Obama's stimulus strategy: Will it work?
Here is another question I have been thinking about for over the past month or so. It is probably the most important question of our time. Much is hanging in the balance including the future of our country.
The first place to start thinking about this question is focusing on what is the purpose of a stimulus. There are several results we are hoping a stimulus package will create. The first is to save jobs and keep people working while we wait for the economy to stabilize. The second derivative effect we are hoping for is additional job creation from these jobs. The trouble with investing in cement projects like building schools and roads is that they do not grow the economy to be self sustaining for the long term. These are short term events, with no life beyond building the project. When the roads are fixed, it's done. When the school is built, we just take crowded schools and make them less crowded by moving students and teachers into them. True stimulus needs to have a multiplier effect. But where could a stimulus create a multiplier effect? The answer is in new technology!
New technology is a part of President-Elect Obama's stimulus package included in his proposal for the Greening of America with solar energy, wind power and other renewable technology, which will reduce and eliminate our dependence on imported oil from the Middle East. But we will need much more of an investment in this area, if we are to stop the transfer of wealth from the U.S. to the Middle East. There needs to be investment in specific technology which will create new jobs in new areas where America can take the lead. Finding new sources of energy for the planet is a very important one, given the negative effects coming from Global Warming. Building more fuel efficient automobiles is good, but building new cars, which use alternative green technology, is better.
What else has a multiplier effect of creating job, which create additional jobs? Can you think of places where job creation creates more jobs? Leave a comment.
The first place to start thinking about this question is focusing on what is the purpose of a stimulus. There are several results we are hoping a stimulus package will create. The first is to save jobs and keep people working while we wait for the economy to stabilize. The second derivative effect we are hoping for is additional job creation from these jobs. The trouble with investing in cement projects like building schools and roads is that they do not grow the economy to be self sustaining for the long term. These are short term events, with no life beyond building the project. When the roads are fixed, it's done. When the school is built, we just take crowded schools and make them less crowded by moving students and teachers into them. True stimulus needs to have a multiplier effect. But where could a stimulus create a multiplier effect? The answer is in new technology!
New technology is a part of President-Elect Obama's stimulus package included in his proposal for the Greening of America with solar energy, wind power and other renewable technology, which will reduce and eliminate our dependence on imported oil from the Middle East. But we will need much more of an investment in this area, if we are to stop the transfer of wealth from the U.S. to the Middle East. There needs to be investment in specific technology which will create new jobs in new areas where America can take the lead. Finding new sources of energy for the planet is a very important one, given the negative effects coming from Global Warming. Building more fuel efficient automobiles is good, but building new cars, which use alternative green technology, is better.
What else has a multiplier effect of creating job, which create additional jobs? Can you think of places where job creation creates more jobs? Leave a comment.
Labels: Global Warming, Middle East, multiplier effect
posted by Charles Amico at 5:16 AM
1 Comments:
I think that all the bail out money has been wasted money. The Bush bailout will borrow a trillion dollars not to invest in anything but simply to buy up bad debt. The government should have let the weak/poorly-managed financial institutions fail and, if it really wanted to borrow a trillion dollars, at least use that money to invest in well-managed institutions, or even start ups, and let them use all that money to make new loans, as opposed to using the money to buy up bad debt.
With respect to borrowing another trillion (which is probably where this will end up, also) to invest in infrastructure, this is basically the same thing as approving every ill-founded bond issue in the entire country, as well as a few well-founded bond issues. Most of the money is guaranteed to be wasted, as a requirement is that it be spent in great haste. This it's really not a prudent investment, it's simply borrowing a trillion dollars from China and the other usual suspects and distributing it as "walking around money."
Borrowing capital to blow it on poorly-conceived projects and "walking around money" is precisely the sort of "spread it around" mentality which was criticized by McCain. The nation would have been better off enduring a 4 year recession than in running up another two trillion (and counting) in debt.
It's one thing for private businesses to gauge capital requirements and borrow money to expand their business. This sort of borrowing is efficient and produces true economic growth. Having the government borrow all the money and spread it around in great haste will do nothing more than increase the future tax yoke around my children's necks.
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