Sunday, January 11, 2009
He Speaks My Language
I heard the tail end of this on NPR the other day and thought to myself, I really like what this guy has to say about the stimulus package. Then I realized, it's Tyler Cowen and I read his blog everyday. I guess I know who I like and I like who I know. Listen here, it's only about 2 minutes long.
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Exactly, I don't agree with this Keyesian viewpoint that aggregate demand from a stimulus package will push production.
ReplyDeleteEven if it could, which is highly controversial, it would almost definitely increase production in things that the general public wouldn't want (brides, roads, dams that aren't cost effective for example). Here is a smarter guy explaining it in less than 4 minutes:
ReplyDeletehttp://www.youtube.com/watch?v=6Av-LCoVcXQ
That was a good explanation. Keynesians want to point to a multiplier effect of government spending. That's great in theory but if the government isn't spending the money on production that the people want, that multiplier effect is out the window.
ReplyDeleteBasically the government is saying they are smarter at spending their money than we are. And that is the true downfall of this since no one possibly has the kind of knowledge to make that decision. Better to let people keep their money and act in their own self interest which will benefit the economy much more in the long run.