"The most direct way in which stimulus is helping the state is by transferring resources from the private economy to itself in a zero-sum game. From Moody’s comes direct evidence. While the rest of the nation’s economy is shrinking, the economy of Washington, DC, is growing at a 2.5% pace. Northern Virginia and suburban Maryland are sharing in the glee, as government gains at the expense of everything else.
One of the great lessons of liberal theory concerns the extraordinary capacity of free exchange to create wealth. Trading makes both parties better off. Saving makes resources available for investment. Investment creates jobs that yield more products for people to purchase. Through this mechanism the West grew rich.
The economics of stimulus are not as complicated. They amount to taking from some and giving to others. There is no wealth creation at all. There is no magic “multiplier” to turn stones into bread. The economics of stimulus is value-destroying, because property is pried loose from owners who are putting it to socially useful purposes, and given to government so it can pass it out to friends."
- Llewellyn H. Rockwell, Jr.
Lew Rockwell.com
Thursday, Feb 26, 2009
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