Crowding Out

Two words explain all you need to know about our national economic debate.  These words have the instant appeal of common sense.  Economists worldwide know the words, yet a few of them, seemingly the more vocal ones, mysteriously reject the truth the words describe.  This rejection confounds because the words simplify our national discussion by demonstrating how borrow and spend policies don't add jobs, how such policies in fact subtract jobs.  This fact precludes any need for the debate to devolve into name calling, attribution of good or bad intent, or the stoking of class envy.  This fact precludes the necessity of any debate at all.  The two words are crowding out.  The concept is well established and the definition straightforward.  Crowding out is "any reduction in private consumption or investment that occurs because of an increase in government spending." An example may help.  Assume a family of four has four apples, resting ripely...(Read Full Article)

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