2/7/09

Spaghetti Economics

The Big Point being lost in all the back and forth over the stimulus plan's flaws is this: there is no such thing as a perfect stimulus. First, we don't really know what will work best; second, no giant bill like this gets through Congress without massive amounts of unattractive stuff. But with consumer demand collapsing and business retrenching, government is the only entity that can lift demand in ways that avert a self-reinforcing downward spiral. We need to throw lots of spaghetti against the wall, and fast -- and continue to throw lots of spaghetti against the wall for at least a few years. This is not a case against trying to make the spaghetti tossing as smart as we can -- it's just an acknowledgement that we're unlikely to know what's really best and the most important thing is the volume and speed of the spaghetti we start tossing. And yes, once we get things stabilized, we'll have to come back and figure out a pasta withdrawal diet (i.e. long term budget reform, slowing the growth of health care costs, raising taxes, etc). But that will be a comparatively good problem to have once we're past this mess.

3 Comments:

Blogger LAToxDoc said...

Yes, absolutely right. Perfection now is surely the enemy of the Good. Let Congress please get on with doing Good. As a specific example, political pork may be an imperfection, but that doesn't mean some pork projects won't redound to the nation's good.

Of course, the stimulus package was on the smallish size to begin with, considering our projected GDP gap ($2 Trillion) and our projected "employment gap" of 3 million jobs. In this situation, we have the early Roosevelt months as a reasonable teaching example. Try things. Then when that doesn't work quite right, try more things. Keep trying.

And for goodness sake, let's hope that Congress (especially the silly Republicans) will drop the cant about pork and free markets. This is nothing more than a figleaf for dead ideas. Here's what America needs, and everybody knows it: Put the country back to work, by paying workers to do what needs to be done. This goal is actually pretty simple.

Of course, thinking about the Bush Bubble years, what was never needed was to pay fat-cats in fancy suits a wasteful upfront share of capital flows, just because they could click a mouse button smartly.

By the way, I listened to LRC from this past Friday. Matt Miller was terrific, as always. But I wondered if Tony B has completely lost his mind about super-rich salaries? He's become a crackpot.

February 8, 2009 at 1:23 PM  
Blogger Michael said...

Tony B losing his mind? P'shaw!

You said it all. The mindless recitation of "cut taxes! cut taxes!" as the cure for everything from hair loss to weakness in the Dodgers' bullpen has been standard issue talking point from the right for decades.

I think Tony and his cohort are panicking because we can now all see the naked emperor.

February 8, 2009 at 4:56 PM  
Blogger Michael said...

Gadfly/podcaster Dan Carlin (www.dancarlin.com) made an interesting point-why do we have to pick between accountability and speed? We can have both-we did during World War II.

Set a few clear guidelines for the projects, and make it abundantly clear to state officials that YOU WILL BE EVALUATED ON HOW YOU SPEND OUR MONEY. So let's say the Alabama Highway Commissioner set up his brother in law on a sweetheart deal to build a Bridge to Nowhere, and didn't take a lower bid? Guess what pal-you have committed fraud against the federal government, and you will be the guest of Uncle Sam for the next 10-15 years.

February 13, 2009 at 7:48 PM  

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