Thursday, April 23, 2009

The Circular Flow Economic Model

Keynes described the economy in terms of a circular flow of money. Maybe this is what he meant:

Top recipients of federal bailout money spent more than $10 million on political lobbying in the first three months of this year, including aggressive efforts aimed at blocking executive pay limits and tougher financial regulations, according to newly filed disclosure records.

The biggest spenders among major firms in the group included General Motors, which spent nearly $1 million a month on lobbying, and Citigroup and J.P. Morgan Chase, which together spent more than $2.5 million in their efforts to sway lawmakers and Obama administration officials on a wide range of financial issues. In all, major bailout recipients have spent more than $22 million on lobbying in the six months since the government began doling out rescue funds, Senate disclosure records show.


I’d say these companies have gotten their money’s worth. As long as investments in lobbying yield more than, you know, actually getting out and competing, companies will keep the cash flowing to DC. Now, if we could just figure out a way to capture a little of that flow for the real economy…..

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