Friday, February 13, 2009

When the Market Collapses

I strain under the objections to spending. I ask, which would be better for the economy:

1a: Federal Government incurs debt,
1b: gives money to people (spends money on tax refunds),
1c: people spend money on private needs (stimulus #1),
1d: no common needs met (stimulus #1 undermined),

2a: Federal Government incurs debt,
2b: pays people to work (spends money for productive work),
2c: People spend money on private needs (stimulus #1),
2d: Common needs are met through work they do (Stimulus #2).

Is there something I am missing? I am not hearing it in the public debate. Government spending packs twice the stimulus value, or more, of just giving tax breaks. What is so horrible about improving the public infrastructure? (I have heard Obama suggest this point.)

I just bought a van - for two months of my income, $1500 - from someone who wasn't using it. It will make a huge difference in terms of what I can accomplish, And my neighbor now has money to spend.

How much would it hurt me just to borrow the money and GIVE it to my neighbor? I would be NUTS!

Do I not do us both more good by getting this vehicle or his services in exchange for my money? Then I have improved my situation AND he has money to spend.

Please tell me, when will Progressives and Democrats finally bring this huge rhetorical lever to bear on the debate? Why are we not speaking this obvious and huge distinction?

The United States Government does not need debt. The People of the United States DO need to rebuild things we SHARE, AND WE ALL BENEFIT FROM, - like roads, schools, Broadband, Green energy infrastructure, US parks, etc. To meet economically beneficial common needs, debt is acceptable.

Suppose, as was told to me yesterday, that the entire stimulus package was sent directly to tax payers (That disenfranchises me) and everyone got $50,000. They would all, of course, spend the money to meet personal needs. How would the Government recover any of this to pay for common needs? By TAXES of course!

So either, without taxes, the universal infrastructure continues to decline, or, with taxes, all that money that was sent to taxpayers under government debt, has to be returned to the government. What is the stimulus value of this?

The stimulative value of tax rebates or refunds is unitary: People have money to meet their needs, which is then lost because these same tax payers must repay those loans. Even if the economy expands under the tax-relief-only, how does the government recover funds to pay off the loans? By skimming off the extra value produced by the economy! This is self-defeating.

The stimulative value of work has two parts 1: the general value to the economy of the product of the work, and 2: the income that enables people to meet their needs. Then, when government spending adds the double whammy of the huge productivity of all the labor it bought, PLUS the money it injected into the economy, the economy will improve dramatically enough to pay off the loans without depressing the economy.

The relative value of the work may vary, but the most useful way for the US Government to spend money is by buying labor. As demonstrated by the New Deal Works, the benefits can be felt a century later. Public spending is one way we become a nation with a vigorous economy.

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