (down
If you believe, as I do, that the macro
economy is the sum total of all of its micro parts, then stimulus
spending really doesn't make much sense. In essence, it's when
government takes additional resources beyond what it would otherwise
take from one group of people (usually the people who produced the
resources) and then gives those resources to another group of people
(often to non-workers and non-producers).
Often as not, the qualification for receiving stimulus funds is the
absence of work or income—such as banks and companies that fail, solar
energy companies that can't make it on their own, unemployment benefits
and the like. Quite simply, government taxing people more who work and
then giving more money to people who don't work is a surefire recipe for
less work, less output and more unemployment.
Yet the notion that additional spending is a "stimulus" and less
spending is "austerity" is the norm just about everywhere. Without ever
thinking where the money comes from, politicians and many economists
believe additional government spending adds to aggregate demand. You'd
think that single-entry accounting were the God's truth and that, for
the government at least, every check written has no offsetting debit.
Well, the truth is that government spending does come with debits.
For every additional government dollar spent there is an additional
private dollar taken. All the stimulus to the spending recipients is
matched on a dollar-for-dollar basis every minute of every day by a
depressant placed on the people who pay for these transfers. Or as a
student of the dismal science might say, the total income effects of
additional government spending always sum to zero.
Meanwhile, what economists call the substitution or price effects of
stimulus spending are negative for all parties. In other words, the
transfer recipient has found a way to get paid without working, which
makes not working more attractive, and the transfer payer gets paid less
for working, again lowering incentives to work. . . .
Sorry, Keynesians. There was no
discernible two or three dollar multiplier effect from every dollar the
government spent and borrowed. In reality, every dollar of public-sector
spending on stimulus simply wiped out a dollar of private investment
and output, resulting in an overall decline in GDP. . . .
The evidence here is extremely damaging to the case made by Mr. Obama
and others that there is economic value to spending more money on
infrastructure, education, unemployment insurance, food stamps,
windmills and bailouts. Mr. Obama keeps saying that if only Congress
would pass his second stimulus plan, unemployment would finally start to
fall. That's an expensive leap of faith with no evidence to confirm it."
Stimulus spending is like all other government spending. The money spent by government originates elsewhere. No magic involved.
Thus, the question always to be answered is whether MOM or OPM rules apply. My own view is that government should do certain necessary things like determine the rules of the game, officiate or umpire the game and finally enforce those laws or rules as necessary. And provide for the common defense and protect our national security, of course. That's enough and a lot as well.
Delivering the mail isn't something government needs to do. Neither is education. Nor Solyndra and ethanol type "investments."
In fact, taking MOM and requiring We the People to participate in things like the Social Security program can't be justified in a free society either. We'll have more to say on all this later.
Suffice it to say for now that, other than cutting taxes, government stimulus is a bad idea and that adding to the national debt is an equally bad idea. Growing government isn't the answer. Not now and never.
The facts are clear. Government spends what it gets and then wants even more money to spend. There's never enough. Let's put the government on a much needed diet and return the power of individual choice in a free market based society to We the People.