Boudreaux on Why The Stimulus is a Bad Idea
The Atlantic's Derek Thompson interviews George Mason's and Cafe Hayek's Don Boudreaux, one of the great explicators of all things economic. Here's Boudreaux explaining why the stimulus is a bad idea:
I'm in the camp—it's in the minority—that argues that stimulus is not good policy for a couple of reasons. First, money taken to spend on stimulus projects are taken from elsewhere in the economy. The second thing, the deeper problem, is what's being stimulated? For the past eight years leading up to the crash, we had a lot of economic activity that everybody understands was built on wealth that wasn't there. People were employed doing things they shouldn't have been doing. A lot of it came through the real estate sector. If the stimulus keeps people in these jobs that they shouldn't have been in to begin with, we're just delaying the day of reckoning. I want to see the economy adjust to a more sustainable growth path where people are not artificially propped up by bubbles or by stimulus, which I worry is is the case now.
I'd question Boudreaux on whether his is the minority camp regarding the stimulus, as only about 6 percent of Americans in one survey believed the stimulus created any jobs at all. The CBO has put the number of jobs created or saved (emphasis on the latter!) at anywhere between 600,000 and 1.6 million, which is tantamount to admitting they have no idea (which they have admitted elsewhere). In any case, Boudreaux's point holds: The stimulus funds so far have gone to mostly propping up existing public sector positions that cannot sustain themselves once stimulus funds stop coming.
Anyhoo, Boudreaux explains why your iPod is patriotic, even if it's assembled in a far-away land and crammed with technology developed outside the U.S. of A.