Wednesday, May 1, 2013

Arithmetic

I've bee thinking how the case for adequate federal stimulus spending could have been made back in 2011, when the Democrats' made their wrongheaded pivot to austerity.

Here's how I think the case could have been presented in terms everyone can understand:

If you have a total sum made up of three parts,and two of the parts drop, the way you keep the total the same is to raise the other part.  That's simple arithmetic.
Our economy has three parts:  consumers, business, government.  We're in a situation now where consumers are spending less because so many are out of work, businesses aren't investing and hiring because folks aren't buying, so two parts of our total economy are down.  So simple arithmetic tells us that the third part of the economy, government, needs to step in to raise the total to where it was before the downturn.
Now there are some who say that by reducing government, we will magically increase the other two parts.  Sorry, I don't believe in magic, I believe in arithmetic.  If we start cutting government - laying off people, buying less from businesses so they get smaller and lay off people, then the situation gets worse.  all three parts of our economy shrink even further. That's also simple arithmetic.
So let's apply that simple arithmetic and bring our economy back up to its potential.  Some more government spending now, and cutting it back when we're at full employment and businesses are once again thriving.