Economists Speak Out – Finally
January 30th, 2009 by 
reality
The Cato Institute finally did something worthwhile. It took out a full-page ad in the NYT and the Washington Post to refute the administration claim that “Every economist, as I’ve said, from conservative to liberal, acknowledges that direct government spending on a direct program now is the best way to infuse economic growth and create jobs.” The ad is signed by some 200 economists and states:
Notwithstanding reports that all economists are now Keynesians and that we all support a big increase in the burden of government, we the undersigned do not believe that more government spending is a way to improve economic performance. More government spending by Hoover and Roosevelt did not pull the United States economy out of the Great Depression in the 1930s. More government spending did not solve Japan’s “lost decade” in the 1990s. As such, it is a triumph of hope over experience to believe that more government spending will help the U.S. today. To improve the economy, policymakers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.
Amen. I guess there are some economists who, unlike Mr Bernanke, have actually studied history rather than accept dogma. My respect for economists crept up from 0.0 to 0.1 on a scale of 1-10.
Posted in Economics, Government, Strategy & Scenarios, The Economy, The Fisc | 
3 Comments »
February 1st, 2009 at 4:24 am
dag reality
i do not agree with what the cato institute says. “parole” as the italians would say, cheap words, nothing concrete. what do they propose to do? “remove the impediments to work” by lowering the minimum wage? “remove impediments to save”? what are these impediments? do they want higher intrest rates? “remove impediments to investment”? what do they mean by that? “remove impediments to production” how do they do that? by lowering standards?
you know, this sounds like this old joke: how do you survive a fall from a 50 story building – well, by falling very slowly and landing gently on your feet.
nota bene, i am not saying that i agree 100% with all these stimulus packages. for one thing, it will cost us dearly in tax increases.
but i have not heard yet a convincing alternative, that will not kill the social fabric of society.
luc
February 1st, 2009 at 6:09 am
Politicians love the idea of “stimulus,” because it will provide more largesse for them to distribute in return for “contributions.” Even as I write, lobbyists are thrusting money into politician’s hands, casting their clients’ bread upon the waters, in the hope of a thousandfold return. Just watch, in order to “speed things up,” normal competitive procurement will be abandoned as being “too slow,” so that the money can be politically directed into the right hands.
As the economists point out, to believe that the stimulus package will lead to a lasting improvement in the economy is to deny all historical precedent. The only thing that will restore sound growth is the resumption of historical rates of savings and investment, and of course higher interest rates will be necessary to accomplish that. There is no alternative, and it will take time. The reason we are facing depression is many years of “stimulus.” More stimulus will cause more pain.
February 3rd, 2009 at 10:01 am
Its the “we have to do something” mentality. The politicos (on both sides) are using it to shovel taxpayer money to their benefactors (and probably themselves) while telling the sheeple “we must do this to stop the sky from falling” (substitue the current fear mongering phrase here).
Someone please explain again how giving money to crooks who got us in this mess will fix the crisis???