With zero government spending, billions of dollars of stimulus could be created by an act of congress

…if Congressional Democrats succeed in lifting export controls that classify satellite technology as weapons and have handicapped American manufacturers since the last days of the Clinton administration. House hearings on the controls are to begin Thursday. Proponents of change are optimistic, pointing to a campaign pledge by President Obama and the support of respected figures like Brent Scowcroft, national security adviser to Presidents Gerald R. Ford and George Bush.

See the article here.  Of course there are many illegal markets that would generate stimulus were they to be legalized.  Here are some of the big ones.

  1. Drugs
  2. Guns
  3. Prostitution (except in Nevada)
  4. Gay prostitution (even in Nevada)
  5. Gambling
  6. Trade with Cuba
  7. Liberalized immigration

Al Roth calls these repugnant transactions and discusses them frequently on his blog.  The demand for stimulus means that the cost of being morally opposed to these transactions increases and the margin between what is repugnant and what is not slides outward.  (Tyler Cowen worries half-seriously that economists are evil when they try to persuade others to think in these terms.)

Food for thought here is how these are ordered on the repugnance margin.  If the motive is stimulus then what matters is not just how repugnant they are but how repugnant in proportion to the untapped economic activity that would be unleashed.  My guess is by that measure the ranking is (from first to be embraced to last) 6>2>5>3>7>1>4.

I suspect that repugnance has a ratchet effect in that if, say, prostitution is embraced for pragmatic reasons such as stimulus, it will never return to repugnancy even when those pragmatic motives fade away.

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