Link

This was linked from /r/austrian_economics.

Government "stimulus" is a fallacious economic doctrine that has evolved into an entrenched political dogma in spite of the fact that government stimulus programs fail to accomplish what they promise.

"Entrenched political dogma?" Maybe on the left, but certainly not on the right.

The notion of insufficient aggregate demand -- that consumers are not buying enough -- is presumptuous and arbitrary, an opinion utterly devoid of scientific content. Who is to say that consumers are making wrong decisions about what and how much to buy and not buy? What should they be buying?

That's like saying "the notion of insufficient growth is arbitrary - who is to say that people aren't working enough/inventing enough?"

When demand for certain goods and services decreases, consumers are signaling to producers that they don't want more at the current price. Producers need to lower their asking prices if they want sales to pick up.

Lower prices lead to lower employment, because wages exhibit downward rigidity. This in turn leads to lower productivity.

If producers can't operate profitably at lower prices, the market is signaling that producers need to switch to producing different goods and services that consumers value more highly.

AD shocks are not shifts in demand - they're declines in demand due to lower wages/employment. When a bubble bursts, consumers and banks attempt to pay down debt, leading to decreased consumption, lower prices, lower wages, deflation, and less employment. A consumer still very much values his food, but he doesn't have the capability to demand it if he is saddled with debt/jobless.

Such distortions are not instances of "market failure," as Keynesians, socialists, and progressives like to claim, but the result of political interventions that subvert and suppress markets' natural self-adjusting processes.

Firstly, it's telling that he puts Keynesians, socialists, and progressives in the same category - Mankiw could hardly be called a socialist or a progressive. And just because it is "natural" doesn't make it a market failure (see: carbon emissions) - when unemployment is above natural rates, assuming those unemployed can do productive work, simply giving them jobs is efficient, even if they pay back 100% of that money to their employer (the government.)

What they can't see are the jobs, business, products, and services that would have been produced in response to consumers' more highly valued preferences, as communicated through the economic language of market prices, had government not boosted spending in certain, politically determined directions (e.g., Solyndra, bridges to nowhere, "shovel-ready jobs," etc.)

Again, lower AD does not mean DIFFERENT demand - it means lower demand. When stimulating the economy, government isn't necessarily taxing anyone - they're borrowing (perfectly market-natural), or printing.

He then talks about tax cuts not being stimulus - this a semantics issue, lowering taxes on someone and giving them a percentage of their earnings are the same thing.

The original "stimulus" programs were launched by Presidents Hoover and Franklin Roosevelt in the 1930s. They were the first presidents to try to assist economic recovery by massively increasing government spending and budget deficits.

Hoover didn't incur deficits until well into the recession, in 1932

Even FDR's own Treasury Secretary, Henry Morgenthau testified to Congress in May, 1939, "We are spending more than we have ever spent before and it does not work...I say after eight years of this administration we have just as much unemployment as when we started...And an enormous debt to boot!"

The unemployment rate was going down until '37, when FDR cut spending again

One would think that the Great Depression would have convinced any rational person that huge increases of government spending prolong rather than alleviate economic sluggishness. Alas, the opposite is the case. Other economists undoubtedly have different opinions,

lolwut

The results of Obama's stimulus plan are well-known and undeniable: the weakest economic recovery from a recession in history.

Umm... what? Other than, like, every other country during the '08 recession (many of these countries incidentally practiced austerity)?

tl;dr not only is he empirically wrong, he also messes up his praxx