Sure, there are some hangers on and family members who gather at the back door to collect their share...but the economic impact of such spending is wasted.
It does not reward productive enterprise or brilliance...it rewards those who believe in the system of graft and nepotism.
Yes, of course the money will eventually find its way back into the system...but only after it has been squandered. Only have such wealth has rewarded drugs, sloth and revolution will it make its way back into the realm of respectable capital.
Martin Hamilton 1 day ago
‘If the government takes a dollar from A in taxes to give to B, even Keynesians can understand that it’s a wash in terms of aggregate demand.”
This statement couldn't be more wrong. In a depressed economy, consumers don't spend so businesses don't invest. There is no wash in aggregate demand because consumers and businesses sit on what cash they have and DO NOT spend. There is therefore a lack of demand, and that's why there is a persistint economic slump. The private sector does not give to A, B, C, D, or anyone. That is why today corporations are sitting on record piles of cash they don't know what to do with.
Government spending doesn't replace private spending WHEN PRIVATE SPENDING ISNT OCURRING or is greatly depressed. That is in part the definition of a depression.
The author admits as much, when she says that Milton Friedman acknowledged (and she seems to agree) that the great depression was a case when government spending was justified. What she fails to realize is that today's economic conditions are very similar to the great depression casue, especially in Europe.