This time from the Chicago Tribune:
From the public debate on the need for fiscal stimulus, you would think the only open question is what form it should take. In fact, among economists, there is a good deal of uncertainty and doubt over whether fiscal policy holds much promise.
John Cochrane, a professor at the University of Chicago Booth School of Business, says that among academics over the last 30 years, the idea of fiscal stimulus has been discredited and in graduate courses, it is “taught only for its fallacies.”
New York University economist Thomas Sargent agrees: “The calculations that I have seen supporting the stimulus package are back-of-the-envelope ones that ignore what we have learned in the last 60 years of macroeconomic research.”
Nobel Laureate Gary Becker says any benefits will be modest at best.
Just because a lot of people believe something doesn’t make it true.
And from Sheldon Richman:
Ask yourself: can you consume your way to prosperity? Of course not. So how can a society do so? Greater consumption is the effect not the cause of economic growth, yet this is so contrary to conventional wisdom that you can read newspapers and watch news programs for months without seeing this truth expressed.
To say the recession was caused by diminished demand is to say that the recession was caused by the recession. The fact is, people are holding on to their cash because the economy is in recession and they are uncertain about the future. As we’ll see, it is exactly under these circumstances that people should be saving.
The idea that consumption needs to be stimulated is ridiculous on its face. Consumption is fun. It’s saving that takes effort. Not long ago the American people were scolded for consuming too much and saving too little. Now it’s the opposite. Will the scolds please make up their minds!
I love this line: “the recession was caused by the recession”.