The effects of stimulus spending
From a 2001 article in the telegraph:
"The government's piling up all this debt, and that will be a real problem for our children," said his wife, Akemi, 37. "We have to save money, not just for ourselves, but for them."
"When everything was going right in the 1980s we didn't have to think about anything," said Mr Tamura. "Now I follow what the government is doing. I hate it that they're spending all this money on public works projects that we don't need."
The Japanese government's huge deficits encouraged people not to spend as they realised that unsustainable spending today will mean higher taxes tomorrow for either themselves or their children. Thus not only does stimulus spending get wasted pouring concrete into holes, it also encourages the very behaviour its architects are trying to avoid.
In the vast majority of cases stimulus spending is pure economic destruction. It discourages economic activity for fear of future tax expenses, crowds out the private sector debt markets and wastes resources in the construction of economically dubious infastructure that would never have been constructed under reasonable budget constraints given the poor cost/utility ratio.
Stimulus spending is embarrassingly stupid.
