So if we wasted even more money then it would have been a success ?
Targeted stimulus was what was needed.
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Well said. It’s about what the money is used for as much as the money itself.
If all spending were equal, we could have saved the world by printing $10 trillion and burning it in a garbage barrel.
the gobment would call that a buy back program…
???
You might want to rethink that example. Money burnt isn’t money spent – it never enters the economy.
If you paid 100 million people $10,000 each to burn their underwear in a garbage barrel, then there would be $10 trillion making its way into the economy as the 100 million people began to spend their “earnings”.
Once the money enters the economy, the companies and employees receiving the dollars can’t tell how any particular dollar was earned.
That doesn’t mean the initial government conduit, or spending doesn’t matter, but it does mean that stimulus spending has economic benefits that are independent of the initial spending.
The beauty of infrastructure spending is that it pretty much automatically creates a long-lasting positive impact on top of the short-term effects. However, it is hard to push a lot of money into the economy very quickly through any given sector, and infrastructure is especially hard to ramp up quickly.
Total government “stimulus” in the US ended some time in 2010 (or even in 2009, according to some sources), when government spending became a drag on GDP.
We are already getting a small taste of austerity, in that sense.
Money was burnt when it was given to Solyndra. It was sunburnt to ashes.
In that example, Solyndra is the underwear that was burnt.
The cash went to the company’s employees and suppliers, who presumably saved/spent/invested it.
There was no value added, so the overall wealth effect was negative.
You might as well have handed out checks at the street corner… the effect would have been equally ephemeral.
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I’m inclined to agree, Jake. None of that is in contradiction to what I said.
I pointed out that Solyndra wasn’t burnt cash – the cash entered the economy.
Taxpayers and investors took a loss.
As you are well aware, the government often subsidizes losing investments, by letting taxpayers (human and otherwise) net gains against losses.
It isn’t necessarily true that there would be a negative overall wealth effect, as Solyndra could have created knowledge and equipment that another venture could later use to great advantage.
I don’t believe they did, though. The original DOE decision not to offer a loan guarantee was the correct decision, IMO.
Solyndra’s technology suffered from multiple-personality disorder. Thin-film PV technology is for fabricating on flat surfaces by the millions of square feet. The idea of creating cylindrical elements in a complicated and expensive tube-in-tube structure was destined to be a commercial loser. It was a pretty cool expression of thin-film PV technology. Unfortunately, thin-film PV is meant to be good enough and cheap enough, not cool.