Tuesday, September 07, 2010

Here We Go Again

Tibor R. Machan

Innumerable arguments and research have been produced showing that government stimulus is useless. Despite what President Obama and his cheerleaders in the academy, like Princeton's Paul Krugman, seem to believe (or at least say), there is no evidence that government stimuli do anything to restore market activities. Such policies merely take funds from the right pocket and put it into the left while most often the transfer entails wasting a lot of resources so the net effect is widespread economic loss.

Just consider the current administration’s plan to funnel billions into public works projects--building roads, improving rail lines, beefing up public parks, etc., and so forth. The funds come from someplace, right? Even if they are borrowed from China and future generations of Americans, there will be a minus sign somewhere on the ledger.

So what then is happening to provide a net gain? Nothing. The multiplier effect is a myth--one just cannot make something from nothing however much one might wish to do so. Thus some enterprises that would have been funded by the monies spent as stimulus will be unfunded; customers will have fewer dollars to spend, banks fewer dollars to lend, firms fewer to borrow, all because the politicians have decided to divert it all to projects they deem worthy. But what about projects that those deem worthy who have to be coerced so as to pay for all this?

Whenever one has funds extorted so as to artificially pay for improving highways, etc., one will no longer have them available to spend down at the mall or grocery store or one’s brokerage. Where is the stimulus here instead of the mere forcible redirection, something that will mostly mean spending on what the taxpayers didn’t want to spend on? Why is what the politicians choose to do with one’s funds more stimulating than what one would do with them?

This seems to be no more than a shell game, at best, or out and out fraud. Making it appear that politicians are doing something about the dire straits a large number of citizens are experiencing. But it is a mirage, nothing real. Again, one cannot get something from nothing and to make it appear one can, the net effect is gross waste. You rob me to support something you want so I don’t get to support what I want; but then I need to make provisions to replace the stolen stuff and you had to exert energy on the theft instead of on something productive. Nothing about it is an economic plus.

Most of the truth of this is hidden behind a lot of talk of what “we” are doing. But there is no “we” involved, only you, I, and the others who get rooked by it all. The United States of America is not a firm but a country. When politicians treat it otherwise they must engage in malpractice. Their job is to provide a setting for us to do productive work, not to embark on various ventures as some kind of corporate giant that keeps borrowing and borrowing but has run out of collateral. Somehow this point is being missed all over the place and journalists who are supposed to hold the politicians’ feet to the fire are failing to get to it during all their Sunday interview programs.

Whenever people’s property rights are violated by all the taking and regulating and redistribution done by the politicians what is involved is removing the people from the position of being able to choose, to allocate their labors and resources, and substituting the politicians and the bureaucrats for this role. Just why these folks are believed to know better is a mystery, other then that perhaps most citizens are still in the grips of the governmental habit inherited from the times when kings, czars, pharaohs and other rulers were supposed to know it all, with everyone else just following orders.

Yet that is precisely the system that was overthrown by the American Revolution! So why do so many Americans still believe in it? Why do they want to imitate Europe and other parts of the globe that American said “no” to in the first place? Go figure.

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