How to argue against a stimulus package?

Surf

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Aug 18, 2008
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So I'm learning about the Broken Window fallacy of job creation.

Also about how injecting money into the economy increases inflation in the long run but jobs in the short run.

So I don't see the broken window in this scenario. The unemployed get more jobs and by the time inflation occurs they will be able to demand higher wages.

The spending isn't diverted from somewhere else since it's new money all together right? What is the downside then of the stimulus package if the inflation isn't even that big of a deal?

I'm a first year eco student trying to cover both sides of the argument.
What I mean is, where is the spending diverted from if it's new money being injected into the economy?

(The broken window fallacy states that some would see teenagers breaking a baker's window as job creation creation because he has to spend the money on the repairman who then spends that money which then gets distributed through the economy. The problem is that, had the window not been broken he would have spent that money on a suit to the tailor or somewhere else. So breaking the window does not create new net spending, it just diverts from spending it somewhere else. My question is again, if the government is injecting money into the economy it's not diverting spending is it? The only downside is inflation?)

So what would be the argument against it.
I'm not choosing a side. I have to fight for both sides for the sake of my class.
 
The easy counter argument is that government stimulus money keeps up employment and investment in those sectors which made up a disproportionately large share of the economy before the crash. A recovery happens when resources, including labor and capital investment, find thier way to their most efficient use. That can't happen when stimulus or other policies try to keep the inefficient uses going, and that's when depressions and recessions drag on.
 
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