Last week I posted a piece on The Biggest Bill in the History of the World – that is, the $22 trillion bill American taxpayers and their children and grandchildren face for bailouts, stimulunacy and nationalisations.
It’s huge. It was huge even last year before the Barack Bailouts and Giant Stimulunacy added another $18 trillion to the bill, but even at the $4.6 trillion it was last November it’s bigger then any other government programme in history.
Not just bigger than any other government programme ever, but bigger than all America’s big-government programmes ever.
Bigger than the bill to purchase Louisiana from the French.
Bigger than the Apollo programme that was celebrated again last week – in fact, bigger than NASA’s entire, all-time budget.
Bigger than Roosevelt’s New Deal and the post-war Marshall Plan that rebuilt post-war Europe.
Bigger than the the cost of the Iraq War, the Korean War, and the Vietnam War put together.
In fact, the bill is bigger than all of them put together – and that’s just the bill to the end of last year. See here (just click through for the full graphic):
And every dollar pissed away is a dollar businessmen can’t invest in productive activity – but it’s been hard work getting any sort of hard information from Henry Paulson, Helicopter Ben Bernanke or Little Timothy Geithner on which specific forms of unproductivity they’ve pissed it away on.
Look at the Stimulus, they say, celebrating the Golden Shower pissing out from the printing presses. Never mind the quality, just enjoy the Stimulus! If Roosevelt’s New Deal failed for insufficient stimulus, which is what the mainstream bozos say, then just sit back – they insist – and enjoy the ride this time!
How much stimulus is enough? Keynesian stimulus-monger and Nobel Prize winner Paul Krugman reckoned a while back that the "spending hole" in the U.S. economy is $2.9 trillion dollars. We’re already well past that with nothing to show for it except a huge bill and the failure to recover.
How could there be a genuine recovery when every dollar pissed away is a dollar businessmen can’t invest in productive activity? That’s even less real productive spending than the $2.9 trillion hole Krugman says needs to be filled up. As Ludwig von Mises wrote,
a government can spend or invest only what it takes away from its citizens … its additional spending and investment curtails the citizens' spending and investment to the full extent of its quantity.
This leads to the question [says ‘Lilburne’ ] of whether government spending and investment does more good than private spending and investment.
Sound economics answers this question with a resounding "no" . . . because ultimately, Keynesian fiscal stimulus is not even about the goods and services produced by the additional spending (infrastructure, welfare, etc). You see, the fiscal stimulus might as well be literally filling holes, since according to Keynes's ridiculous understanding of how an economy works, it doesn't matter what the government spends money on; even digging up holes just to refill them would qualify as beneficial stimulus. You might think that this must not be literally true. "Keynes may have been wrong on some things," you may protest, "but no economist as prominent as him would believe something so foolish!" Read the man's words for yourself:If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coal mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.
The above passage is not some off-hand note written to a colleague in a fit of academic speculation. It is part of Keynes's chief contribution to economics, upon which his reputation rests: The General Theory of Employment, Interest, and Money. I don't care how prominent, credentialed, or "accomplished" an economist is. If he says that burying cash in the ground can be a boon to society, then he should be immediately dismissed from public and academic discourse.
That thinking hasn’t just not been dismissed – it’s the very “thinking” that made the government and its minions piss away $22 trillion on things you aren’t allowed to know about.
Happy about that, are you? Because our own government is still promising its own “decade of deficits."
UPDATE 1: More good stuff on our local problems from David Beatson of all people, who says, “in case you’ve missed the main message: the tradable sector of our economy – the real driver of sustainable growth in New Zealand – has been in recession for the past five years. No wonder we’re in trouble.”
The sector that produces the goods and services we export to the rest of the world and that competes with imports for your purchasing power at home actually shrunk around 10% over the last five years. If we want it to grow, something else has to make way – like central and local government spending. . .
The recession is going to change everything else in New Zealand. Why shouldn’t it change the shape and nature of our public sector too?
Trouble is, it’s not, is it. Job losses in real businesses are going through the roof. Job losses in the bureaucracy by comparison? Bugger all.
UPDATE 2: And here ‘s another piece, on the debt problems of the dairy industry (who in a story that’s now all too familiar) have partially substituted the “economically perverse” illusion of debt-fuelled capital gain (i.e., the illusory “wealth” of a bubble) for real productivity growth. Read Analyst warns of dairy debt tsunami (and also, if you’re keen, a piece I wrote a few weeks back on the foolishness of “farming for asset gains”: ‘The credit/debt delusion: The faster you go, the bigger the mess.’)