related (IMO) story:
Why Republicans are devouring one book
"I think it?s conclusive when you read the book, although I don?t believe she said so, that the New Deal was actually a bad deal, and today we have a president who believes that the New Deal was a good deal, and would have been a far better deal if FDR would have spent a lot more money,? Rep. Steve King (R-Iowa) said.
i certainly don't see the value that keynes did in hiring one group of people to dig a hole, then hiring another group of people to fill it. . .does it decrease unemployment and increase government spending? sure, but it is neither efficient nor productive.
I haven't read Keynes for many years, but I'm pretty certain that he would not advocate hiring people to dig useless holes as the best solution. I think he'd argue that much better would be to support activities with a multiplier effect -- such as government infrastructure projects, which not only put people to work, but accrue lasting benefits to the economy as well. That's what FDR's Works Project Administration was all about -- nearly 80 years later, we still reap economic benefits from the structures built under that program.
This is what mom's-basement-dwelling Ayn Rand fans completely ignore... the huge value that government-built infrastructure such as highways, railways, the internet, and urban transit provide our economy. There is no way that competing private firms could accomplish something like the interstate highway system.
I think Obama did a bad job of managing the stimulus bill-writing process, but overall, the stimulus bill is more about accomplishing needed projects, rather than digging holes then filling them. It's pretty telling that when Bobby "Page from 30 Rock" Jindal, John McCain and the other Republicans tried to single out flaws in the stimulus, they could only find a few tens of millions of dollars worth of projects to mock in a bill of close to $1 billion.
"Keynes backed up his theory by adding government expenditures to the overall national output. This was controversial from the start because the government doesn't actually save or invest as business and private business do, but raises money through mandatory taxes or debt issues (that are paid back by tax revenues). Still, by adding government to the equation, Keynes showed that government spending - even digging holes and filling them in - would stimulate the economy when businesses and individual were tightening budgets. His ideas heavily influenced the New Deal and the welfare state that grew up in the postwar era."
citesimilarly, "If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing."
the problem is that government spending is almost, by definition, inefficient and wasteful (i.e., by subsidizing programs takes money that would have otherwise been spent, or saved, the government overspends and encourages wasteful spending). . .that's almost what keynes hopes for.....and what keynes ignores is the far more valuable effects of non-governmental spending, which is far more efficient and results in far greater productivity. the money collected by the government to pay off this increased spending, via higher taxes, results in less productivity and less collective private wealth....and less private investment. government becomes a self-fullfilling prophecy. . .
