Please don’t stimulate my economy…

Country Politician - George Bingham

In my other recent blog, In Defense of Capitalism, I argued that increased government activity would exacerbate this crisis. I argued that, in the long-run, investment will fix itself. As I read the news, I hear good and bad things. I cringe when I hear that the government is going to spend $850 billion for a stimulus package. But, I am encouraged when Barack Obama wants to cut taxes to stimulate the economy. I fear that government spending, on this scale, is bound to be inefficient and may makes things worse. But, I also know that tax cuts tend to stimulate economies in the long run. When people can spend their own money, they tend to benefit an economy. Money is invested wisely, looking for returns. The government is a bureaucratic mechanism that is extremely slow to work. When it does finally work, it tends to lend and trade favors not always for the social economic good. Governments tend to overspend on shotty merchandise. You need only look at the J. Edgar Hoover building to see how poorly the American government spends its citizens’ money. What makes you think they will use $850 Billion any wiser?

You may ask what proper role the government should be playing during the crisis. It seems the social consensus is that the government should be spending. Even the Economist argues for such stimulus and spending. I can’t agree with the consensus. I know that the government will not spend it wisely, and projects will only begin simply to get government money. Many argue for infrastructure repairs, public repair efforts. These contracts beg to be bought and bribed. If there is one thing politicians always owe, it’s favors. Horse-trading is notorious in Washington. With that $850 billion, we have given them all the tools they need to repay favors. Every one of those dollars is a corruption charge waiting to happen. As if Ted Stevens wasn’t evidence enough.

As bad as this economy has gotten, I imagine government spending will avert a complete economic collapse. I only fear that if the government cannot avert the collapse, they may end up exacerbating it. Zimbabwe is clearly trying to spend their way out of a crisis, with millions percent inflation. As a result, their currency is worthless and a society continues to spiral down. I understand we are one of the richest countries in the world, but many lessons await a government that tries too hard. Every world ruler has eventually fell, before us it was England, and before them Spain, and so on. With poor governance and corrupt spending, we only move ourselves closer to being the next fallen World Power.