Everywhere one turns today, he hears about how "the government" needs to "stimulate" the economy, and that such "stimulation" will provide a foundation for future prosperity. The implicit premise is that all the money spent by the government will be more wisely spent than if it were left in the hands of private individuals and institutions in this market. I question this premise not on the tried-and-true Hayekian "Use of Knowledge" grounds ; rather my criticism goes like this: what happens when you blindly pull the bottom legs of a Jenga tower (notwithstanding its quality)?
Let's assume, for the sake of argument that the stimulus bill "works" in the short-term (functionality being tied to the decrease in unemployment). Let's also assume that government does indeed "place all the logs" in the places it thinks best. Here, the governmental spending (whose wisdom is questionable at best) is banking on its placement of all sorts of "logs" at the bottom or foundation of the Jenga tower that is our economy. But, such a drastic increase in governmental spending is clearly unsustainable (one eventually runs out of space on the bottom where he can place the logs). What happens when the spending that drove such development goes away because it is thought 'the storm is over?' In other words, what happens when we pull those base logs (notwithstanding the need to place the logs back on the top)? History has shown that we end up right back where we started (i.e. the tower collapses).
Anyone who thinks that President Obama's budget + Stimulus bill + Federal Reserve liquidity will result in a costless return to prosperity need only watch this clip to see what the future holds.