Monday, January 26, 2009

Multipliers?

Remember what happened once Bill Clinton got into office? One of the first things on the agenda was a "stimulus package", which had an uncanny way of winding up benefiting his Democrat supporters.

Now the Dems have a new scheme dwarfing Clinton's. Read this for some background.

There is much to question, but my favorite is the Keynesian "multiplier" - the theory that every buck the govt puts into the economy results in $1.50 of greater output.

Does it not follow that every dollar govts suck out of the economy costs $1.50 of output? Worse yet, you have to support the drones who take the money and reward their buddies, so things are even worse.

Unless there's something magical about dollars after they've passed through the govt, like that rare expensive brand of coffee that is collected from civet scats in the Philippines.

No, I'm not an economist. I'd like an explanation of why this multiplier effect doesn't work both ways.

Or if it does, why we shouldn't have immediate tax cuts, which would have immediate impact rather than some pork project starting years from now.

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