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Politics : Mainstream Politics and Economics -- Ignore unavailable to you. Want to Upgrade?

To: Steve Lokness who wrote (8313)	2/6/2012 8:25:47 PM
From: TimF	Read Replies (2) \| Respond to of 85487

There is plenty of demand for products out there, esp. products that can be delivered at bargain prices. Investment in new equipment can make the marginal, and in time the total per unit cost lower. In cyclical industries, esp. cyclical growth industries, companies who have a significant amount of cash can often make the investment at a lower cost (less interest if they borrow, less forgone interest if they spend cash, lower price for the equipment and getting it set up, etc.) during slow times. Except perhaps through pre-existing counter-cyclical "automatic stabilizers", government shouldn't try to manage demand, to the extent reduced demand really is the problem, the government is unlikely to get any stimulus effort right in terms of size or timing, and is unlikely to be cost-effective in its effort to promote stimulus, and is unlikely to run surpluses or at least balanced budgets or tiny deficits (small enough that even with a deficit debt as a percentage of GDP goes down as the economy grows), when times improve. And government stimulus, to the extent it has success at doing anything, props up old patterns of doing things, you keep government payrolls from shrinking as much as they should (and then in the boom times they often grow rapidly, rather than shrink as a counter-cyclical move), they prop up old companies that haven't been very profitable over time, subsidize unions who in turn influence politics to get more government intervention, and also reduce the restructuring and creative destruction needed to adapt to new situations, and push new companies that aren't likely to cost effectively meet any demand (Solyndra etc.). The stimulus funds become a big kitty for the government to use to sprinkle benefits on political favorites. -- Government Cannot Create Sustainable Jobs online.wsj.com Message 27928620