DEFICITS
Growth is yet again what enables government borrowing, so to pretend that the borrowing adds to economic growth is a monument to double counting that would cause even the crooked among us to blush. West Virginia remained poor despite it all. Though politicians can redistribute wealth, they can’t control where it ultimately migrates to once it’s consumed. Applied to West Virginia, Byrd directed tens of billions of taxpayer wealth to his constituents, they spent it, only for the funds to flow to more productive commercial concepts well outside of the state. Paraphrasing legendary former Citibank CEO Walter Wriston, money goes where it’s treated well . Goodness, if government borrowing and spending actually boosted growth, West Virginia would presently be one of the richest U.S. states. Showered with endless largesse over the past few decades thanks to the late Robert Byrd’s immense power within the U.S. Senate, To believe that deficit spending stimulates economic growth is the hysterical equivalent of believing that during periods of economic weakness, theft should be legalized. Back to reality, governments can only spend what they’ve extracted from the private economy first... thus dampening economic dynamism thanks to the politicized allocation of precious wealth.
It is simply because countries, like individuals and businesses, are once again able to run up debt based on investor optimism about their present and future economic prospects. Confidence about present and future economic growth is what enables the borrowing... meaning the growth already occurred . Government borrowing is a consequence of economic growth, or growth that will take place in the future, which means that borrowing amounts to politicians taking a piece of the fruits of the growth and redistributing it. The U.S. can borrow in gargantuan amounts because investors strongly believe that Treasury tax collections now, and in the future, will be much greater than gargantuan. Russia can’t borrow at all like the U.S. can because investors have precisely the opposite view of present and future Russian tax collections. To believe then, as Krugman and others do, that the borrowing and spending boosts economic activity is to believe that Nancy Pelosi, Kevin McCarthy, Chuck Schumer, and Mitch McConnell are better allocators of precious resources than Jeff Bezos, Mark Zuckerberg, and Apple CEO Tim Cook. But such a view can’t be serious... Central planning that doesn’t work in total most certainly doesn’t work in limited fashion. Furthermore, it brings new meaning to fuzzy math. Growth is yet again what enables government borrowing, so to pretend that the borrowing adds to economic growth is a monument to double counting that would cause even the crooked among us to blush.
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May 2021
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