Ron Paul and other conservatives have been arguing that Keynesian-style stimulating the economy is a waste of money – so much of what we buy is made overseas that we don’t get much bang for the buck. Is that true? Paul Krugman says no:
Barry Ritholtz sends us to a San Francisco Fed paper from last summer that makes a point on which many people seem confused: despite globalization and all that, the bulk of a consumer dollar spent in America falls on American-produced goods and services…Why? For one thing, most consumer spending is on services, few of which are really tradable. For another, even if the thing you buy in WalMart says “Made in China”, the price includes a lot of US value-added in the form of transportation and retailing costs…. we’re still a country where about 85 cents of your consumer dollar is spent at home, one way or another.
Good to know!
