Friday, February 5, 2010

Why road building fails to stimulate.

It is an article of faith among Keynesians (i. e. democratic Socialists) that building "infrastructure" such as roads and bridges will stimulate the economy. Yet, experience tells us that it is not happening. The reason why not is simple. Money for these projects is taken from high earners who know best how to invest productively. Roads and bridges are not necessary for economic growth (except in the long run), because the country already has them. In a sense, roads do not produce income, they are in fact the cost of producing income in the long run. The best way to stimulate the economy in the short run is to allow those best at producing income (the high earners) to keep more of their income so they can use it to produce more.

The Socialists demagogue this as "trickle down economics" and "tax cuts for the rich," but these methods work every time they are tried.

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