Scott SoCal said:
Pushed the budget deficit to $455 billion in the name of "stimulus."
Every one of these policies failed to increase eco*nomic growth.
A careful analysis of words could reveal some interesting assumptions.
For one, I don't know if 'stimulus' should be interpreted as a policy to increase economic growth. The word 'stimulus' is used in times of economic trouble, like looming recessions or depressions, not when the economy is doing swell. Therefore, my understanding of stimulus - or public/gvmt investment in times of trouble - makes me believe that its intent is to absorb the shocks from decreased market demands. The idea seems to be to not grow the economy, but to protect it from shrinking, while at the same time cushioning those who have been/will be negatively affected by this faltering economy.
This is not the first time government expansions have failed to produce economic growth. Massive spending hikes in the 1930s, 1960s, and 1970s all failed to increase economic growth rates. Yet in the 1980s and 1990s—when the federal government shrank by one-fifth as a percentage of gross domestic product (GDP)—the U.S. economy enjoyed its great*est expansion to date.
Here the word stimulus is replaced with the catch-all phrase 'government expansion'. What does that mean? (Long overdue) investments in infrastructure, the military, education, health care, social security, the protection of the law, law enforcement?
Even if it were used as a stimulus, what were the economic conditions in the 30s, 60s, 70s, and what was the intent behind the interventions? Were they intended to create actual growth, or do something else, such as boosting trust in a faltering economy, protect the political stability of a country due to massive armies of unemployed, stabilize the economy from further decline etc etc.
You cannot blame Johan Vansummeren when he fails to win the TdF if his intent was to support his leader.
Cross-national comparisons yield the same result. The U.S. government spends significantly less than the 15 pre-2004 European Union nations, and yet enjoys 40 percent larger per capita GDP, 50 percent faster economic growth rates, and a sub*stantially lower unemployment rate.[1] "[/I]
Does a country need to be the champion of economic growth?
The competition derived from ranking economies - ranking seems to be a favorite US pass time in any case
- becomes even more explicit with the mention of '
faster growth rates'. This means that when it grows (from 1%-1.5%), the US does it faster (in 1 year, instead of 1.5 years), this is not to be confused with no or low growth. Both statements (40% larger GDP AND 50% faster growth rates) have no bearing on the growth of other (non-US) economies. They all might have grown, even big percentage wise, but still not as fast and not as massively as the US's.
Less massive growth and/but/or (better) redistribution could also be a form of 'protecting life, liberty and the pursuit of happiness'. Economic growth alone seems to be a poor guideline for government policy-making.
For example, if the US were to be the champion of economic growth (and remember I am also teasing) it:
- has a rather non-existent railroad system.
- has a pretty lousy social safety net if you get in trouble
- has a less than desired health care system
"Mountains of academic studies show how gov*ernment expansions reduce economic growth:[4]
Now it's already reducing growth (from 4% to 3%)...
before it 'failed to increase growth': from 3% to an anticipated 4%, it stayed put at 3%. Given the state of the economy one is talking about, it could be quite an accomplishment. In other words, if the objective of 'stimulus' is to not let the economy enter a period of shrinkage/recession, it actually met its economic objective, and then we haven't even discussed what it did socially.
Public Finance Review reported that "higher total government expenditure, no matter how financed, is associated with a lower growth rate of real per capita gross state product."[5]
Here the article even mentions 'lower growth' while omitting its comparative term. Since it fails to complete the comparison (lower to what?), we can only make explicit the implicit assumption that government expenditure is loosely associated with lower growth rates compared to those with higher growth. That is again insufficient to prove that there is no growth (0%) or low growth (.5%), just that it isn't as high (China's 10%?).
Also troubling is that 'higher gvmnt expenditure is ASSOCIATED with lower growth. Again, careful with the words, it states ASSOCIATED (they are brought into a relation, but is not a necessary one) not PRODUCED/CAUSED, or even CORRELATED (mutual reciprocity).
And what if the state of the economy is shrinking, ie negative growth, do the same economic associations apply? Does that thus mean that government intervention reduces negative growth (from -2% to -1.5%) or does it actually stabilize negative growth (at -2% instead of going down to -3%)
The Quarterly Journal of Economics reported that "the ratio of real government consumption expenditure to real GDP had a negative associa*tion with growth and investment," and "growth is inversely related to the share of government consumption in GDP, but insignificantly related to the share of public investment."[6]
A Journal of Macroeconomics study discovered that "the coefficient of the additive terms of the government-size variable indicates that a 1% increase in government size decreases the rate of economic growth by 0.143%."[7]
Economic growth is driven by individuals and entrepreneurs operating in free markets, not by Washington spending and regulations.
And the 'free market' independently exists of the government? I could easily invert this statement and contend that 'economic growth is driven by state spending and regulations'.
It assumes that the free market is an institution that is dependent on the government for its current manifestation. Without:
-enforceable laws (validity of contracts, anti-slavery, establishment/protection of corporations as legal entities, protection of companies abroad, fraud, stealing, definition/protection/establishment of property)
-economic regulations (anti-cartel, customs, tariffs, safety standards, WTO agreements, patents, copyright)
- the autonomy of the state to create and destroy money (as a vehicle for exchange/trade)
-basic infrastructure (roads, aviation regulation, railroads, energy plants)
-basic education of the masses
-....and even economic participation (such as providing the monetary/infrastructural incentives for the private sector to develop an economy in a particular field, for which the market itself did not have the courage, the resources or the framework to start it up)
The government is intrinsically part of any economy, even the 'free market', in which it is supposed to refrain from intervening.
The U.S. economy has soared highest when the federal government was shrinking, and it has stagnated at times of government expansion.
This experience has been paralleled in Europe, where government expansions have been followed by economic decline. A strong private sector provides the nation with strong economic growth and benefits for all Americans."
And a strong government provides the private sector with the framework in which economic growth actually has any meaning, and more pragmatically, supplies the resources/infrastructure from which any economy necessarily draws, and hence benefits all Americans.
It's about finding the right balance...