Spending our way to prosperity
You know beginning an article by quoting Keynes in a non ironical way isn’t the best manner to state your case. But, whatever.
Right now, I’m worried about the damage that might be done by one particularly wrong-headed idea: the notion that, in stark contrast to Keynes’s teaching, government spending destroys jobs.
Oreally? Do tell.
No, that’s not a typo. House Speaker John Boehner and other Republicans regularly rail against “job-killing government spending.” Think about that for a minute. The claim is that employment actually declines when federal spending rises. Using the same illogic, employment should soar if we made massive cuts in public spending—as some are advocating right now.
I wonder if this guy has a newsletter I can subscribe too …
The generic conservative view that government is “too big” in some abstract sense leads to a strong predisposition against spending. OK. But the question remains: How can the government destroy jobs by either hiring people directly or buying things from private companies? For example, how is it that public purchases of computers destroy jobs but private purchases of computers create them?
Oh, lemmee think. When the government doesn’t actually spend money by hiring people, but instead uses the money to prop up public employee pensions.
When the recession officially ended in June 2009, just 15% of the stimulus money had gone out the door. And that figure’s likely inflated, since almost a third of the money was in the form of grants to states, which some studies suggest they didn’t spend, but used to pay down debt.
Excellent VDH article here.