Tom Woods, author of the new book Meltdown (Regnery Publishing) contends here that the Obama economic program is tooth fairy economics. He refutes the Keynesian argument that during a recession, we must have increased government spending to put “idle resources” back to work.
It may put some back to work, but on projects chosen through politics, always a means of getting little benefit for a lot of cost. If politicians allow competition in the free market to work, fairly soon all those idle resources are put back to work where they can be used profitably. That’s exactly what happened the last time we have a severe recession and the federal government responded properly — by cutting taxes and spending. That was in 1921 under President Harding.
