A few thoughts on the Likely Failure of the Stimulous
from my post here
The stimulous may be a “last ditch” effort but its no more likely to work than monetary policy. While the infrastructure spending is much overdo and quite welcome the rest of the effort is just a wasteful continuation of the current failing system.
It would have been cheaper and more effective to cut each adult US citizen whose income is under a certain threshold a check for $4k . make it tax free and free from being attached.
Much of this would have been socked away (thus stabilizing the banks) or used on mortgages or other debts or even spent
Whats ailing the economy goes much deeper than the bubble, its a chronic trade imbalance and lack of demand. The big consumers are tapped out (US earning as percentage of GDP have plummeted in the last 30 years) and in the case of most of the others (US exempted) have aging declining populations — there are less consumers.
The new markets mostly in China are far more likely to meet any demand with local goods. Everybody is producing more than is needed.
On top of that automation is killing a lot of jobs, both high and low. if you trust the AFL-CIO they suggest that as many as 30 million service jobs (10% of all US jobs) are slated to be outsourced
In the long run, lack of jobs means lack of buyers and that means deflation and poverty.
if we are serious about repairing the current problem and preventing future ones we need a multi pronged approach
#1 balanced trade ala Buffet’s import certificates
#2 anti outsourcing laws. (treat jobs the same as material goods for purposes of trade)
#3 national health care (this is the biggest cause of Bankruptcy in the US)
#4 Tighter financial regulation
#5 a better social safety net that includes a lot more direct transfer of money
#6 a clamp on immigration
and last #7 shorter work weeks (4 day) and longer vacations to soak up excess productivity