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So, if spending unilaterally stimulates the economy, then why stop at $1 trillion? Why not just spend quadrillions of dollars and really stimulate the economy?
by jamoes 13y ago
So, if spending unilaterally stimulates the economy, then why stop at $1 trillion? Why not just spend quadrillions of dollars and really stimulate the economy? The answer is that the there is a very real opportunity cost to their spending. That trillion dollars could have been spend on other infrastructure, or education, or even a more efficient warplane, and all of those expenditures would have resulted in greater value creation.
Hayek originally debunked this line of thinking in the Parable of the Broken Window: https://en.wikipedia.org/wiki/Parable_of_the_broken_window https://en.wikipedia.org/wiki/Parable_of_the_broken_window
- mikegagnon 13y agoThere is always a debate about how much to spend and what to spend it on. I believe these issues are what primarily distinguish republicans from democrats. I agree that Military Keynesianism is not the best way for the government to stimulate the economy. That does not change the fact that it is the de facto economic policy of the United States. Here are some relevant analyses from inside and outside the Pentagon. - Spinney's "Defense Power Games" http://www.dnipogo.org/fcs/def_power_games_98.htm http://www.dnipogo.org/fcs/def_power_games_98.htm * Chomsky's - - "The Pentagon System" http://www.thirdworldtraveler.com/Chomsky/PentagonSystem_Cho.. http://www.thirdworldtraveler.com/Chomsky/PentagonSystem_Cho....
- guscost 13y agoIndeed there is a very real opportunity cost to having the government redistribute that trillion regardless. /libertarian
- guiomie 13y agoSir, thanks for the link! I feel like I am going to bed more intelligent tonight.