Opinions are personal. This is why in instances when people start throwing rhetoric around as fact, a person should step back and wonder if their "facts" are actually that. The recent stimulus package has been just such a case.
Instead of listening to pundits and people with vested interests, it is best to approach the argument from an objectively logical basis. Though there is no solution to this problem that is guaranteed to work, I believe, personally, that there is one option with more validity than the others.
If the financial crisis is examined carefully, it can be seen that the peek of prosperity before the fall was artificially created. What exactly does this mean? Homebuyers were taking out loans to buy properties they could not afford, and mortgage bankers would sell these loans in a bundle calling them securities. These securities were then bought by banks. When the homebuyers couldn't pay for the loans, the securities became worthless. From the beginning the homebuyers did not have the income or savings to pay for the houses.
So in the end all that happened was the inevitable: the banks found out the securities were generally worthless. People were making millions off of assets that were not backed by real capital, creating fake wealth. So even though we are in a recession now, how prosperous would the economy have been if a different trajectory had been followed and this artificial wealth had not been created?
The Great Depression did not leave us with only bad results; it did lead to the articulation of macroeconomics and aggregate demand by John Maynard Keynes. His idea was that the Great Depression was caused in large part due to a lack of demand due to low consumption. President Franklin D. Roosevelt attempted to fix this problem by stimulating the economy through government action, and though many naysayers noted that unemployment rose during the New Deal, this is a gross misstatement. When the New Deal was in place, unemployment dropped. When FDR thought the economy was picking up, though, he tried to balance the budget by cutting many programs, which drove the country further into depression.
So what is the lesson from this example? From what I know about the Great Depression, how it was dealt with and the fundamentals of aggregate demand, why people do not support the stimulus bill is a mystery. I know that our generation will have to pay for the stimulus later, but I would rather see higher taxes later than to see my friends and family lose their jobs.
The Great Depression shows that the stimulus bill is not pork. Yes, there are huge sums of money going to green initiatives, family planning, transportation, and so on, but is this really pork, or is this the government stimulating demand, keeping people employed and creating new jobs? This comes back to the artificial wealth of the boom before the bust. If people do not have enough wealth to support consumption even close to the level during the boom, the government must step in to inject funds to support our economy, and spending on these projects is the best way to do this.
Though I am presenting my own views on this subject, I believe everyone needs to form their own opinion on these issues and not take the word of others as gospel. Instead ask questions, research, even Google things and come to a personal conclusion. This issue goes much deeper than I can even come close to discussing in one short column.
Dave Stone is the arts consultant for The Eagle. You can reach him at edpage@theeagleonline.com
