Why government spending is no economic stimulus

In my commentary today, I tackle the idea of “economic development” spending as a stimulus for economic growth, and contrast that with lower taxes. More detailed analysis of this data can be found here.

Further reading:

The Allegheny Institute wrote on the effect of Pennsylvania’s economic development spending earlier this year.

Brian Riedl’s recent backgrounder for the Heritage Foundation offers a synopsis of why government spending doesn’t “stimulate” the economy, and refers to several studies that more spending (including “stimulus” packages) undermine economic growth.

Tyler Cowen has a good editorial in the New York Times on the failure of the New Deal to end the Great Depression:

Our current downturn will end as well someday, and, as in the ’30s, the recovery will probably come for reasons that have little to do with most policy initiatives.