Stimulus Goals: What are the true causes and effects?

This from RealClearPolitics:

“White House press secretary Jay Carney says the Recovery Act added several million jobs and lowered the unemployment rate. According to Carney, the “goals” of the stimulus package “have been met.”

A reporter asked Carney why unemployment is at 9% and not 7%, the percentage projected if the stimulus worked. Carney dismissed the question. “We’ve said repeatedly that we don’t want to relitigate the battles of the past,” Carney told the reporter.”

But was it the act that added the jobs and lowered the unemployment rate? And if it was is it sustainable?

In order for the politicians in Washington to keep being elected, they have to convince the majority of Americans that they are “doing something”. What exactly they are doing doesn’t matter as long as the results happen. Now some may say that this is good because the results that are all that matter. But would we say the same thing about President George W. Bush running his 2004 campaign on the highest home ownership rate in the history of the United States?

Of course, now we see that it was a bubble that ended up making many Americans bankrupt. So how do we know, again assuming the government stimulus did work, that it too did not also create a bubble that will burst in the face of Barack Obama and Mr. Carney?

The arrogance of politics is that anything a President or Congress does while it is in office makes for whatever the best results in the economy are. Imagine that the boost in GDP and the lowering of unemployment was because of new technological innovation or that the country’s rich saved more money for investment and invested in new business, how would that have anything to do with building new roads by the stimulus?

It wouldn’t.

The American people must wake up first to the fact that politicians cannot create jobs. All they can do is shift valuable labor and materials to a different sector of the economy. That means that more labor and materials are being put in an industry that it would’t be in if it wasn’t for the government entering the market and bidding up the price.

So what are we losing for those falsely allocated materials and labor?

Published in: on February 17, 2011 at 11:03 pm  Leave a Comment  
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Happy Easter Weekend!



Published in: on April 10, 2009 at 12:07 pm  Leave a Comment  
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U.S. Banking System: Now Accepting Loans



Published in: on March 13, 2009 at 11:34 am  Leave a Comment  
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Calvin Coolidge on the Economy & Government

Via Dr. Pete Boettke at the Austrian Economists:


Published in: on February 17, 2009 at 1:01 pm  Leave a Comment  
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Barack Obama “The Stimulator” or Not



Published in: on February 14, 2009 at 7:02 pm  Leave a Comment  
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Barack’s Honeymoon



Published in: on November 15, 2008 at 4:07 pm  Leave a Comment  
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McCain on Economy and Foreign Policy

John McCain is back touting his policies again, this time comparing  them directly to his competitor, Barrack Obama. The Arizona Senator began by criticizing Obama’s foreign policy and lack of experience in that area. McCain claimed that America’s enemies might be willing to test Obama’s reaction and resolve in a Presidential situation.

After speaking on foreign policy and defense, the Republican then moved to our favorite topic; the government’s role in regulating the economy. McCain defended his decision to support the recent $700 billion buyout. He received allot of criticism for the support while he also promises to cut government spending and not raise taxes. As well mentioned in previous posts, these actions are very contradictory. McCain claims to be a capitalist, makes socialist decisions while promising less government intervention. Can we trust such a sketchy individual with the role of President? Perhaps he is simply a politician reacting and adapting to the gradually changing understanding and ideology of the American voting class. But then again, aren’t they all.

It only gets better. McCain has been continuously questioned with regard to the credit crisis, and what he would do as President (and what he would have done so far). I think this is a stupid question, because the President does not have a direct influence on the credit market’s welfare. The Senator’s answer was worse than I expected. McCain replied by saying the whole market slump would not have occurred had he been President at the time. What? How could McCain have legitimately, positively impacted the business in the credit markets? Had the regulation of the markets been less you can argue a better scenario, but McCain as President certainly would not have made a difference here.

Considering the floppy-poorly defined economic policies of McCain’s recent assertion, I am weary of voting for someone who claims to have more influence than they possibly can. Every politician claims to do more than they can or will, but this is going a little far. I say this because in order to have more of a hand in the credit markets, the government will have to increase regulation of the industry. This is scary to me because both candidates seem to be heading down that path….


Published in: on October 22, 2008 at 6:13 pm  Leave a Comment  
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Stunting Consumer Spending

This is just an idea but if economic theory holds true and that when people recieve tax rebates or cuts but know they are not permanent, they usually do not change how they act. People only spend more when they know their income increased. This may have something to do with the Presidential Business Cycle.

Who spends money at a larger fraction? The rich. They spend more money because they have more money to spend it is simple. Even if you put trickle down economics aside, but realize that noone buys luxury goods as much as the rich and that those who make the luxury goods are most of the time not rich. This would bring you to the conclusion that trickle down is possible.

With Obama calling for more taxes on the rich and having an early lead in this race, does that make the rich save their money? I know that if I knew for sure that someone was coming to seal my money tomorrow, I would save today.

Now from Obama’s point of view, if he does this and the economy stagnates or recesses then he wins. He can be ushered in as the fixer. If he does this and the economy does well then he loses. The incentive is for Democrats to always say “Tax the rich!” and then say “The Economy Stupid!” Of course, one must keep in mind is it possible for a Presidental rhetoric to change the economy? Wall-Streeters would say yes. What do you say?


Published in: on August 10, 2008 at 2:46 pm  Comments (1)  
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