If Government Spending Jump Starts the Economy....

[ddeclue]

who really cares if it is paying for one group that digs holes and another that fills them in?

Does anyone honestly believe that there is no private sector equivalent?

How about cigarette manufacturers vs nicotine patch sellers?

How about Burger King vs. LA Fitness?

How about health insurance companies vs. doctors?

How about lawnmower manufacturers vs. sprinkler system manufacturers?

There are plenty of examples of the private sector working at "crossed purposes" yet no one points out the "nightmare" there - hey it's just "free enterprise" when they do it for profit.

The fact is that these anecdotal spending complaints are all just that anecdotal and not indicative of the overall package. In fact many of the so called "pork" problems are not problems at all but have legitimate benefits to society beyond their spending aspects.

The whole point - and Mr. Keynes was right - is that DEMAND drives the economy and economic investment NOT supply.

Investors are chickenshits who will not invest first and hope a demand shows up later, they want their profit, they want it right now and they want it guaranteed. The only way that can happen is if they invest where a demand already exists.

The only way to fix a deep recession is through government spending to hire workers to perform work so that they will have money to spend back into the economy and so that they will have the confidence in their financial situation necessary to spend. Otherwise it is the feedback loop of cutting jobs which cuts demand by consumers which in turn causes more job cuts.

The longer term solution is re-regulation, financial transparency and the breaking up of these giant corporations and banks into small entities that will be forced to compete with each other and hire workers and a requirement that imported goods are produced under US labor, safety and environmental laws or are taxed to death otherwise.


Doug D.

[Selatius]

1. Keynes' ideas have been abandoned for quite a while now.

The idea that demand drives production still holds true, regardless of how much the wealthiest deny it or abuse consumers. Producers will not produce if people do not have the money to buy the goods and services. A producer is nothing without consumers, something too many corporate leaders fail to appreciate. FDR understood this at a basic level, but that was sufficient to have an effect on the economy.

Programs such as the Works Progress Administration or the Public Works Administration or even the Civilian Conservation Corps put money in the pockets of people to do things such as plant trees, build dams, connect people to a new power grid, establish or repair schools, construct bridges, and pave highways. The people would then go out and spend that new-found money on goods and services, driving producers affected by the buying to ramp up production and hire workers to meet the new demand.

Of course, history shows it took a world war to end the last great depression when everybody was essentially drafted to play a part in winning a war against a malevolent tyranny. Hopefully, we won't have to wage a world war to end another depression.

[Trekologer]

2. Supply-side economics has never worked and never will

Stimulating demand will naturally stimulate supply. Stimulating supply does not stimulate demand because there is no one to buy the products. If you don't believe me, take a look any any car dealership and count the number of unsold cars. The supply is there but no one is buying. Building more cars won't magiclly make the old ones be sold. To sell those cars you need to get people wroking and build confidence in the economy so that they but those cars (or other products).