Obamanomics and Failure

Economist John R. Lott is another voice crying in the D.C. wilderness, where demagoguery has more value than truth, especially when it comes to economics. From his latest, beginning with the Democrats touting of the discredited Keynesian "multiplier effect" claim about government spending:
The problem with this multiplier claim is pretty simple. First, the money has to come from some place.

Second, everyone spends their money one way or another. This claim of some people "spending" their money while others are "saving" it really assumes that saving is the equivalent of burying one's money in a hole in the backyard. In reality, if you don't spend your money, you are putting it in the bank or you are putting it in stocks or bonds, which means you are giving it to someone else to spend.
Mr. Lots concludes the article as follows:
Increased marginal tax rates will clearly be bad for the economy. But President Obama just can't let go of the old Keynesian arguments that have failed so spectacularly over the last two years.
Not to mention the Keynesian policies' failure to end (and instead they prolonged) the Great Depression of the 1930's.

Read more: http://www.foxnews.com/opinion/2010/12/07/does-president-obama-understand-economics/#ixzz17RJYW8Da


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