Economics 101

This pearl of economics wisdom is from Ross Gittins:

Economics 101, lesson 1: every dollar that’s spent by governments, businesses, consumers or the most despised welfare recipient helps to create jobs.

Does anything else more need to be said?

Hell yes.  Ross Gittins.  Please stop writing.  You are consistently wrong, and especially so with other peoples money.

GOVERNMENTS DO NOT CREATE JOBS.

Please don’t anyone say but (public sector) nurses, teachers and police.  Nonsense.  To get the funds to pay the nurses, teachers and police, governments take (by force at the point of a gun) money from the private sector and in doing so destroy other private sector jobs.

Governments can borrow to pay for these nurses, teachers and police.  But that is just taxing from tomorrow to pay for today.

GOVERNMENTS DO NOT CREATE JOBS.  Period.

So says Mr Gittins:

In high school economics it’s called “the circular flow of income”. They ought to write a song about it: the money goes round and round. That’s because what’s a cost to an employer is income to their employee. And when that employee spends part of their wage in another employer’s business, that cost to the employee becomes income to the other business. (I know it’s complicated, but stick with it.)

There is a reason we don’t take advice, especially financial and economic advice, from high school students.  They, like Gittens don’t know what they are talking about and have no judgement.

This “song”, like much of Gitten’s economic advice is utter nonsense.  Nonsense.

Economies grow through production and not consumption; and passing money back and forth is not even consumption.  It’s like that old joke about the 2 economists walking down the street, let’s just call them Paul Robin and John Maynard.

One day Robin and Maynard were out for their daily walk, they came across a recent canine dropping. 

The economists paused when John Maynard turned to Paul Robin and offered him $50,000 to taste the droppings.  Paul Robin considered the risks, rewards, cost and benefits and decided that he would do it.  So he tasted the droppings, money was exchanged and they keep walking.

Some 100 meters further down the road, the economists encountered another canine dropping.  This time, Paul Robin offered John Maynard $50,000 to taste the droppings.  John Maynard considered the risks, rewards, cost and benefits and decided that he would do it.  So he tasted the droppings, money was exchanged and they keep walking.

As they walked further, the economists paused.  John Maynard turned to Paul Robin and said – Paul, we have both just tasted dog droppings, but neither of us is any better off.  To which Paul Robin briskly replied, perhaps, but the economy has just grown by $100,000.

Mr Gittens.  Please just retire.  Or otherwise just eat your share of dog droppings to stimulate the economy.

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23 Responses to Economics 101

  1. stackja

    Ross is really Keynes, this is not news.

  2. Sunbird

    Gittens retiring won’t change anything because his over weight deputy Jessica Irvine (who currently specializes in feminist economics) will just take over and keep writing the same rubbish for the nine papers.

  3. Bruce

    Economics is called, “The Dismal Science” for a very good reason.

  4. Flip Headland

    Ah, what if they both like what they ate? What if it’s on par with French truffles to their taste?

  5. Botswana O'Hooligan

    Many economists would opine that the inhabitants of a small village who did each others washing for a fee and did no other work, would be fully employed in good economic circumstances.

  6. Flip Headland

    I think I’ve answered my own question … non-Keynesian economics doesn’t sit well with post modernism.

  7. Bronson

    Economics the modern day equivalent of medieval alchemy except in reverse turning gold into shit!

  8. Leo G

    Mr Gittens. Please just retire. Or otherwise just eat your share of dog droppings to stimulate the economy.

    Ross is more concerned with serving a dog’s breakfast to others.

  9. Somebody somewhere has to first Grow it, Raise it, Catch it or Dig it up.
    Everything else downstream rely on those.

  10. stackja

    Liberty Quote
    The elementary truth is that the Great Depression was produced by government mismanagement. It was not produced by the failure of private enterprise.

    — Milton Friedman

  11. stackja

    Liberty Quote
    Yes, sure, Labor has stimulated the Australian economy, in the same way that Ned Kelly used to stimulate the economy of Victoria.

    — Niall Ferguson

  12. BM

    Economics 101, lesson 2: every dollar that’s taken by governments to dole out to businesses, consumers or the most despised welfare recipient helps to destroy jobs.

    Even if what the Git says is true, it’s only one half of the ledger. He and his fellow travellers never like to apply the same concepts to taking money out of the economy, do they?

  13. I, Pencil

    Sure Ross, whatevs.

    To be fair this Git is as credible on this economy as Krugman is on his.

  14. Entropy

    It’s the assumption that a dollar of government money is as well,spent as a dollar of your own money that is also sad.

  15. Entropy

    If Gittens retired Jessica irvine, the globe economist, would have you wishing for him to come back. I could imagine she picked up her quals at some Daekind a University, but no, she is an Economics (social sciences) grad from Sydney uni majoring in political economy. I guess all the Chicago school acolytes must have been cleaned out by the Marxists years ago.

  16. Entropy

    The blonde economist.

  17. Destroyer D69

    In the beginning someone has to spend some income to buy the food so that the dog can supply the s##t.

  18. tgs

    The easiest way to debunk this sort of thinking is to take it to it’s logical extreme.

    If every $1 the government spends leads to increased economic activity via a multiplier effect then wouldn’t it be logical for the government to increase its spending as high as it could possibly go? Wouldn’t the economy be infinitely better off if the government borrowed and spent an infinite amount of money?

  19. John A

    Entropy #3473356, posted on June 3, 2020, at 2:18 pm

    If Gittens retired Jessica Irvine, the globe economist, would have you wishing for him to come back. I could imagine she picked up her quals at some Daekind a University, but no, she is an Economics (social sciences) grad from Sydney uni majoring in political economy. I guess all the Chicago school acolytes must have been cleaned out by the Marxists years ago.

    AKA Keynesianism. It’s all she knows, right?

  20. Tator

    tgs,
    thats already a belief in the MMT wankology.

  21. Squirrel

    “Economics 101, lesson 1: every dollar that’s spent by governments, businesses, consumers or the most despised welfare recipient helps to create jobs.”

    It’s really great that we have an unlimited supply of dollars, so we don’t have to worry about minor details like when and how we (or someone else on our behalf), might repay dollars that have been borrowed before they were spent, and we also don’t have to worry about whether some spending is so wasteful that it would be better if it were not done……..

    Ross’ salary is paid for by advertising, so it’s probably no great surprise that he thinks it’s a good idea for people to spend money, including on stuff that is advertised by the media outfit which pays him.

  22. Lee

    Okay, why do governments tax us then?
    After all, we’d all have more to spend if they didn’t!
    Some ideas are so idiotic, they could only have been thought up by a economist.

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