Keynesian arrogance

To defend their radical attack, pseudoconservatives suggest that shrinking the government will help the economy. This is a canard. It ignores that by definition, GDP = C + I + G + E, where C is consumption, I is investment, G is government consumption expenditures and gross investment, and E is net exports. Any reduction in G is an immediate reduction in GDP. Because the reduction will diminish demand for goods and services, the eventual multiplied effect may exceed the amount of the reduction. Any dismissed government employees are consumers sent into unemployment. As for secondary effects, declaring that a smaller government is better for the economy does not make it so. It seem unlikely that businesses will order new equipment, or that consumers will buy more groceries, if they hear that the enormous government is smaller than it once was.
--http://www.huffingtonpost.com/louis-m-guenin/why-voters-should-turn-fr_b_2005275.html

 This is what I mean by Keynesian arrogance.  Any government spending by this definition is good, and the more government spending is better, up the the limit of full employment.  But this ignores the fact that most government spending is either wasteful or even harmful.  If you hire one man to dig a hole and another man to fill it back in then you have created two jobs. If you shut down this jobs program, then the above author would complain that you are hurting the economy.

The G in the above equation refers to government deficit spending.  But deficit spending can occur only by stealing the same amount of value from holders of US dollars.  I've shown in a previous post, that each trillion dollars of deficit spending will cause inflation of about 5% (it adds to the total money supply of about $19 trillion).

So the Keynesians advocate stealing (which is what deficit spending is) from those who have money, and giving it to people who waste it.

A true economic recovery should not depend on deficit spending at all.  Adjustment to this honest economy will cause some short-term pain to the looters, but will result in long-term prosperity, whereas an ever-expanding government will eventually cause the whole system to collapse.