Adam notes

Also, if he’s going to praise all the jobs created by it, he should probably point out that he believes the project on net is going to destroy jobs. If that’s logically consistent enough to please his constituents, then great. But to omit those points is to imply more support for the project than is accurate. Did the congressmen make those disclaimers?

More importantly the suggestion is that stimulus projects will destroy more productive private sector jobs through crowding out. More government sector = less private sector.

We have to ask how will that crowding out take place?

Perhaps, through the bond market. However, the cost of short term government debt is essentially zero and long term debt is at record lows. This of course is what encourages stimulus advocates.

Moreover, many of the same congressman were in favor of tax cuts as stimulus which should have the same bond market effects as government spending.

We have to think they mean that private sector jobs will be crowded out through the real goods market. That market is likely to have its most intense effect locally. Sure spending on government construction projects in Portland, Oregon will raise the input prices that builders face in Louisville, Kentucky.

However, spending on government construction in Louisville, Kentucky is going to raise input prices in Louisville, Kentucky by a whole lot more.

If you were consistent you would want the stimulus money to be spent as far away from your state as possible so as to have the minimum economic dislocation.

Ultimately, that’s my problem with a lot of the Anti-Keynesian rhetoric. Even the people who are spouting it, for the most part, don’t believe it. Most people actually think its better to have a government spending project in their town as opposed to someone else’s town.

Now, it could be that almost everyone is wrong. Fine. But, you shouldn’t be attacking policy on grounds that you, yourself don’t believe.

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