Boondoggle: Work of little or no value done merely to look busy.When a government introduces financing into the economy, John Maynard Keynes terms it “loan expenditure” – for example, public unemployment benefit is partly financed out of government loans. Keynes noted that the reasoning behind types of loan expenditure often seem unclear:
Moondoggle: Establishing a Moon colony – work of little or no value done merely to look busy (and appear inspirational).
It is curious how common sense, wriggling for an escape from absurd conclusions, has been apt to reach a preference for wholly “wasteful” forms of loan expenditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict “business” principles.
— J M Keynes “Chapter 10. The Marginal Propensity to Consume and the Multiplier (VI)”, The General Theory of Employment, Interest and Money, 1936 [Keynes’s emphasis]
Newt Gingrich’s idea of almost wholly wasteful loan expenditure in establishing a Moon colony follows along that path, and indeed it can be seen as good old colonization – a case of sticking it to China. Sticking it to rest of the world, the moondoggler even thinks that those living in the Moon colony could sue to become a US state, even though the US District of Columbia has been refused statehood many times.
If the push to colonize is strong enough, and the rhetoric becomes sufficiently jingoistic, then we might have a crusade to colonize the Moon (Gingrich: a “Northwest Ordinance for space”). Crusades – like wars – help generate wealth. As Keynes said: “Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better”. Gingrich’s idea that colonizing the Moon shows his grandiose and visionary thinking is less apt than calling it pretentious and illusory thinking, closer to pyramid building than settling the Northwest – possibly helping the unemployed in Florida’s Space Coast (Gingrich was campaigning in Florida). To “bail out” automobile makers to help restructure, stopping company failures and the resulting unemployment, was – so Gingrich thinks – an enormous mistake, but it wasn’t Florida that was in trouble.
Keynes (writing, remember, in 1936) noted that paying unemployment benefits was often easier to justify than improving national infrastructure by putting people to work in construction projects at a lower rate interest. He parodied digging of holes in the ground for gold mining – which he felt added nothing to the real wealth of the world (gold having few practical uses, being mainly used as an exchange medium). The parody is as follows (try substituting gold for bottles of banknotes):
If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is.Keynes felt that “It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing.” He did not support the bottle-burying exercise, he thought it ludicrous. Of course, the quote is usually ripped out of context.
— J M Keynes “Chapter 10. The Marginal Propensity to Consume and the Multiplier (VI)”, The General Theory of Employment, Interest and Money, 1936
Keynes expands on the similarity between digging up bottles filled with banknotes and digging up gold: when gold is found at suitable depths, the real wealth of the world increases, but when little gold is easily accessible, wealth suffers stagnation or decline. And “just as wars have been the only form of large-scale loan expenditure which statesmen have thought justifiable, so gold-mining is the only pretext for digging holes in the ground which has recommended itself to bankers as sound finance”. Keynes thinks that, if we are prevented from increasing employment by increasing useful wealth, gold-mining is a highly practical form of investment:
- Gold has a place in gambling, unconnected to interest rates.
- More houses mean lower rents, or lower prices, whereas more gold does not really affect gold’s price (the marginal propensity to consume is stable).
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