Keynesianism and Juvenile Delinquency
9 January 2009
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Paul Krugman faults Barack Obama's $775 billion "stimulus" plan for being too small ("The Obama Gap," January 9). I fault this plan for being about $775 billion too big.
If raising government demand for private-sector output were a sound recipe for economic health, then all that the government of, say, Zimbabwe must do to elevate that country to first-world status is to spend, spend, spend. Of course, such spending would do nothing to help Zimbabwe's economy because the problem lies in that country's poor institutions that discourage investments and prevent prices from being determined by market forces.
While America's institutions are more pro-growth than are those of many other countries, today's economic downturn will be reversed not by artificially raising demands for assets but, instead, by ridding the economy of institutional obstacles that discourage productive investment - obstacles such as high capital-gains taxes, inflationary monetary growth, and poisonous uncertainty about how Uncle Sam will next intervene into the economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Editor, The New York Times
229 West 43rd St.
New York, NY 10036
To the Editor:
Paul Krugman faults Barack Obama's $775 billion "stimulus" plan for being too small ("The Obama Gap," January 9). I fault this plan for being about $775 billion too big.
If raising government demand for private-sector output were a sound recipe for economic health, then all that the government of, say, Zimbabwe must do to elevate that country to first-world status is to spend, spend, spend. Of course, such spending would do nothing to help Zimbabwe's economy because the problem lies in that country's poor institutions that discourage investments and prevent prices from being determined by market forces.
While America's institutions are more pro-growth than are those of many other countries, today's economic downturn will be reversed not by artificially raising demands for assets but, instead, by ridding the economy of institutional obstacles that discourage productive investment - obstacles such as high capital-gains taxes, inflationary monetary growth, and poisonous uncertainty about how Uncle Sam will next intervene into the economy.
Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University
Posted by Don Boudreaux on
Sunday May 31, 2009 at 9:11am