Why The Stimulus Isn't Working: Q & A with economist Richard McKenzie

It's been a year since Congress passed a stimulus bill that will eventually dole out $787 billion in taxpayer money to lucky recipients across the country.

In California, stimulus money has been used to pay the salaries of cops, provide rental assistance to residents of Santa Monica, and subsidize homeowners who weatherize their homes. Were those good investments?

The University of California at Irvine was awarded $42 million in stimulus money to fund different research projects and, in one case, $2 million to "stimulate student interest in mathematics and computer science." Was that a good use of scarce public dollars?

To learn more, Reason.tv's Paul Feine spoke with UC-Irvine economist Richard McKenzie who, a year ago, predicted that the stimulus package wouldn't work.

Richard McKenzie is the author of Why Popcorn Costs So Much at the Movies: And other Pricing Puzzles.

Shot by Paul Feine and Alex Manning; edited by Paul Feine.Approximately 7.30 minutes.

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[ThePenWolf]

Keynes will not be dead. Why? Because to fascists like Obama, his economic policies are effective in one area: Amassing Power. That's is all these people care about. The nation could collapse all around them, but now everyone is finally equal, with the exception of the ruling class, which liberals always fail to understand. In a free market, anyone can be their own king. In a socialist system, only government can be a king. And they do not share power.

[coffeebuzzz]

If I was broke and got a credit card to pay for consumer goods, would I be better off? NO.

I can't see how it is different for any Government to do this, all it does is ignore current problems and puts them off for another day.

[GoGreenCo]

/watch?v=ESFVnZZegXs

I guess it did after all.

[CletusGoldsteinberg]

@ThePenWolf Oh brother...so I guess Fascism and socialism are very similar. I'd hate to be drinking out the same punch bowl as you.

[CletusGoldsteinberg]

@ThePenWolf Calling Obama a fascist and criticizing liberals? And you call US elitists....

[Trimbler00]

@jm04206 This has been objectively proven. Tax cuts have a lower multiplier effect (about 80 cents per dollar in economic stimulus) than food stamps ($1.30 per dollar)

[Trimbler00]

@jm04206 If we redistribute wealth via health benefits and food stamps for the poor, we will create demand which will stimulate the economy. I understand your point that if we give tax breaks and give rich people more disposable income to reinvest back in their business we should stimulate the economy as well. But the former (redistribution of wealth) is more effective because the savings rate is higher for employers (high-income earners); that's why tax cuts yield less economic stimulus. (contd

[jm04206]

@Trimbler00 PHD level writing to be sure. Let me point something out you've probably never heard or thought of before. No one in the history of history has ever been employed by a poor person. So when you take money that rich people have you are always hurting the poor more than the right. A) rich people's spending provides income to businesses B) their savings invests in companies bonds/stocks for new products/plants and C) they directly employ individuals. Take their money, less for the poor

[Trimbler00]

I thinkt hat he's wrong because really the united states needs to give money to people becase they are really not doing well and this would be good for the economy because we have money just rich people havit who are kicking the pooor

[sarchisi]

I do not think this guy is in any way an economics professor. If he thinks 800 billion is going to turn this country around, it only goes to show how uninformed he is about the greatest collapse of an economic system where over 60% of it's people are unemployable. Think I'm wrong? Just wait and see. Unfortunately, the massive spending is only there temporarily to keep the heart pumping and not for recovery. And let's not start thinking this just happened within the last 2 years either.

[aviomaster]

More and more people moving from middle class to below poverty line , This will be the hammer which will break society.