In response to:

The Fallacy of Government Spending

Ric47 Wrote: Jul 17, 2012 9:00 AM
Carter says "In an economy, the economic effects from a transfer program always sum to zero". But if transfer payments move cash from under mattresses into commerce, they do increase economic activity. Whether a specific transfer program is fair or effective in getting frozen capital into circulation is surely debatable. I'd have no problem with arguments about how Food Stamps, Medicare, or Social Security effect economic activity. But the blanket statement that no transfer program can have a positive effect on the economy is clearly erroneous.
latebloomer Wrote: Jul 17, 2012 5:46 PM
First off, Mr. Carter isn't saying that; he's quoting Mark Perry. Second: why would transfer payments "move cash from under mattresses into commerce"? Anybody with enough pride to only take public assistance as a last resort will have already used up accumulated savings. Anybody willing to feed from the public trough when they don't really need to is not going to diminish their own savings- though that person likely isn't the type to have a significant amount set aside, anyway (trust me- I used to be that person).
The Teleprompter Speaks Wrote: Jul 17, 2012 9:47 AM
No transfer program is 100% efficient. Less than 30% of the money spent of welfare is used on benefits, for example.

Also, the money has to come from somewhere. In a free market, efficiency is rewarded. Making superior products, or less expensive products, or offering a better service is rewarded. Business that can't compete either have to improve or go out of business. There are no such forces working on government.
McWheel Wrote: Jul 17, 2012 12:15 PM
I see our inner cities as an opportunity to put many to work renovating buildings, cleaning up bricks, cutting brush & removing waste in exchange for the government payments so freely being given out for no effort to able bodied recipients. Disabled persons even find uplifting jobs at Threshold/ St. Vincent de Paul/Goodwill. I met a disabled veteran in New York who was directing tourists from his wheel chair to local business & shops as he felt it a "duty" to give something back to the community for the disability payments he receives. We could use more like him.
The Teleprompter Speaks Wrote: Jul 17, 2012 5:53 PM
If this was useful, productive work, we wouldn't need the government to hire people to do it. In other words, there would be private sector jobs if this work was necessary.

There has been a pretty heated argument over the past few years on the effect of government spending having a stimulative effect in the economy. Keynesians say it’s positive. Others say it’s zero or perhaps even negative. Certainly it’s not 1:1.

Mark Perry has an excellent blog you should read on food stamps. But his food stamp analogy carries over to all government transfer payments. Every program. Not just your favorite ones. Every one. That includes Social Security and Medicare.

In an economy, the economic effects from a transfer program always sum to zero. Simply...