Virtual Bourgeois

Just An Analog Guy Trying to Upgrade For a Digital World

Some Random Thoughts about Political Economy

Posted by Gerald on January 30, 2008

The House approved a $146 Billion stimulus package to “jump-start” the economy.

The government’s most recent numbers put the US Gross Domestic Product in 2007 as a little over $14 Trillion.

Will rearranging about 1% of the value of the economy really matter?  This money doesn’t come from some black box outside of the economy.  It will be financed by lenders domestic and foreign.  It will have to be paid back.  This package might have some effect on the psychology of the marketplace, which might be good.  If it is used to extend unemployment benefits or in some fashion channeled to the neediest among us it would at least alleviate some suffering.  But will this really make a noticeable change in the direction of the economy?

Second – whenever conservative talk about government spending they do not approve of they describe it as “taking money out of the economy.”  The only way to take money out of the economy is to put it in a mattress.  Money spent by the government goes to companies and individuals who then spend that money on what they need.

Just like in the stimulus package.

We’ve had several successful examples of these stimulus packages.  The biggest was called the Cold War.  For decades we took billions of dollars of tax money and put it in the pocket of employees of the defense industry.  Where would California have been after 1945 without those billions of dollars?  Would there even be a Silicon Valley?

I don’t know.  This all seemed to make more sense before I started writing.

I’m tired.


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