The Other McCain

"One should either write ruthlessly what one believes to be the truth, or else shut up." — Arthur Koestler

Economic Growth Causes Consumer Spending, Not the Other Way Around

Posted on | December 1, 2010 | 2 Comments

Regarding Keynesian economics as self-evidently false, I seldom bother explaining in detail what’s wrong with it, preferring instead to mock it, e.g., “Aggregate Demand! Aggregate Demand!” It is nice, however, when economists provide us with the detailed analysis of specific errors of Keynesianism, in this case a five-minute video examining the relationship between consumer spending and economic growth:

Let me go ahead and declare that Hiwa Alaghebandian is to free-market economics what Kim Kardashian is to . . . well, whatever it is that Kim Kardashian is famous for.

Meanwhile, back to the Keynesian fallacy:

“Keynesian policy is based on the fallacy that you can become richer by taking money out of one pocket and putting it another pocket, but this is a zero-sum game that appeals to statists and other redistributionists,” added Dan Mitchell of the Cato Institute. “Real economic growth occurs when we figure out ways to increase national income, which is why good policy means reducing the burden of government.”
Dan Mitchell, Cato Institute

Mitchell has produced his own video, explaining why the best way to balance the budget is to focus on reducing spending:

Dan Mitchell is to free-market economics what John Holmes was to . . . well, whatever it was that John Holmes was famous for.

RELATED: Why the Spending Stimulus Failed.


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