The Obama administration isn’t the first to call on the black arts to bend the unyielding laws of the dismal science. Reagan’s policies were called voodoo economics by Bush the elder. Voodoo, however, worked a lot better than the conjuring tricks the Democrats are dazzling us with now.
It’s magic! First Jay Carney, and now, Labor secretary Hilda Solis, another wise Latina, assure us that unemployment benefits create employment, and they aren’t talking about jobs for the government folks who administer the program. No, jobs for people like you and me.
According to Jay the the Republicans have nothing more than gorilla dust, so we should stick with the Democrats’ pixie dust.
Here’s how it works: You have a dollar in your left pocket. Take it out, put it in your right pocket. You now have TWO dollars
No dollar in the left pocket? Borrow one from China.
This is of course, in the view of many, a gross oversimplification. There is the “multiplier effect,” which, while reading up on it will lead you to pages of arcane formulas composed of weird symbols, Greek letters and very few actual numbers, can be fairly simply stated as “spending begets more spending,” so that if all goes well, economic activity will increase, and output grow, if somebody will just throw some cash into the game.
And common sense will show that there is some truth to this. Way back in eighth grade, one of my teachers gave the class an example of a new car purchased for a thousand dollars, and showed how it would generated thousands more in economic activity, what with repairs, maintenance and resales.
These were transactions in the private sector, but the the multiplier effect is bedrock to Keynesianism, wherein the first dollar is borrowed by government. Here as far as the general public and the academic/media /government complex are concerned, the science has long been settled.
Until it stopped working, if it ever had: an examination of stimulus programs will show many instances when economic activity had been picking up before the stimulus, No, I don’t have citations, but I can remember the 40-60 billion dollar stimulus packages of the 80s and 90s that lumbered through Congress, and then spread goodies around various constituencies long after recessions had ended.
You don’t need to be an econometrician, or economic historian, but merely to have had decent high school U.S. history course to know that Keyensian stimulus did nothing to end the Great Depression. Believers argue, just as socialists do, that there wasn’t enough of it, and point to the Second World War as the ultimate stimulus, This has long been debated, and probably always will be. One could ask if being the only country with massive and completely untouched industry and agricuture base might have had something to do with the post war resurgence,
But let’s return to simpler, less academic concepts. If you rob Peter to pay Paul, you still have one rich guy and one poor guy, and if the government is holding the gun some comes off the top,
But hey, what do I know? Ms Solis holds degrees from Cal Poly and USC, and Mr Carney went to Yale( after Lawrenceville, I have to add: preppies always at least look like they have money, so they must know something.) Ms Pelosi went to to a catholic college, but better than an an ivy credential,she has decades of legislative experience and she is also really rich, and has been getting richer.
So why not give it a try? Let’s give a whole lot more people food stamps and unemployment benefits, thereby creating heaps of jobs which the unemployed can then take. How many more people? I dunno, just keep going. If we run out of working people to put on unemployment and food stamps, we can move to the next step, the thermonuclear option: Give everyone a government job.
And at living wages, of course.