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Stimulus Surprise: Companies Retrench When Government Spends
Harvard Business School ^
| 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.
posted on 06/18/2010 7:27:31 AM PDT
How DARE these stupid companies act intuitively to artificially-imposed external pressures!!!!
/do I need it?
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.)
How can this be a surprise to anyone with an IQ above room temperature?
posted on 06/18/2010 7:37:00 AM PDT
by Army Air Corps
(Four fried chickens and a coke)
posted on 06/18/2010 7:59:29 AM PDT
by WOBBLY BOB
(drain the swamp! ( then napalm it and pave it over ))
They forgot to describe the results as “surprising” and “unexpected”.
posted on 06/18/2010 8:05:42 AM PDT
(Natural born citizen of the USA, with the birth certificate to prove it)
Unless you don't really give a damn about private business investment and capitalism.
With animals like Ubama and the rats, government is God.
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