Are you as annoyed as IFO is by references to government spending as “investing?” As in all taxes spent on schools, roads, welfare, unemployment, military, scientific research, etc., etc, are not “tax and spend” liberals at work, but prudent investing, you know, like business people do it? This is usually followed by claims of jobs created, etc.
Well, that balderdash that we intuitively understood as bad for the economy, has been confirmed by information from several blogs on IFO’s blog roll, ZeroHedge and Mish. Consider:
* Tyler Durden of ZeroHedge, “It now takes $2.52 in new federal debt to buy $1 worth of economic growth.” IOW, government spending is bad for American economic health.
* Madeline Schnapp, Director, Macroeconomic Research at TrimTabs Investment Research elaborates: “From 1974 to 1980, each $1 increase in GDP was accompanied by an increase in debt of between 20 and 47 cents. Since 2009, however, each $1 increase in GDP has been accompanied by a whopping $2.50 increase in debt. At some point, the amount of debt required to generate $1 of GDP will suffocate the economy and trigger another financial shock.”
* Mish cites government figures to show that due to people dropping out of the labor force, employment “fell by 169,000, but the unemployment rate dropped by .1%.” Where did these dropouts go? Some retired. But some 2 million others, as unemployment benefits ran out, went on Social Security Disability! Coincidence?
Are the generous pensions paid to government workers an “investment” in education or roadbuilding, or whatever? We think not! If there isn’t a dramatic pullback in government spending AT ALL LEVELS, our economy is in for serious trouble.