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Apparently spending money isn’t a good way to do stimulus

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This is a good lesson for us all to learn in two different ways:Dame Meg Hillier, Labour MP and chair of the Public Accounts Committee, said: "It cost the taxpayer £50 million just to administer the pointlessly rushed-through Green Homes Grant scheme, which delivered a small fraction of its objectives, either in environmental benefits or the promised new jobs."We heard it can take 48 months - four years - to train the specialists required to implement key parts of a scheme that was dreamed up to be rolled out in 12 weeks."It was never going to work at this time, in this way, and that should have been blindingly obvious to the department. That it was not is a serious worry. I am afraid there is no escaping the conclusion that this scheme was a slam-dunk fail."Well, yes, and let that be a

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This is a good lesson for us all to learn in two different ways:

Dame Meg Hillier, Labour MP and chair of the Public Accounts Committee, said: "It cost the taxpayer £50 million just to administer the pointlessly rushed-through Green Homes Grant scheme, which delivered a small fraction of its objectives, either in environmental benefits or the promised new jobs.

"We heard it can take 48 months - four years - to train the specialists required to implement key parts of a scheme that was dreamed up to be rolled out in 12 weeks.

"It was never going to work at this time, in this way, and that should have been blindingly obvious to the department. That it was not is a serious worry. I am afraid there is no escaping the conclusion that this scheme was a slam-dunk fail."

Well, yes, and let that be a lesson to all those Green New Deal enthusiasts. Actually getting competent workfolk on site and doing something useful is not something governments are good at. No matter how the effort is financed - say, green or peoples’ quantitative easing - it’s the people making hammer hit nail that are the actual scarce resource.

There is also this:

A government spokesperson said: "The Green Homes Grant voucher scheme was designed as a short-term economic stimulus and was delivered during a global pandemic.

Government actually trying to spend money isn’t a good way of doing stimulus. Don’t forget that, assuming we want to do any stimulus at all, the aim is just to get the money out there. To increase that gap between government revenues from taxation and government spending. That increase in the deficit is the stimulus.

Rather than fiddling with bad - OK, lousy - plans to create some lovely little project government actually has two effective and efficient ways of gaining that stimulus. One is simply to give money to people - as the US showed with their possibly overenthusiastic lockdown stimulus checks. The other is to stop taking money off people. Simply cut taxes to produce that stimulus. As Keynes himself once pointed out, cutting national insurance will appear in the next paycheque, will be of a size that would be stimulatory. There’s almost certainly nothing faster as stimulus than doing that.

So why don’t we try to learn that lesson. We want stimulus? Don’t get government to try to do anything, just get it to take less money off folks. Tax cuts, not spending increases, don’t try to get government to fertilise the economy from one end of the alimentary canal just stuff less into the maw in the first place.

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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