Excerpts from October 27, 2009 Editorial The Case for More Stimulus in the New York Times. Bold by me.
The consensus among economists is that the recession is over, and, technically, the herd is probably right. Corporate profitability has been boosted by job cuts, pay cuts and a drive to restock depleted inventories. Immense federal stimulus has jolted the economy.
But what happens when those measures run their course? The economy is going to need more government support, or it is bound to be very weak for a very long time — and vulnerable to a relapse into recession. . .
And Washington is mired in a warped political debate. Congressional Republicans say continued economic weakness is proof that February’s stimulus package failed. Lawmakers in both parties fret that large budget deficits preclude more stimulus, lest the burden of debt outweigh the benefit of deficit spending.
Both arguments are wrong. If anything, ongoing economic problems are a sign that stimulus needs to be bolstered. Deficits are a serious issue, but the immediate need for stimulus trumps the longer-term need for deficit reduction. A self-reinforcing stretch of economic weakness would be far costlier than additional stimulus. . .
Congress and the administration should agree on ways to ease the dire financial condition of the states. Most important is continued aid for state Medicaid programs, which would ensure vital services, support jobs and free up money for other needs. . .
To be highly effective as stimulus, cash aid must be targeted to needy populations. The housing market would be better served by a reinvigorated attempt to reduce foreclosures, including, at long last, reducing principal balances for the millions of people who owe more on their homes than they are worth.
Without another round of effective stimulus, the worst recession in modern memory will likely become — at best — the weakest recovery in modern memory. Another boost to federal spending that is targeted and timely should not be too much for politicians to deliver.http://www.nytimes.com/2009/10/27/opinion/27tue1.html?_r=1&ref=opinion&pagewanted=print
This is why I stopped watching NBC and reading Time magazine. The Keynesian ideology is so all-encompassing that when true free market solutions are proposed (stop spending money we don't have), those courageous souls are barked down by ivory tower intellectuals with models based on Marginal Propensity and Aggregate Expenditure fallacies.
ReplyDeleteThe Keynesian argument can be boiled down to a child arguing with his parents that he should be able to eat candy for dinner. After all, it fills him up and he is no longer hungry. The solution for the subsequent malnourishment is just as obvious - more candy. The child, like most Keynesians, do not see into the future when their fate is plagued by disease and famine. No longer are clear thinking and logical reasoning valid criterion for policy procedure. The horrific Keynesian proverb "We are all dead in the long run" exemplifies this. It is a mockery of civilization's intelligence that such shallow wisecracks pass as devastating epigrams and the ripest wisdom.
I thought that op-ed would bet your blood boiling...nice comments, well said.
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