Stimulus Links
Posted by Wayne Bretski in Economics
The stimulus package....political self-gratification at its finest.
Steven Landsburg makes a good point about twilight industries (for example, those pandered to most sloppily during the primary season):
Ultimately, the only solution to unemployment is for displaced workers to get retrained and find their way back into the workforce. The new stimulus package only delays that process by propping up dying industries for a while and postponing the day of reckoning. Ultimately, there will be just as much hardship because the stimulus package can't last forever. Why spend all this money trying -- and probably failing -- to delay the inevitable?
Japan in particular moved their economy extremely quickly from Industrial Revolution-era industries to high-tech ones by subsidizing the losers: paid re-training for computer skills, severance packages for older workers, and other more subtle (keyword: market-tweaking) measures.
Also today, I'm going to do the unthinkable: link to a Bob Herbert post. Okay, so it's still sophomorically written and over-simplified, but it's one meta-issue on which I agree with Mr. Herbert (can I have that job??). Read Investing in the U.S. at the NY Times; the crux of the issue is that the nation's infrastructure is falling behind the rest of the world and more importantly, behind the capabilities of our economy. Mr. Herbert reminds us that government spending on public works is good for economic stimulus, pointing to the Erie Canal and the New Deal. OK, great. Obvious, but true. Let's not wait for another I-35 Bridge Collapse or Hurricane Katrina to prove that our roads, bridges, dams, ports, trains, etc. are out-moded.
Tyler Cowen at Marginal Revolution noted recently that it would be more beneficial for everyone who got money back to invest in annuities so that the feds could borrow at low interest rates for us. I think he hits the nail on the head by saying that inadequate aggregate demand was never the problem, and thus, greater liquidity isn't a solution. Read his always-cogent comments here.
Finally, Greg Mankiw, never one to beat around the bush, puts together a list he calls The Coalition Against Fiscal Stimulus, including Mr. Landsburg, Alex Tabarrok at Marginal Rev., Russ Roberts and Don Boudreaux at Cafe Hayek, and a host of others.
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