That there will be a huge “stimulus” package in the early days of the Obama administration is a certainty. Nearly everyone thinks the government must do something drastic to, using President-elect Obama’s word, “jolt” the economy into recovery. That something is deficit spending on “infrastructure.” But it’s not as simple as it sounds. A big debate is shaping up over whether the program should concentrate on big, transformative projects or boring bridge repairs and pothole filling.The rest of my op-ed, "Economic Stimulus Amounts to Central Planning," is at The Future of Freedom Foundation website.
Either way, it is taken for granted that deficit spending will stimulate a sustainable recovery. But it won’t. A real recovery requires real savings and investment to correct for years of government-induced waste. Government spending, however, displaces savings and investment. Whether the government borrows, taxes, or creates money through the Federal Reserve, real wealth will be commandeered by bureaucrats. Jobs thus created in the parasitic sector will mean fewer jobs created in the productive sector. That can hardly be a recipe for recovery.Moreover, real danger lurks in the Obama administration’s plan to use the recession as a cover for “transforming” the economy, particularly with respect to energy.
And here are a few previous ones I neglected to blog:
"The Wizards of Washington"
"The Bailout State"