Economic View - A Dose of Skepticism on Government Spending - NYTimes.com - 5 views
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the centerpiece is likely to be a huge increase in government spending
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Economic downturns, Mr. Keynes and Mr. Samuelson taught us, occur when the aggregate demand for goods and services is insufficient.
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Higher consumer spending expands aggregate demand further, raising the G.D.P. yet again. And so on. This positive feedback loop is called the multiplier effect.
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each dollar of government spending can increase the nation’s gross domestic product by more than a dollar
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The solution, they said, was for the government to provide demand when the private sector would not.
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Professor Ramey estimates that each dollar of government spending increases the G.D.P. by only 1.4 dollars.
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If you hire your neighbor for $100 to dig a hole in your backyard and then fill it up, and he hires you to do the same in his yard, the government statisticians report that things are improving.
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To this day, we have yet to come to grips with how to pay for all that the government created during that era
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a temporary crisis as a pretense for engineering a permanent increase in the size and scope of the government. Believers in limited government have reason to be wary.