Every dollar that the government spends is a dollar that comes from tax payers. That dollar doesn’t stimulate anything, but government. Taking a dollar from me and you does what to stimulate you, or me? Nothing. The only stimulant is that of not spending on something that I want. Now I have to save more, to keep what I have. In order to enjoy the things I want, I have to cut back on a lot of other things that would have really stimulated the economy.
Everyone remember the Frederic Bastiat story of the Broken Window? Econ 101 if you were sleeping, obviously Congress and Der Fuhrer were.
THE BROKEN WINDOW
Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation – “It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”
Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.
Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade – that it encourages that trade to the amount of six francs – I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.
But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”
It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.
Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs; this is that which is seen. If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs; this is that which is not seen.
And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not.
Now let us consider James B. himself. In the former supposition, that of the window being broken, he spends six francs, and has neither more nor less than he had before, the enjoyment of a window.
In the second, where we suppose the window not to have been broken, he would have spent six francs on shoes, and would have had at the same time the enjoyment of a pair of shoes and of a window.
Now, as James B. forms a part of society, we must come to the conclusion, that, taking it altogether, and making an estimate of its enjoyments and its labours, it has lost the value of the broken window.
When we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end – To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”
What will you say, Monsieur Industriel — what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?
I am sorry to disturb these ingenious calculations, as far as their spirit has been introduced into our legislation; but I beg him to begin them again, by taking into the account that which is not seen, and placing it alongside of that which is seen. The reader must take care to remember that there are not two persons only, but three concerned in the little scene which I have submitted to his attention. One of them, James B., represents the consumer, reduced, by an act of destruction, to one enjoyment instead of two. Another under the title of the glazier, shows us the producer, whose trade is encouraged by the accident. The third is the shoemaker (or some other tradesman), whose labour suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore, if you will only go to the root of all the arguments which are adduced in its favour, all you will find will be the paraphrase of this vulgar saying – What would become of the glaziers, if nobody ever broke windows?
John Stossel covers this well.
by John Stossel
We’ve been rolled again.
Sure, the economy is in bad shape — though the late ’70s and early ’80s were worse in many ways, but is it true that every economist agrees that massive “stimulus” is the solution?
“A failure to act, and act now, will turn a crisis into a catastrophe,” President Obama said.
If someone expresses skepticism, Obama and other political leaders suggest that economists are unanimous in believing that government spending is the only answer.
“We have a consensus that we need a big stimulus package that will jolt the economy back into shape,” Obama said.
House Majority Leader Steny Hoyer agreed: “Every economist from right to left, Republican, Democrat, advises that it has to be a very substantial package.”
It’s a lie. There was no consensus. (Anyway, a consensus doesn’t mean something is true.) Finding an economist who opposed government spending as a way to fix the economy was easy. More than 350 signed a opposing the bill. You can hear some of them on “20/20” this Friday at 10 p.m.
The moral of the story? Keep government the hell out of it and all will be well. Government interference is what got us into this mess in the first place. Government interference isn’t going to fix the problem.
by Thomas Sowell
Now that the federal government has decided to bail out homeowners in trouble, with mortgage loans up to $729,000, that raises some questions that ought to be asked, but are seldom being asked.
Since the average American never took out a mortgage loan as big as seven hundred grand– for the very good reason that he could not afford it– why should he be forced as a taxpayer to subsidize someone else who apparently couldn’t afford it either, but who got in over his head anyway?
Why should taxpayers who live in apartments, perhaps because they did not feel that they could afford to buy a house, be forced to subsidize other people who could not afford to buy a house, but who went ahead and bought one anyway?
Related:
The Risible Claim of “Responsibility”
by Mona Charen
Happening to scroll through old news the other day, I came across this declaration from Speaker of the House Nancy Pelosi: “While President Bush continues to trumpet his so-called ‘economic achievements,’ the Bush Administration confirmed today that the budget deficit for 2006 will be one of the largest in our nation’s history. President Bush’s failed economic policies have resulted in budgets that are drastically out of balance and skyrocketing debt. Budget deficits translate into higher interest rates, which means that mortgages cost more, credit-card debt grows, and student loans cost more. … Democrats know how to restore fiscal discipline with tough policies of pay-as-you-go budgeting, no new deficit spending…”
Cough cough. Daniel Casse at the Commentary Magazine blog offers additional golden oldies. He remembers the New York Times’ Paul Krugman writing in 2003, “As a drunk is to alcohol, the Bush administration is to budget deficits,” as well as Thomas Friedman lamenting just a few months ago that “Under George W. Bush, America has foisted onto future generations a huge financial burden to finance our current tax cuts, wars and now bailouts.”
Truth, Lies and In Between 
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