Saturday, March 21, 2009

How a Stimulus Works

Or Honor, Honesty and Confidence:

Keynes (founder of Keynesianism, the economic philosophy of mainstream liberalism) believed that recessions could be evened out by the debt spending of government. He believed that certain "multiplier" effects could be achieved by the way such money was spent. But the basis of the whole argument was confidence.

You see, in a deflationary recession (according to Keynes), demand sags because of a shock to the system or bankruptcies and the resulting loss of business confidence. By allowing government to be the buyer of last resort, you remove such concern and allow them to avoid taking a loss or as large of a loss for a time, preventing their need for new investment (and thus inabillity) later.

They know this will pass, and by way of the multiplier it does, and they will make a profit then.

But what happens when those same businesses see that at this banquet, they are the skeleton on the dinner table?

When they see it is a trap, when they see that they will be paying and subjugated to their "customer," in the here and now, later? What happens when, in the excuse of "a deeper problem," we push a healthcare system that was contrived hastilly, funding for Student Aid that is permaneant and is thus in no way stimulus, bizarre rhetoric about "greed" when business is but a tool, and force the contraction of an industry (healthcare) in the name of "cost" when we are suffering deflation (damage from the reduction of cost, according to Keynes.) What happens when we subject our entire economy to a byzantine carbon cap, instead of a simple carbon tax? What happens when government pulls strange shenanigans with stimulus money and contracts and creates a "scandal"?

And then in "response," they attempt elimination of the right of ex post facto. I don't care how cleverly their little bill is phrased or what kind of strange loopholes they are using to break a legally-binding contract, I have a right not to be prosecuted for something that wasn't illegal at the time I did it. AIG, scoundrels as they are, has that right to. As far as I can tell, we left it in the contract, and if contracts and legal process are not observed, well, why should it end with "scoundrels?"

See, you can debate the ideology all day, but it's the people I'm worried about. And anyways, AIG may be awful, but in their defence, they never agreed to be public servants.

1 comment:

bereezy said...

I like the post a lot. You make a very good point that all this media fuss about the bonuses is really pointless. How is it fair to criminalize someone for upholding their own contract? I really hope that the american people see through this sham and realize that even if you can call accepting these bonuses greedy, there is no basis for punishment by law.