activity responses

Since I've been busy lately arguing over some various political questions I'll re-post some ideas I sketched out. One of them is actually mine, one is basically my adaptation of several old ideas.

"Should the government become the spender of last resort and have a massive stimulus to boost the economy?" -- Further clarification of this relies on the idea that the government could just buy up cars or TVs, or whatever in order to inject spending in the system. A direct stimulus check to the public it is argued would go into savings or debt, or mortgages and wouldn't cycle as much as spending does. There's a lot of problem with the idea that we should be spending (even though not spending is what causes recessions in part..and it means I've been spending because everything is so damn cheap). I was also very worried that this sort of idea was basically a soft price floor which price controls are generally a horrid economic idea.


I'd propose something a little different if his (Blankley's) idea is to have government buy stuff. Take people who are currently filing for unemployment and ask them if they'd like to have something to do for a little extra cash. Tell them it doesn't involve bombs or guns (which may dismay some). Give them a mission to go out and purchase a car or TV, or whatever it is the government wants them to buy on their behalf with a pre-paid credit card. If they spend less than the amount necessary to get the item(s), then they get a commission on the difference and still collect unemployment as usual. If they spend the amount or more, they get unemployment (and I guess the difference), but nothing else. They should have plenty of time to bargain hunt. If they spend the credit card on strippers or whatever, it's gone (they don't have to repay it), but they get nothing. They forfeit unemployment benefits and obviously no commissions. It should be spent on the requested item(s) only. That gets around the price floor from negotiated government spending, gives unemployed people something to do in the 'make work' tradition of FDR (and I'd have no problem extending unemployment out for a reasonable time of service in this task), and it still injects some money into the economy by force feeding spending. I'm not fully in favor of this idea either, but I find it much preferred to a price control system created by massive non-defense government purchases in consumer arenas.

I'm not seeing a reason to use a price floor as consumers won't buy below their market price which merely encourages more people not to produce (or adds to the inventory surpluses of manufacturers/retailers, which would create a massive price war between MSRP and retail except for the Supreme court's decision last year). Consumer spending makes up something like 70% of GDP, not the government's budget. If they don't buy, there is no way the government can make up the difference. That's many trillions of dollars we're talking about.