> At a moment when the entire spectrum of bourgeois stupidity and cowardice is breathlessly [??] embracing the magical "stimulus package" nostrum, one might imagine that a "left" would be eager to develop a critique of the prevailing idiocy. Instead, many of those [unnamed individuals] who style themselves "on the left" reveal their thinking to be simply the left flank of bourgeois stupidity.<
SO, TOM, WHAT'S wrong with the "stimulus package" _per se_? Let's
examine it (remembering, of course, that at this point, it's
* It involves Keynesian fiscal stimulus of the demand side in a time
when monetary policy has largely lost its power. Even without the
supply-side stimulus, it creates jobs and income via the multiplier
* If a major part of the program goes to "revenue sharing" with state
& local governments, it will prevent the current cut-backs in social
services, education, etc. from happening or even reverse the trend.
* This demand-side stimulus will increase the markets faced by
business, encouraging them to do fixed investment (the accelerator
effect), which would have a further multiplier effect. In theory,
this fiscal expansion would also "crowd out" business investment by
raising interest rates. But if the US economy is indeed falling into
some sort of depression, this is precisely the time when what's more
important to business is the size of the markets where they sell
stuff, not the cost of finance.
* If done right, it helps the "supply side" of the capitalist economy,
too: fixing old infrastructure that's decayed over the years (due to
neglect) and adding new infrastructure (and education and basic
research, etc.) help raise the ability of the capitalist economy to
produce in a few years. This is quite different from the wasteful
spending (Iraq, etc.) that has characterized the last 8 years.
(If Obama and his economic advisers are smart (and their fans say they
are), this kind of spending will be done using a "capital budget"
rather than from a merged budget, where unlike the current budget, the
capital budget does not have to be balanced (cf. Robert Eisner's
* If done right (as described by Obama's followers), this kind of
investment program would reduce the US economy's negative
* Any accelerator-driven fixed investment would also promote the supply side.
I don't see why this is "stupid," but obviously there are problems:
* It increases the US government's debt, adding on to the obligations
that Dubya accumulated. But if done right, it would also raise the
ability of the US economy to produce and thus the US government's
ability to handle the debt using tax revenues (without raising tax
rates). In any event, the increased government would correspond to
increased government assets, no? Unlike consumers, firms, or state &
local governments, the US government is not going to go bankrupt in
the near future (at least not during the next 20 years).
* Much of the demand-side stimulus in the US would "leak out" to buy
imports. But the _world_ economy needs stimulus, doesn't it? Even
China is having problems. Also, a lot of countries outside the US are
also investing in infrastructure, etc., which would "leak out" from
their economies, some of it to buy US products. So it's possible that
a world-wide recovery could happen.
* In theory, fiscal deficits cause higher interest rates, which would
raise the dollar exchange rate. Given the low interest rates that
monetary policy has imposed, this might be a good thing. Absent the
"safe haven" effect, the US dollar would have fallen drastically in
* A lot -- even 90% or 99%? -- of the infrastructural investment
might be "pork barrel" spending, helping the districts of influential
congresscritters and businesspeople but not helping long-term supply
growth. But if we're in a severe depression, maybe even building
pyramids is appropriate (as Keynes suggested) because it's the
demand-side stimulus that's most important.
* However, building pyramids and the like (cf. Memphis, TN) might lead
to increased pollution, just as with normal growth of real GDP. The
"green" content of the program has to be emphasized.
* The program saves capitalism, not humanity. It's not going to
produce socialism, to the utter disappointment of the maximalists. In
fact, without political pressure to counteract the prevailing winds,
it might not even have very equitable results. The steady rise in
inequality since the late 1970s in the US might stop, but it might not
be reversed. It's quite unlikely that the US will see any kind of
social democracy in the near future.
* It does not reduce individual hours of work per year. But in the
current situation, I'd guess that many people would rather work _more_
hours, especially since there's no guarantee that higher pay per hour
will compensate for the reduction of hours. Faced with their severe
debts accumulated over recent decades, a lot would be interested in
more hours of work simply to reduce their debt loads. The program does
not seem to promise to end the US slide toward mass debt peonage.
I'm sure that there are other flaws in the Obama program (especially
in practice) and I'd like to hear about them.