Varying Points of View

I've just read a few different articles on the state of the economy and our national debt and thought I would share them here. There are varying opinions on what to do next to start creating jobs. There are actually more than two sides to the argument, but the two basic sides are that we've already spent too much money and now we must focus on national debt vs. we didn't spend enough on the stimulus last year so we need to do more and forget about the debt in the short run. There are also the sides of the argument for a larger government role in our daily lives, and against.

There are no easy answers. However, when it is clear that one plan hasn't worked at all, it's time to come up with some new ideas. The Gulf of Mexico situation is a microcosm of this.

For whatever reasons, I don't believe last year's stimulus has done much for the economy. The typical boom and bust economy would probably have done as much. The stimulus could possibly have worked if Congress had not filled it with pork and had not forced through the healthcare package, which spooked business. The proposed cap and trade legislation and the expiration of the Bush tax cuts will also be drags on the economy.

Now, that we are faced with issues in Europe, there is another tide coming in that we have to swim against in order to get this economy jump started.

It is worth looking at Japan since 1990. They have tried stimulus after stimulus over the last 20 years, but their economy has never enjoyed a significant recovery. Deflation took hold in spite of these stimulus packages. Ultimately, too much government spending becomes a drag on the economy due to the interest payments on the debt, and the crowding out of the private sector.

What are the solutions? I don't know, as the problems are very complex. We need to provide help for the unemployed and poverty stricken, but how much and for how long? Eventually, we must get the economy going to produce the new jobs. Any way you look at it, we are probably in for more pain and more government debt.

http://theweek.com/bullpen/column/203544/does-washington-care-about-unemployment

http://www.tnr.com/blog/william-galston/75228/the-case-against-keynes-some-questions-krugman-too

http://www.usatoday.com/news/opinion/forum/2010-06-01-column01_ST_N.htm