Smashing a Fallacy

Someone sent a message via my Facebook page in which he noted something a friend had told him:

Demand creates jobs. How do we increase demand? We provide assistance where needed to create economic activity where the private sector won’t. We INVEST it in our infrastructure instead of throwing it away in tax cuts. We provide assistance to those in need. Food stamps and Unemployment Compensation, which I am sure you oppose, are two of the best economic stimulants and are backed up by real data. Every dollar spent on food stamps generates about $1.51 in economic activity. Tax cuts are one of the worst returns, creating a net loss in return.

On the Peter Schiff Show tomorrow, which I’m hosting again, we’ll be taking this common string of fallacies apart piece by piece. Tune in! No subscription required.

Shane Killian

Hark! Do I hear the sound of breaking glass?
StandardConny

Yep, I hear the window breaking, too. Liberals like this are just amazing to me. They assume the money the government spends is magic money from heaven (unless a Republican is spending it).

Krugman always screws that up, for example. They just refuse to accept that governments only get money by taking it from citizens (or printing it, which is the same in the end) and then re-distributing it.I’d love to see the “real data” that backs up the idea that taxing someone and giving the money to someone else results in a greater economic stimulus than just letting the poor taxpayer keep and spend/invest his own damn money as he sees fit!
oldsmobile98

The real question isn’t “How can we increase demand?”, it’s “How can we increase demand for Hazlitt’s Economics in One Lesson?”
Anonymous

50% return on food stamps? Who would have thought economic growth was so easy? Too bad the Soviets didn’t think of that. Or maybe they did. Perhaps they “economic activity”‘d themselves into economic ruin.
Anonymous

You have to wonder, what will it take for people to realize that the Government is broke and the Treasury is bare!? A Banking/Currency collapse?

I watched/listened to Peter Schiff last night on the Gary Johnson Town
Hall Meeting via the Internet. He said something to the effect of…

If you believe you can make the National Debt better by first making it
worse then you believe you can drink your way to sobriety.
Mike

Yup, I do. Whenever you even go near a statist the sound of shattering glass becomes deafening. Naturally I always wear shoes around those people. With all the shattered glass around do you blame me?
Mike

Wouldn’t it be nice if it were that easy? Simply “throw money at it” and all is well?

Geez what fools.
StandardConny

Schiff really has it figured out. He’s one smart dude. I”m not so sure about Johnson, though. He doesn’t seem like a principled libertarian to me. Did you get a feel for him last night?
http://www.facebook.com/profile.php?id=23903272 Ryan Olson

never mind the cost to produce and distribute the dollar that spurred $1.51 of economic activity.
http://twitter.com/Libertarian_76 Bob

So we should pay more people not to work, in order to get the economy going? Brilliant.
Robert van

http://youtu.be/CZ-4gnNz0vc
“If I wanted America to fail”
http://www.facebook.com/profile.php?id=100000377917208 Marshall McBride

So much nonsense in so few words. At least he’s efficient…
Anonymous

I’d have to say that Gary Johnson is a good guy and the real deal.

I’d say that I agree with something like 98% of what Ron Paul stands for. Maybe even 100%.

I’m not exactly sure about my percentage with Ron Johnson, but it’s probably also very high. I’m just not as familiar with him as I am with Ron Paul.
David

One of the reasons I have a big problem with GDP statistics. Government spending cannot be valued by the market, and therefore it’s impossible to accurately say how much it is worth. All it does is simply transfer resources from one sector of the economy to another, reducing efficiency along the way. Yet, it’s one major reason why the fallacy of WWII prosperity lives on
tomshag

I got a quick question.
Let’s say Ron Paul wins the republican nomination. Would it be better if Gary Johnson ‘dropped out’ in order to keep the libertarians solidified behind Ron Paul, or would it be better for Ron Paul to use his position as one of the ‘two’ candidates to demand that Gary Johnson, and for that matter, any other third party candidates be given space at the podium, even if this may dilute his own share of the vote?
Timeszero Band

Maybe I’m thinking too simply or missing something, but I’ve never understood how so many Keynesians also consider themselves pro-environment. Wouldn’t spurring (unnecessary) production lead to waste (i.e. the enemy of the environment)? Doesn’t deadweight loss in economic inefficiency often mean pollution? I hate to be lazy and reference wikipedia, but I think the causes listed are telling: ”
Causes of deadweight loss can include monopoly pricing (in the case of artificial scarcity), externalities, taxes or subsidies, and binding price ceilings or floors.” I know externalities is a whole other topic, but you catch my drift.
Pmpockets

haha $1 in stamps = $1.51! haha. I never knew making stuff free was so enriching! Why is anyone paying for anything???
Rick

We need transcripts!!
http://www.facebook.com/matthew.swaringen Matthew Swaringen

Gary isn’t very good on foreign policy. On other things he’s ok, but he’s much more beltway and about libertarian “efficiencies” than making a moral case against the state.
purple_persuader

Meaning what? Meaning demand already exists, as Hazlitt explained. The need is not demand, but production.
http://www.TomWoods.com Tom Woods

It’s a joke; you don’t get it?
jaffi411

facepalm
purple_persuader

Well, I was hoping he would elaborate. I’m sure he knew whereof he speak, but if one hasn’t read Hazlitt, then one wouldn’t understand. I was not trying to correct him, but push him to say more next time.
Andy

long live the broken window fallacy…
Capn mike

Dude.

My very words.
More nonsense posing as knowledge.
But we mustn’t question our overlords. (to use TEW’s happy phrase)
Hugh Henry

Hey Tom, I’ve just come up with a new slogan I just know will tug the heartstrings of those guys down at the Catholic Justice Development and Peace Office:

” Give a man a fish, and you feed him for a day.
Get his government to repeal its anti-fishing laws, and his country will be exporting fish inside a month. “
purple_persuader

I’ll go with you there. Let’s say RP wins the nomination, why then would the vote be diluted? Let him push for Gary to have a spot at the podium, the LP has failed to ever really garner a significant amount of votes, and with RP getting the nomination, IMO most folks of a libertarian vote are going to vote RP to make sure that a statist is not re-elected.
gatefold

If there is a 50% return on Food Stamps then, naturally, we should double or even triple the # of food stamps we distribute. ? While we are at it, let’s mandate every state and municipality to build new sports stadiums…because there is lots of “real data” to support their positive stimulus on the local economies.
Ryan Murphy

This is a side note about unemployment insurance. Many years ago back in the 1800s I read that you could buy private policies. Of course this was long before the govt. got involved. What is funny about this was the book I read it in was one on the labor movement by Eric Foner, the communist. I’m pretty sure this is the father of the younger one most folks are familiar with.
Dkmallar

Does demand create jobs? I have a liberal friend who keeps saying this, and stuff similar to above. I would appreciate perspectives from folks here on how to respond to “demand creates jobs”. What’s the fallacy in that line of thinking?