Harvard Study Finds Increased Gov’t Spending Results in Unemployment

Discussion in 'Economy' started by boedicca, May 27, 2010.

  1. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Harvard researchers are surprised to discover something which is painfully obvious to anyone who has run or been employed by an actual business:

    Increased government spending causes unemployment.

    Duh.

    Recent research at Harvard Business School began with the premise that as a state’s congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.

    It turned out quite the opposite. In fact, professors Lauren Cohen, Joshua Coval, and Christopher Malloy discovered to their surprise that companies experienced lower sales and retrenched by cutting payroll, R&D, and other expenses. Indeed, in the years that followed a congressman’s ascendancy to the chairmanship of a powerful committee, the average firm in his state cut back capital expenditures by roughly 15 percent, according to their working paper, “Do Powerful Politicians Cause Corporate Downsizing?”

    “It was an enormous surprise, at least to us, to learn that the average firm in the chairman’s state did not benefit at all from the unanticipated increase in spending,” Coval reports.

    ....


    If this seems counterintuitive, it might be from marinating too long in Beltway conventional wisdom. When private entities (citizens or businesses) retain capital, it gets used in a more rational manner, mainly because the entity has competitive incentives to use capital wisely and efficiently. The private entity also has his own interests in mind, and can act quickly to use the capital to its best application. Private entities innovate and look to create and expand markets, creating more growth.

    In comparison, government moves much slower with capital. It generally works to its own benefit and not that of private entities. Lacking competition, there is no incentive for efficiency. Most importantly, it rarely creates new markets or growth but instead creates a spoils system that ends up reorganizing the status quo to favor some and disfavor others....


    Hot Air Study finds increased gov’t spending results in unemployment
     
  2. Neubarth
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    Neubarth At the Ballpark July 30th

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    There are some types of government spending that can result in increased employment. If we were to take excess water from the Mississippi Missouri watershed and divert that water to the arid west, we could put more than a million arid acres to cultivation, put a million people back to work and decrease the balance of trade deficit. Obama refuses to do that.
     
    Last edited: May 27, 2010
  3. PixieStix
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    PixieStix Coal Member Supporting Member

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    Simple mathematics ;)
     
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  4. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Indeed. ;)
     
  5. KissMy
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    KissMy Free Breast Exam

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    We do not have enough energy to pump that much water that far. Best to move people closer to the river.

    Most of the government spending is paying people to do nothing. Just imagine if that money actually went to build high speed rail trains, windmills, solar, electric cars, dams, water & sewer projects, etc. We would create jobs, reduce imports, & increase living standards for everyone. There is no better time to hire cheap labor for big projects than in a depression. Politicians take all the money for themselves or to buy votes. The working people are getting screwed.
     
    Last edited: May 27, 2010
  6. Neubarth
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    Neubarth At the Ballpark July 30th

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    We easily have enough energy to pump that water over the Rockies. In a well designed system the energy use would be minor because of siphon action. The question is why didn't we do it fifty years ago? We have all these millions of government acres sitting idle while the world is starving and we have a tremendous balance of trade deficit. I have been willing to head up the project for the past thirty years, but everybody does not want to get involved. Not one politician will champion the project because they are too lazy and only interested in projects that pay them under the table.
     
  7. AquaAthena
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    AquaAthena INTJ/ INFJ

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    An enlightening and realistic post. :clap2:
     
  8. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    Most of the spending has gone to state and local governments to forestall lay-offs of bloated public employee union jobs and to transfer payments. Very little has gone to real projects with any net economic benefit - as is glaringly apparent in both the GDP and unemployment stats (and tax receipts).
     
  9. Quantum Windbag
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    Quantum Windbag Gold Member

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    Because it is a pipe dream? Because environmentalists would be up in arms about the impact on small fish? California cannot even pump water in pipes that already exist because the federal government prohibits killing a small fish, thus making some of the richest farm land on Earth desolate, and even causing cities and people to do without water. All to save a fish.
     
  10. boedicca
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    boedicca Uppity Water Nymph Supporting Member

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    It's Not About The Fish. The fish is a pawn. It's about control and changing people's lifestyles to conform to some bizarroworld Utopian ideal in which we live the way They Want Us To.
     
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