Excess Returns The Stimulus Deception | Rob Arnott Explains What Economists Are Getting Wrong
6 snips
May 31, 2025 Rob Arnott, the founder of Research Affiliates and a leading voice in challenging economic norms, joins to discuss the pitfalls of government stimulus on growth. He argues that higher spending historically correlates with slower economic progress, emphasizing the importance of sustainable fiscal policies. Arnott explores lessons from Ireland and trade strategies, particularly tariffs, while providing insights into market expectations and uncovering undervalued investment opportunities in today's economy.
AI Snips
Chapters
Books
Transcript
Episode notes
Stimulus Often Slows Growth
- Government stimulus often fails to boost real per capita GDP growth as spending is mainly a transfer from private to public sectors.
- Over 80 years, data show countries that spent more grew slower across multiple periods and countries.
Keynes vs Modern "Keynesianism"
- Keynes advocated for running surpluses in good times to fund crises spending, aiming to smooth economic cycles.
- Modern Keynesianism diverges, often encouraging persistent high government spending that Keynes himself would oppose.
Use Light-Touch Crisis Stimulus
- In crises like COVID, governments must intervene but with a light hand, prioritizing protecting vulnerable groups over blanket measures.
- Transparency about uncertainty and willingness to adjust policies foster public trust better than rigid top-down orders.
