[clue-talk] The stimulus bill

[David Rudder]

This is how I understand the stimulus bill.

It's based in pretty classic Keynesian economics.  Keynes was an
economist who promoted spending on capital projects to boost the
economy.  He's famous for advising the government pay people to "dig
holes and then fill them up again".  I'm pretty sure that was hyperbole.

In theory, when businesses are in desperate need of improvements, when
machinery is out of date or basic investment has been neglected, then
you lower taxes.  This gives business the capital they need to invest in
new computers, upgrades to their manufacturing, R&D on their software or
internal processes, etc.  This is "supply-side economics", because it
concentrates on the people who supply the goods.

But, when businesses have full warehouses and no one's buying product,
you give money to the consumers.  This could be called "consumption-side
economics".  Find needed improvements, places where we can get real
value for our money.  And then pay a crap-ton of people to work on that.
 Gets money into the hands of the consumers, creates jobs, and gets the
improvements fixed.

This is the situation we're in now.  Businesses have been making capital
improvements for a decade now, starting with the rush to replace
computers for Y2K and continued by the Bush tax cuts.  But, warehouses
are full and no one's buying. Houses are empty, fiber is dark, cars are
sitting on their lots, unsold.  Before the economy improves, people need
to start spending again.  Before people start spending, they need jobs.

But, it's worse.  Right now, we also have real infrastructure problems.
 Bridges are falling, levees are failing, the electrical grid is
overloaded and roads are crumbling.  If the government pays American
companies to fix all this stuff, then people get jobs and companies
survive.  Plus, we get fixed bridges and levees, etc.

It's not government jobs.  We're not hiring bureaucrats.  The government
is paying private companies to do the work that government needs done.

It's like Obama said.  "We have so much to do, while so many are in need
of a job".

-Dave


Collins Richey wrote:
> On Sun, Feb 1, 2009 at 6:14 PM, Angelo Bertolli
> <angelo.bertolli at gmail.com> wrote:
> 
>> Speaking of entertainment, this was written recently.
>>
>> http://www.commondreams.org/view/2009/01/26-0
>>
>> I'm not informed enough to know which parts might be stretched or untrue,
>> but I definitely found it interesting.  And the reason I bring it up is
>> because it has a part in it about "deregulated media" which your email
>> reminded me of.  I'm not sure what was deregulated though.
>>
> 
> I, too, am not sufficiently informed. On the surface, it appears to be
> motivated by the classic "the rich need to have the bulk of their
> income confiscated" type drivel. I would love to see the factual
> comments debated by someone with a real understanding of economics.
> 
> In any case, it's somewhat eloquent proof that the Republicans are the
> root of all evil. most especially of all economic collapse. I believe
> I've heard that mantra elsewhere.
> 
>