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Cheers - AE

Tuesday, 28 September 2010

Filling a lake, Keynesian style.

Via the ALS blog I've just come across the best demolition job I've seen on the whole idea of stimulus, quantitive easing, nicking even more money from taxpayers and spunking it away at random, call it what you will. It's in a transcript of an interview with Grover Norquist, president of Americans for Tax Reform, that aired last night on ABC's Lateline program. The whole thing is worth a read despite what look like a couple of annoying transcription errors ("government 'limbed' to the Constitution" - 'limited' surely) but there's one part that really caught my attention, and that's a very simple explanation about why government stimulus is flawed.
LEIGH SALES: Is it a good idea to be cutting spending when America's economy is still weak. Because there is of course the counter-argument that the economy needs to be stimulated, it needs to be stimulated by the government?

GROVER NORQUIST: Yes. Um, this is a very interesting argument that the government's gonna take a dollar from somebody who earned it, either in taxes or debt and give it to somebody who's politically connected. And if you do this 800 billion times there'll be more money in the country.
If you take water from one side of the lake and put it back into the other side of the lake in front of the cameras, that there's more water. It doesn't work, it isn't true. We've wasted almost a trillion dollars and nothing has happened. It's time to stop wasting money.
This is what governments and their spendthrift supporters have been trying to tell people - that taking water from one side of the lake and pouring it into the other somehow makes more water, and that's clearly bollocks even to a six year old. Sure, some would say that the money is actually from borrowing and so there really is more water, but that's simply taking the water from the stream that feeds the lake instead of the lake itself. You do have more water right now but less water will come in the future than would have if you'd left things alone. Anything governments borrow must be repaid, and one way or another it is the taxpayers who must repay it.

Now, could someone put it in a join the dots book and give it to Red Ed (for a giggle - if he gets it he won't be allowed to make anything of it) and the twins and their pal Georgie over on the government benches? But don't waste your time with Vince Cable, eh.

NB - this is a repost of an identical post earlier today which lacked a comment link because of a setting I'd fiddled with and hadn't put back.
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