Money Management, Financial Markets

Those who receive the Mercatus Center’s weekly email update may have already clicked to get a preview of the Keynes v. Hayek rap video by Russ Roberts. In a related NYT interview on Economix blog, Russ Roberts defends the Hayekian position against Lord Robert Skidelsky who defends Keynesian countercyclial stimulus spending. Around the 6:00 mark, when asked whether stimulus spending is necessary to reach full employment after a negative shock, Roberts invokes political inefficiency.

Roberts: Well unfortunately, what Keynes has done is he has given solace to politicians who want to spend money wastefully on special interests rather than on things that would help us.

Interviewer: Is that completely unfair?

Skidelsky: No, not completely unfair. There’s a lot of waste. But the waste doesn’t matter. There’s more waste if you have heavier unemployment. See you’re balancing a smaller waste against a larger waste. There’s no ideal way out of the hole.

In a new Mercatus Center working paper called “Stimulus Facts,” Veronique de Rugy and David Brito analyze the Economic Recovery Act’s FY 09 Q4 allocations by congressional district.

On average, Democratic districts received 1.6 times more awards than Republican ones…. Democratic districts also received 1.89 times more stimulus dollars than Republican districts. The average dollars awarded per Republican district is $232,047,857, while the average dollars awarded per Democratic district is $439,200,100. In total, Democratic districts received 73.47 percent of the total stimulus funds awarded.

And as for comparative waste?

A total of 56,399 contracts and grants totaling $157,028,362,536 were awarded in this first quarter for which Recovery.gov reports are available. The number of jobs claimed as created or saved is 638,826.54—an average of $245,807.51 per job.