Don Boudreaux has a really great – and short – letter on the utter failure of Keynesian thinking as espoused, specifically in this example, by NYU econ prof Nouriel Roubini.
I dare say a child could recognize the absurdity of the stimulate-and-succeed mentality that is plaguing the economic, political, and popular culture as embodied by Roubini’s thinking.
If there are too many children on the corner selling lemonade – and so some go out of business – does it make any sense to try to solve the problem by giving those out-of-business children money with which to continue trying to sell lemonade?
Alternatively, does it make any sense to give wind turbine manufacturers in New England stimulus funds as a way of supporting the struggling lemonade stand market when those lemonade stands are in Phoenix?
Stimulus is a great way to buy votes…and that’s about it (other than the debt that then has to be repaid by generations that don’t currently exist and cannot vote).