Arthur Laffer: Stimulus doesn’t work. He writes:
It worked miserably, as indicated by the table nearby, which shows increases in government spending from 2007 to 2009 and subsequent changes in GDP growth rates. Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.
The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).
I’ll say it again: Consumption doesn’t create wealth; productivity gains, do. That’s why supply side worked in the ’80s and ’90s, and why stimulus failed in the Naughts and today.
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