A television news story from yesterday in Wichita went like this:
Television news anchor: “Some may think that using food stamps is a drain on the economy, but the truth is that’s really not right. Local organizers say using food assistance can help boost the economy during these tough times. One dollar of food assistance relief equals about three dollars. Kansas is only using about half of the money assigned to it by the federal government. Using this money helps to pay everyone: from truckers and farmers, to workers in the grocery stores.”
Dr. Anita Raghavan, Campaign to End Childhood Hunger: “It’s kind of saying ‘Hey, do your American duty. Apply for food stamps.’”
The notion that government spending can stimulate the economy is erroneous and dangerous. Here’s what the economist Walter E. Williams had to say earlier this year in his article Stimulus Package Nonsense:
There are three ways government can get the money for a stimulus package. It can tax, borrow or inflate the currency by printing money. If government taxes to hand out money, one person is stimulated at the expense of another who pays the tax, who is unstimulated and has less money to spend. If government borrows the money, it’s the same story. This time the unstimulated person is the lender who has less money to spend. If government prints money, creditors, and then everyone else, are unstimulated. As my colleague Russell Roberts said in a NPR broadcast, “It’s like taking a bucket of water from the deep end of a pool and dumping it into the shallow end. Funny thing — the water in the shallow end doesn’t get any deeper.”
If people are hungry — and no doubt many families are — there are better ways than government welfare to help them. There are many private charities that are much more efficient than government in helping people. Plus, since people donate to these charities voluntarily, it’s an example of free people cooperating voluntarily in free markets. That’s how wealth is created.
It turns out that this is how happiness is created, too. Arthur C. Brooks has done research into economics and happiness. I quote him in my post How Government Makes Us Unhappy: “Givers of charity earn substantial mental and physical health rewards, even more than do the recipients of charity — empirical evidence that it is indeed more blessed to give than to receive.”