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Wednesday, February 09, 2011

Government's Job-Killing Broadband Stimulus

The federal government's "stimulus" efforts were supposed to be about boosting the economy and job creation. That's including broadband stimulus spending.

An article written by SBE Council chief economist Raymond J. Keating for the tells a different story.

The piece starts out:

First, there’s the fairy tale version of government stimulus spending.

This says that politicians and their appointees can spur the economy forward by spending more taxpayer dollars. Infrastructure spending tends to be a favorite, and in the twenty-first century, of course, infrastructure is not just roads and bridges, but also broadband Internet service.

Real-world economics tells a very different story.

For example, more resources spent on government, for whatever purpose, means fewer resources available for consumption and investment in the private sector. For good measure, while the private sector allocates resources according to their highest value as determined ultimately by consumers, government doles out dollars according to political incentives — i.e., special interest lobbying and support, political party and connections, and the impetus to expand power, budgets and staff.

According to the liberal fairy tale, government spending stimulates the economy, and we’re all better off. But reality tells us that we’re worse off as resources get allocated according to political preferences rather than private choice and competition, and the private sector is drained of resources and often directly undermined by this government spending.

That’s exactly what’s going on with so-called broadband stimulus spending, which is going to be the subject of a hearing on February 10th in the House Subcommittee on Communications and Technology...

Read the full piece here.

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