07 February 2007

How Cutting Government Spending Can Boost the Economy

My wife teaches 3rd grade at San Diego City Schools. Her kids get P.E. once a week. Why do I mention it? Because this is a warning of how cuts in government spending can stimulate the economy - but not in necessarily positive ways.

Layoff 80% of your PE teachers and now schedule PE for your kids only once a week instead of once a day. So, how does this stimulate the economy? Stay with me to watch the dominoes fall.

Kids who are less active gain weight. Some even become obese. This has health consequences, triggering demand for weight-loss products, treatment for childhood diabetes, new wardrobe, and joint pains and injuries associated with the stress of being overweight. Dealing with all these problems involves cost - what politicians call economic activity.

Measures for economic growth are both less objective and less obviously a positive thing than many would have you believe. Economic growth that comes about as the result of increased spending on security equipment, health complications, or thrash metal concert tickets is evidence that economic growth needn't acttually correlate with improvements in quality of life.

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