fordy said:
The state of an economy could have external factors driving it down. As we see with many recessions, it becomes a massive chain reaction. Economies are always inflated with speculation and bubbles. All it takes is a few outside influences to destabilise it. The point of stimulating to avoid a recession is probably for a more broader sense, attempting to stop the after effects, like if somebody took a supporting pillar from a building. Stimulus should help the poor, but that in turn does provide some degree of stability, since that stimulus goes into the economy where an otherwise growing hole would be. It wouldn't be long-term beneficial, but it would stop negative speculation and a declining economy from working in tandem to make the problems worse. If I remember correctly, didn't the US spend it's stimulus all on the banks? Was this just to bail them out, or was this to try and kickstart the economy again? If it was the latter, it probably might have done better in the hands of consumers. On a side note, wouldn't some public service jobs be considered stimulus? Think about it....at least the government is getting some degree of work in return... |
1) Stimulus doesn't work like that though. If it did it'd be awesome... but it never seems to work out. All it does is fill that hole with garbage that eventually must be removed and then you get more economic downturn. Hence the whole double dip recession worries. You can't get out of paying the piper. It's just a matter of if you prefer to rip off a band-aid or prefer to pull at it very slowly.
Generally ripping it off is beter in the long term assuming you can provide for everyones physical needs, because real growth starts sooner, and comounds faster.
2) The bailout and the stimulus were too different things, the theory behind the bailout was that if the banks failed the credit market would freeze and nobody could get a loan. So the bailouts happened.... and the credit market froze.
Why? Because the Federal Reserve upped the interest it gave a bank for holding money in reserve, so rather then lend it to your average person they held tight.
Meanwhile small mom and pop banks which were doing awesome and popping up all over the place were crushed by the big banks... those that survived and even some of the smaller chain banks are now getting crushed by the new Dodd-Frank legislation that puts higher regulations on all banks. (Regulations are like taxation, when flat they weigh heaviest on the "poor". Which is why we should have progressive regulations.)
Which is why our two big to fail banks are even bigger.
Had we let them default...? We'd have a much smaller more diverse set of banks right now.
The stimulus was different, and mostly wasted or just used to plug budget deficits already on the books.
3) Welfare vs Government jobs. You can see government jobs as a form of Welfare sure, but it's a really ineffective form of welfare since it helps very few people for the money it spends.
Sure you are getting something for the money... but for a lot of the projects... what you are getting isn't really worth it. I mean would you rather give your friend 5 dollars or buy a pencil off him for 20. The government job really only makes sense financially if you aren't planning to help out in the first case. (Not all government jobs, but definitly ones added in a stimulus type sense.)
Better to have everyone get welfare then distort the market by taking more money out of the private market to overpay for stuff that often has limited benefit. (Espiecally the way the US handles infrastructure, leading to countless "Bridges to nowhere" beause they want that money in their state even if they don't need a bridge)
A lot of people no longer see helping people as a worthy goal in of itself anymore... and need to make bunk economic arguements to justify welfare spending. Welfare is in of itself, it's own reason, making up economic claims doesn't help because you don't want people to consider the negatives. Nearly all political positions have both positives and negatives, it used to be the positives of your plan were magnified, but lately it's popular to claim your policy does everything the best, just modern snake oil salesmanship.
That said though, it would be good if the US did get something out of Welfare. Rather then just sending able bodied people checks if they instead made them go to classes, or do busywork or something to help them rehabilitate into being able to work again
Being out of work for a long time can really mess with your social skills and just knowing how to be an employee in a work place. Just how to function in the world even. So it would be good if welfare targeted such things. (or barring force, offer a bonus.)
