> JG: > > Is it not true that assistance to states and localities will have the > three following primary effects? 1) Services that would have been cut > remain partially or wholly intact... the various state medicaid schemes, > for example. From a humanitarian/social justice point of view this is great > but in and of itself this is not stimulative, save for generating demand > for the inputs of public service contractors (firms embedded in the medical- > industrial complex, for example).
Yes it is stimulative. Preventing a spending cut or tax increase is stimulative, since the counterfactual is a negative impact. Pressure to balance the budget, substantially due to state law, encourages pro-cyclical actions. Sure some income received by state government workers would be saved, but that's second round in terms of the multiplier. The first round effect is mostly a boost to GDP. But even this generated demand does not > create new jobs, it keeps old jobs from being shed. 2) Public sector workers > who might have been permanently dismissed get to keep their employment. > Very nice, but again, are new jobs being added? 3) Public sector workers > facing pay cuts don't have to cough up give-backs. Hunky dory, but won't > the preserved income simply go toward paying down personal debt? Certainly > no new jobs are being incubated here. > > (Yeah, I know, my depiction is kinda crude...) > > > > > > > > ________________________________ > Windows Live™: Keep your life in sync. See how it works. > _______________________________________________ > pen-l mailing list > [email protected] > https://lists.csuchico.edu/mailman/listinfo/pen-l > > _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
