He argues government spending during boom times diverts resources away from business, which artificially inflates particular sectors relative to others.
When governments launch massive spending programs, they simply grab more of the factors of production that businesses need, which keeps the economy down.I have a few problems here.
What past massive spending does he mean? I was under the impression that we hadn't spent enough public monies on infrastructure, that it desperately needed renewal. I thought we'd cut spending to balance the budget. If there was an increase in spending in, say, the last couple of years, that still couldn't explain his point - that spending would be too recent I think.
Which sectors were inflated by government competition? Automobiles? Credit? Real estate? High tech and IT? Really, I don't know what he's talking about here. I don't see the evidence that past inflation or bubbles were created by too much government spending.
I thought stimulus spending seeks to employ idle resources. If the resources are idle, then how is there competition and thus inflation? If the resources are NOT idle, why is the economy shrinking? There is a decent point underneath this, though: the government shouldn't outbid private industry for already employed resources, if at all possible.
When I see opinion without any facts or data to back it up, I usually see red flags waving.