Hacker News new | ask | show | jobs
by mynameisvlad 1917 days ago
And stimulating local economies is a problem... why?
1 comments

All expenditures stimulate the economy equally, as measured by the "marked bills" theory. That means the only way to compare them is to evaluate opportunity costs. Spending a million bucks on constructing a big hole in the middle of nowhere, and performing an important infrastructure revitalization, will both put dollars in the hands of laborers, and thereby grocery stores and so on, at the same rate. That's why all of the useful parts of the discussion are on the specific, immediate consequences; the distant consequences are the same no matter what you do.
> the distant consequences are the same no matter what you do.

Three things

1) Spend the money on blackjack and hookers

2) Spend the money on a new bridge

3) Burn the money on a bonfire for giggles

Those three have very different "distant consequences"

1) Money ends up in the local economy

2) Money ends up in the local economy

3) Currency deflates, making all owners of currency richer, and as long as nobody expects deflation to continue, stimulates the economy.

In the case of (2) there is a new bridge which increases productivity in the long term

In the case of (1) there is a no bridge

You've already disproven your "All expenditures stimulate the economy equally" claim with your explanation of (3)