A study at Harvard Business School demonstrates that higher federal spending in a district corresponds with lower corporate spending (via memeorandum)
A number of Council members have blogged about this.
Business people understand what liberal policy wonks don’t: all that spending has to be paid for by taxes; all those taxes suck money out of the economy; and an economy with no money is a perilous business environment.
The study looked at the last forty years and considered the states in which their Representative ascended to chairmanship of powerful committees. First, the study found that earmarks went up 40-50% and discretionary spending went up by 10% in those states. Meanwhile, private investment, R&D, and sales went down over those same periods. That puts serious cold water to Keynesian theories.
More specifically, The Glittering Eye writes:
In my view that constitutes additional empirical evidence for a Keynesian multiplier of less than one. I’m still waiting for empirical evidence from supporters of fiscal stimulus via deficit spending that measures outputs rather than measuring inputs.
In a later post, The Glittering Eye applies a complementary analysis to the latest report from the CBO.
I concluded that Robbing Peter doesn’t pay Paul.