Economics of Government Spending

Hard Times in the United States can be terrible, Everyone having seen the restored film libraries of the 1930s (go to the History Channel and await if not). China is a far different matter. I believe 1952 was the last year in which over a million Chinese starved to death. Hard Times, though, is still a organically different structure in China. China does not possess the resources to provide the Social Welfare of the West, though they have finally forced reallocation to eliminate most actual Starvation (here again a misnomer: all except for the military, police, and leadership suffer from dietary deficiency). Social unrest is common even in the best of times, and China often has to fill its detention camps in Hard Times simply to squash active rebellion. I would like some knowledge of the populations of these Camps, as this can be an economic bellwether of the economic clime of China.

Here is a normal reaction of a Free Trader, but the genus is a little dubious. Restriction of federal stimulus spending to American Products is a minute element of the current context of the stimulus packaging. The Products matrix will probably be only about 17% of the Stimulus bill, though it will generate a probable 28% of the Business Products. Restriction of purchase to American producers may increase the Cost of the Products to maybe 3-6%, but could increase Investment capitalization to the industries involved by as much as 70%. It seems I would rather have that growth generated in American plant, which it might increase American competitiveness by 30%.

Tyler Cowen brings a good discussion of Keynesian effect to the discussion. I know only that long-run economic performance determines the capital investment made into the sectors, and that investment schedules are particularly immune to Keynesian spending past the immediate period of that expenditure. The market corrects for impression mistakes in rapid order, and it is likely that Keynesian spending should be compressed to have any effect. I believe the problem with Keynesian spending is that it insists on continuous provision of funds to maintain a constant performance; this means the Government must keep spending at the same levels to hold the same degree of increase which was derived. It is acceptable if resultant recovery replaces the stimulus provision, but do not expect an overall increase in production without a constant flow of cash. lgl