Monday, January 21, 2008

Poor Stimuli

Political plans to stimulate the economy are frequently more popular than effective. Russ Roberts, an economics professor at George Mason University, offers commentary on NPR that puts campaign promises in proper perspective.

An excerpt:

The money has to come from somewhere. If you raise taxes to fund the plan, the people who are taxed are poorer and they'll spend less. If you borrow money to fund the plan, the people who buy the government bonds have less money to spend and that offsets the stimulus. It's like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing—the water in the shallow end doesn't get any deeper.

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