I went to one of those academic presentations today. These things are usually extremely boring with a heavy dose of esoteric statistical methods. My eyes usually glaze over about 15 to 20 minutes in.
Today's presenter, a Harvard man, presented evidence to support his theory that government spending is actually bad for the economy.
As a person that has written numerous letters to congress in opposition to stimulus spending and bailouts, I was intrigued.
His reasons were much better than anything that I have ever come up with. And his data... oh the data...lots of data and regressions...
Basically, what he showed is that when government spending increases in a state, the private sector (in aggregate) cuts capital spending, employment, R&D expenditures, etc.
Even if a few companies in the state do better because of the increased government spending, in aggregate, the state's economy is worse off than before because the private sector is crowded out of the market.
Here is a link to the paper: http://www.people.hbs.edu/cmalloy/pdffiles/envaloy.pdf
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