Sorry everyone, this post is going to be short tonight as I'm fighting a bug and really need a full night of sleep. This last week has been challenging as I try and fit in more schoolwork to an ever busier week. I'm confident I'll strike a balance as I move from a mode of scarcity to a realm of possibility, but whoever said that November was going to be a difficult month in our first year at BGI was right!
Anyway, we've been discussing fiscal policy and its effect on the economy. Expansionary fiscal policy can directly effect GDP and create more jobs. One question that we need to ask is, can we combine expansionary fiscal policy with investments that will make long-term benefits for the economy and society as a whole? The Bush tax cuts and military spending hikes may have grown the GDP, but at what expense? Arguably, we made the rich richer, the poor less secure, and created a culture of fear and instability, while partly setting the stage for the largest recession in recent memory. This led to more power in the hands of the powerful serious tension and polarization in our politics. Hardly a positive development.
On the other hand, the American Reinvestment and Recovery Act (or ARRA) of the last four years, while modest, has sought to invest in infrastructure projects and various programs that can have a lasting positive impact. Particularly valuable is the investment in public transportation, which benefits the middle class and improves connections within and between cities. The construction projects themselves provide thousands of jobs, while the systems, once running, will also provide jobs while improving connections between people, which can help lead to a more vibrant economy. Like the great freeway expansion of the Eisenhower era, creating something valuable and tangible with our government spending has the double impact of injecting money into the economy immediately and supporting long-term economic health.
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ReplyDeleteNo problem on the short post, Chris. Health trumps homework in my book.
ReplyDeleteThe piece that's missing from your short analysis is, of course, political will. So long as the country is divided on the fundamental issue of the appropriate role of government, we'll never get the fiscal stimulus we need. That said, a full-blown depression that hit the 1% as well as the rest of us might make a difference. And may be coming...