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Why do people say that government spending has a multiplier effect without also mentioning the fact that the money was also there to be spent by the private sector if it hadn't initially been taken as tax by the government? Why don't they talk about a multiplier effect when it's a private individual / company spending the money?
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>>1049507
because keynesians
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>>1049507
Because you're an idiot.
The multiplier effect is supposed to be produced by huge government spending during a recession, when the private sector fails to provide such spending.
On the other hand, when the economy is growing, moderate taxation is made to build up the budget, to fight against later recessions.
Many free market supporters need to cease jumping to conclusions about the neo-Keynesian theory without understanding it first. They're acting just like creationists in regards to the theory of evolution.
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>>1049507
Because companies sometimes have more money than they know what to do with, resulting in stagnation throughout the economy.
See Apple's $200 billion cash reserves.
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>>1049507
>if it hadn't initially been taken as tax by the government?
Government spending precedes taxation.
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