Friday, October 02, 2009

About the Stimulus

Today's as good a time as any to muse about the stimulus. A few weeks ago, VP Joe Biden was saying the stimulus was working better than he could have imagined. With today's disappointing employment figures I heard several media-types asking if we need yet another stimulus. Yowza.

Conservatives are split as to whether the stimulus is completely awful and unable to promote even short term growth, or whether government stimulus can give a short term boost at longer term expense. I find myself torn between these two ideas.

What I'm more sure of is that, at the margin, the degree of "badness" of the stimulus has to do with whether the government is spending the money on things that are of real economic value, or whether the funds are being blown on multiple upgrades of the recovery-dot-gov website, dog parks, homeless projects for cities without significant homeless problems, upgrading airports for nobody, and other generally porky projects.

But assuming that stimulus can "work" (at later, greater expense), in order to stop unemployment quickly it must be spent swiftly and profligately. This is in direct conflict with the idea that it be spent smartly, which would take some time and careful planning.

The Obama stimulus is in many respects the worst of both worlds. It was jammed down with little to no planning, assuring maximal waste. But it was also designed to spend out relatively slowly in such a way that the short term boost (that may or may not be theoretically possible) would not materialize.

Thus, I criticize the stimulus both for being spent too slowly and also too wastefully, yet accomplishing the goals of neither model.

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