Stimulus and Leeches

This is why a “stimulus” plan that involves increasing the size of government can NEVER work today. Even if one believes in Keynesian economics. Both federal and state government employees earn more than the average worker.

Keynesian economic theory is based entirely on the notion that sometimes the link between savings and investment breaks down (which I would agree that it has). When that occurs, monetary policy is useless (I agree) and hence fiscal stimulus is necessary in order to force the transfer of money from those who have a higher propensity to save (generally – the higher income) to those who have a higher propensity to consume (the lower income).

Unfortunately in America today, self-proclaimed “Keynesians” are simply moronic “progressive” ideologues who eternally advocate bigger government and who simply use “Keynesian economics” as their justification/rationale for it. Combine that with a Democratic Party that is in thrall with public sector unions and that relies for its electoral success on government employees (and other government dependents) — and we have a very large part of the population that is the source of a major economic problem. Our government has itself become the means of transferring money from the lower-income to the higher-income. Everywhere else in the world that is called a kleptocracy or a plutocracy. Regardless, even in purely Keynesian terms, the increasing size of that sort of government diminishes macroeconomic growth and risks turning self-correcting recessions into self-reinforcing depressions.

Unfortunately as well, despite the attempts of the tea party folks, the Republican Party establishment is completely owned by a different group of, generally, private-sector plutocrats/kleptocrats advocating their own form of bastardized Keynesianism — supply-side economics. Which advocates ignoring government spending and focusing entirely on marginal tax cuts at the high-end. Thus creating a fiscal deficit which will supposedly foster economic growth — not via the demand-side of consumption by the lower income but via the supply-side of increased investment/production opportunities which will then trickle-down.

It is Keynesian in that it relies on govt – via the fiscal arena – to micromanage supply/demand in the economy using macroeconomic measures. And not so bastardized anymore since public sector employees are also high income — and thus any expected economic “growth” can only occur via some form of trickle-down.

In hard times — which we have not yet even begun to see — social resentments and competition inevitably lead to the politics of class-warfare. It is ironic that both of our major parties are now entrenched on the side of economic stagnation (and in Marxist terms – on the side of oppression) and “trickle-down economics” – even though they may not even know it. And that libertarians – and even anarchists – are now on the side of both social/economic “compassion” and economic growth. Can’t think of any group less suitable for making a political argument based on “compassion” than libertarians/anarchists. But until they do, things will likely only get worse.

Because, unfortunately, what the economic facts reveal is that every public sector job that we “save” comes at the cost of one-to-two private sector jobs. Probably even more than that since government is a distributive function (ie their wages do not pay for themselves in increased economic capacity) not a productive function.

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