This stimulus package cannot really be considered a broken window scenario when talking about the infrastructure expenditure, because we have all seen the statistics for the depreciating infrastructure in the US that needs to be rebuilt or fixed.

Productive work is impossible to measure, I mean the creation of weapons and tanks is not really productive work since eventually it leads to destructive purposes.

However the stimulus package expenditure in healthcare computerization and education is productive in the long run.

It all really depends on application of the stimulus, or as you say efficiency. Simply giving states more monies to spend is not effective stimulus, because a bridge to nowhere is a net loss in the long run even if it provides employment in the short run.

Comment hidden because you are ignoring dag. (show it anyway)

I like economic parables. My favorite one is about how two ice cream salesmen on a beach will always, eventually end up selling from the exact same spot.

They need to attach a lawyer to every dollar given. Until that's figured out, I can't respect what they're doing.

Absolute transparency and accountability should be an iron-fisted prerequisite to receiving a single federal cent.

No handouts.

http://www.videosift.com/video/The-Greatest-Economic-Myth-Government-as-a-Window-Breaker

I agree with Farhad about infrastructure spending being absolutely necessary, and about productivity sometimes being hard to measure. Public Schools need to be improved, but throwing money at it isn't necessarily the solution, when sometimes lower-funded schools perform better than higher funded schools.

One could argue that public school students in better-performing, richer districts are performing better because of their parents' genes, prenatal environment, and lifestyle habits. The parents on average had some characteristics that increased their propensity to get a house in the richer district. Or you could argue that the performance of the school caused the high property values. Or you could argue that the extra money for the school from high property values accounts for some performance. All three are in play and positive feedback sustains the disparity.

The best way to help personal profit motives coincide with actual productivity is to tax negative externalities and subsidize positive externalities.

For example, all fossil fuels should be taxed at a very high rate, and the income from this tax should be rebated to everyone equally. Thus it provides the incentive to conserve without harming the poor in the way that has previously caused people to oppose such taxes.

The government should also subsidize the placement of copyrighted work into the public domain voluntarily by copyright holders.

Health computerization is a nice goal. Such a database would be a gold mine for research that could save millions of lives if only the privacy paranoia could be dealt with by anonymizing the data like Google Trends.

All subsidies and safety nets of the form "If x>y you get nothing, otherwise you get something greater than epsilon" (also, atomic tax credits and atomic scholarships) should be eliminated because they create local maxima where there is no incentive to earn slightly more. They should be replaced with smooth linear subsidies such as "take home income = 10k plus 3/5 of earned income".

One reason for the decrease in demand for goods is that most of the money is in the hands of those who use it least, and not in the hands of those who would use it. Supply side economics is crap when clearly there's an excess supply and not enough demand in most industries. The amount of money they've already spent on stimulus and bailouts is more than enough to send a flat $10,000 rebate to every adult citizen (perhaps split up into a smoother schedule), which would surely increase consumer spending back to pre-recession levels without negatively impacting anyone's profit motive. Mortgage-default bailouts conditioned upon being in default should be avoided because of the perverse incentives they create. More generally, any policy of help being conditioned upon something bad happening should be eliminated because of the perverse incentive to create the bad occurrence. Unconditional yet meager help is better because it keeps the incentives straight. Many forms of insurance should be abolished because of the perverse incentives they create.

People can only be really counted on to do the right thing when the the situation is such that doing the right thing is in their own personal interest. Primary purpose of all governance is to change the way the game is played so that individual interests become more congruent with each other (metaphorically, congruent with the public good). This includes punishment, which can only be justified as a disincentive to future crime.

The stimulus package contains less than $150 billion in infrastructure spending, out of over 3 trillion that has been spent on stimulus and bailouts. Most of the stimulus package consists of reckless tax cuts.

For a more rigorous explanation of that, look up the inverse correlation between income and marginal propensity to consume.