As if to prove that the Albuquerque Journal will run anyone’s opinion article no matter how crazy, Nick Estes (a left-wing liberal who I’ve debated in the past) has a column in today’s paper touting the alleged benefits of “helicopter money.” Helicopter money is a term for government printing money and proceeding to spread it around the economy by dropping it out of helicopters.
Estes justifies the idea claiming that the great libertarian economist Milton Friedman recommended it “half-jokingly.” I am not sure where Estes gets that. Friedman routinely decried the dangers and pernicious impacts of inflation (government printing of money). As Estes notes in his column, the government would indeed have to print more money in order to drop it out of his helicopters. Here is just one of Friedman’s many lectures on inflation.
But one doesn’t need to rely on Friedman to debunk the idea that printing money will improve our economy. Is Estes familiar with Zimbabwe(see picture below) How about Venezuela where inflation is running at 500%?
Friedman had another famous quote, “There’s no such thing as a free lunch.” In other words, you can’t build prosperity without increasing output, improving economic efficiency and doing more of the things that actually build wealth. Unfortunately, Estes is by no means alone in supporting government spending as a means of economic growth. It is an affliction of both the left and right nowadays.
If we want to build wealth — in the US, Venezuela, or right here in New Mexico — we need to reduce tax and regulatory burdens (including minimum wages and other government mandates) to get people back to work. We need fair and consistently-applied legal policies (free of corruption) and low, reasonable taxes, especially on productive economic behavior.
3 Replies to ““Helicopter Money” would destroy economy”
There are only a few ways to get money into a community so that it can function. Debt has become the way preferred by big banks, ie, rent the money to those who are trying to start businesses. Another traditional way is to have government supply money to build local infrastructure. What you guys call pork. No rent to the big banks. So I understand why you dislike that. Money is a utility, it is not wealth although it will be horded by the likes of Apple and Microsoft to look like wealth. Albuquerque is starved for money just to function. Banks won’t/can’t lend and the GOP enforces austerity. So how is money to get into the system so that it can function? Cut taxes? Taxing starved profitless small business? Right.
Wow, Pat, I know we don’t agree about solar, but you really have no understanding of basic economics. I’m certainly no fan of the Federal Reserve’s policies or everything the banks do, but people in other states manage to build wealth and new businesses without massive government spending. New Mexico has had such spending for decades with little in the way of results.
Our City and State can thrive if they just make themselves more attractive as a location to engage in business and entrepreneurship. This can be done by removing or right-sizing a variety of regulations, reducing or eliminating taxes, and creating a competent and entrepreneurial workforce. We don’t even have to rely on existing businesses to come here. Those aforementioned things will allow New Mexico to generate its own wealth.
Basic economics has to do with how money is introduced into the community so that economic activity can take place. I was attempting to rise above the squabbling about regulations to get to the real and very basic reason small business is dying in favor of large multinational enterprise. It has to do with where the money comes from and where it goes. The money comes in by debt or equity or government spending. Ideally it spends some time in the community multiplying its utility, generating wealth by using it to make things, rendering helpful services, or to mine the crust for “natural resources.” The way we have it today, the money comes in and immediately goes out to pay interest on debt or it goes straight to Walmart/Amazon and on to China.
Communities all over the world are crippled by the slavery of debt. Our economic system must grow to correct for this fundamental mistake in money flow. Continuous growth cannot happen in a resource constrained world. At some point the teenager must stop growing and become a mature adult. Our system doesn’t understand this or a very small percent doesn’t want you to.
If we want to build a strong economic system in NM we must begin with how we utilize the money that comes in and stop sending it immediately out. Then we will be able to invest in enterprise, education, infrastructure worthy of our time and effort.