Discretionary Keynesian stimulus is built on the notion of propping up the existing firms, labor market relationships, and purchase patterns. In the aftermath of the Great Recession and Obama Administration stimulus efforts, new-firm creation dropped dramatically in the U.S. and the recovery proved modest at best. This is not a coincidence. Interfering with the core mechanisms for reinvention harms the capacity of the economy to transform itself for the future.
Sounds like a PSST story.
Holtz-Eakin’s piece is on a new conservative web site called Opportunity Lives. I like the look of the site, and almost every link on the front page tempts me to click. However, I was a bit disappointed that some of those links took me to teasers that linked to columns published elsewhere. If you are going to tease-and-link, then do so in a blog-like manner, without making me waste a click on my way to the actual article. See Arts and Letters Daily.
Meanwhile, the IGM forum recently reaffirmed that the economists on their panel think that the fiscal stimulus was just the cat’s meow.
I am no economist, I am an entrepreneur, and it looks like all these academics that are keynesians now don’t acknowledge what seems obvious: policies that are targeted to “increase resource utilization”, at a macro level, if they succeed at all, are actually rewarding vested interests in capital (existing plants, etc), and/or labor (people have no incentive to check and possibly invest time increasing/changing their skills). It is not that the data does not fits their prescriptions, quite to the contrary, it does! And there should be no surprise there … But, is the role of the economic system “maximize resource utilization” ? Or is it meet customers demands and wants ??