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To: Little Joe who wrote (484861)	4/28/2012 12:00:16 AM
From: skinowski	1 Recommendation Read Replies (1) of 536495

Nice speech. But I am "scratching my head" that the man failed to address the notion that during recessions it is the government's duty to increase public spending - in order to compensate for the decrease in private demand and spending. The idea is that ANY spending is good, because it perpetuates economic activity. It "primes the pump". This Keynesian idea is basically identical to the so called "broken window fallacy" (google the wiki article). A child throws a rock and breaks the window. The shopkeeper calls the glazier who will fix it. The glazier will use the money to buy shoes. The shoemaker will spend the money on something else. Etc. Etc. Economic activity is taking place. There are problems with this. First, the government gets an excuse to borrow and spend large amounts of money. Second, as Bastiat showed, the fallacy is that this thinking ignores the fact that the money spent on fixing the broken window will no longer be available for other investments, which would likely be more effective. The shopkeeper will not be able to expand the business, hire more workers, etc. Not sure if I explained it well... but I think this is a central point. This fallacy of pushing economic activity at any cost is harmful - and this is exactly what our government is doing.