Robin Hood Government Isn’t an Economic Stimulus

Bryant University Assistant Professor of Economics Edinaldo Tebaldi steps around an important consideration with the following:

During recessions, the government often acts as a “buffer” to help revive the economy, Tebaldi said, by increasing spending to generate jobs and boost economic activity. But state government is actually “doing the opposite” by cutting personnel and programs in order to close a budget deficit, he said.
“So rather than operating as a buffer to help the economy get out of the recession faster,” Tebaldi said, “they’re actually contributing to make the recession even more severe.”

This may be true in situations in which the government has been tightly controlled and limited prior to the economic downturn or in which the private sector is, for some reason, not maximizing its opportunity potential. But Rhode Island has been operating under a de facto deficit for years, plugging the holes with one-time fixes, and its productive citizens have been fleeing for lack of opportunity.
Expanding government, at this time, by borrowing or increasing taxes would “buffer” the private sector right out of the state. Public sector employees, and those who rely on government for funding do not create wealth, private sector innovators and go-getters do. Rhode Island state government can only help its cause by encouraging people to move from the former group to the latter.

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Patrick
Patrick
12 years ago

To quote Chris Farley: “Remember that one time, when we had tobacco settlement money? Yeah, that was awesome!”

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