I admit it… I subscribe to Keynesian economic theory.
The government is working on the details of a “Economic Stimulus Package,” proposing to send a $800 check to every taxpayer.
One tiny problem, though… when Keynes was working out his theories, trade was a completely different animal than it is now. Remember, he made his mark by critiquing the Treaty of Versailles.
Today, if the Government decides to mail everybody a check in order to increase aggregate demand for goods, well, we better know where that money is going. In the days of yore, American factories (run by American businessmen and filled with American workers) were largely producing the goods people were buying. Handing money out to the citizenry would certainly have a salubrious effect on the economy. The initial money would be multiplied many times as it passed from one person to another.
Nowadays, with all that manufacturing stuff sent outside our borders, that same money will quickly vanish, like a bucket of water running into a desert of (foreign) sand. The effect won’t last long, and will help foreign factories (run by foreign businessmen and filled with foreign workers) more than American. The Keynesian stimulus will be minor.
Mr. Government, if you want to help the economy, get rid of some of the onerous laws and regulations (ADA and some of the ridiculous EPA laws come to mind, I’ll give my thoughts in a later post) and invest in infrastructure, particularly energy. Removing our dependence on foreign oil would be a Good Thing.
As for me and my house, we’re going to start preferring American-made, cheap Wal-Mart socks be darned.