Stimulate THIS!

So as it turns out, there is a “multiplier effect” from government spending. Problem is, it’s more like a divisor.

Historically, every dollar of government spending “grows” the economy by 80 cents. Consumer spending is probably about break-even, and private investment stimulates the economy dollar-for-dollar, plus the rate of return on the investment.

Now to be fair, some investments incur a loss (see: Motors, General). But the vast majority enjoy profits, else we’d all still be living in caves and eating mud, quod erat demonstrandum.

Do the math, and you’ll find that the $787 billion “stimulus” package can be expected to cause the economy to grow by about $630 billion — a $157 billion loss. That, as even a Princeton-trained economist can tell you, ain’t chump change.

Now I’ll do something no one in Washington will do, and be honest with you: I haven’t read the scholarly work quoted by Nick Gillespie in the link above. So I honestly can’t tell you if it factors in the inflationary effects of all that debt, or if it includes the suppression of future growth created by higher interest rates and increased uncertainty about future government interventions.

But I can tell you this much with complete assurance: If those factors are included, then the numbers get no better — you and me and Cousin Dupree are out a hundred and fifty some-odd billion dollars. And I can also tell you — again, with complete assurance — that if those factors aren’t included, then we’re all out a full shitload more.

Feeling stimulated yet, suckers?