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Moonbeams and Fairy Dust (Vol. 14)

Updated: Feb 7, 2023

analyticsbox | Aug 25, 2021

THOMAS SOWELL, ECONOMIST

PBS (Political Bull S--t)

Why we should listen to the objective economists, not the politicians

We have all heard about all of the plans and good being done by the extraordinary expenditures proposed by the Federal government these days. Trillions upon trillions will be spent, and some taxes will help to partially pay for this. But, is this a good plan for the long-term future of the country?

To determine this, we need to separate the PBS from reality. Sound economic analysis from independent, objective economists who explore the ‘seen and unseen’ consequences of the proposals will shed light on this.

It is widely accepted by most economists that growing the pie (economy) comes from capital accumulation in the private sector. This investment allows for innovation, investment, and growth of output. That is how an economy grows and a rising standard of living, (Gross Domestic Product per capita), can be achieved.

As the government takes more and more out of the economy for its own purposes and gets bigger and bigger, the money has to come from somewhere. To believe otherwise is to believe in moonbeams and fairy dust.

So, where does this money come from?

The Government has 2 choices:

  1. They can borrow it. This money can be from the private sector or the government. Borrowing money from the Fed is printing money, which is inflationary, and lowers the value of the money you have. Or it can be borrowed from the private sector, taking the money out of private hands. Either way, government debt will grow (please see The Facts No Spin email #4, The Great Ponzi Scheme).

  2. They can increase taxes. This of course takes money out of private hands and into the government to pay for government services or redistribution plans.

The government can not create money painlessly from thin air. A study of the most recent Trillion dollar proposal (the infrastructure proposal) by an Ivy League school, puts all of this in perspective. This kind of spending increases government debt, and does not create new jobs or grow the economy. In fact, just the opposite occurs!


THE BOTTOM LINE

Growth comes from capital accumulation, period. More government spending does not grow the economy and raise the standard of living, but just the opposite, it slows growth. So when you hear the PBS and all the spin, call it out, find out the real story from objective economists, and vote intelligently for sound economic policy.

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