Veronique DeRugy may have found the best analogy for the problems with stimulus spending. She writes in Reason:
Imagine that I break my arm, but instead of getting a cast I take a big shot of morphine. The drug will make me feel better, but it won’t fix my arm. When the effect wears off, the pain will come back. And instead of being restored to their proper position, my bones will remain out of place, perhaps solidifying there, which will surely mean chronic pain in the long run.
Stimulus spending is like morphine. It might feel good in the short term for the beneficiaries of the money, but it doesn’t help repair the economy. And it causes more damage if it gets in the way of a proper recovery.
The whole article is a must-read in breaking down the failed premise of the stimulus. Veronique argues persuasively that far from stimulating economic recovery, government spending slows economic growth. This intuitively makes senses, since everyone knows that the government tends to waste money and that make-work government jobs don’t provide dollar-for-dollar value to the economy.
Let’s hope that the failure of this last stimulus bill is the final nail in the coffin of this concept of government spending as the key to recovery. It’s past time for policymakers to recognize that the best way for government to stimulate job creation is to get out of the way of the private sector.