Friday, February 20, 2009
America Going to Hell in A Handbasket
Cartoonist Paul Nichols of the Catholic Cartoon Blog links to my blog about Cortes de Russy's article here. The blog to which he links is as follows:
America Going to Hell in A Handbasket: Stimulus A Fraud
Cortes de Russy has an excellent article in Pajamas Media about the nonsesensical economic stimulus that our economic experts, who are rather our economic illiterates, have been advocating on the half-witted media outlets.
De Russy notes that:
"We now find ourselves informed by 'leading' economists and politicians that the solution to our current economic malaise is for government to embark on a gigantic spending spree. This spending, we are assured by one of the leading securities rating organizations, Moody’s Economy — whose recent history of ratings brings into question its judgment for quality analysis — that these expenditures will generate 'multiples' of growth in GDP in magnitudes exceeding 1.5 times the amount spent."
What a laugh. If I print $10 and spend it on a baseball, then prices go up because baseballs become scarcer. Any additional production due to the spending is offset by higher prices. Only cranks would make Moody's argument. And, of course, Moody's is one of the firms that was giving Enron an "A" rating in the weeks prior to its collapse. Now, they feel qualified to dispense dumb economic advice.
De Russy notes:
"Lest we forget, capital formation is the seed corn of wealth and job creation, and since wealth creation is the driver of economic progress, one must ask if government spending increases or enhances capital formation."
Government spending does not enhance capital formation--it demolishes it.
De Russy concludes that:
"The history of economic progress throughout the world provides irrefutable evidence that the economic well-being of ordinary citizens is closely correlated to the relative degree of freedom in markets and the relative lack of government planning and spending. To argue that government direction and allocation of resources will produce better results is to ignore history and the general understanding of how markets function."
A conclusion with which I have to agree.
Looking over the comments on de Russy's articles on Pajamasmedia, some are of better quality than others. This one from Sara for America caught my attention:
"The stimulus is like the treasure found in a mummy’s tomb. It excites at first, but then everyone who touches it starts dying."