Thursday, April 9, 2009

News Flash: People Spend More When the Government Gives Them a Lot of Money

In an episode of Monty Python's Flying Circus several decades ago, the troupe poked fun at scientific researchers, with a sketch about the comparative intelligence of humans and penguins. A lab-coated researcher addressed the camera about his findings:

Here at the Institute Professor Charles Pasarell, Dr Peaches Bartkowicz and myself have been working on the theory originally postulated by the late Dr Kramer that the penguin is intrinsically more intelligent than the human being. . . .

If we increase the size of the penguin until it is the same height as the man and then compare the relative brain sizes, we now find that the penguin's brain is still smaller. But, and this is the point, it is larger than it was!

This sketch came to mind as I was reading an essay by Lawrence Reed (president of the Foundation for Economic Education) that takes apart a fatuous New York Times article. In the Times piece, the writer argued that Washington's stimulus package is likely to succeed, because the federal funds poured into New Orleans after hurricane Katrina resulted in an increase in construction there:

The Times story notes that the feds have dumped more than $50 billion in money on Louisiana since Hurricane Katrina. “Indicators suggest,” notes ace reporter Nossiter, that “dumping a large amount of reconstruction money into a confined space . . . has had a positive outcome.” It’s an “experiment” that he says bodes well for the flood of stimulus spending Washington is doling out to alleviate the nation’s financial woes.

Lo and behold, guess what has happened to construction in Louisiana? It’s up! (Apparently, not even government can spend $50 billion on construction without yielding some construction.) Nossiter quotes a professor who says this proves that “stimulus can have an effect.”

Apparently, an effect -- any effect -- is enough to make a stimulus worthwhile. What's important is that the penguin's brain is larger than it was!

Hat tip to Cafe Hayek.

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