 Let's go ahead and hop in So my topic this afternoon is errors business cycles and government stimulus So before I get too far I want to say like this topic I'm going to give a little bit of background of kind of how I started looking into this as I really think this topic specifically the first part about errors and business cycles is probably the first topic that I did any work on where I made a However very very small, but possibly positive contribution. It's the literature My first non-negative Contribution so anyway, so I'm really interested in this idea of errors But but how did this come about what started because I became very convinced of Austrian business cycle theory And that it is in fact true and descriptive of what happens in the economy Of course, not everybody agrees with us right and there are critics out there that try to criticize the theory along various lines all right, so for example, Paul Krugman, I likes to criticize our theory and It's very frustrating to read Paul Krugman criticizing the Austrian theory is it's obvious that he has not read much about it Or even bothered to look at professor Garrison's PowerPoints So like five minutes of those PowerPoints and most of those objections are gone Right because he clearly doesn't actually understand the theory The one that stands out to me is he makes this claim that all the Austrian business cycle theory Suggests that we should have this negative correlation between consumption and investment That's one of his favorite lines to pull out But of course you look at professor Garrison's PowerPoints The only time you'd see a negative correlation between consumption and investment is if our time preferences have changed So we're moving along the production possibility frontier toward either a faster slower longer and rate of growth, right? Of course once the growth happens now both consumption and investment are growing together at some rate or say a business cycle is starting Then we're moving outside of that. It's stable sustainable production possibility frontier with both consumption and investment growing And then when things turn they both fall So what Paul Krugman says is just flatly not true, which makes it remarkably difficult to respond to Just let's say look at the PowerPoints Anyway, or For example, there's also Friedman's plucking model And so Friedman as he kind of moved on in life thinking about the issue of business cycles He became convinced or the business cycles are not a boom and bust, but rather a bust in recovery Who in this obviously would move against the Austrian theory where the bust is the result of the boom rather than the other way around Well here Friedman isn't really understanding what's actually happening. He's thinking on too aggregate of a level And so it might be that during the boom We don't see this unusual extremely high rate of overall economic growth But we still do have actual physical limits how much we can grow, right? But we still have this misallocation of capital We're moving out of at those middle stages right being stretched in both directions toward higher consumption and also higher long-run investment But so we might not see this enormous growth In terms of things like GDP nonetheless we get this misallocation which will result in the collapse eventually And so he's overly aggregating and missing the actual story But the best criticism that I found For the Austrian business cycle theory that I thought was actually worth more of a response is the rational expectations for you Now here we have now the first benefit is the people that author these types of Criticisms tend to be more familiar right with the Austrian business cycle theory For example, there is one person fairly well-known economist. His name is Ludwig von Mises And he authored this Book theory of money and credit and what he suggests right that if people could actually come to expect what the effects would be of this monetary Injection then they would act in such a way as to offset the grand majority of the effects, right? Okay That suggests that maybe this is a pretty good criticism possibly Other people like Brian Kaplan also like to bring out this kind of thing now And we could very easily respond by saying well, maybe expectations just aren't rational Problem solved Three guys just an unrealistic assumption that you're throwing on here, but then Kaplan is very clever, right? He says but right right Austrians believe right that entrepreneurs are generally pretty good at what they do right and By our perspective what entrepreneurs do right is for see what demand is going to be for a good and plan Ahead of time for that demand so that we can actually produce the good on time for when people need it Right, so the idea of having good foresight is actually built into our view of how entrepreneurs work as they're using their judgment They're they're good at foresight in order to use their judgment. Well, if this is true, and then that suggests that maybe Entrepreneurs actually could possibly foresee what's going to happen Hmm, and if entrepreneurs are driving the production process now we have a problem We actually have to deal with right. It's not so easy as just saying expectations aren't rational Because in some places well, we may not see that strictly we come very close right to saying this Well, the first thing I want to point out is we're responding to this criticism is this idea that error Right that is making plans that don't actually work out having expectations that don't actually get fulfilled in the future This is not at all unique to the Austrian theory of the business cycle In fact, virtually every business cycle theory is built on this idea that there are errors being made By entrepreneurs as they're looking toward the future even as somebody like say John Maynard Keynes When you start looking into the way equilibrium works in his system when things start moving It's because our inventories are different than what our planned inventories were This suggests there was an error in entrepreneurs minds. We had some idea of what we wanted We wanted inventories to be they didn't end up there because we overestimated or underestimated what consumption was going to be And now we have to adjust production in order to get inventories where we would like them to be We're adjusting to the error. We made right or we also have say just kind of a standard This might be some kind of heresy to draw this graph here, but we'll do it Can't forget that a or if we look at the standard aggregate supply Agri-demand the way that is currently taught we have this nice long run aggregate supply curve in there I and suppose that something happens. See there's an increase in aggregate demand for some reason Just call it a shock. There we go. That's the reason that it increased. There's a shock Maybe people were more confident for no reason. Yeah, right. So we have this increase in aggregate demand, right? There we go. Now we get this boom right price levels start going up at the same time We get a boom in the economy in real GDP Of course, then we know the story is right the once people realize right prices have gone up And we start asking for higher levels of wages Well now the costs of production are increasing, right? As a result suppliers find it not worth actually worthwhile to produce anymore as their costs have gone up I say fall back right toward that long run aggregate supply point Now the observation of the new classicals was that if people have good foresight about what prices are going to do Right, then as aggregate demand is increasing right moving to the right aggregate supply will simultaneously right shift to the left So we don't actually get a boom in the economy whatsoever, right? So there must be something else going on, right? There's an air, right? The only reason we got this was that somehow prices rose without us realizing it and thinking to ask for higher wages along the way Now I would note here kind of the modern I would say inheritors of this view would be the real business cycle theorist, right? And the real business cycle theorist is probably one of the most ironically named Theories out there and I will admit I have certain sympathies for it Because I had a couple people that really advocate this view on my dissertation committee and and they let me pass Right, it's one of those ironically named views what they really are claiming right is that business cycles Aren't really real Rather there are these real changes that happen in the economy and it's not necessarily cyclical Just kind of we in our own minds. We like to see patterns Right, so all we had some kind of positive technology shocks now We're producing more and then there's some kind of negative technology shock and now we're producing less and we interpret this Right as being a boom followed by a bust and so on now Sometimes they do use things like the way that capital adjusts to these to get something more cyclical out of it Right, but still when you look at what is happening here What was it that started that this positive technology shock and this negative technology shock? Well, this is an error right this we had this shock come along that people did not foresee right There's this assumption right these shocks have some kind of distribution Distribution centers around zero or one depending on how you want to formulate this thing and we expect right things to be average Because on average things are average Of course, we never actually experience in any particular day the average day right so we're shocked every time Oh, wow things weren't actually average today. This is amazing, right? You know, I know that the average height for people is 510 so for for males in America But it's amazing how few people I meet that are actually 510 So weird It's okay So we're shocked all the time in these models and it's these shocks that are resulting in what we at least interpret as business cycle Okay, right so error being a part of business cycle theory is not unique to us But let's look a little bit more deeply into exactly how does error play out What is kind of the Austrian view of how errors play into explaining the business cycle and then we'll get into what? Implication does this have for things like if we want to stimulate the economy in the course of a recession? And so here when I look at the roles of the role of errors in business in our business cycle theory I do want to recommend a paper that I'm going to disagree with on some points or rather going to ignore on some points That's Gito Holtzman's general theory of error cycles In this paper, I read it when I read it. I was very very impressed Right, and then I went on and did my research totally ignoring what dr. Holtzman said, right Holtzman suggests right that we can break kind of the way that error is treated in Austrian Approaches into kind of two different ways, right? One is what he calls the consequentialist theory of error where we see that there are conditions that lead to error So error is a consequence of things and then there is Holtzman's theory Which I don't know that he would claim it existed before him right is the essentialist view of error Which is that if we really believe that economics should be based on an analysis of human action, right? Well, we never plan for error, right? So error is never a part of the end. We are shooting at G I really want to make an error is kind of his claim it rather It's just something we have to accept as a given, right? So it's just something that will show up occasionally So we should just take as given that errors will happen and then what we can do as economists is for example We can analyze institutions, right to see if they may be inherently erroneous That is that they will not possibly achieve the ends that they are shooting for and he lays out a few different Institutions that would apply to things like fiat money things like fractional reserve banking, right and so on Yeah, and so he can kind of suggest we shouldn't go down this consequentialist path So I'm going to go down this consequentialist path All right, and so in Austrian business cycle theory business cycles are really driven right by this cluster of errors They were all making right these errors in our investments We were investing at the wrong place in the production structure based on what is eventually going to make sense Now the reason this happens as professor Garrison explained is that when we have credit expansion And in effect our interest rates are lying to us So as Investors trying to decide what I want to invest in now interest rates are very low It makes sense for me to undertake very long structures of production Now normally this would be the case if savings are high savings are high interest rates fall With the credit expansion though savings aren't actually high in fact They're less than before exactly as professor Garrison described So people are trying to consume more at the same time as we're trying to invest more and this creates an issue So one way that we can think of this I really like Mises's parable here Regarding the home builder right so he kind of imagines So suppose you have a home builder building this housing development, right? And there's a certain stock of resources available and there's somebody in charge of keeping track of say how many bricks we have Right so the home builder goes to the person in charge of the brick inventory and says well How many bricks do we have and he gets some number right from them say okay? Well in that case I know that I can build say 10 houses right in this development and start building these 10 houses But then it's discovered right as they have built say the first story of each of these houses They're planning to be at least two stories tall they find out they actually don't have as many bricks as they thought This is gonna be an issue right it's physically we don't have the resources to finish what we were planning We are trying to do more than our sustainable level of resources would allow right so in that case. What do we have to do? We're gonna have to change our plans right we found this error We're gonna have to change our plans So some of these houses are not going to be able to be completed right some of them We might decide it's actually best just to scrap and try to save whatever bricks We can to move them towards some of the other houses to make sure those are two stories Maybe some of these are only going to be one story now right either way We see this error and it results in us adjusting our plans Now in as far as we try to move say some of the bricks from the houses that are already halfway built to the others We can expect there will be loss and it's very difficult to disassemble a brick house and not lose anything in the process I've not tried to do it myself, but I'm gonna trust this is the case right whenever I've seen buildings torn down We tend not to end up with very nice neat orderly piles of bricks It's it's very broken up very hard to use in the future This is kind of capturing the fact that we can't just easily move right capital from one stage to another Once we've started using it for something it becomes somewhat specific toward that particular use and that makes it very difficult To move towards something else. This is going to be a very important part of our story Okay, so this is where air comes in we're investing in the wrong things The things we're investing in though are somewhat specific Which means when these errors are revealed and we have to adjust we're going to lose something in the process All right So how are we going to explain these errors happening in light of the fact that generally entrepreneurs are pretty good at what they do So now we could just say that you know foresight is hard In particular foresight for business cycles is hard. It seems like macroeconomists who you think it's our job to predict business cycles Don't always do it very well Well, this is the case right it might be that somebody that say as a home builder They may be very good at predicting say on average what the demand for houses will be but that doesn't mean they can predict the overall State of the economy These are two different connected the different things right so maybe foresight is specific into a particular area Whereas macroeconomic foresight is very different. It's not actually the same skill right this is possible So that's one possibility another out there is that a Walter Bloch suggests that we could think of the low interest rates as an effect being bribes Right, so I may know that eventually this isn't going to work out But at the same time even if I know Austrian business cycle theory, I know that the boom does not immediately end right Okay, I might be convinced right to go along with this for a little while Because in effect by giving me a low interest that you're bribing me to participate in the boom Even if I know it's going to end I can hang on for a bit So it's me be a possibility another view out there which I Criticized is a Krillian Dempster. They suggested that there's this conflict between private and social incentives That is that in this low interest rate environment, even if I know for sure that there is this Boom that is going to end up collapsing, but I might go ahead and participate anyway despite the fact that that makes the boom happen Oh, the reason that I criticize them those who have heard my talk on game theory. If not, I'm sure it's on YouTube I go go look it up right is that if we all collectively know we can do better, right if we plan together and make different choices It seems like there's an incentive there to plan together and make different choices, right? So it's not immediately obvious to me why we wouldn't do that, right? So what I suggest and actually this was not at all original to me this particular idea Original as far as I can tell to back some day on the Evans That is that what monetary expansion does is it changes the quality of entrepreneurs by changing who is an entrepreneur? All right, so we could imagine all of our entrepreneurs say lining up in a line All right, so we have our best entrepreneurs on one side are worst at the end right and say they're they're getting bank loans All right, so they come to the bank if we review their application. Oh, yes This is a very good plan. It looks like it's going to succeed I we give this particular entrepreneur alone Next entrepreneur comes in and so on until we've run out of money and okay everybody at the end of the line doesn't get Any money right so the worst entrepreneurs are ruled out by the financial system making reasonably good choices about who to fund Know what happens though, and we have this credit expansion Well two things right first. I now have more money to hand out in loans So I can fund this somewhat lower quality, but still probably has a good chance We hope right types of on projects, but another thing happens That is those people that were the front of the line say I know how this works I know this investment very well may not pay off at some point things are going to collapse So I'm not going to stay in the line It's just abandoned the line right so if this line of people we've lost the people at the front right that have decided They would rather wait for the crash and pick things up there I and we've picked up people from the end So we've had we have this very systematic decline in the quality of the entrepreneur All right, so even if we believe that say foresight is foresight It's not just about foresight in your field, but foresight macroeconomically We still end up with errors here Precisely because good foresight is actually keeping some people out But not everybody has the same level of foresight if you want proof that there are people with bad foresight you can look at me I Have I've been investing in the stock market for a very long time. I first got started I think it's like seventh grade at the planet at the time. I was planning to go to law school and be a lawyer right Bad foresight, right? Okay. I can't even predict my own actions in the future. This is not good Right, so I was planning to go to law school. So I was investing in the stock market to pay for law school eventually And I did very very well at first the first stock that I bought was air-touch communications Which nobody here remembers because you were probably born after it got bought out by Vodafone Which are European friends may know right here in America? We know Vodafone not as Vodafone, but they're in partnership with Verizon, right? Yeah Yeah, this stock did very well. I sold it. I think I think it had roughly doubled I think it was roughly a year. I saw there's eighth grade me I have good foresight right move over Warren Buffett But it turns out what was actually happening was that it was just the mid to late 90s Right, and if you bought stock in a cell phone company odds were pretty good It was gonna get bought out by somebody and the stock was going to double me a year I got a little bit lucky, but stock was gonna double sometime within a couple years, right? So what happened then? Well, I went to college, right? You know young Warren Buffett majoring in economics, right? I decided to open in a merit rate account. This is great because now I can trade very cheaply This means I can use that wonderful force that I have really really fast and I can buy I Can buy these stocks and and watch them go bankrupt one after another It seemed like for a while that was the best predictor a stock would go bankrupt as I would buy it And I have literally one dollar and 19 cents in that account now. I Put in much more than that, right, but I keep the account, right so that I remind myself How good my foresight is right so if some people they're bad that have bad foresight They get sucked into this right and my biography is it is a case of that, okay? All right, so we can see have we have some idea then okay on average our entrepreneurs are pretty good at what they do Right and most of the time they have pretty good foresight. Maybe even pretty good at the macroeconomic foresight But when we start having that credit expansion We lose the good entrepreneurs we bring in worse entrepreneurs and we start making these errors As soon as you recognize that people are not all the same when it comes to foresight Suddenly we get this rational expectations claim right should fall to the wayside, right? We don't even need to say that nobody is rational We don't even need to say the normal rat the normal entrepreneurs aren't rational as long as there's a group out there That isn't that might possibly take their place. That's good enough All right, so let's move then and to thinking about right what kind of conclusions does this create for us when we Start thinking about government stimulus So let's talk about government stimulus is right here. I'm not thinking about say Janet Yellen when we have you know things collapsing right I'm not talking about her deciding to print more money. We've already talked about business cycles We know what the eventual consequence of that would be rather. I'm thinking about What seems to always happen? This happened to me. I was in graduate school at the time that the housing market collapsed here. There we go Right, so I was in graduate school at the time the housing market turned and started falling My wife was working at the library at the time And you know we went out with some of her coworkers and their family and I got into this discussion with one of her co-workers wives right and you know things are really bad and she turned she said oh you study economics What should we do and I said nothing? She said but we have to do something right now this is one of those cases where I've gotten someone interested in classical education Right, and there's this very useful term. I'm a Distinguo. I don't I'm pronouncing it very wrong because my Latin is horrific Right, but but it basically means let's define our terms. Right. What exactly do we mean there? We have to do something Okay, who is we? Right, I suspect we did not specifically include my office This is a really roundabout way to say somebody my wife's co-worker's wife I Suspect she did not actually include herself as someone that needs to actively do something right about the recession I don't think she was planning for example to go out and start a business and hire up all these unemployed people I don't think that was what she had in mind right we probably did not include her personally It seems though anytime people say this we have to do something They often mean the government in this kind of situation right so it's not we have to do something We the people right acting through Congress is which really just means Congress right right has to pass a law Right, right that is going to do something right. Well. What is something? Well, something generally means has to spend a lot of money right to hire up all these people that just lost their jobs Okay, so that that's really what we mean. We have to do something not we that's what they mean Right, we have to do something Congress has to pass a law the government has to sign and it's going to hire up a bunch of these people or lead to them being hired In order to create jobs right to hire these unemployed people Okay, so that's what we have in mind by government stimulus or we would call fiscal stimulus stimulus through spending So what we want this stimulus to look like right given what we know about the way Austrian capital theory works, right? well It would be really nice right if we could immediately start producing stuff that people would like to buy Which means would be really nice if we had a bunch of capital sitting around that wasn't being used Right, and then all we have to do right is hire some people right have them right start working We're going to produce stuff, right? I know kind of the story you often hear Say related in some way to the Keynesian cycle theory as well Why is it that we have all these unemployed people without shoes in this empty shoe factory? That's kind of the image we have in mind The solution is obvious right? Let's open this shoe factory's doors have them hire those people than the people have an income And they can buy shoes This is wonderful right and it ends up but we have good news as Austrians right for our government Since we believe that the cycle was caused by these misallocations of capital and once these errors are revealed We have to abandon some of this capital We have some empty shoe factories This sounds nice right? We're actually ready right for some stimulus to happen Except these aren't actually shoe factories right so I think the the much better Analogy is something like lead baseball factories Lead baseballs that that example is not original to me. I'm pretty sure I took that idea from Walter Block As you know what what uses a lead baseball right? Not very much right so I suspect there's a very low demand for these goods But but let's imagine that for example the government decided right that we needed to produce Lead baseballs right so they say start some kind of stimulus program for producing lead baseballs Right, so we start subsidizing the production of lead baseballs the government buys these things up Okay, well we can imagine then that even though it's not socially useful whatsoever. They're going to be entrepreneurs that say There's money to be made right the government will hand it to me. I'm gonna start producing lead baseballs I don't care if they sit in a government warehouse somewhere forever I I can spend this money as well as anything else right so we start producing lead baseballs I Would suggest that all of the all that misallocated Capital that we had during the boom is basically the equivalent of these lead baseball factories Now some of it we might be able to reallocate to something else, okay We'll grant that right but some of it is going to be very specific And if we want to bring that capital back into production We're going to have to have people produce those things right that we're planning to be produced now you actually hear Although maybe you didn't hear you may not have been paying attention at the time as ten years ago at this point When we hit up here, we have this is the housing prices We can see very clearly where the housing boom happened and collapsed right right around the time that the housing boom was Collapsing and the economy was falling apart Okay, we have to do something All right, so what should we do? Well, we really want to fund shovel ready projects That was the phrase right it was all it was also around this time Shortly thereafter that one of my favorite phrases from President Obama. I got spoken. We need to repair our crumbling roads and bridges right which as someone who has visited countries that are not as wealthy as the US calling our roads and bridges crumbling I've been on much worse But anyway, I might be that I just live in my serve the US. I don't know Right so That's what we're gonna do. We're going to look for shovel ready projects Right, that is where we've already made some investments right in the planning Right, so really all we need is the funding for these projects It just so happens that a lot of state governments have just sitting around waiting for funding things like infrastructure projects We want to do we want to build roads and bridges because if we don't who else will all right, so That's what we have ready to go. We've done the actually the earliest stages of production here would be the planning So we've done those early stages of production these plans are just sitting there right there shovel ready All we have to do is put the shovels in people's hands and we can start doing the excavation start doing the construction. We're good to go All right, so What do we do we fund shovel ready projects? This makes perfect sense. We're using the capital. It's already been accumulated But what does this end up doing economically? Well creates lots of jobs, right? Oh, this is wonderful In fact, it was estimated that these stimulus programs at the time we're going to create something like four million jobs Wow four million jobs now. I'm because I'm a human being Illion words start to get confusing Right when you talk to an average person, they don't actually understand the difference between a trillion and a million Right, but because I'm an economist. I am actually used to these differences Right, so four million I start comparing like four million people. I come from Ohio We have a population about 10 million. Wow, right four million people is basically the entire workforce of Ohio I that is supposed to be able to be employed thanks to the stimulus That's a lot of people. This feels like a pretty good program if we really have these people that need work Sounds good, right? Of course, then you start looking at the cost Well, it's 800 billion. Well, this doesn't sound that bad right 800. Illion divided by 4. Illion That's like 200 a piece 200,000 a piece Okay, and suddenly it feels a little bit different, right? I have my doubts right that these four million people are making two hundred thousand dollars each in these jobs If they were I'm in the wrong field Right So okay, so the first reality we have to recognize right is that The stimulus programmer this money that's going to create jobs is not actually all going to the people It's supposed to help right there's there's other things that have to be done because we recognize that if really all we did was take This 800 billion dollars and divide it by four million and hand 200,000 dollar checks right to these four million people were previously unemployed We're not going to produce anything, right? Okay, we could actually have a very similar program in terms of creating jobs and also expense if we paid them $200,000 a year to sit at home and watch YouTube cat videos This would have exactly right the same cost exactly the same effect on it Unemployment and actually perhaps be more reliable in the effect on unemployment But we kind of recognize this is gonna be wasteful because even politicians recognize that some things are obviously wasteful right, so as much as Keynes may have recommended that we should bury What is like pots of money or jars of money and have people go and dig them up as a stimulus program He didn't really mean that right he did suggest though that it would work as a stimulus program But we all recognize this this doesn't feel like a good use of resources, right? All right, so we want to go back right what are those plans we have for something that looks productive Right, so let's build the roads and bridges right then we get some real thing out of it Of course when we do this then that means we're having to divert resources right and not just the labor But also other resources toward building these roads and bridges right now These resources likely have other uses as certainly these workers would potentially have other uses So what are we doing then with this stimulus program? We're simply taking these projects right that have been proven right to be erroneous That's why we had the capital started and didn't finish it right. It was something we abandoned right So you have something that was proven to be erroneous and we want to make sure that gets finished right This may feel productive, but I doubt that is actually productive. I'm gonna tell a story here Which before I got tenure I would not have told but one of my favorite examples of waste On my campus. We have a windmill Now windmills are not inherently unproductive But when they were thinking about doing this the Dean of our campus right had about had our campus Evaluated right for various types of green energy that we could potentially produce right so maybe we should you know put up some Solar panels or something like that Anybody who is familiar with the climate in Northeast Ohio suggest solar panels may not be the best idea And we don't have enough Sun for that to really be productive probably or maybe right We are well suited for things like windmills so we're evaluating and this is a reasonable thing to do right And so he had it evaluated and he announced at a faculty meeting at the beginning of the school year He said we did this evaluation. We found out we are not a good location for a windmill Okay But solar panels might actually be okay There are actually ways to do this that it might be all right if we say use them say to shade cars in the parking Law then we get the benefit of the shade and also produce some electricity. Okay It doesn't sound horrible, right? So if you if you want to do this, that's fine I'll happily park under one of these solar panels, right? It doesn't bother me But no, I think we're gonna build a windmill All right in order to show that we are devoted right to sustainability Okay, no isn't isn't sustainability about using resources in a wise fashion To make sure we get value out of them that we're not just wasting resources All right, you tell me I should recycle so that paper doesn't end up right in a dump somewhere All right, it comes back into use right right So what what we're really doing here is building a dump on campus with a functioning windmill on it That's not producing much electricity, right? I actually are one of our secretaries Apparently somehow got hold of the data for how much electricity we've produced and I believe in the first year after the windmill was built It produced something like five dollars worth of electricity All right, this windmill cost I believe At least fifty thousand dollars to put up All right, fortunately the math there isn't hard to do. It's a point zero one percent rate of return right, which admittedly is what I'm getting on my savings account at the moment, but This is not a great rate of return for an investment if we have the fifty thousand dollars Maybe we should do something else with it, right? There might be better investments. I I will take part of it I'm happy to do that if we're going to waste this money It turns out though. We had a grant so I didn't matter. We can waste it. That's fine Okay, all right, so this would be one of those kinds of examples We're just taking resources that could clearly be used somewhere else So there are places where it does make sense to build windmills Instead we're using them here all right on our campus where it doesn't actually make sense similarly when we make these kind of stimulus payments to try to get these Industries going again. We want to make sure those lead baseball factories don't shut down so we can actually get lead baseballs out of the end Right, we're diverting resources away from things that could actually be produced productively All right, we have workers that now aren't having jobs producing things people actually want We have other forms of capital that could actually move out of these lead baseball factories into productive lines might be costly We're gonna lose something in the process right, but we don't lose everything by producing something. Nobody wants right So that's the idea behind this behind with the effect of government stimulus We are taking away From these productive lines moving it into unproductive lines right and in fact the Because we know Austrian capital theory. It's going to be most tempting to put these investments Right the stimulus investment in those lines that we are most sure are unproductive This feels like a problem Right, so then what we've just proven right is that if we're going to have effective stimulus right that is going to produce Something right we're going to put it in those lines that are least productive in terms of value