GMU Econ alum Dan Mitchell reminds us that “by historical standards, today’s Americans are fantastically wealthy.” My intrepid Mercatus Center colleague Veronique de Rugy talks with Emily Jashinsky about some of Biden’s irresponsible policies. Also from Vero is this EconLog blog post on Covid and Keynesian stimulus. Here’s her conclusion: I am not expecting newspapers to stop calling government spending “stimulus”, but it would be nice if textbooks would adjust their Keynesian theory content to reflect what we know the value of the multiplier actually is rather than what Keynesians hope that value will be. At the very least, they should note that just because an idea is true in theory does not mean it is true in fact. Here’s my new GMU Econ colleague Vincent Geloso on inequality.
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Also from Vero is this EconLog blog post on Covid and Keynesian stimulus. Here’s her conclusion:
I am not expecting newspapers to stop calling government spending “stimulus”, but it would be nice if textbooks would adjust their Keynesian theory content to reflect what we know the value of the multiplier actually is rather than what Keynesians hope that value will be. At the very least, they should note that just because an idea is true in theory does not mean it is true in fact.
The practice is known to economists as the “Tang Fallacy.” Tang was a horrible faux-orange drink made from a powder to which you added water. It was touted as a spin-off from the space programme (poor astronauts!), which implied Nasa was transforming our daily lives. In reality there was no link. And of course we never saw what technologies might have arrived had ordinary people had that money to innovate with instead of it being wasted on moonshots. Yet High-Frontier romantics try to persuade us to give them trillions by adding Tang to the wonderful benefits of space exploration that we have enjoyed. Let’s not.
From Ryan Bourne: “Minimum wages encourage uneconomic automation”. Here’s his conclusion:
Not all automation, in other words, is created equal. Indeed, if raising minimum wages to encourage automation was “good for the economy,” then why not increase the minimum wage to $100 per hour to really see a productivity boom?
Having Congress set industrial policy is good news for businesses with power and influence over federal policymaking, and this proposal is no exception. The bill’s 1,500-plus pages—which were reportedly still being finalized even just a day before the package was supposed to go to the Senate floor for a vote—provide ample opportunity for waste and cronyism.
“The bill spends well over $100 billion on special interests and managing the U.S. economy in areas where the private sector has already proven itself effective,” writes Walter Lohman, director of the Asian Studies Center at the Heritage Foundation, a conservative think tank.
A huge amount of that spending is flowing to Intel and other microchip-manufacturing firms, despite the fact that there is little indication the industry is in need of $52 billion in government aid. Schumer and the Times are eager to suggest that America is losing its technological lead over China in semiconductor manufacturing, but that’s not accurate either. According to the Semiconductor Industry Association, a trade group, American-based firms control 47 percent of the global share of the semiconductor industry—while China controls just 5 percent.
Framing competition with China as a crisis has allows lobbyists to snag some taxpayer cash for their clients, and it also allows Congress to avoid figuring out how to pay for the bill. Instead, the entire package will be financed with public debt.