How to Simulate Stimulation

Historians have noticed something interesting about the Great Depression: The bulk of Roosevelt’s New Deal money and effort wasn’t directed at the hardest-​hit states. It was directed at swing states.

FDR’s New Deal could thus be seen as a vast re-​election drive.

Economist Veronique de Rugy, of the Mercatus Center, recently testified before Congress about her studies of recent stimulus spending. She noticed that Democratic districts received bigger bucks than did Republican ones. Coincidence?

Nick Gillespie wrote about this on Reason magazine’s blog, Hit and Run. And, nestled in the comments section, is testimony from someone in the federal government about how stimulus money is actually spent. The government does not look for especially hard-​hit areas. It looks for prospect projects that have been designed and engineered and ready to be funded to reach completion quickly.

This is useful to know. If believed, I’ll leave to you the explanation why Democratic Districts might be further along this pork-​project train than Republican Districts. But it’s worth noting that this method does not really show any targeted expertise on the part of the federal government. It’s just a spend-​and-​spend-​quickly program. Throw out enough dollars and hope something “sticks” … to produce real growth.

You see, this is nothing like how markets for capital projects work in the private sphere. And it’s nothing like a good way of jump-​starting a wounded market economy.

It’s just government-mismanagement-as-usual.

This is Common Sense. I’m Paul Jacob.