February 15, 2009
I find myself in the curious position of finding merit in the position of the critics of the economic stimulus package that will be passed into law this week. I was schooled in the thinking of Maynard Keynes and taught to be critical of the Monetarism of Milton Friedman so beloved of Margaret Thatcher and Ronald Reagan. Nonetheless I am nervous about what is going on now. It is unclear to me that the idea behind the package is anything other than ‘putting lots of government (i.e. taxpayer) money into the economy will restore confidence and ‘stimulate’ all that makes it go’. If that is the thinking then many of the projects that were cut in the negotiation process were just fine because it doesn’t really matter where the money goes as long as it released for spending.
It seems to me that the confidence or trust that underlies the economy has been damaged and investors are not responding positively if the stock markets are a measure of confidence.
I’m all for helping people keep their homes and creating jobs. Those things make sense to me, but spreading out the pain of change over a longer period of time and at great expense does not make sense. It makes for more debt in the future doesn’t. I smell putting good money after bad and would love some help in understanding why I am wrong about that, which I earnestly hope I am.