Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“There is no maxim, in my opinion, which is more liable to be misapplied, and which, therefore, more needs elucidation, than the current one, that the interest of the majority is the political standard of right and wrong.”     James Madison

June 28, 2010

Quote Of The Day

by Brad Warbiany

Ezra Klein:

For those of you who don’t click on the link, the conclusions, based off a raft of numbers that the Committee for a Responsible Federal Budget worked up for me, are that you’ll never get deficits under control if you don’t get growth back on track; you’ll never get deficits under control if you refuse to consider tax increases;

And yet he just doesn’t seem to see that if you raise taxes, you’ll kill growth.

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5 Comments

  1. It’s impossible for anyone still under the sway of the Keynesian multiplier spell to realize that big government spending doesn’t lead to any sort of sustainable economic growth.

    The solution here is for government to quit with the spending spree, get the money supply under control, and put the breaks on the capricious law making and regulation that are leading to continued uncertainty. That solves for growth and deficits.

    Comment by Quincy — June 28, 2010 @ 5:37 pm
  2. National policy makers seem to have a undying lust to boost the (G)overmnent component of GDP at the expense of both business (I)nvestment as well as (C)onsumption. The Keynesian GDP formula is

    GDP = C + I + G + (net exports)

    The bailouts and stimulus of 2008-2009 were something like $800B if I remember right. That would be a (G) figure here.

    The question is, how much (C) and (I) does pumping up (G) kill in the process? And, if you still manage a positive GDP after doing that, what kind of real world growth does it promote. Innovative growth of living wage employment? Increased personal and community freedoms? I highly doubt it.

    Comment by Procopius — June 29, 2010 @ 2:18 pm
  3. Procopius –

    Interesting you bring up the Keynesian GDP formula. As best I can tell, the way the neo-Keynesians seem to look at it is something like this:

    GDP = (P + 0.5G) + I + G + (net exports)

    In this expression, the component C is broken down into P (private sector consumption) and the mythical Keynesian multiplier.

    My play on the GDP formula is this:

    GDP = C + I + (net exports) – (G – (CG + IG))

    In this expression, CG is the amount government consumption and IG is government investment. This allows government economic activity to count towards GDP, while representing the true nature of other government spending (such as transfer payments) as a drag on the other factors of GDP.

    I believe this GDP formula, or something like it, represents a much truer picture of reality by making clear the zero sum nature of government spending as opposed to other economic activity.

    Comment by Quincy — June 29, 2010 @ 5:01 pm
  4. “…you’ll never get deficits under control if you don’t get growth back on track; you’ll never get deficits under control if you refuse to consider tax increases AND SPENDING CUTS.

    Emphasis added for accuracy.

    Comment by Akston — June 30, 2010 @ 2:34 pm
  5. Well said Quincy. I checked out the Budget calculator, and I was a little disappointed at the options I was allowed. For example, there is no option for cutting the pay or benefits of elected officials.

    Comment by John222 — June 30, 2010 @ 6:43 pm

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