The Coalition of the Swilling

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February 06, 2009

De-Stimulated?

Well, certainly this stimulus disaster has slowed in the Senate, so let's hope the rising public opinion against it will finally kill it. I think it will be an unmitigated disaster. People are finally taking a serious look at the very similar approach that Japan tried in the mid 80s: the real estate market crashed, causing a massive economic downturn, the government slashed interest rates to near zero, and when that didn't work the government unleashed a massive spending/stimulus program.

In the end, say economists, it was not public works but an expensive cleanup of the debt-ridden banking system, combined with growing exports to China and the United States, that brought a close to Japan’s Lost Decade. This has led many to conclude that spending did little more than sink Japan deeply into debt, leaving an enormous tax burden for future generations.

In the United States, it has also led to calls in Congress, particularly by Republicans, not to repeat the errors of Japan’s failed economic stimulus. They argue that it makes more sense to cut taxes, and let people decide how to spend their own money, than for the government to decide how to invest public funds. Japan put more emphasis on increased spending than tax cuts during its slump, but ultimately did reduce consumption taxes to encourage consumer spending as well.

Economists tend to divide into two camps on the question of Japan’s infrastructure spending: those, many of them Americans like (noted tax cheat) Mr. Geithner, who think it did not go far enough; and those, many of them Japanese, who think it was a colossal waste.

Among ordinary Japanese, the spending is widely disparaged for having turned the nation into a public-works-based welfare state and making regional economies dependent on Tokyo for jobs.

Not that economists or noted tax cheats like Mr. Geithner give a rat's ass what ordinary citizens think about the plans, mind you; we exist solely to fund them.

When you look at the provisions of this monster, which of course one is most certainly not encouraged to do, one is overwhelmed by the naked rampant pork, and not in a good "the other white meat" sort of way. Unless my memory is failing, it seems to me that one of the reasons we're in this mess is that people racked up way to much debt, so of course it makes perfect sense that a Michigan Senator adds a provision to this beast to make the interest on car loans deductible. Stealth Auto Bailout, baby! It's a brilliant plan, actually: reduce reckless debt accumulation by making it cheaper.

But I don't expect this calm to last. There are too many Chicken Littles running about screaming that we "Have To Do Something!!!" and that something invariably means more government spending, more government regulation, more government intervention in more aspects of our lives.

We need drastic changes in how our government is run and in what we expect from it, but that requires us to vote for people who will cut it down to size, and to hold them accountable...and ourselves if we refuse to act against them.

Posted by Mr. Bingley at February 6, 2009 06:06 AM

Comments

Posted by: Ogmmwoau at July 14, 2009 11:39 AM