Economic Stimulus

You see, this is why they don't put me in charge of the Treasury or some other financial giant. I obviously don't know how economics work.

It seems fairly simple to me. In a "free market" individuals and companies are going to have a product that they can sell to people who need their product (whether it is a service or an actual product). This product is priced in such a way that it brings income to the individual or company. And we have an economy.

In this simplified economy, there are, of course, variables. You may have something people need (or want), but they don't know it. You have to let it be known (advertising). You may have something people don't need (or want). You have to sell them on the idea (sales). You may have something people want or need, but there is competition. You are going to have to compete. You may need to produce a better product or a less expensive product.

Of course, this all gets more complicated as things interweave. You may make a product used in another product. There are safety issues and government approval and things like that. There are tariffs and taxes and other modifications externally imposed to affect business. Still, in my simple view, in a "free market" individuals and companies are going to have a product that they can sell. This produces income. And we have an economy.

The reason I say that I'm obviously wrong in my simple-minded view is that the "economic stimulus" plan I've seen doesn't seem to address any of this. There is a goal of making jobs, but these are government jobs that are designed largely to fix infrastructure. And we need infrastructure. Don't get me wrong. But maintaining infrastructure, although it is good, is not creating a product to sell. While it will give income to those who are given jobs, it won't produce income to our economy. Very little of this "economic stimulus" package is aimed at stimulating the economy. It might improve infrastructure. It might create jobs. But it won't change the economy.

Here's what it looks like to me. If you give a man a fish, he can eat for a day. If you teach him to fish, he'll eat for life. Or, in terms of economic stimulus, you can create jobs, or you can stimulate the economy (which will create jobs). The current package seems to me to be giving the country a fish. Out-of-work Americans will find jobs available that weren't before and they can eat ... for a day. But ... wouldn't it be better if there was a plan to increase production? That would be a lot more like teaching the man to fish. Take this whole Big 3 automaker thing going on. They need money to continue. So we're going to give them billions of our dollars. Is the reason they are struggling that they don't have enough money? Or is it that they don't have a product? Is it possible that they're in trouble because their competition is making better, cheaper products than they are? And if that's so, isn't this spending simply giving them a fish?

Oh, it's all so complicated. The economy looks so simple to me. Encourage production and you encourage economic growth. But, hey, what do I know? Obviously this is something the President knows. Of course, Wall Street isn't impressed, but, hey, who says they know economics?! Nah! Stop being such a naysayer! Surely the answer to all problems is simply to throw money at it, isn't it? Yeah, that's the ticket!