What's Wrong With Spending Stimulus Cash On Mozzarella Cheese?

drudge stimulus

As only he can do, Matt Drudge set off a mini scandal today, pointing to some questionable stimulus expenditures, like $1.5 million for mozzarella cheese and $16.8 million for canned pork. Drudge’s little hyperlinks made such big waves this morning, that the Agriculture Secretary put out a press release explaining what the money went to.

Anyone who pays even the slightest attention to government spending and stimulus efforts won’t be particularly surprised by any of this, and the money isn’t even that much.

Plus, as liberal political pundit Peter Feld points out, the point is just to get cash “into the economy,” and it doesn’t matter how it gets there.

Unfortunately, this is flat-out wrong, and it exposes a deep flaw in the orthodox Keynesian idea that the job of the government is to just get “demand” higher when it goes into a lull.

Fostering a healthy economy is not about stuffing it up with cash like a Christmas turkey, or just getting people to buy “stuff.” It’s about facilitating actually productive trade.

So for example, we doubt that Feld would think it’d be a good idea to spend money on shoddy houses in the middle of California’s inland empire, even though technically this would constitute getting money into the economy. And we think many would agree that we don’t need new, gigantic highway projects stretching deep into the exurbs, and that rail projects would be better. Both would get money into the economy, but one might be good for the economy, and the other might keep us mired deep in the weeds. The stuff we spend our money on actually matters.

Remember, it’s easy enough to get cash into people’s hands. You can just print it, or repeal the payroll tax or extend unemployment benefits or whatever you want. If only cash=wealth, it’d be super simple. But the actual challenge is in making sure you have a scenario in which people can create real wealth for themselves, and you’re not going to get there if you insist that “demand” is this big pile of gloop (or mozzarella cheese) that you sometimes just need to make more of.

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