Sunday, February 08, 2009

Lessons from Japan

As I wrote two months ago:
Real estate collapse, a stagnant economy despite the central bank lowering rates nearer and nearer to zero...God help us if we're going to spend the next two decades like Japan's spent the last two. We're already in a "liquidity trap": interest rates are so low that monetary policy just can't provide any more economic stimulus, as artificial as it would be.
On the fiscal side, Russ Roberts links to a New York Times article that admits Japan's efforts at fiscal stimulus were a failure.

Dr. Roberts was spot-on to call it "schizophrenic." What he didn't cite as a highlight is something I'd deem perfectly indicative of liberals' agenda:
"Japan spent too much on increasingly wasteful roads and bridges, and not enough in areas like education and social services, which studies show deliver more bang for the buck than infrastructure spending."
There you have it: collectivism isn't accomplished merely by directing people to build more "infrastructure" for themselves, but by converting current generations and breeding future generations to be dependent on a central authority's direction. Sprinkle some Keynesian junk science about "multipliers" so people will swallow the guff without question.

Remember that my patron saint debunked the idea 160 years ago, nearly nine full decades before Keynes, that government spending can create economic growth. It also brings us a point of simple logic: Keynesians shouldn't be in favor of any private spending at all, proceeding straight from their absurd posit that government spending has a greater multiplier than private individuals' choices. But you won't hear this at the present time. Even Western Europeans haven't been quite that softened -- yet.

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