Originally Posted by Alexandrite
Scenario A: States reduce Rages(sic) by $1 and government applies $1 of stimulus to a money-hole digging project.
Scenario B: States keep wages the same, and government applies $1 to shore up the budget.
Net Effect is the same. Only in the first scenario, the states are better positioned for long term stability, AND we get a money-hole.
The "Net Effect" can't be the same. You're talking about two radically different worlds. Ex: In Scenario A many people have no reason to accept lower wages than they've learned to expect because they're being hired to waste capital while building bridges to nowhere. If they aren't producing anything but BTNs, then there's less stuff to be had. And once the BTN is built, some new BTN has to be thought up to maintain that "stimulus" because those workers haven't started companies, moved somewhere or learned some useful job skill.