I keep wondering if he's missing the point of why deficit spending and putting money in the hands of the workers is also bad thing. When the consumers have limited money, they will spend that limited amount of money more wisely, and it will put the companies that rely on them buying things they don't need out of business. It will drive wages up in the right industries and down in the wrong industries. With deficit spending you will distort that information which could lead to even bigger problems. That said, deficit spending will always be more popular under democracies, because it provides a benefit to the individual voter first, so it's the easier thing to argue for and taken up by young people as they become political.
Unfortunately, your assumption that less money to consumers translates to wiser financial decisions is incorrect. It's well studied that quite the opposite behavior occurs and for good reason; more stress and less access to time saving goods and services. On top of the huge disadvantage that levies on a person, the things that person DOES need start costing more. In the vast majority of the states, having a car is a necessity to work. Loans cost more if you can even get one so you end up spending what little is there on a clunker and all the time and energy that goes in to that heap. Uh oh, now you can get to your job, but if you're working anywhere near minimum wage and have a family (that doesn't just include kids and spouses, but also elderly parents (whose social security and medicare aren't enough), you won't have the cashflow to keep everything going. So you end up with a payday loan and so on. I think everyone has the picture by now.
You mention that the 'right' industries will shrink and the 'wrong' will expand. Let's make that leap and follow it through, ignoring the pedantry of arguing what's a 'right' and 'wrong' industry. I get the point you're trying to make with that. There are two obvious paths. First, that as it stands now, increased corporate profits has not translated to increasing wages or employment. Regardless of whether the 'right' or 'wrong' industries expand, that still translates to less money in the hands of those that have the most need to spend it. The article does a much better job communicating the consequences of that. On the second path, I'll ignore the previous and just look at the overall growth consequences. If we assume that indeed only the industries producing things consumers need expand that eliminates a ton of research, development and source of unexpected discoveries (and jobs and wages and... I digress). How many 'useless' web apps and services are out there that also contribute to open source? Did consumers really need Google? Not at all, but damn if we don't all enjoy many of the things Google has contributed to our sector.
The following isn't in reply to you, Kokey, but I want to get it out there.
Of course government spending on things that don't contribute to real growth are a terrible idea. Government spending on infrastructure, education and healthcare, however, contribute more than the sum total of their costs. Most like to use the NASA example to illustrate that point, but how about finally investing in upgrading our power grid? A nationwide upgrade would put hundreds of thousands to work including a huge number of engineers and other knowledge jobs. Not to mention, we'd also be increasing our knowledge, expertise and intellectual property as a nation in a sector vital to every country on the globe during the process. What about using the next few billion we were going to subsidize telcoms with to upgrade our internet infrastructure (I don't know anyone who has been informed of the billions given to telcoms to upgrade infrastructure that wasn't used for that at all, that wasn't furious about it)? But what about healthcare? Surely that's just a money pit, right? A healthy population is more productive. Simple as that.
I doubt anyone reading this can't see that these kinds of large government spending projects and programs pay for themselves many times over in all sorts of varying ways.
