"It's a bit more complicated than what Mr. Grunwald suggests. Concerning point 1, the stimulus and job creation. Well blame Bush created stimulus. That created jobs, the economy to initially exploded then crashed. Essentially, we have the drug addict analogy, so why would more stimulus work?As an additional question; some point to the number of jobs created by the stimulus to document its success. But lets take a look at Solyndra, which is one of several failed companies. When it received it's government backed loans, it did create jobs. But it then declared bankruptcy. These jobs have now become "lost". Have these jobs been subtracted from the supposed success of stimulating the economy? Or are these jobs still being carried forward to disingenuously support the concept that the stimulus program is working?
Yes, stimulus can be used for public works projects and I won't dispute that. But the What I will say, is that under blame Bush the US over-consumed. Let me repeat that, we over-consumed. People will only consume so-much. We are in a hangover period. Flooding the market with "free" money has not stimulated the economy because the consumer is NOT buying and the private sector has no need to produce more.
Next Mr. Grunwald ignores the whole issue of stimulus as deficit spending that ads to the National debt. In theory that has to be paid back. Paying it back will mean the need to direct future tax revenues to debt reduction. That will "slow" future economic growth. Essentially artificially stimulating growth now cannibalizes from future growth. Blame Bush essentially proved that.
Finally, there is even the very fundamental question of: "Can economic growth even be stimulated?". Unfortunately, this is an election year and any answer other than "yes" is immediately vilified. I don't have an answer, exactly. A lot depends on demographics - a young growing population tends to buy more than an old "established" population. One can look to Europe and Japan as being examples were the lack of economic growth is not because of "bad" economics (as Romney claims) but simple demographics. Neither Obama nor Romney should make any promises claiming the ability to promote economic growth. The demographics may be well against them. This is a "myth" that Mr. Grunwald failed to delve into."
Saturday, August 11, 2012
The Hidden Failure of Stimulus
The Washington Post ran an opinion piece "Five myths about Obama’s stimulus" by Michael Grunwald. Since my response is a bit wordy, I will repeat the much shorter to the point response of Steve Hanna fist: "The stimulus was like trying to run your fireplace with newspaper. Burns for a few minutes then needs more newspaper. The only lasting thing from it is debt." Below is my response to that article.