Recessions are good for an economy because they involve a resolution process whereby malinvestments are re-purposed to better serve consumers and whereby labor is reallocated to better serve consumers. All the bad decisions that took place during the boom are thereby resolved.
One boom town presents a bigger and better opportunity than an ordinary recession — Washington, DC. Inside and outside the Beltway is booming. Economic Policy Journal reports that Congressman Rod Blum even thinks “DC needs a recession.”
Construction is everywhere booming and is hard evidence about the expanding federal government, the role of lobbyists, and the pain it is imposing on the productive economy here and abroad.
The truth is that the size and scope of the federal government has been increasing ever since the founding of the Federal Reserve in 1913. The Fed facilitates the expansion of the government and the national debt. That’s what made the invasion of Iraq and Libya so important to the Establishment.
More recently, the 9/11 attacks were used as a justification for a massive increase in the size and authority of the “intelligence services.” This involves 16 separate agencies and a known budget of over $50 billion. Of course, much of the heavy work of these agencies is done for them by American corporations. If more money is needed the CIA can just go out an sell another truckload of heroin.
This great expansion also involves a great deal of construction in Washington, DC for office space and other reasons.
If the US government was forced to balance its budget with no tax increases the boom in Washington would come to an end. If it was forced to return to pre-1971 spending behavior the entire world might be a much better place.
