“The work of Friedrich Hayek shows why EU governments cannot spend their way out of the Eurozone crisis,” Steven Horwitz

“The assumption in most stimulus spending is that there are projects just waiting to be pursued if only we would spend the money. What is overlooked is whether the capital and labour that are idle are the resources best suited to those projects, not to mention whether consumers and citizens even want those outputs in the first place. Just buying, hiring, and producing for the sake of “doing something” will create a structure of production that is quickly found to be unsustainable. A few projects may be “shovel ready,” but most will require engineers and others to do the planning. If the unemployed are mostly construction workers and financial managers, these projects will not be able to find the engineers they need at wages they can afford, and unemployment will not be reduced.”

http://blogs.lse.ac.uk/europpblog/2012/08/21/hayek-eurozone-crisis/

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