Recent research at Harvard Business School began with the premise that as a state's congressional delegation grew in stature and power in Washington, D.C., local businesses would benefit from the increased federal spending sure to come their way.
It turned out quite the opposite. In fact, professors Lauren Cohen, Joshua Coval, and Christopher Malloy discovered to their surprise that companies experienced lower sales and retrenched by cutting payroll, R&D, and other expenses. Indeed, in the years that followed a congressman's ascendancy to the chairmanship of a powerful committee, the average firm in his state cut back capital expenditures by roughly 15 percent, according to their working paper, "Do Powerful Politicians Cause Corporate Downsizing?"
Wul...duh. Milton and Rose Friedman smile.
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But they feel like it will work, so they'll continue to try it. They just didn't spend enough is all.
ReplyDeleteYep. That's the formula we've seen for decades now.
ReplyDeleteThe great laff on Keynesian "stimulus" is the idea that you get $1.50 (or whatever) in economic activity for every $1.00 government spends. Talk about alchemy...!!!! If it were valid, we should ALWAYS spend everything...'cause it would get us so much more!
Egg head theoretical pseudo reality. Harvard is full of bone head/egg heads who have never had a real job or lived in the real world. Yes Barry, that means you.
ReplyDeleteTheoretically, gravity can not be verified by scientific data, so I should be able to fly. I'll get the ladder and let you know how it goes.
Read something today that was really frightening...our money supply was at the lowest levels since the 1930s.
ReplyDeleteThat is what Friedman said was a big factor in making the Great Depression so "Great". As he noted, the Fed allowed the money supply to shrink by 30%. The next inaugural, FDR was talking about 25% unemployment, with 25% of factories idle.
Not good...
Now you know why they don't publish the M3 any longer. Bernanke doesn't feel that it's useful.
ReplyDeleteHide the decline!
"Decline" if you mean "precipice"...
ReplyDelete"Read something today that was really frightening...our money supply was at the lowest levels since the 1930s."
ReplyDelete??? Not what I've been reading. Barry's rolling the presses big time.
http://research.stlouisfed.org/fred2/graph/?s[1][id]=AMBNS
http://www.telegraph.co.uk/finance/economics/7769126/US-money-supply-plunges-at-1930s-pace-as-Obama-eyes-fresh-stimulus.html
ReplyDelete