Hoagie sent me a joke e-mail:
It is a slow day in the small Saskatchewan town of Pumphandle. Streets are deserted, Times are tough, everybody is in debt, and everybody is living on credit.
A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night.
As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.
The guy at the Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her “services” on credit.
The hooker rushes to the hotel and pays off her room bill with the hotel owner.
The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.
At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.
No one produced anything. No one earned anything… However, the whole town is now out of debt and now looks to the future with a lot more optimism.
And that, ladies and gentlemen, is how a “stimulus package” works.
Alas! If that had been how the Obama stimulus plan had worked, maybe it would have worked. But what really happened was that a few people in a few selected “shovel ready” industries got additional money to do projects that would eventually have been done anyway, and instead of everybody in town being out of debt, we went further into debt. Some of the individual workers who had the jobs might have paid off a few debts, but they also wised up, and didn’t buy more, but saved; the downstream demand for which the President had hoped was depressed. A few things were produced today that would have been produced tomorrow, so it can be said that something was produced, but now those jobs which were done early won’t exist to be done when originally scheduled.