Quote:
Originally Posted by sgtclub
No, I don't. It's just abundantly obvious to anyone with have a brain that the government does not deploy capital efficiently. Had they taken the $850B and let professionals invest the money, it may have actually be deployed in a manner that would have been worth the cost. You are on the other end of the spectrum. As long as the money is spent, it is "good" and if it doesn't work, it must be because we didn't spend enough. That is assinine.
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Larry Summers and I probably both agree with you that the government does not deploy capital efficiently relative to private enterprise -- I'm pretty sure about Summers and very sure myself -- although there are some times when government actually is more efficient.* But that isn't an answer to what Summers
is saying. Because in the current economy, government spending isn't crowding out other forms of spending. In usual circumstances, the fear about government spending is that it displaces other economic activity. As he explains, times are different right now. If you disagree with that, you have to actually engage with the point.
Whether or not the government deploys capital "efficiently," that capital stimulates the economy. If it takes three bureaucrats to process the paperwork for a construction loan, and those are three bureaucrats who otherwise wouldn't have jobs (if they would then that's not a cost), then you have three more people working, receiving a paycheck, and spending money on things. (Hank understands this, so he's trying to be difficult by imagining that government stimulus disappears into bank accounts of Democratics fatcats, never to be spent, except he then forgot that he understands this and started imagining that they spend it on Opus, which also would stimulate the economy.)
It is certainly true that federal expenditures can stimulate the economy in different ways, more and less effective, and that the stimulus bill has some less effective channels, thanks to Congress (and particularly to conservative hostility to some of the forms of spending with higher multipliers). But that's not a question about whether it works at all, that's a question about how best to do the sort of thing Summers is talking about.
Most Republicans are very happy not to stimulate the economy because they don't want to see Obama get a legislative victory, and they have a fundamental philosophical objection to anything the government does that doesn't involve putting people in prison or killing people in foreign countries. If people are unemployed, it's their fault for losing a job. But they know that this doesn't go over well, so they contrive economic theories to explain why those are the best outcomes.
* E.g., in healthcare spending or student loans, the government covers enough people that it can strike a better deal with providers when the Republicans let it.
