The (Counter)Productiveness Of Stimulus?

by Mario Rizzo

Continuing the Stimulus Watch (HT Greg Mankiw)
Continuing the Stimulus Watch (HT Greg Mankiw)

Greg Mankiw continues to trace the unemployment rate as predicted by the original calculations of the effect of  the fiscal stimulus as against no-stimulus. My advanced “eye-ball” extrapolations suggest that we are following the same path as the no-stimulus projection BUT at a higher level of unemployment throughout.

Dare I suggest (ever so tentatively and with all scientific humility given the nature of the data) that the stimulus has done harm?

2 thoughts on “The (Counter)Productiveness Of Stimulus?

  1. the money is all spent now. Obama said ‘the stimulus did what it was supposed to do’. Unemployment rates are higher than ever before and the economy is worse…thanks for spending our tax money, Obama, to put us in debt for plans that only made things worse. He has now spent more money than ALL presidents to ever exist combined…we have no idea what is going to happen from here. Now they are printing more money and our dollar is going to have the same worth as a peso. Be prepared…things have only begun to get bad.

  2. Mario,
    economics concerns the utility of consumption, but there must be sources of utility other than goods and services. For example, there is also utility pertaining to belief. That is, utility obtained from holding a notion to be true, independent of any observable evidence in its favor.

    It would be a mistake to believe that the only purpose of the ‘stimulus’ is to maximize the utility of consumption, when its ulterior purpose is to activate, reinforce and rationalize the utility of belief in demand management as an absolutely necessary feature of the modern economy.

    As evidence of this belief driven policy making, just look at the claims being made that the ‘stimulus’ worked (in spite of the unemployment figures), and that any short-fall in employment numbers is because the ‘stimulus’ wasn’t big enough. Reference to the graph in your post is simply not going to be made by the supporters of ‘stimulus’, in the sense of it indicating failure, but only as an indication that more ‘stimulus’ is required.

    The idea that the ‘stimulus’ has failed or has even made things worse is rejected on principle by its proponents. Supporters of Keynesian interventionism don’t call Keynes ‘The Savior’ for consequentialist reasons, but out of religious reverence. From this point of view, the ‘stimulus’ has indeed worked.

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