Wealth Management

Voted #6 on Top 100 Family Business influencer on Wealth, Legacy, Finance and Investments: Jacoline Loewen My Amazon Authors' page Twitter:@ jacolineloewen Linkedin: Jacoline Loewen Profile

May 29, 2010

Surprise - Government stimulus can reduce private sector spending


If you are wondering if your tax dollars can re-build the economy, I recommend reading more about this fascinating study by HBS which confirms that government spending skews opportunities for private businesses.  I like it when we can separate out the social rhetoric and see the economic factors clearly, particularly with well-meaning government interventions. Central planning has been shown to be far less effective in the many political forms it has tried over the past century.  If you are running your own business and having to meet payroll, you will already be aware of these findings even thought the researcher, Joshua Coval, was surprised.


Executive Summary:

New research from Harvard Business School suggests that federal spending in states appears to cause local businesses to cut back rather than grow. Read the full article here - A conversation with Joshua Coval.
Key concepts include:
  • The average state experiences a 40 to 50 percent increase in earmark spending if its senator becomes chair of one of the top-three congressional committees. In the House, the average is around 20 percent.
  • For broader measures of spending, such as discretionary state-level federal transfers, the increase from being represented by a powerful senator is around 10 percent.
  • In the year that follows a congressman's ascendancy, the average firm in his state cuts back capital expenditures by roughly 15 percent.
  • There is some evidence that firms scale back their employment and experience a decline in sales growth.

3 comments:

Anonymous said...

A tale of four catalogs - Barnes and Noble and Amazon.
Check out these top picks from the heavyweights in the tablet
industry, Google, Amazon and, of course, Apple. If you already have
a Google Gmail account, you can add that easily through your Google account settings.



Also visit my web site ... nexus 7

Anonymous said...

Helpful info. Fοrtunate me I found your site accіdentally, anԁ I'm shocked why this coincidence didn't happened іn
advance! I bookmarked it.

Feеl free to vіsіt my web-site .
.. Payday loans

Anonymous said...

However it is not so with the new Samsung galaxy note
2. Most of the Android smart phones come with their own
customized ring tones which can be set as ring tones and
other tones but now in this article lets learn about something with which you can
set the customized Alarm Ring tones to android devices very easily.
there are types that are for a single phone or data card and
there are types for multiple, simultaneous, phones and data cards.