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Stimulus Surprise: Companies Retrench When Government Spends
Harvard Business School ^ | 5-24-10 | Sean Silverthorne

Posted on 06/18/2010 7:27:30 AM PDT by bigbob

New research from Harvard Business School suggests that federal spending in states appears to cause local businesses to cut back rather than grow. A conversation with Joshua Coval. Key concepts include:

* The average state experiences a 40 to 50 percent increase in earmark spending if its senator becomes chair of one of the top-three congressional committees. In the House, the average is around 20 percent.

* For broader measures of spending, such as discretionary state-level federal transfers, the increase from being represented by a powerful senator is around 10 percent.

* In the year that follows a congressman's ascendancy, the average firm in his state cuts back capital expenditures by roughly 15 percent.

* There is some evidence that firms scale back their employment and experience a decline in sales growth.

(Excerpt) Read more at hbswk.hbs.edu ...


TOPICS: Business/Economy; Government; News/Current Events
KEYWORDS: deficit; depression; hbs; hiring; obamanomics; pork; porkulus; recovery; spending; stimulate; stimulus; surprise
The knowledge has finally come even to the ivory-covered walls of Harvard that government intervention in the private sector has unintended consequences: When government spends more, the private sector spends less.

Or to put it more bluntly: The whole notion of the "stimulus" doesn't work. Unless you don't really give a damn about private business investment and capitalism.

1 posted on 06/18/2010 7:27:31 AM PDT by bigbob
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To: bigbob

How DARE these stupid companies act intuitively to artificially-imposed external pressures!!!!

/do I need it?


2 posted on 06/18/2010 7:33:42 AM PDT by Titus Quinctius Cincinnatus (When fascism came to America, it was wrapped in the Democrat platform and carrying a welfare check.)
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To: bigbob
How can this be a surprise to anyone with an IQ above room temperature?
3 posted on 06/18/2010 7:37:00 AM PDT by Army Air Corps (Four fried chickens and a coke)
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To: bigbob

Employers on Strike

http://www.freerepublic.com/focus/f-news/2528169/posts


4 posted on 06/18/2010 7:59:29 AM PDT by WOBBLY BOB (drain the swamp! ( then napalm it and pave it over ))
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To: bigbob

They forgot to describe the results as “surprising” and “unexpected”.


5 posted on 06/18/2010 8:05:42 AM PDT by Pollster1 (Natural born citizen of the USA, with the birth certificate to prove it)
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To: bigbob
Unless you don't really give a damn about private business investment and capitalism.

With animals like Ubama and the rats, government is God.
No joke.

6 posted on 06/18/2010 8:12:28 AM PDT by Lancey Howard
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