Kevin Murphy is Right

Megan McArdle points us to this fascinating panel at the U of Chicago devoted to evaluating Obama’s stimulus plan. Kevin Murphy’s remarks  (between 17:20 and 31:37 in the video) wonderfully elucidate the terms of the debate, and helps me better grasp exactly why the stimulus is sure to be a bust. If you agree with Murphy, as I do, that the efficiency of government spending is generally low, that the value of activating currently idle resources is low (the “multiplier”), and that the deadweight loss from the future tax increases required to finance the stimulus spending is high, then the whole thing looks like a pretty sure loser.

Author: Will Wilkinson

Vice President for Research at the Niskanen Center