Tuesday, February 26, 2013

The Heritage Foundation is not a think tank

Changing economists, Menzie Chinn at Econbrowser points out that  the Heritage Foundation doesn't really seem to understand economics all that well.

I thought this one was a real gem.
While budget deficits most certainly increase demand, the borrowing necessary to finance those deficits must dollar-for-dollar reduce demand. The net effect is more government debt but not more total demand and certainly not more jobs.
So the government borrows money to finance things. More often than not this means they or their contractors go and hire people and/or buy things from businesses. Yet this "economist" from Heritage says that every dollar the government must borrow for this magically vanishes from the economy. This is a constant claim of self-identified conservatives which is just as fact free an ideologically based claim as is the desire to have intelligent design in science classrooms. The Heritage Foundation is not a think tank if you consider thinking the ability to seek out and recognize facts. It is a belief system tank, no more.