Stimulus Porn: Commonsense Observations

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.

4 comments so far

  1. futiledemocracy on

    It’s a mess that neither side has the correct answer to. But i’d say that at least Obama is actually trying.

  2. mark hansen on

    one small way that the work of the new deal is still visible in redding are the sidewalks imprinted with “wpa 1939” or “wpa 1940”.
    of course the shasta dam and others are much more obvious examples nation wide.
    perhaps wind farms built in the near future would be still in use sventy years later.

  3. mperelman on

    What you saw in Redding is typical of most communities that date back to the New Deal. We take these projects for granted and never notice the wpa 1939 beneath our feet.

    Thanks.

  4. Michael Wade on

    Dear Dr. Perelman, I didn’t see another way to contact you, so I have a couple of general questions as opposed to comments on your blog material. As a reader of most of your books, I have great respect for your point of view as a critic of the capitalist order and the classical economic theory that backs it up. In an attempt to write some short pamphlets listing critiques of the current system and, more importantly, a list of reforms(both immediate AND long-range), I have been researching many left-leaning writers in an effort to find some already existing lists in order to make my work a little easier.It is difficult for a non-professional and inexperienced writer and researcher such as myself to edit the voluminous material on this subject. Such a list of your own would nice, if you have one, AND/OR the lists of other progressive economists. My second question concerns your knowledge and opinion of the revived monetary and banking reform movement and the Social Credit movement as exemplified by such books as The Web Of Debt by Ellen Brown, The Lost Science of Money by Stephen Zarlenga ( also his American Monetary Institute at http://www.monetary.org), We Hold These Truths: The Hope Of Monetary Reform by Richard C. Cook, and Debt Virus by Jacques S. Jaikaran. Their ideas seem very exciting to me but so far as I can see they seem invisible to all the progressive economists and political writers that I read( and I read dozens of them besides yourself). I am seeking confirmation ( or NOT!) of the basic soundness of their ideas from progressive economists that I respect( Michael Hudson, Doug Henwood, William Greider)and as a longtime admirer of your works would appreciate your thoughts also. The answer can be short, if positive, with a brief explanation for those points on which you have a negative opinion. You might also guide me to other economists whom you respect who may have critiqued this reform movement as well. I look forward to your answers AND to your new book! Sincerely, Michael Wade


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