The View From 1776

Spending vs. Consumption

Spending is for purely political purposes mandated by collectivized government.  Consumption is purposeful activity arising from free choices by individuals and businesses.

Government spending, as in Obama’s stimulus program, is simply taking money from some taxpayers and giving it to special interest groups that support the administration.  Alternatively, it is funded by crowding small business borrowers out of the financial markets, as nearly all available funds go into low-risk Treasury debt, the condition now prevailing.

Consumption, in contrast, is using private funds for purposeful activity aimed at satisfying the needs of individuals and businesses.

Government spending, however many trillions of dollars that spending may be, cannot create stable consumption.  Government stimulus spending is directed at what ivory-tower Keynesian economists decide is the proper end for a good socialist economy.  Promoting high-cost, uneconomic green jobs, while stopping drilling in offshore waters is a typical example.  Individuals and businesses understand that government stimulus monies are temporary.  Businesses won’t re-hire laid-off workers because of a sales blip like that effected by the cash-for-clunkers program.

Professor William Anderson elaborates.

Be sure to read the first comment under his essay.