The Forgotten Man

The chart to the left was taken from Murphy's blog on Mises.org which in turn was taken from Mankiw's blog. http://michaelscomments.wordpress.com/2009/09/04/august-unemployment-data/

It shows how the Obama economics team claimed the $725 billion TARP would reduce unemployment by stimulating the economy -- the bold blue line. Without this recovery, the economics team argued, we would have experienced the higher unemployment illustrated by the light blue line. In reality, we have experienced the red dots -- approaching a 10% unemployment rate. Has the government program stimulated the economy and led to a recovery? No. While it might provide temporary shots in the arm in particular sectors, such as the cash for clunkers did for the auto sector, it can not provide a sustained recovery. It is merely transferring spending from private individuals and businesses to the government. Moreover, it typically means a slower growth in the future if not an outright double dip or triple dip recession -- such as occurred in the 1930s. Instead of investment in machinery, we have expenditures on community organizers. Instead of private spending on whatever income earners want to spend on, we have spending on the Murtha Airport. Amity Schlaes' book discussed in the previous blog is a great read. Combined with Murphy's The Politically Incorrect Guide to the Depression, provides an alternative view of whether government policies helped get the economy out of the depression.