Government “Stimulus”: Robbing Peter to Pay Paul

I’ve quoted Walter Williams quite a bit on this blog, and there’s a reason for it. As usual, he gets to the point: There Is No Santa:

Here is what my George Mason University colleague Professor Richard Wagner wrote, which was published by Office of the House Republican Leader: “Any so-called stimulus program is a ruse. The government can increase its spending only by reducing private spending equivalently. Whether government finances its added spending by increasing taxes, by borrowing, or by inflating the currency, the added spending will be offset by reduced private spending. Furthermore, private spending is generally more efficient than the government spending that would replace it because people act more carefully when they spend their own money than when they spend other people’s money.” A short translation of Wagner’s comment is: There is no Santa Claus or Tooth Fairy. Let’s examine the ruse.

He’s even clearer toward the end:

In stimulus package language, if Congress taxes to hand out money, one person is stimulated at the expense of another, who pays the tax, who is unstimulated. A visual representation of the stimulus package is: Imagine you see a person at work taking buckets of water from the deep end of a swimming pool and dumping them into the shallow end in an attempt to make it deeper. You would deem him stupid. That scenario is equivalent to what Congress and the new president proposes for the economy. A far more important measure that Congress can take toward a healthy economy is to ensure that the 2003 tax cuts don’t expire in 2010 as scheduled. If not, there are 15 separate taxes scheduled to rise in 2010, costing Americans $200 billion a year in increased taxes. In the face of a recession, we don’t need that.

Of course, that’s merely the “practical” discussion, meaning: it says that government shouldn’t engage in “stimulating” the economy because such a thing is actually impossible. Government shouldn’t spend our money for us because it’s not effective; we’re better at spending our own money ourselves. What it doesn’t answer is the moral problem with such spending, that is, government has no right nor authority for it.

That’s fine, though. If more people understood the practical, then they’d be more willing to consider the moral. And then, of course, they’d see that the practical and moral are really just two sides of the same coin.

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