Off-Topic: The Forgotten Man
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Name:
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MartiniMan
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Subject:
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The Forgotten Man
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Date:
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1/30/2009 10:31:53 AM
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Hound: It wasn't so much that the WPA or any of the government programs didn't accomplish some good. It was just that all these programs were intended to spur the economy and while there is some economic benefit it is not sufficient given the cost nor long lasting for several reasons.
First of all, how is it funded? We all know where the money ultimately comes from, the taxpayers. So if you raise taxes you are simply robbing Peter (who is productive) to pay Paul with a wildly inefficient middleman (the government). Either way, Peter has less money or incentive to invest, grow a business, start a business, etc. Alternatively, you could do what Congress is proposing which is in essence to print money to pay for the government programs. This raises the specter of stagflation on the one hand and alternatively will ultimately cost the taxpayers at some point in the form of increased taxes which will depress the economy.
Second of all, from a purely historical perspective it is clear that the worldwide depression manifested itself as the "Great Depression" in the U.S. Part of this was due to the early actions and inaction of the Hoover Administration. For example, he should have never signed the law increasing tariffs because our trading partners retaliated and trade dropped 40% in one year. But when Roosevelt was elected he took almost the opposite tact and believed government was the "beneficient hand" to spend into prosperity. And so he implemented huge government programs and inserted government into business in a way it had never been done before. If you look at the economic data it is crystal clear that it simply didn't work and we continued for another 7 years in economic malaise.
What will end a recession is investment by business which will create jobs and improve consumer confidence. Government has a definite role to play in this process but the kind of spending that is proposed in the current economic stimulus package will not work as intended and is a huge waste of the people's money. The best solution for short-term stimulus is permanent tax cuts and credits that will stimulate business investment. The stimulus package costs $275,000 for every job created. If you gave me that very same $275,000 I will create 10 jobs paying between $65,000 and $125,000 per year. That is why I think they are all wrong and it won't work.
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