However, as long as income growth is largely dependent on public-sector spending, growth is just a matter of income being redistributed from net tax payers to tax receivers, which is largely why personal income continues to improve in spite of only very small gains in private-sector employment. Ultimately, however, economic “growth” that is driven by mere transfer payments, cannot be growth founded any any true creation of wealth.

Oil accidents are indeed horrible. But they are the very visible downside of a product with an enormous upside – an upside so important and ubiquitous that, ironically, it has become invisible. It is to us as water is to fish.

Government fiscal stimulus projects do not create any lasting economic benefit. While it is true that new roads and safe bridges benefit the economy, that is not the purpose of fiscal stimulus. The purpose of fiscal stimulus is to create “jobs” and stimulate consumer spending. Such stimulus is wasteful and never creates a viable economic enterprise which would continue after the money dries up. One must ask what the private economy would do with the $62 billion already spent through the American Recovery and Reinvestment Act ($202 billion contracts, grants and loans awarded to date). I urge anyone who believes the spending through ARRA would stimulate the economy to check out the various contracts and grants that are being awarded. The main web site is Recovery.gov. You will see that most are repairs to federal facilities or grants for federal programs. I recommend you hold your nose while doing this. They are outrageous wastes of your tax money and they will damage the ability of the economy to recover and will place a great burden on future generations to pay them. If government spending were the key to economic wealth then we should all be rich.

Democrats think that if they agree to spending cuts to reduce the deficit, then Republicans will take advantage of that by passing tax cuts. Meanwhile, Republicans think that if they agree to tax increases to reduce the deficit, then Democrats will take advantage of that by raising spending. The equilibrium strategy is for neither party to compromise on deficit reduction.

Herbert Stein, in his memoir Economic Bedtime Stories said that he had learned two things from experience about economic matters.
1. Economists know very little.
2. Non-economists know even less.

If you are a government employee, you have little reason to favor tax cuts: taxes pay your salary. As confiscatory taxation and over-regulation strangle private enterprise, the government is presented with endless excuses to increase public employment as a supposed response to the crisis in the private sector. It is a vicious cycle, but one that inevitably comes to an end. The goose stops laying eggs, or, as Margaret Thatcher put it, eventually you run out of other people’s money.

What people cannot seem to get their minds around about the subprime crisis is that the biggest losers were the big companies that took the credit risk on the loans, not the borrowers. I think that this reflects our deeply-ingrained folk Marxism, which divides the world into villain and victim classes. Our folk Marxism leads us to view low-income and minority home buyers as a victim class and to view corporations as a villain class. What’s wrong with that picture is that the villain class wound up incurring the majority of the losses (I was going to say that the villain class wound up taking the losses, but that would be overlooking the fact that taxpayers wound up holding the bag.)