Thursday, January 26, 2012

Simple Thoughts on Complex Economics

How much can a government help to promote an economic recovery? There are two different schools of thought on the subject. Now, please note that these are simplified ways of summing up this complex topic as well as notes from one who majored in neither economics or political science. So I might be making things too simple. However, even in my limited understanding I can understand that we live in difficult, hard to fathom times.

One is that the government can provoke a recovery by spending money on different things. Unemployment payments, highway projects, government jobs--all take government money and attempt to inject it into the economy, hoping it will provoke growth. Austerity is seen as something that retards growth, making everyone reluctant to spend money on anything.

The other school of thought is that the government can't grow anything--that any spending that the government does is a net negative--at best it's neutral. It is a moving of money from one place to another and creates no new wealth, no new innovation and does not promote recovery. Government can best promote recovery by getting out of the way of the private sector as it works.

Last night's SOTU speech and the reply were just the latest salvos in this ongoing war of ideas. From the differing views of how things are now to the views of how capable the United States still is, the differences noted above were on display from President Obama and Governor Daniels. We also see this right here in our little cowtown on the river: we have the projects downtown, Power and Light, the Sprint Center for example, with heavy government investment.

We are always going to have a certain amount of the government pushing and pulling the private sector. Because humans are the way they are, a certain amount of regulation will always be needed, especially as corporations get bigger and lose their individual human identity (despite the Supremes' decision, corporations are not people) and fail to take heed of the price of being part of the society that surrounds and supports them. Yet we also know that the private sector, the person or group working on their own behalf, with their own goals and missions creates the most breakthroughs and new wealth--and is entitled to enjoy the fruits of their labors. Government can not bring that creative energy and desire--just love at the sad state of the Soviet Union when it fell--first world weapons and third world infrastructure.

We are in difficult times--we have to stop demonizing each other. It just doesn't help the cause. We need to take some difficult medicine and we have to start working towards the next breakthrough, the next frontier. Otherwise, we will suffer both here and in the world at large.


chuck said...

The different philosophies notwithstanding, the American infrastructure is a disaster. Our nation's bridges and highways are desperately in need of repair.

THAT needs to happen, no matter what the state of the economy is. Recession or boom the streets and especially the bridges are shot.

This activity, fixing the American infrastructure would create jobs, public assets and training for those who would be employed in this work.

Thhis work needs to be done now, and with unemployment at all time highs, why can't we get to work actually doing it?

I realize my request is an oversimplification, when attempted in real time, but if there is a national will to get to work and fix these broken roads and bridges, I really don't see excuses, I see opportunity.

Quit whining and get to work.

Bob G. said...

I have to agree with Chuck here.
While we worry about the "global" stage and which part we're playing, our OWN nation is rapidly falling into shambles...LITERALLY!

And not much (if anything) is being done to reverse it.
You can only put SO many band-aids on that compund fracture...for so long.

Thing is, we are also players ON that global stage (can't pull isolationism these days), and many times, we become the "victim" of other nations' folly...that can't be helped.
Excellent post.

Stay safe.

The Observer said...

some more simple thoughts on the way...great comments here!