Sometimes the gobbledy gook that is government produces a real zinger. This one comes from the UK, but I’m sure that the same thinking applies in the idiotic (i.e. Democrat) wing of the US government too:
This too is an oddity, since the Treasury’s own long-standing research shows not only how investment can revive activity, but also how government investment actually produces a positive return, which could be used to pay down debt or boost other spending programmes.
The first of these is the Treasury Public Model, which shows a rising ‘multiplier effect’ from government spending, Annex, page 102. It shows that for every £1bn spent by government there is a much larger economic impact: £1.1bn in the first year, rising to £1.4bn in both the second and third years. This is a bigger stimulative impact than cuts to either direct or indirect taxation.
OK – so do you have that? Government spending creates a bigger economy. Government, which can create nothing without destroying something first, which might print money and buy somethings and thus produce an artificial “stimulus” in some economic numbers, is able to grow the economy.
Let’s take this to the logical conclusion. If your economy is $10 trillion then why not spend another $10 trillion and get an economy that is $11 trillion? Isn’t that what the above is saying? How about really growing your economy and spend $20 trillion – would that give you an economy of $12 trillion the next year? Would anyone with any logical thought believe this would be a logical outcome?
And yet, the British Treasury publishes this kind of stupidity and apparently believes it. There are two ways that the government can “get money”. It can tax everybody (or tax the hated “rich”, or Big Oil, or Big Tobacco, or whatever evil is the flavor of the day) to get its $10 bucks. It then applies its massive overhead (administrators and diversity managers and quality control managers and Congresscritters and Congressional aides and flacks and PR people and ….) and then spends $10 bucks in order to grow the economy. If you actually took in the 10 bucks out of the economy in the first place and then gave it to your favored union, did you grow anything? Adding in the overhead you actually destroyed value in the total economy, not added to it.
Of course, since its Government they can just print the $10 bucks. In this case, you might be able to get a widget maker to make some more products and buy some supplies and pay some wages to his workers. And in your measurement of economic activity it might show up as an increase. But now you have to pay back the $10. Plus interest. So in the end, did you grow the economy at all? I supposed you might think so as long as you ignore your debts – or if you never plan to pay them back anyway.
However, its just as silly as spending twice your GDP in order to “grow” your economy by 20% or some other ridiculous number. You end up with debt, inflation, and eventual collapse of your civilization.
Just where America is headed. And Britain, and Greece, and…..
And you should either tell your children to start buying gold and silver, or tell them to go live in China.
Victor Davis Hanson has a wonderful recap on all the things The Teleprompter-in-Chief is racing to do – mostly to get us so completely in the hole we can’t get out again:
I think his key insight is:
Given that the 1964 LBJ landslide quickly led to Nixon, the 1976 New Carterism led to Reagan, and the 1992 Clintonism was followed by GWB, Obama must know that his gargantuan spending and borrowing and regulation will lead to mega-taxes which will lead eventually, as is always the case, to stagflagation: low growth, high unemployment, high inflation, and high interest.
So we are in a race—a race to get the dependent constituents permanently in place and institutionalized before the proverbial (fill in the blanks) hits the fans. If he succeeds, we will end up like a Greece, France, or Belgium— weekly strikes by government workers and unions, rampant cynicism as everyone seeks to land the federal job for base salary and taxes and benefits, and then moonlights to get untaxed cash and barter for necessary goods and services, all coupled with a culture of blame at various foreign and domestic “thems” who make us so unhappy.
I know that more than 50 million Americans didn’t vote for any of this to be happening, but with control of the Executive and Legislative branches firmly in hand and a Judicial branch that only moves left, we have a lot of work ahead of us to undo this damage. Assuming it can be completed.