"The Multiplier Effect" (highway, economy, financial, money)

[pnwmdk]

I want to scream every time I see this talked about.

It does not exist, at least not in the form that those who use it think it does.

Imagine you own two cows.

Imagine the government takes your cows, hires you to milk them, and distributes the milk to more people:

This is what liberals call "the multiplier effect", as in, more people have milk, but it's still the same amount of milk.

Imagine you're a capitalist. You own two cows.

You sell one cow, and buy a bull.

That's the real multiplier. Redistribution does not multiply. It dilutes.

Only investment in PRODUCTION multiplies. That's called "profit".

[djacques]

I'm no economist, but from the little I do know on the subject, it's not got anything to do with distribution, but with government spending on things that enable better productivity (i.e. building a public highway system). Those things are said to "pay for themselves" because such things as poor transportation inhibit productivity. Whether and to what extent various things do this, is outside my area of familiarity.

[pghquest]

Originally Posted by djacques

I'm no economist, but from the little I do know on the subject, it's not got anything to do with distribution, but with government spending on things that enable better productivity (i.e. building a public highway system). Those things are said to "pay for themselves" because such things as poor transportation inhibit productivity. Whether and to what extent various things do this, is outside my area of familiarity.

How does government giving out food stamps, enable better productivity than those who pay cash for food?

[djacques]

Originally Posted by pghquest

How does government giving out food stamps, enable better productivity than those who pay cash for food?

Because everyone doesn't have the cash.

I suppose the idea is that people will be more productive on a full stomach. Certainly, if hunger is so rampant and severe that it is inhibiting productivity, the smart thing to do is address that problem. Whether that is actually the case in the U.S. is debatable, but that doesn't nullify the principle.

[Think4Yourself]

It's real and a well know economic fact even if you don't like it.

Multiplier (economics) - Wikipedia, the free encyclopedia

http://en.wikipedia.org/wiki/Fiscal_multiplier

[borregokid]

I live in an HOA with lots of Republicans. They don't tax us but they do collect about $120 a month from each of the home owners. Me being a Democrat I am outraged at this tax..Guess what the HOA does with this money they hire gardners, maintenance men, book keeper and all sorts of outside contractors. I think it would have been much better if each of us had kept the money and stuffed our mattresses. The HOA's do this all over the place. Isnt that outrageous providing work for so many others?

[pknopp]

The wars are also a "mulitplier". Wars provide many jobs but I will argue the risks are not worth the pay. It keeps many in a job providing arms.

I will argue that it is still a bad thing. In the end this is a complicated subject. Building roads where there is a real need can be a good thing. Building roads just to build roads is not.

[pnwmdk]

Originally Posted by Think4Yourself

It's real and a well know economic fact even if you don't like it.

Multiplier (economics) - Wikipedia, the free encyclopedia

Fiscal multiplier - Wikipedia, the free encyclopedia

LOL!!!!

No, it is NOT a fact.

It is, to be blunt, utter hogwash.

It's like taking a cup of water out of the pond, tossing the water back in, and saying you've multiplied it, because it made waves.

[pnwmdk]

Originally Posted by borregokid

I live in an HOA with lots of Republicans. They don't tax us but they do collect about $120 a month from each of the home owners. Me being a Democrat I am outraged at this tax..Guess what the HOA does with this money they hire gardners, maintenance men, book keeper and all sorts of outside contractors. I think it would have been much better if each of us had kept the money and stuffed our mattresses. The HOA's do this all over the place. Isnt that outrageous providing work for so many others?

The only point you made, is that you're financially and economically illiterate.

[Hoonose]

Originally Posted by pghquest

How does government giving out food stamps, enable better productivity than those who pay cash for food?

This isn't the Multiplier Effect. The Multiplier Effect is essentially fractional reserve banking. And that concept has been refuted by modern money realities.

But you may be describing a major redistribution effect.
By and large our economy and businesses are run by consumer demand. Food Stamps simply create more demand. To the related businesses it doesn't matter cash or Stamp, and they produce more.

Now if you say that means the taxpaying consumers now have less to spend on other things, that has some merit. Except deficit spending creates new money and thus new and more demands beyond what the taxpayer gives up. And in a weak economy this can be much more important and easily net beneficial.