The widely-accepted textbook answer is that governments can sometimes do so during times of economic panic. Counter cyclical spending, in judicious, properly-applied times and doses can benefit an economy.
However, a few politicians have added to the above belief and claim that government spending can grow economies during normal times as well. It is false. It is wrong, nonetheless it is an increasingly common belief. In the recent past, only lefty whack job political types that. In the current climate, a lot of folks including candidates and office holders talk like righties, but support big government anyway.
_(edited for brevity)
That said, the above applies only to specific periods of sudden decreases in aggregate demand. We are not in such a period now.
I was hoping to get some lefties to explain why they believe our system of confiscate and redistribute could bring about prosperity. My observations is that the more government takes to redistribute, the more poverty we get. It must be a touchy subject for them.
There’s that old saying, at some point you will run out of other’s people’s money to spend! Especially when you run the wealth out of the country and flood the poverty in!
[quote=“Optrader, post:1, topic:246622, full:true”]
I So why would any thinking person believe that bigger government with unlimited spending is something to vote for?
Those who pay no taxes and recieve a ton of freebies at the expense of others love it!
On Newsmax, it’s my channel of choice for news. I’d dump Fox News entirely if not for Sean, Mark, Greg and Jesse. I record all their shows and watch in the evening or next day, I never watch Fox News live anymore.
Because they believe in the Federal government (when run by libs). They believe that we are always just a new legislation away from their promised utopia.
When we consider economics as an academic discipline, it is sometimes true that, in some case a nation can spend its way to prosperity (although, even then, perhaps only in the short-term, and perhaps in the long term more damage is done.)
When we consider economics as an academic discipline, there is an accounting identity that goes something like “we count only spending, so, by definition, when we increase spending the economy grows.”
It (the accounting identity) is really nothing more than a Zeno’s paradox.
It (the accounting identity) begins with the assumption “all other things being equal,” the economy that spends more is the healthier economy, (which is true, btw). It then proceeds as if it had never made that assumption.
Basically, if we use GDP accounting,
When you receive $100 if you spend $90 and save $10, economist count only the $90 toward GDP. (On an accounting level it makes sense right? They are going to count the other $10 later and don’t want to count it twice.)
It’s a good indicator of the economy, but should not be used as a synonym of the economy. (Broken window fallacy.)
Because it often is the result is a series of policies that attack savings and encourage spending, thus “spend your way to prosperity.”
EX. Lower interest rates. If you are not getting any interest you won’t save. $10 you’ll spend it.
EX. Tax the middle class guy (who saves $10 for college or doctor visits) and give it to the poor woman who will not save but will instead spend it on tattoos and vapes.
Well, let’s compare tow economies (countries)
A. (strong economy) Has $1m debt, saves $100k a year and spends $100m every year.
That means every year the people get $100m worth of stuff they want and some number of people are employed providing it.
B. (weak economy) Also has $1m debt, saves $100k a year but is spends only $90m every year.
Now the people get only $90m worth of stuff they want and a smaller number of people are employed.
In that sense economy A is better and stronger than economy B.
Point being the second economy is smaller.
It never had the other $10 m in the first place.
Imagine you are comparing two similar poor countries
(Indonesia and Malaysia maybe?)
If everything is the same in the two countries but in one country they are buying more cars and gas and in the other other they are buying fewer cars and less gas (more bicycles) the first one is better.
