A Wild Whirlwind?
August 6, 2010 - by
The other morning there was an article in the paper listing perverse examples of how the President has spent ‘Stimulus Funds’ – like paying $300,000 to study the power of yoga to relieve hot flashes.
Now, at first blush this sounds like typical government foolishness (or some Congressman buying votes from yoga enthusiasts) but beneath the persiflage there is actually a serious ‘economic theory’ at work a lot of folks in Washington (mostly Democrats) are convinced is true: That government spending stimulates growth. Obama believes it. And so did Franklin Roosevelt during the Depression. It’s a kind of economic sacred cow that goes back to, I gather, an Englishman named John Maynard Keynes who a lot of folks think was the Einstein of economics.
According to this philosophy government spending money during a recession is good in and of itself and it doesn’t matter – at least not much – whether government spends the money wisely. Up in New York State Democrats decided they’d spend Stimulus Funds to give every poor person on welfare $200 (for each of their children) to pay for back to school clothes and supplies, only the New York bureaucrats forgot to tell the welfare recipients what the money was to be used for – so when a lot of people got their unexpected windfall they rushed right out to the stores and bought big screen TV’s and video games, a boondoggle a spokesman for the New York Governor shrugged off, more or less by paraphrasing Keynes, saying, Well, whatever it was spent on it stimulated the economy – which a lot of PhD’s and Congressmen will tell you is the absolute truth which leads to an interesting question.
Now, what a run-of-the-mill fellow (who isn’t an economist) learns mostly through trial and error is in this world he reaps what he sows. If he loves his wife and slips and has an affair with a bimbo there’ll be hell to pay. If he drinks too much liquor then one of these days all those nights of high spirits and high-living will come back to haunt him.
So is government economics (during recessions) the one time on earth when the laws of reaping and sowing are magically suspended – so it doesn’t matter if Congressmen spend money on yoga and hot flashes?
Let’s hope that English economist knew what he was talking about. Because if it turns out he was wrong, after Congress has sown the wind with a couple of trillion dollars we may be about to reap a truly wild whirlwind.
A Wild Whirlwind?
August 6, 2010/
The other morning there was an article in the paper listing perverse examples of how the President has spent ‘Stimulus Funds’ – like paying $300,000 to study the power of yoga to relieve hot flashes.
Now, at first blush this sounds like typical government foolishness (or some Congressman buying votes from yoga enthusiasts) but beneath the persiflage there is actually a serious ‘economic theory’ at work a lot of folks in Washington (mostly Democrats) are convinced is true: That government spending stimulates growth. Obama believes it. And so did Franklin Roosevelt during the Depression. It’s a kind of economic sacred cow that goes back to, I gather, an Englishman named John Maynard Keynes who a lot of folks think was the Einstein of economics.
According to this philosophy government spending money during a recession is good in and of itself and it doesn’t matter – at least not much – whether government spends the money wisely. Up in New York State Democrats decided they’d spend Stimulus Funds to give every poor person on welfare $200 (for each of their children) to pay for back to school clothes and supplies, only the New York bureaucrats forgot to tell the welfare recipients what the money was to be used for – so when a lot of people got their unexpected windfall they rushed right out to the stores and bought big screen TV’s and video games, a boondoggle a spokesman for the New York Governor shrugged off, more or less by paraphrasing Keynes, saying, Well, whatever it was spent on it stimulated the economy – which a lot of PhD’s and Congressmen will tell you is the absolute truth which leads to an interesting question.
Now, what a run-of-the-mill fellow (who isn’t an economist) learns mostly through trial and error is in this world he reaps what he sows. If he loves his wife and slips and has an affair with a bimbo there’ll be hell to pay. If he drinks too much liquor then one of these days all those nights of high spirits and high-living will come back to haunt him.
So is government economics (during recessions) the one time on earth when the laws of reaping and sowing are magically suspended – so it doesn’t matter if Congressmen spend money on yoga and hot flashes?
Let’s hope that English economist knew what he was talking about. Because if it turns out he was wrong, after Congress has sown the wind with a couple of trillion dollars we may be about to reap a truly wild whirlwind.