KA-POW! #16 - Bonner

This week's “Kick-Ass Post O’th’ Week” (KA-POW) goes to Bill Bonner for “Government Spending Economic Theory” :

Yesterday, we went on at some length as to why government jobs weren’t the same as private sector jobs. Since they’re never put to the test of the market, you never know whether they are worth having, let alone saving. Do they add to the sum of human wealth and happiness…or do they subtract from it? No one knows for sure.

But here’s the strange and remarkable thing; modern economists actually would prefer jobs that are NOT worth doing.

In the twisted mind of a mainstream economist the problem in a depression is that people don’t spend money. Since they don’t spend, demand goes down. The secret to avoiding a depression, they believe, is to replace private demand with government demand.

Easy, peasy…right?

But what if government-funded stimulus projects actually produced goods and services that people wanted? Ah…that would be a problem. Because in a depression, there is too much supply and not enough demand. Prices fall, encouraging people to delay spending…further depressing demand…and causing an even worse depression. So, the last thing the feds want is more supply. They want more demand but LESS supply. That means that the ideal government project is one that doesn’t produce anything worth having. Such as military spending. Or digging holes and filling them up again. Or, departments and agencies that employ people who don’t do anything.

It sounds to us as though practically any government program would fill the bill!

Honorable mention also goes to Bill Bonner for “Paying for the Mistakes of the Public Economy” :

In the private economy, people are always making mistakes. People buy things they really don’t need with money they really don’t have. Then, they pay the price.

In the public economy, people are always making mistakes too. But since the person who makes the mistake is not the one who pays the price there is little incentive to ever recognize the mistake or to stop it. Just the opposite. In the public economy, people are rewarded for failure. The worse a situation becomes…the more money gets thrown towards it. Just look at Detroit!

Government mistakes become eternal…programs that can’t be stopped because too many jobs would be lost…useless community centers that can’t be closed…wars that go on forever…the bureau of this…the department of that…

More and more parasites…fewer and fewer honest workers. But parasites do not build honest prosperity. They just waste resources.

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It all goes on…until it all goes broke.