published Thursday, May 10th, 2012

Stimulus mirage

Memo to Europe: Don't do it!

"It" being trying to prop up Europe's pitiful economies with enough government spending to choke the Danube. (Unemployment among Spaniards under 25 is a breezy 51 percent, and the overall figure is a less-than-scintillating 24.1 percent.)

And then there's Greece. And Italy. And ... .

Well, you get the idea.

Anyhow, Euro-socialists are floating the notion that all that's really necessary for prosperity to return is a lot more government spending.

That, in case you missed the giant flashing signs, is exactly what got so many European economies in deep buttermilk to begin with.

Greece, for instance, long has operated as practically an organized crime ring, with government bribes and other forms of corruption mingled with lavish entitlement programs whose costs were at least partially hidden by clever accounting.

But the bill came due, as bills tend to do, and bailouts from the European Union haven't solved matters. Many European countries simply do not have the money to pay for the things they want. Let us repeat that, since it sounds painfully reminiscent of circumstances here on the other side of the Atlantic: Many European countries simply do not have the money to pay for the things they want.

Yet many of their people are so debilitated by long-term dependence on government that rather than focus on how they can individually help themselves through hard work and initiative, they are reduced to violent protests and mindless demands for the governments that created the mess to solve it -- via the same means that generated the crisis.

And so we get the recently popularized idea that some government cutbacks of recent years are to blame for continued Euro-misery.

Government could "stimulate" the economy and make it all better with lots more spending, the thinking goes.

Left out of the anti-austerity blame game is the fact that European nations are coupling some spending reductions with massive tax hikes.

"Economies are contracting across the Eurozone as governments cut spending and raise taxes to reduce deficits," The Associated Press reported. Fresh new spending is viewed as the solution to the economic pain.

Spending cuts and deficit reduction are worthwhile. But unexplained is exactly how the economy is supposed to expand when a country seizes an ever-greater share of its people's output and guides that money into things that the people obviously didn't choose to spend their money on while it was still theirs.

That is among the fatal flaws of "stimulus" spending. It presumes superior, almost mystical knowledge on the part of a few that entitles them to spend the money of millions of others more wisely and productively than they can spend it themselves. The ghastly arrogance of that view is exceeded only by its sheer inaccuracy. (See "Stimulus, U.S.")

Europe is not practicing "austerity" in any meaningful sense so long as it mixes necessary spending reductions with disastrous tax increases that divert capital out of the free market, where it otherwise would be distributed more efficiently. And pumping more dollars through government into "stimulus" only adds fuel to the fire.

Seeking deficit reduction through tax hikes -- rather than genuine free-market growth, which thrives on the plentiful capital that stems from lower taxes -- is no recipe for a healthy economy.

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I notice you assert there are tax hikes.

But you didn't name a single one of them.

I think you're demonstrating the fatal flaw of "austerity" that it presumes superior, almost mystical knowledge on the part of a few that entitles them to put a burden on millions of others who don't have the personal wealth stored up to weather such deprivation without suffering. The ghastly arrogance of that view is exceeded only by its sheer inaccuracy.

May 10, 2012 at 12:20 a.m.
nucanuck said...

The assumption that there can be free market growth without first dealing with the sovereign debt issues seems a bit naive. Growth in the developed countries could be as much as ten years away while debt is liquidated. If resource scarcity drives up oil and other commodities, we may never see growth again like we experienced in the 20th century.

The new "moving forward" is likely to be with far less consumption than we have known. Finding the balance that maintains a healthy planet may become the new description of success.

Zero growth may well become the maximum that our planet can tolerate.

May 10, 2012 at 12:47 a.m.
joneses said...

In the last 3.5 years we have accumulated national debt at a rate more than 27 times as fast as during the rest of our entire nation's history. Over 27 times as fast! Metaphorically, speaking, if you are driving in the right lane doing 65 MPH and a car rockets past you in the left lane 27 times faster . . . it would be doing 1,755 MPH! This is a disaster! . Obastard is clueless about the economy or he is purposely trying to destroy the economy.

May 10, 2012 at 7:26 a.m.
conservative said...

"That is among the fatal flaws of "stimulus" spending. It presumes superior, almost mystical knowledge on the part of a few that entitles them to spend the money of millions of others more wisely and productively than they can spend it themselves. The ghastly arrogance of that view is exceeded only by its sheer inaccuracy. (See "Stimulus, U.S.")"

I view the failure of stimulus spending as Socialism gone wild. I agree that Socialist are arrogant but they are also thieves, something much worse.

The "fatal flaws" are masked by our borrowing and it appears to me that our country does not have the will to stop borrowing and increasing our massive debt. Why do we borrow? We borrow because we spend more than we take in. We know that Obamination is the biggest spender and worst borrower in American history and has large support. He did not get into office without the support of other thieves.

I know Obamination is trying to change the subject from the economy but his recent promotion of sexual perversion will only make his reelection chances worse.

May 10, 2012 at 9:44 a.m.
Livn4life said...

One day we will look back with utter sadness and say, "Our leaders knew the right thing to do for the country and just would not do it." Then all the right blaming the left, the left blaming the right, middle and anyone/anything but themselves will all be moot and we will be in the same boat. Who will then be in charge? For decades voices crying in the wilderness have warned us of just where we now stand and what is ahead. It seems we will keep driving toward the edge of that economic cliff. But who listened to those voices? They were ridiculed, demeaned, marginalized and isolated. Meanwhile, the spending band played on and is still at it. People would not and still refuse to listen. So we get what we vote for. There was a song a number of years back, "People get ready, train is comin'...." That song applies today but the train is comin' at us in the form of what many think is simply the light at the end of the tunnel. Let's wait, pray if we do it, grovel if not, and see.

May 10, 2012 at 12:31 p.m.
EaTn said...

joneses said... "In the last 3.5 years we have accumulated national debt at a rate more than 27 times as fast as during the rest of our entire nation's history"

Why did you just start 3.5 years ago--how about 11 years ago? Do you really believe that the prior Repugnant president and legislation were blameless with one third of the current debt?

May 10, 2012 at 2:09 p.m.
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