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Prof. Antony Davies: Does Stimulus Spending Work?

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Comment from : @CorreiaEmanuel-v6g

This video completely disproves the standard Keynesian economics you learn in college
Comment from : @trishasabrina7278

The most infuriating part of this 10 year old video was the understanding of the insane $46 Trillion debt We seem to add that much and more every year now
Comment from : @garyclark8034

making sense in 2023
Comment from : @shahzaibajmal1073

ABANDONED MALL"S JOBS LOST"S WAR"S KILLING THE STIMULUS WAS COVIC LAB''s HUSH MONEY AS THE UN SECURITY COUNCIL AND MALL COP''s AT HOMELAND FBI RCMP WITH COURT''s TOP JUDGES WATCHING THIS !
Comment from : @timothy627

I wish the criminal would do a lot less than doing more Sadly the criminal is in charge
Comment from : @johnmicheal3547

Sometimes I wonder if our elected officials are so misinformed they have no idea what they are doing to our economy, so greedy they don’t care what they are doing to our economy as they buy votes, or if the intent is to intentionally bring this nation to its knees for “the great reset”
Comment from : @garyclark8034

I do not quite understand The idea is that the goverment steps in in crisies in order to prevent a drop in gdpbrYour point was valid if the government was blind towards economic growth and just by chance sometimes spent more and sometimes less Actually that there is no correlation is what you should expect if you assume stimlus works Let me explain:brLet us just assume that stimulus does work We have a year of economic crisis and the economy is ecpected to drop The goverment issues stimulus packages thereby preventing the drop leading to a growth rate of 0 Now there is a good year for the economy The goverment spends less in order to pay pack its loans This harms economic growth (as we assume stimulus has an effect on growth) so the growth rate that would have been lets say 3 drops to 0 as goverment spending contracts Hence you could say there is no obvious correlation even though goverment spending influenced economic growth substantially in this example
Comment from : @maximiliankleineberg8382

Great vid!!
Comment from : @simonharrison9727

But mama said…
Comment from : @wesjones6370

You should make a graph of total federal spending not the growth in federal spending this is misleading
Comment from : @urvagrawal2358

Wish learn liberty would make more educational videos like this and less propoganda videos
Comment from : @jonathanbauer2988

How did President Clinton balance the budget and grow the economy in the 1990s? Was it the result of his policies, Congress’ policies or American citizens response to President Clinton’s leadership style? I don’t know, that’s why I ask
Comment from : @bradwilliams4921

Covid 19
Comment from : @juanr8591

It's only gotten worse, way, worse as of 2020
Comment from : @FKAAYA

It would be logical for government to borrow money and give it to poor in order to create demand in recession and pay off it debt in time of boom
Comment from : @PeterPan-ob8lo

No
Comment from : @MR-bh8ie

Isn't the set of points centered around (1, 8)? Yes, it doesn't tell us that there is a linear dependence between the two, but it tells us that slight growth in real federal spending is usually correlated with the economic growth 1yr later
Comment from : @Higgs000Boson

weak sauce
Comment from : @jSatch1

So, what should the government do with all that money?
Comment from : @onee

Wouldn't this be expected if they thought it would work? They only stimulate the economy when they expect it to be going down As a result, the economy stabilises, it's not supposed to have more growth What's more interesting is to contrast the time before and after stimulus
Comment from : @MoleDownunder

he looks like my teacher
Comment from : @SIashinatorX

I am a moderate Classical Liberal, but this simply illustrates a shocking ignorance of what Keynesian economic actually means Firstly, stimulus spending is not defined as an increase in government expenditure, but an increase in the deficit There is copious empirical evidence for fiscal multipliers when the correct data is looked at Secondly, there are more sophisticated arguments against fiscal stimulus (eg Ricardian equivalence, although it is not well corroborated empirically), but to say that borrowing undermines employment in an output gap is extremely misguided- the whole point in Keynesian economics is that stimulus is necessary when savings are lingering idly in the capital sphere and not feeding through into investments in the real economy
Comment from : @Samgurney88

This is bogus By that measure it means that there is also no evidence that gov spending lowers jobs
Comment from : @javierwagner4410

Wow, the graph is so misleading The video essentially confuses the causal relationship between government spending and growth It is not government spending that creates prosperity (ie high growth) It is prolonged economic downturn (ie low growth) that triggers high government spending to rescue the economy
Comment from : @trguofd

@Hithereman HellobrIn case you don't know, the US econ has gone into a recession/depression in every 5-8 years This is a economic cycle Even in the 1800s, 1900s, or gold standard, the econ has fallen into a recession or worse You can't stop it Since the last big recession occurred in 2008, it will happen again in 2015/2016 b/c it's human nature that consumers will start to stop spending at some point, resulting in a recession
Comment from : @veramann

Shouldn't there be a negative correlation between GDP growth and deficit spending? Imagine, for example, unemployment insurance payouts increased during an economic downturn Or (wildly speculating), imagine a world in which tax revenues tended to fall during a recession If stimulus had no effect, wouldn't those two factor create an binverse/b relationship between deficits and GDP growth? Doesn't the fact of a zero correlation lend weight to the idea that deficit spending bdoes/b stimulate a contracting economy?
Comment from : @LeviDanielBarnes

Wasn't WWII a massive "stimulus" that got us out of the depression?
Comment from : @scotchleaf

I can't help myself but say that the video this person make comes from a perspective of Neo-Classical (Pretty much opposite of Keynesian No government intervention Market and price mechanisms knows the best) Although i'm not saying he is wrong In my opinion a combination of Keneysian and Neo-Classical is the best way to manage an economy
Comment from : @darlhoney416

The massive gov't spending during World War 2 caused the US economy to come out of the Great Depression
Comment from : @veramann

Wait a second Am I looking at the same graph this dude is? Because, aside from the anecdotal 2 cases he was pointing out, the graph shows an extremely apparent TREND that increased spending concludes increased economic growthbrbrHe should also have a graph for 2 years and contrast that to 1 year Because it seems like there is a strong possibility that you wont see a large increase to production when judging from 1 year (namely the recess takes more than 1 year to happen, reversing that and bringing the economy back up isn't immediate)
Comment from : @garysanders6091

Stimulus spending is like private spending while both are regurgitated wages which only works if you want to make a minority rich and the majority poor It is capitalism at the root of its own failures to thrive This is another zombie capitalist utopian who still believes that society can be reduced to an economy and he honestly cannot tell one from the other
Comment from : @garymorrison4139

Notice how they showed the graph? They basically had to teach us how a graph works I think this is a way to reach the radical right's base Uneducated
Comment from : @brady157

That's a misrepresentation of KeynesianismbrIt argues that stimulus should be used in times of economic stagnation thereby making use of the resources sitting idle in the recessionbrThink about it The reason stimulus spending doesn't work under normal circumstances is because, seeing as the economy is working well at full capacity, there are no spare resources for the government to put back into use The government can't very well magic up new resources to be used to increase growth!brBy the same token when the economy stops functioning properly it's not like a whole load of resources have disappeared, it's not like all the pigs in south america have died! What government spending does is spin the wheels of the economy when they stick, not accelerate them when they're already spinning!
Comment from : @TheYopogo

money is a coward the majority of it goes to the safest place to multiply these places are different in a "bull" or "bear" market, and there is a long history of investment strategy to back that up if these guys could take other peoples money and just throw it at the economy to get it really rolling, and make themselves rich these bastards would have done it a long time ago there would be a long history of successful stimulus growth and gdp expansion there is a history of stimulus though, google "lost decade"
Comment from : @LouLovesLyrics

maybe unemployment is normal Has it ever been at less than 3? Ever?
Comment from : @BobanOrlovic

Stimulus Spending does not destroy jobs Thats a big statement LL made with little explain Yes Stimulus Spending can destroy jobs if it mean increase taxes or government going into the red but alone it doesn't
Comment from : @kalien9990

When he has the growth in spending, wouldn't it be more effective if he had the amount of spending? perhaps as a fraction of GDP? the growth could be negative one year, but it may have gone down from a really high amount, and the reverse could be true for a large increase from a small amount Am i missing something?
Comment from : @SamMcinturff

No it isn't Maybe in China, but not America
Comment from : @iheartwarheads

You should mention that the term positive is used in its statistics definition, meaning that when you value correlate in the same direction they are positive and when they correlate inversely they're negative
Comment from : @JLinker613

I would argue for a government that interacts with various markets And before you get all, "the government can't do anything right," I feel the need to point out that YOU were the one that held China up as a strong growing economy and I am the one that presented a critique of it
Comment from : @MrTortillasoup

Income taxes are neutral Income taxes ecourage leaving money in assets because gains in value are not taxed until the assets are sold So if you have the income you need, you are better off, at least from a tax perspective, not disposing your interest in an asset Investments are tax deductible in the form of depreciation, Section 179, and amortization So the tax code may not necessarily favor "saving" when you are just putting that money in a savings acct, but it does encourage investing
Comment from : @MrTortillasoup

There are lots of markets that have different interest rates There is the loaning of money between banks so that banks can maintain their reserve requirements There is the corporate bond market There is bank to individual borrowers There are payday lenders Which one of these markets are you looking at to come to the conclusion that the fed is undercutting interest rates?
Comment from : @MrTortillasoup

Pretty sure that I said saving/consumption rates should be determined by the situation Developing nations need high savings rates for infrastructure and technology investments China's growth was driven by investment Its high savings rate was incredibly necessary But now they have all this infrastructure that isn't really doing anything They have ghost towns and ghost ports and ghost malls If they don't shift to a consumption economy their system is going to collapse
Comment from : @MrTortillasoup

Both stock investments and savings accounts require consumption to make saving worthwhile for the savers
Comment from : @MrTortillasoup

Essentially, you're arguing that the building of roads is an unproductive activity I'm assuming you're Amish
Comment from : @charlesmahes9770

That was a very coherent point, said no one
Comment from : @charlesmahes9770

Yeah sure I'm not at all flagging for stimulus spending JUST saying that if you are pointing to empirical data and yelling "EVIDENCE!", you can't compare growth in federal spending and economic growth 1 year later For example stim spending is usually employed during recessions, to soften falls in growth I would have preferred that he used a comparison between similar economies with different stimulus policy
Comment from : @virregribbe

America and Europe aren't Austrian They are both primarily Keynesian The point is, Keynesian spending is not inherently good and can be bad
Comment from : @SniperofDoomFromKong

If Stimulus spending doesn't work, why has America and Europe (Austrian ) experiencing a decade-long recession, whilst Australia and China ( Keynesian) is the richest and fastest growing countries in the world
Comment from : @mshara1

It's 79 in the UK Besides the fact that there are differences in the two nations, which generally makes the US have a lower unemployment rate (flexibility of labour market), there are more measures of economic well being than employment And, to say that the UK didn't have stimulus packages is plain wrong, even if it was smaller than that in the US
Comment from : @TheBobblebob

"Unemployment remains stubbornly high at 9" Such a short-sighted comment, probably used as an anti-Obama message US unemployment is currently 76 Clearly the stimulus took a while to filter through from the government, to banks, to businesses, to order books, to more employees Conversely, the UK used no stimulus packages, it's just been cutting spending Unemployment rose to 8 in 2009 It's still 8 now Prima facie it looks like the US stimulus was the better idea
Comment from : @tintinecon3057

Also the ideas behind stimulus spending ignore the fact that in times in which confidence in the market is lower people are more likely to save their money so that stimulus will not be spent
Comment from : @alexmiller3719

I like your theories We're on the same page
Comment from : @jobsinphiladelphia

I'm not disputing that there are examples, just that he didn't do a good comparison We have to look at very similar economies that differ in stimulus policy
Comment from : @virregribbe

Great work, with time I hope to succeed you in production quality Keep up the good work and the quippy, compelling commentary
Comment from : @UncommonSenseUSA

Stimulus bought China merchandise I guess China is doing better now since the stimulus check we got
Comment from : @angellane3142

My thoughts exactly, the comparison should have been between one economy that uses stimulus packages during low growth and one that doesn't (do realize that there are no good control really) not between individual data points within a Keynesian economy You can still make a critique of Keynesian economics - but he doesn't do it justice
Comment from : @virregribbe

In bad times nobody has any money to spend except government, who can print as much money as it wants What about the drop in supply? Foiling companies will cause a shortage of everything If what you said was true, USA would have experienced a noticeable price drop in non-vital goods in the 2008 crisis, but no such thing happened
Comment from : @jackmcslay

I do not think I follow your logic When the economy is raging there will be lots of companies to choose from which will compete te give the best at a lower cost In an economic crisis, fewer companies will be available, and the ones that are left are likely to overprice to make up for losses caused by the recession and lack of competitors who would offer a better price
Comment from : @jackmcslay

5) Income mobility is a thing that exists If you have drive and talent you really can go from rags to riches Solve a problem, make something people want, etc poverty is not a life sentence, it can be overcome And again with the welfare, it does not make it any easier Why work hard when you can just sit and collect those checks?
Comment from : @imbored742

4) The poor in north america are better off than they've ever been Most own refrigerators, televisions, stovetops, etc Furthermore, they have access to a wide range of charity services such as food-banks, shelters, employment assistance, etc These things do far more to improve their lives than gov't checks In fact, the general trend is that private charity is more efficient and effective than gov't And it works without coercion If you wan't to help the disadvantaged, donate to a charity
Comment from : @imbored742

3) If you are working for a decent wage and still unable to maintain savings it's not society's fault As a society we've grown into a tendency to live beyond our means Cheap credit has got us all thinking we can buy whatever we want, heck, I've fallen for that trap myself If you can't make ends meet, cut costs or negotiate a raise Grow a spine and do some self-advocacy, or you'll just end up with the same problems again
Comment from : @imbored742

tax the rich and give to the poor, you know, the people who spend 100 of their money instead of parking it in a bank
Comment from : @MrRazzeldazzel88

These models only confirm Keynesian theories These theories are contested by other schools of economics To say that there is an increased output when the government spends is based upon the Keynesian model and therefore is not a universal "basic" concept of economics The only basic economic principles that exist today lie in the works of the 18th century and 19th century classical and Austrian economists (with the exception of a few modern works)
Comment from : @Harpsichord246

Yes, indeed there is an effect on the economy from government spending; but is a good effect? I would say no This video does not say there is no effect, it is saying there is a bad effect
Comment from : @Harpsichord246

If it's going directly to the people why not just not take it from the people in the first place? When you give people money from the government they're actually spending money to get less money due to the costs of administering such a stimulus Lower taxes make for better stimulus than "stimulus spending", the only difference is it's less satisfying than getting a shiny check from the gov't Less satisfying means lower approval ratings, means less job security for congress
Comment from : @imbored742

Again, not true You are essentially contradicting the arguments made in this video Spending is not a bringer of prosperity nor a stabilizer I only moves money around How could Keynesian economics not apply to growth as well? If it is meant to reduce the impact of a downturn, why could it not increase the effects of an upturn?
Comment from : @Harpsichord246

Even if that was the case, the money would have to be ripped from the hands of other people in order to accomplish this
Comment from : @Harpsichord246

That is not necessarily true The Keynesian model is applied to growth and maintenance of growth This idea that it is only for minimization of damage is cover for the fact that you cannot prove that government spending stimulates the economy By saying it is for minimizing damage you are essentially protected in your argument as no one can prove that things would have been worse if we had not implemented these stimulus policies
Comment from : @Harpsichord246

The belief that government should not be distrusted exploded during Nixon's water gate scandal You know that exactly same group of people is trying to persuade people to have a smaller government since Reagen? Government is our tool Just do not use hammer on your own toe
Comment from : @EternalHappElements

He probably means the debtors as opposed to the creditors
Comment from : @DMAN123223

banks are run by people and millions of people work at them money going directlly to people? which people?
Comment from : @bat353

If the graph here uses the same data as in the slides, there's an issue I can see The data is spending based on a of GDP If GDP decreases, it would show as the government spending more even if there is no nominal change If GDP increases, spending would look decreased though there is no nominal change If stimulus spending did have a positive effect, the above effect could smooth out the data until there is no correlation, as featured in this video
Comment from : @DMAN123223

This is not entirely true, I understand what your saying, but this statement alone does not always lead to a 1-1 relationship Below is a more precise explanation There is a loss of the purchasing power of money when the money supply, in circulation, increases faster than the production of goods & services being produced Also, Money Supply does not just comprise of printed money [M0] The Money Multiplier under a fractional-reserve system affects the rate at which the Money Supply increases
Comment from : @CptUSMC

notice how he says federal spending not state spending not local spending
Comment from : @thetbag

Two practical problems arise: (1) Governments don't shut off the stimulus when the economy returns to expansion, so the stimulus becomes a sequence of permanent spending increases (2) Because of delays in collecting and analyzing information, and delays in stimulus spending taking effect, in practice (at least for the past 50 years), the government has been accelerating spending during expansions and decelerating during recessions -- the exact opposite of what it professes to be doing
Comment from : @AntonyDavies

Fire department is primarily voluntary, the defense budget is the opposite of concise and efficient, and the police is shifting to an oppressive policy
Comment from : @LeMeccerino