Spending and Redistribution are Not the Answers to Slow Growth

Richard Ebeling emails:

Dear Bob,

I have a new article on the news and commentary website, “EpicTimes,” on, “Spending and Redistribution are Not the Answers to Slow Growth.”

Old fallacies never seem to permanently fad away, and one that keeps reappearing is the notion that slow economic growth and unemployment are caused by “aggregate demand failures.”

Neither taxation nor borrowing by governments can bring about any real net gains in output and employment. They merely transfer resources from the private sector to the government with no net effect.

Another Keynesian fallacy, now repeated by Nobel economist, Joseph Stiglitz, is that there is deficient aggregate demand because the wealthier save too much and the lower income segments of the population don’t have enough income to spend more.

What is not always easy to understand, but is no less the case, is that savings is the essential factor for the formation of capital and the employment of those looking for work in investment and production activities in any society.

If we ask why economic growth has not been more robust and why job creation has been lagging, the real answer is to be found in the economic policies of the government that hinder competitive activity through spiders’ webs of regulation and control, burdensome taxation, and destabilizing monetary policy by central banks.

http://www.epictimes.com/richardebeling/2015/05/spending-and-redistribution-are-not-the-answers-to-slow-growth/

 Best,
Richard