Its no secret that I think that all of the various economic stimulus plans are simply a bad idea. None will work, and in my opinion will make any recession or depression longer and deeper, not shorter.
Over at the Foundation for Economic Education (FEE), they have 3 excellent pieces that do an excellent job at refuting the "Stimulus Madness!" that has gripped governments not only on both sides of the border, but around the world:
1. My friend Sheldon Richman's The Goal is Freedom: Smoot and Hawley Return shows how the infamous "Buy American" portion of the package is merely a repeat of Herbert Hoover's ill-fated Smoot-Hawley Tariff, widely accepted as one of the causes of the speed and depth of the great depression.
"When laws prohibit or limit the purchase imports, foreigners have fewer dollars and therefore fewer opportunities to buy American exports or to invest. The Americans who would have benefitted from those transactions lose out. So while protectionism is defended as a way to help the American economy (at the expense of foreigners), in fact it is special-interest legislation that helps only a small well-defined interest group at the expense of many other Americans. If people generally understood this, they would not fall for protectionist appeals."
Its odd that for all the daily comparisons to the depression we are seeing, no one seems to have noticed that the US Congress and President Obama are acting more like Hoover than FDR (not that acting like FDR would be much better).
2. William Anderson questions the very idea of government spending - especially bailing out failing companies and industries - to create jobs in his Not So Fast!: The Fallacy of Production for its Own Sake:
"...jobs simply are a means to the end of consumption; they are not ends in themselves. People become confused because they fail to recognize the connection between production and consumption. Yes, jobs produce income for individuals, but they can provide real income only if the job contributes to the production of goods people are willing to purchase."
So simple an idea, yet something that few people get.
3. And to shore it all up, FEE links to an article first published in 1957 (warning: PDF), an excerpt from economist Frederic Bastiat's classic 1850 Pamphlet That which is seen and that which is not seen.
"From all the benefits attributed to public spending we must deduct all the harm caused by preventing private spending—at least if we are not to go so far as to say that James Goodfellow would have done nothing with the five-franc pieces he had fairly earned and that the tax took away from him; an absurd assertion, for if he went to the trouble of earning them, it was because he hoped to have the satisfaction of using them. He would have had his garden fenced and can no longer do so; this is what is not seen. He would have had his field marled and can no longer do so: this is what is not seen. He would have added to his tools and can no longer do so: this is what is not seen. He would be better fed, better clothed; he would have had his sons better educated; he would have increased the dowry of his daughter, and he can no longer do so: this is what is not seen. He would have joined a mutual-aid society and can no longer do so: this is what is not seen. On the one hand, the satisfactions that have been taken away from him and the means of action that have been destroyed in his hands; on the other hand, the work of the ditchdigger, the carpenter, the blacksmith, the tailor, and the schoolmaster of his village which he would have encouraged and which is now nonexistent: this is still what is not seen."
I'm quite sure my stance will not make me popular with my progressive friends, but I cannot support an orgy of spending, a return to long, deep deficits - no matter how well intentioned - when the effect will be the opposite of what is wanted. Sometimes, perhaps, we should rely on sound economics rather than wishful thinking to help people.
Right now, the road to economic hell is being paved with gold by the very governments trying not to.