Thursday, December 5, 2013

Salvation through Government Spending

"In the early nineteen thirties, in the depth of the Great Depression, the theory became fashionable that the cause of all depressions was lack of purchasing power. The people just did not have enough money, and because of unwarranted pessimism they were refusing to spend enough even of what they had. The solution was therefore simple: at such a time the government should boldly increase its own spending, 'prime the pump,' and 'get things moving again.' Naive advocates of this theory assumed that more government spending was the whole answer. The more sophisticated advocates saw that the increased spending would not give people more purchasing power if the government kept the budget balanced and took it all away again in higher taxes. . .The trick, in other words, was deliberately to unbalance the budget—to run a deficit." - Henry Hazlitt, Man vs. The Welfare State, 1969, pp. 4-5
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Jean-Baptiste Alphonse Karr (1808-1890) is right when he said, "the more things change, the more they stay the same" (Les Guêpes, 1849).