“Stimulus”
Mar. 26th, 2020 11:44 pm![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
ndrosenThe word is not the reality, and labeling something a “stimulus” does not prove that it actually stimulates. So I said about Obama’s economic “stimulus”, and so I think about the Republican Senate’s “stimulus”, which is a huge raid on the Treasury, and stuffed with crony capitalism.
Sometimes, without physical reasons why production cannot be kept up, there is a recession, and people are laid off from their jobs, making them unable to buy the products no longer being made in the factories from which they have been laid off. John Maynard Keynes had some ideas about why this happens, and Henry George had different ideas. I am a Georgist.
But what we have here is not that kind of recession, and even if there may have been some merit in Keynes’s views of what should be done in response to a financial crisis recession, they don’t really apply here. The problem is not that people are hoarding money under their mattresses instead of spending it; the problem is that the coronavirus, and the quarantines, shutdown of restaurants, disruptions of trade and travel are genuinely interfering with production, and that’s what is throwing people out of work and reducing GNP. Having the government borrow money to give to people to spend won’t address the real problem.
There may be a case for aiding unemployed waitresses, independent businessmen whose businesses have been shuttered, etc., but we should keep in mind that any resources the government provides to some people have to be paid for somehow; other people will then have to do without these resources. We should also keep in mind that spending two trillion dollars of borrowed funds brings the day of reckoning for our financial irresponsibility closer, and I fear that things will get ugly when that day comes.
Sometimes, without physical reasons why production cannot be kept up, there is a recession, and people are laid off from their jobs, making them unable to buy the products no longer being made in the factories from which they have been laid off. John Maynard Keynes had some ideas about why this happens, and Henry George had different ideas. I am a Georgist.
But what we have here is not that kind of recession, and even if there may have been some merit in Keynes’s views of what should be done in response to a financial crisis recession, they don’t really apply here. The problem is not that people are hoarding money under their mattresses instead of spending it; the problem is that the coronavirus, and the quarantines, shutdown of restaurants, disruptions of trade and travel are genuinely interfering with production, and that’s what is throwing people out of work and reducing GNP. Having the government borrow money to give to people to spend won’t address the real problem.
There may be a case for aiding unemployed waitresses, independent businessmen whose businesses have been shuttered, etc., but we should keep in mind that any resources the government provides to some people have to be paid for somehow; other people will then have to do without these resources. We should also keep in mind that spending two trillion dollars of borrowed funds brings the day of reckoning for our financial irresponsibility closer, and I fear that things will get ugly when that day comes.
