The Government and Economic Stimulus

Nowhere is the need for better education more apparent than when politicians talk about “economic stimulus.” And it doesn't matter which political party we are talking about.

Ignorance About Economic Stimulus

The other day I heard a person with a business background suggest that if he could pass just one law he would require all members of congress to take a basic course in economics! That might be a good idea.

One party seems to think that spending money on almost anything is a stimulus to the economy. The other seems to think that cutting taxes on almost anything is a stimulus. But will either of these help?

When you consider the long term affect of the debt incurred, most deficit government spending hurts the economy in the long term. Tax cuts, unless carefully crafted, are equally problematic. Certain spending and certain tax cuts could stimulate the economy, but they must be intelligently and carefully designed.

What Makes for Effective Economic Stimulus?

What could the government do to stimulate the economy, if anything? Actually, there are some things that could be done if a new perspective is adopted, one that focuses specifically on steps that will enable businesses to become more productive, allowing them to expand and put more people to work. Also, things that lower the cost of living for people so they will have more of their money to spend on additional purchases.

These steps require accepting the fact that effective government actions must be for long term growth, rarely quick fixes. This is one of the weaknesses of government fixes. Both the public and politicians look for short term cures which almost always make things worse in the long term. Their personal interests are at odds with the long term good of the country.

Examples of Effective Economic Stimulus

One good example of what has been done in the past that effectively stimulated the economy was the construction of the interstate highway system in America. In many cases a twelve hour trip was reduced to an eight hour trip, reducing shipping costs dramatically, greatly increasing the productivity of American businesses and workers.

A good example of what needs to be done now that the government could help with is to improve the electrical grid in this country so that all forms of energy production could be developed in all places and make their input for the good of the country. Both political parties give lip service to it but little seems to get done.

Act Now to Stimulate the Economy

This is the time for all in America and around the world to take time to learn a little about the basics of economics, apply that knowledge to their personal lives, and try to influence government leaders to act intelligently in their efforts to improve the world economically.

There are things that can be done to stimulate the economy. Some of the most effective ones may not require more money! All of the most effective ones require a little intelligence, good judgment, and adherence to sound economic principles.