Wednesday, February 11, 2009

A Cynic's Cynic

Tom Smith, discussing the Keynsian multiplier, absolutely kills it:

I repeat my view that fiscal stimulus has a large multiplier. So you find a person that has a great idea for a business or wants to be an engineer. You take away his money and give it to a bunch of people in Washington or Sacramento. They look at it, count it, fight over what to do with it, often for years, then finally use what's left of it to pay somebody else (who can't be fired) to teach another guy who wants to be an engineer that engineering is patriarchal. So he changes his major to comparative cultural studies, drops out before graduating, and eventually goes into the illegal drug business, in which he sells ambition-sapping substances to the children of people who braved a hundred miles of fatal desert and miscellaneous human predators to get into this country. Now you need more money to put these children in prison. Meanwhile, having gathered yet more money as per above, the people take what is left after having paid themselves, and pay it to still other people, whose job it is monitor, regulate and generally harass those people who are crazy enough to try to be productive, their motives being only partially pecuniary. Other cycles exist simultaneously, such as taxing people indirectly to pay the people who make the money from the various special favors, rents, monopolies, etc. that they got for using some of this money to pay the campaign costs of the people who granted them the special favors, etc.-- but we do this not so much to stimulate ourselves as to improve our quality of life and promote justice. These go on in a cyclical fashion until much productive activity has to done in secret, like Catholicism under Cromwell or homosexuality in 1950's America. None of this includes, of course, the psychic costs of having to listen all along to how wonderful all this is, and how good for us, and how anybody who disagrees is stupid. The multiplier is large, and its sign is negative.