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Archive for October 9th, 2011

The folks at U.S. News & World Report have posted an online debate on the never-ending topic: “Does Stimulus Spending Work?

You know my thoughts on the topic, including my thumbs-down to Obama’s latest stimulus scheme, so it won’t surprise you to know that I think Veronique de Rugy of the Mercatus Center beat her three left-wing opponents (there was also a participant who served in the Bush Administration, but I don’t view his section as credible since he basically argued that stimulus spending is okay when GOPers are the ones wasting money).

Here’s some of what Veronique wrote.

…let’s look at the latest attempt to use government spending to jump start the economy: the American Recovery and Reinvestment Act. Three years after Congress passed that law, unemployment lingers over 9 percent, far above the promised 7.25 percent, and the economy remains weak. Clearly, the stimulus didn’t work as advertised. …The data show that stimulus money wasn’t targeted to those areas with the highest rate of unemployment. In fact, a majority of the spending was used to poach workers from existing jobs in firms where they might not be replaced. Finally, a review of historical stimulus efforts shows that temporary stimulus spending tends to linger. Two years after the initial stimulus, 95 percent of the new spending becomes permanent. …Research from Harvard Business School shows that federal spending in states causes local businesses to cut back rather than to grow. In other words, more government spending causes the private sector to shrink, the exact opposite of the intended result.

If anything, Veronique is too kind in her analysis. I would have pointed out that Keynesian stimulus didn’t work for Hoover and Roosevelt in the 1930s, Japan in the 1990s, or Bush in 2001 or 2008.

But how often do you find someone from France arguing for smaller government?

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I’ve previously blogged about the declining status of the United States, as measured by objective sources such as the Economic Freedom of the World Index and the World Economic Forum’s Global Competitiveness Report.

My attitude about these developments is to sarcastically say, “Thanks for nothing, Bush and Obama.”

But the real insult to injury is that America is dropping even according to indices created by left-wing groups.

The Tax Justice Network is a bunch of crazy Euro-socialists (no snarky comments about redundancy, please), and they specialize in seeking to undermine tax competition in order to make it easier for government to impose class-warfare taxes and expand the burden of government.

One of their projects in a “Financial Secrecy Index,” in which they identify the supposedly bad jurisdictions that have strong human rights policies on financial privacy. The TJN crowd hates privacy since it makes it difficult for greedy governments to track – and tax – flight capital.

Anyhow, these statists issued their first Index in 2009 and I’m proud to say the United States came in first place, presumably because of our pro-growth policies to attract foreign investment and the business-friendly incorporation laws in states such as Delaware and Nevada.

But now, as you can see, we’ve dropped to 5th place in the 2011 Index.

I confess, though, that I didn’t bother to read the accompanying report, so perhaps changes in methodology account for America’s decline in the rankings.

Regardless, it can’t be a positive sign that the United States is losing its status – particularly when we need more investment to counter the negative impact of the Bush-Obama policies.

One can only hope that there will be changes that lead to America claiming the top spot when the next Index is released.

By the way, for more information about the value of tax competition and financial privacy, click this link.

And here’s a link to a British politician, Dan Hannan, who understands what is at stake.

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