Wednesday, July 07, 2010

Too bad Obama listens to the stimulus quacks...

Stimulus monies devoted to public sector projects a waste says ... Harvard economist?

Rick Moran
The surprising source for this learned opinion is from Harvard economist Edward Glaeser and it appears in an even more astonishing venue: the New York Times:

While it is easy to get all misty-eyed about the Tennessee Valley Authority, public spending on roads or high-speed rail can be enormously wasteful. At the extreme, spending a billion dollars on a bridge to nowhere may temporarily increase employment and gross domestic product, but it does so by burning a billion dollars on something no one wants. Infrastructure is serious business, and it is impossible to spend quickly and wisely.

While wading in ignorance, it's best to avoid the paths near the most dangerous depths.

There is little downside to giving a tax break to previously unemployed low-income workers. Those dollars are being given to people who value them. Building a bunch of unneeded highways, conversely, is a road to waste. The political and economic case for a second stimulus is strongest if that stimulus means a temporary tax reduction and weakest if the package is yet another increase in the size of the public sector.

Keynes' disciples like Paul Krugman are pushing hard for a second stim bill - just as big or bigger than the first. No doubt when that one doesn't work they will ask for another. It's the only arrow in their quiver and if given their head, will spend and spend and spend until they run out of other people's money and the Fed's printing press melts down from overuse.


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