[Pen-l] Stimulus Porn: Commonsense Observations

[Michael Perelman <michael@xxxxxxxxxxxxxxxxx>]

I do not pretend to be an expert on stimulus plan, but it seems to be too 
little, misdirected, too much infected with tax cuts, and filled with 
special interest nonsense.

The Republican speak authoritatively as if tax cuts are the best way to get 
investment going, but real investment, the kind that results in the 
production of goods has been terribly anemic in spite of decades of tax 
cuts.

I do note that one of the most direct ways during the recession is to 
eliminate costs, including debts, that hold the economy back.  Letting 
assets falling value raises the rate of profit, once the realization sets 
in that the asset prices have hit bottom.

Leaving banks fail and writing off debts will cause some dislocation, but 
they will leave both the economy and society stronger.

In terms of getting money spent, putting it in the hands of the poor and 
the unemployed seems far more reasonable likely to create spending than to 
give to the rich, who may just pump up asset prices once they feel 
confident, undoing some of the stimulus.

In terms of public works, Gray Brechin, has been doing remarkable research 
showing how much the public works of the New Deal have contributed to the 
country to this present day.  The government has the opportunity to sell 
bonds at less than 3%.  Interest costs of public works represent a 
significant part of the total costs.   Taking advantage of the bargain 
basement cost of credit now represents a major savings, increased jobs, 
plus the opportunity to make a significant contribution to both the economy 
and society.


-- 
Michael Perelman
Economics Department
California State University
Chico, CA 95929

Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
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