Unexpected Economics

Every month we hear "government economists" announce that unemployment numbers have "unexpectedly" done this or that.  Since it is the economists' job to predict such things, they're obviously bad economists, but the real reason for this failure is that they are government economists.  Larry Kudlow offers a detailed explanation of why Obama's stimulus package hasn't worked, but I think there is a simpler explanation: Government has no money!

Government cannot spend one nickel (or $1 trillion) that it does not first take out of the private economy in some form, be it taxes, borrowing against future taxes, or inflation, the "cruelest tax of all."  In other words, it can only redistribute wealth that has already been produced by the private sector and CANNOT produce new wealth.  Certainly, government can fund things that the private sector might choose to do to produce more goods and services, but in the vast majority of cases funds those things which do not.  That is, most government spending reduces and consumes wealth rather than creating it.  At its very best, government redirects wealth to something of equal value to (but different from) what a free economy would choose.  There should be nothing unexpected about the failure of central government planning for the economy.  It fails every place and every time it is tried.  We should expect better.