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Vote With Your … Votes?

Posted by on February 24, 2009

[This post was originally written for my employer’s blog, Show-Me Daily.]

Criticizing economic stimulus on a free-market blog is like wearing school colors to the pep rally. Sure it will get you a lot of high-fives, but there’s a risk that people who don’t share your spirit will miss the point. Widespread wealth should be our goal. We want more people to have more of what they want. During recessionary periods, there is often a cry for the government to “do something” in spite of academic economists assuring us that markets clear and GDP growth is not a straight line. Another warning, heard less often, is that a frequent cause of recessions is governments redistributing income, spending taxes on infrastructure, and manipulating trade.

The problem with stimulus is the problem of economic calculation: Where can the money be put to best use? In a free market, people spend money on things they want, and in the next round of production and sale, there is then more of what people want produced (to meet the demand). In a planned economy — or one based on redistribution — it is up to the experts to decide what should be produced, and in what quantity. If the experts don’t feel up to the job, they can always ask the people what they would’ve bought if they’d been allowed to keep their money, but that’s probably less efficient than just taxing less in the first place.

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