October 3, 2012
As we patiently await tonight’s much-anticipated debate – and its zinger-ful diatribe of tax, spend, save, borrow, jobs, jobs, jobs word bingo – we thought this perfectly succinct clip dismissing the myth of how government stimulus leads to economic growth was particularly pertinent. Professor Antony Davies provides evidence, via empirical data from 1955, that there is no connection between federal spending and economic improvement – and as we have repeatedly noted – it merely adds to government debt. From the ‘magic’ of the Keynesian multiplier to the eyes-wide-shut view of spending creating jobs while ignoring the taxing-borrowing-printing nature of that spending. Government doesn’t create jobs, it ‘moves’ jobs; as three years of stimulus spending has left us with ~8% unemployment and $4.6tn more debt.