Kubez wrote:
Familiar with "Economics In One Lesson"?
Written by Henry Hazlitt. Classic. The example he uses is the claim that
breaking a window is "good" for the economy because repairing the window
creates economic activity (the manufacture of the replacement glass as
well as the job of the individual who performs the repair).

Hazlitt easily bursts that bubble by demonstrating that no value has been
added to the society through such an exercise - the window is the same as
it was before, yet resources (the glass and the repairman) have been
expended, therefore wasted.


Agreed, to a large extent (more below)


Really? You'd think that any random added expenditure would have at
least a random chance of increasing velocity. And any increase in buying
adds to aggregate demand, at least incrementally.

Kubez wrote:
But as explained above, spending money just to spend money adds no VALUE.

True, but VALUE isn't the same as demand. Because you need a new window,
demand for windows has gone up. Because you gave the window-fixer some
money that he wouldn't have otherwise had, he can now go out and buy
something with it that he otherwise would not have, and a third nebulous
party has more money to spend, etc etc.

This is how velocity of money works. It profoundly affects the money
supply, which of course profoundly affects supply & demand. Working out
the math of income velocity & supply velocity is what won Milton
Friedman the Nobel Prize.


Think tax accountants: billions of dollars spent and millions of hours
logged, but no VALUE in the form of a tangible good (a pencil, a
grapefruit, a sewing machine) or intangible benefit (relaxation from a
massage, enjoyment from a musician's performance) is added to society.

I disagree strongly. There is TANGIBLE benefit to both individuals and
to society at large. The individual gains the service of knowing that
his taxes are paid, of quantifying his income & securely identifying
it's sources, and even getting some fiscal advice from the accountant.
The benefit to society is greater assurance that the tax burden is being
distributed in a lawful way (and a way presumably approved by that society).

You have a very narrow idea of what constitutes benefit. Haven't you
heard that we live in the Information Age? Knowledge is power, and data
is wealth.


President Bush keeps saying "it's your money" so instead of this complex
plan, why doesn't he simply let us keep more of it and do with it what
we think best?


Ask the AARP or any other of a thousand groups who want more spending and
more taxes and more spending and more taxes.

Sure. Bread and circuses... a big part of the problem is that nobody
ever goes to Congress & demands that they spend LESS money on problem X.
However, I'm addressing the specific things that President Bush has done
to make the situation worse.

DSK