Thoughts and ramblings on tech, media, culture, and food. Plus some other stuff, I'm sure.

Time to Weigh In

Well, everyone else is talking about economics and the stuff going on with the now $838 billion stimulus bill, I figure after a few Twitter conversations I should weigh in a little. Because, as @matthewgood says: Everyone is a macroeconomics expert right now.

And he's right. The past few weeks and even back before the first bailout was issued, everyone was espousing their ideas, waxing intellectual on the topics of how the government should spend money, where it should go, how big that number should be, etc. There are a few differing camps and they seem, often times, to be broken up between the more liberal and more conservative. That line between Democrat and Republican is always rough and each side claims to have proven results in their case.

As far as macroeconomics go, it's pretty simple really. While in Washington state last month, I talked to my cousin Josh (who has a doctorate in political science and teaches at SUNY Buffalo) about this stuff a bit. We carried the conversation over to facebook via a few articles we'd read, and he explained that it doesn't really matter where the money goes or how it's spent, it just matters that it is. "It's Keynesian economics 101," he told me. Just by spending that money - wherever it may go - we'll increase GDP and thus revive the economy.

I trust my cousin more than most people on these issues--mainly because he's been into politics for as long as I've known him, and now has a doctorate in poli-sci--but, being me, have to question that line of thinking. Now, there may not be a question of whether spending that money will start some motion, the question lies in how effiicient that spending is going to be. Because large spending didn't seem to help out during the Great Depression or with the New Deal, didn't help during the Panic of 1893, and hasn't helped more recently with stimulus checks and automotive bailouts.

The two differing sets of ideology are summarily this:

  • Free Markets should exist outside of government meddling and be allowed to run their courses no matter what.
  • Government should have a say in how Free Markets are run and step in at any time to fix things.

I am not opposed to government regulation, but I am opposed to bad, arbitrary government meddling. A lot of our problems now are due to 1.) The unethical behaviour of those with the most power (I lump in certain politicians), and 2.) Poor or inefficient regulation. I think regulation can be good, if it's done intelligently. But so far, we don't seem to have a good track record with knowing how to regulate markets effectively. This has gotten to the point where we now need to re-regulate our regulations in order to fix what's been screwed up in the first place by regulatory legislation.

So, starting with the first problem I've pointed out above, those with financial power have abused the markets to better their positions. This is seen in the mortgage crisis, bad loans, automotive collapse, the stock markets, etc. In a capitalistic system of free markets, you would normally allow this collapse to take place in order to build a better system the next time around. That's the phenomenon that will inevitably happen in a system left to its own devices.

Here in America though, we believe everything has to be constant (except, apparently when it comes to presidential campaign marketing - though that's another topic for another time), so we meddle with those markets by instituting legislation. Sometimes it works, more often than not it just bogs down the system, making things more expensive. We push legislation into effect to stop global climate change - regardless of whether the science is actually valid, and regardless of whether it matters. We think we have to keep a static system, that any change is bad.

I contend that when industries or companies fail due to their misdeeds, newer, better, more innovative identities will take their places. That's how the system is supposed to work. GM goes under because their cars aren't selling. Their cars aren't selling because the company hasn't been smart enough to make the cars people want to buy. Whose fault is that? Who should take responsibility? If they disappear will not a newer, smarter, more appealing car manufacturer take their place?

Instead we take tax-payer money and put it back into an industry, that has been failing for a while, to keep it alive just a few more years. To give them another chance. That's not responsibility, that's stupidity. That's gambling.

People around the country are losing their jobs. So the government is going to take over and cradle them, tell them it's alright and to stop crying, 'because you can work for me now.' So we come up with new jobs to build roads, or buildings. The ROI (Return on Investment) doesn't matter, the fact that we are borrowing against our grandchildren doesn't matter, all that matters is that people have jobs. How do we pay them for that work? I mean, these new roads aren't generating any money. We just take future taxpayer money and give it to them.

Hysterics fuel a sense of "we have to do something, anything" rather than a smart, intelligent look at how we can wisely spend money to help our economy.

I am of the firm belief that the government is not supposed to be our mommy and that citizens need to take responsibility for themselves. As the old adage states, shit happens. We deal with it and we rebuild. That's what America has always done. We take responsibility for our actions, we take our job loss and turn it into new, profitable ways of supporting ourselves.

But in today's climate we've turned lazy and want the government--no, expect it--to do everything for us. From giving us money when we can't get work, to subsidizing our loans, to giving us tax refunds when we don't even pay taxes. Does government exist to make everything fair--is that a Republic's original purpose? I think when it comes to America I'm more in favor of justice than handouts.

This is where the problem is. Instant gratification has even entered the President's vocabulary when he tells us that we can't afford to do nothing. What he really means is, we have to do something. Anything. And that's what is happening. Shooting from the hip, throwing money at the problem without a clear idea of where we're headed or what it's going to do.

There is no precedent for saying unequivocally that a spending plan of this magnitude will bring about 3-4 million jobs. Or that those jobs are sustainable or will help anybody. But we believe it will. It's all speculation. We're committing to this amount when only 25% will be spent in the next year and there isn't any sort of definite proof that any of this will change anything. But we believe it will. And we are all the more gullible for doing so.