09 February 2009
What is a Stimulus?
As the President might say, "Look--." There's bound to be a lot to gripe about in whatever stimulus package Obama eventually signs. There will be pork-barrel spending. There will be expansion of government. But both cases would still mean putting people to work and paying them so they can spend money. This most likely will mean borrowing more money and making the deficit bigger. But what, really, are the alternatives? Some might prefer to stand down and let the market run its course. Only after a necessary bloodletting, they suggest, will resources be in the right hands to be invested properly for real economic growth. Before the rising tide can lift all boats again, some survivors of the recent shipwreck must be beaten off the lifeboats to appease the sea god. Others propose a kind of passive stimulus in the form of more tax cuts. They assume that entrepreneurship only suffers from unfair impediments; remove these, relieve our best people from their paralyzing taxophobia, and they'll create jobs like flivvers off the assembly line. All we'd have to do is wait for these geniuses to think up the next fad and hope that people can afford it. I've even seen some people propose giving everyone another tax-rebate check so that they can spend without becoming (the horror!) dependent on their own democratically elected government. But we saw how well that worked last year. The real choice is between a general policy that has worked in the past -- the old Keynesian notion of pump-priming -- and an ideological dependence on an unadulterated entrepreneurship which, had it been what people crack it up to be, would have left us immune to crises and looking for another subject to blog about. The resistance to the present stimulus proposal is ideological and is more concerned about restoring a supposed ideal state of economic affairs than in solving the real problems of the moment. Naturally the resisters accuse the proponents of being unprincipled, opportunistic and so forth, and there's probably some truth to the second charge, at least. But when it comes down to a choice between programs that plausibly promise some concrete results and dogmas that depend ultimately on appeals to faith -- praying for the market and its priests to save us, our natural preference, if we believe in a national interest, ought to be for action.