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From: renner@uiucdcs.UUCP
Newsgroups: net.politics
Subject: Re: YOU EARNED IT??? - (nf)
Message-ID: <29200125@uiucdcs.UUCP>
Date: Tue, 10-Apr-84 20:25:00 EST
Article-I.D.: uiucdcs.29200125
Posted: Tue Apr 10 20:25:00 1984
Date-Received: Thu, 12-Apr-84 05:09:11 EST
References: <1527@mit-eddi.UUCP>
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Nf-ID: #R:mit-eddi:-152700:uiucdcs:29200125:000:1386
Nf-From: uiucdcs!renner    Apr 10 19:25:00 1984

#R:mit-eddi:-152700:uiucdcs:29200125:000:1386
uiucdcs!renner    Apr 10 19:25:00 1984

   /**** uiucdcs:net.politics / iuvax!notes /  6:42 pm  Apr  9, 1984 ****/
>  	Your argument that government does not stimulate the economy
>  by giving money to people (Financial Aid, Unemployment Insurance, etc.)
>  is incorrect.  By taking idle money from the wealthy (money invested in
>  some form of savings) which creates no aggregate demand and giving it
>  to people who will (because of lack of money) need to spend it on goods
>  and services, you will increase aggregate demand and the money will
>  be cycled back to the public in the form of goods payed for.  This line
>  of reasoning is another virtue of taxing the wealthy more heavily: to
>  put idle money to use.

Don't they teach basic macroeconomics to undergraduates any more?  If they
do, then where does the myth that increased consumer demand is beneficial to
the economy come from?  It is capital investment -- what Mr. Conley sees as
"idle money" -- that strengthens the economy, by increasing the capacity to
produce goods.  Government income transfer programs take money from those who
produce and give it to those who do not, thereby increasing demand without
increasing production.  Welfare may be a fine humanitarian thing -- though if
it is so fine, why the need to force people to contribute? -- but as an
economic policy it is basically counterproductive.

Scott Renner
{ihnp4,pur-ee}!uiucdcs!renner