Student Of Liberty

3. TAXES.

A caterer in Paris has earned one hundred sous, I grant you, but you should grant me that a laborer in the provinces has failed to earn five francs.

Frédéric Bastiat
What Is Seen and What Is Not Seen

A hundred years before the theory from John Maynard Keynes became popular, Bastiat strips down the arguments from the advocates of stimulus. What I understand from a Keynesian stimulus policy through demand is that it would be applicable when a structural unemployment would allow to allocate ressources to this new artificial demand replacing the inexistant demand from a sclerotic economy.

Granted. The problem is that since I have started observing politicians waving their arms about and adopt budgetary deficits in order to generate economic growth (or reduce unemployment) unsuccessfully, the Keynesian postulate of under-employment does not exist (there is under-employment indeed but for systemic reasons rather than structural ones). So far as boosting demand consists in robbing Peter (as a taxpayer or as a bondholder, this is irrelevant) in order to pay Paul (salary of a civil servant or construction of a bridge to nowhere), there is a displacement of the demand but it does not change anything on a macroeconomic level while changing everything on a microeconomic level (Peter does not choose his spending anymore). One of the consequences, already forecast by Bastiat, is that the policy does not meet its target.

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