T Nation

Harvard gets Common Sense?


#1

http://hbswk.hbs.edu/item/6420.html?wknews=052410

Q: These findings present something of a dilemma for public policymakers who believe that federal spending can stimulate private economic development. How would you suggest they approach the problem that federal dollars may actually cause private-sector retrenchment?

A: Our findings suggest that they should revisit their belief that federal spending can stimulate private economic development. It is important to note that our research ignores all costs associated with paying for the spending such as higher taxes or increased borrowing. From the perspective of the target state, the funds are essentially free, but clearly at the national level someone has to pay for stimulus spending. And in the absence of a positive private-sector response, it seems even more difficult to justify federal spending than otherwise.

Q: Although you didn't intend to answer this question with the research, what does your team suspect are some of the causes that could explain why companies retrench when federal dollars come into their neighborhoods?

A: Some of the dollars directly supplant private-sector activityĆ¢??they literally undertake projects the private sector was planning to do on its own. The Tennessee Valley Authority of 1933 is perhaps the most famous example of this.

Other dollars appear to indirectly crowd out private firms by hiring away employees and the like. For instance, our effects are strongest when unemployment is low and capacity utilization is high. But we suspect that a third and potentially quite strong effect is the uncertainty that is created by government involvement.


#2

What an enormous surprise!!!! Ya gotta love these eggheads.


#3

it's remarkable how long it takes academia to make reasonable inferences sometimes. the second question and answer is very similar to the crowding out effect in the market for loanable funds.


#4

BREAKING NEWS: BUSINESS SCHOOL ADVOCATES CONSERVATISM

zzzz tits or gtfo


#5

^^ I see TheFederalist's avatar has answered the call


#6

Studies like this are always one of two things:

  1. Wrong

  2. Confirm common sense

I think we know what this one falls into.


#7

I think this is pretty much right. What's even more idiotic sometimes are the responses to the ones that are common sense. After some very long very expensive study wherein it's determined that after spending astronomical sums of money to "fix" something the problem is worse that it was before they'll conclude that what we really need is even more astronomical spending.


#8

"Guys, we got into this mess by too much easy money and spending, but I've got a solution! We can just print and spend MORE money. It's foolproof!"


#9

Any idiot (read PWI poster) can make inferences or reasoned guesses. It's another thing to have evidence and proof.

Some of the toughest open problems in mathematics concern statements that appear intuitively obvious, and it's incredibly easy to convince yourself that they're true (and indeed, there might be masses of numerical data supporting them). These are problems that have defeated some of the greatest geniuses mankind has produced.


#10

Great, you have a lot of studies saying the opposite and some studies saying this...


#11

That's fabulous. Unfortunately the human condition and societal stability are not in any way analogous to ivory tower spawned mathematical masturbation. On the fortunate side, the greatest geniuses mankind has ever produced are not required to solve our problems. Some honest citizens of high character and common sense will do just fine. Their idiotic reasoned guesses are exactly what's been missing the past 40 or 50 years.


#12

Proof?

:slightly_smiling:


#13

Very cute =]


#14

Ah yes, because if you start accepting evidence and proof, you might end up believing all sorts of nonsense, like evolution.


#15

Yep. That's exactly what I said.