Thursday, January 29, 2009

Stimulus Debate: Flakey Economics

Jeff Flake had a novel argument against increasing at least one form of additional government spending as Josh Marshall notes and rebuts:

Now he's explaining how capital spending on AMTRAK is also not stimulus because AMTRAK doesn't run a profit. Again, total non-sequitur. I think rail is something we should be spending a lot more on. But you can certainly disagree with that on policy terms. But you can't claim that that capital spending on rail stock and rail upgrades doesn't provide jobs. Of course it provides jobs. And whether Amtrak is profitable or not is completely beside the point.

Net income for both Ford and GM has recently been negative so does Congressman Flake think that if the American automobile manufacturers are somehow encouraged to hire more workers that this fails to constitute stimulus? In fact, a lot of companies currently have negative net income. According to Flake’s “logic”, the prospect for a recovery is really dismal!

1 comment:

TheTrucker said...

The objective is to inject money into the hands of the common people because that is the only way to actually devalue the ill gotten gains of the Republican sympathizers, apologist, and neoconomists.

We need inflation. We don't just need to fight off deflation but to turn this totally around. If inflation is induced by injecting money at the bottom such as with this stimulus package, then the people that the rightards claim will have been hurt by inflation will not be harmed. The claim is that the inflation hurts the poor and the people on fixed incomes and the like. The truth is that SS is tied to CPI and more jobs and rising wages are not harmful to the actual producers in the economy.

The rich and the Republicans have spent many, many years teaching all the kids that the inflatioin monster is Satan incarnate and that he will eat us. But if inflation is induced by virtue of additional money and more velocity among the common people, then the inflation hurts the people that currently have all the money -- the Republican supporters.

It is also true that real estate is considered to be the best hedge against inflation. The bad mortgages get good with a lot of inflation.