Since everyone is an economist now, I figured that since I’ve had at least one course in economics and that I have no debt, I’m at least as qualified as others to ask some questions about the stimulus.
- Do we know both the originating cause and the maintaining causes of the current economic downturn? This is an epistemological question: do we have real knowledge in this area or are we still at the stage of robust competing theories?
- To what degree do the originating and maintaining causes feedback on each other? We hear of several aspects of the economy being involved: Housing, Lending, Finance, Employment, Consumer purchases, Government spending and non-spending. I mention the last because some believe that government non-spending will contribute more to continued economic decline than will government spending.
- What behaviors led to the current problems? I see several from my vantage point: High tolerance for deep debt on all levels (individual, familial, and multiple levels of government), a conviction that it is appropriate to live beyond our means when living in such a way has some positive consequences (I call it a conviction because the practice is so wide-spread I don’t see how we can use weaker language), a wide-spread sense of entitlement (“I deserve to be able to retire comfortably when I’m in my 50’s,” “I deserve higher pay then those other folks since my skills are rarer than theirs,” “Government has more responsibility to see to my needs and well being than I do.”), and a conviction – there’s that word again – that the economy ought to be constantly growing.
- If these behaviors contributed to our current condition, what can we do about them?
- If the economy is primarily about money and its transit through our society, then government is the biggest player in the economy. It controls the spending of the most dollars. Though the aspect of the economy we tend to be most aware of is the flow of money, does that mean we can adequately understand the economy if all we consider is money?
- Flowing directly from the previous question: If the economy is more than money, then surely there are more than monetary stimuli affecting the economy. If this is so, why do we think of “a” stimulus only in terms of money?
- Which behaviors are we trying to stimulate with our Stimulus plan? We hear the positives: hiring, home buying, consumer spending. But what about the other behaviors, the ones that drove our economy to its recent heights – and right over the edge? Do we want to stimulate more consumer debt? A greater feeling of entitlement? A conviction that we always need more, newer and better?
- If the Giant in the (monetary) economy – the government – wants to stimulate individuals and businesses to spend money (buy stuff, hire people), what kinds of action on their part will lead to that? Do we have knowledge (or only guesses) about why those agents are not performing the desired behavior right now? How do we map their attitudes? Is it a simple, “If you (government) spend the trillions, then they will feel free to spend their money also?” Or have people and businesses learned to think a little more long term, setting aside (at least a little) desire for instant gratification?
- Are there some broken parts of the economy that require time more than money to fix/heal?
- To what degree does desire to gain or keep political power play into the rhetoric people use to urge the passing, amending or scrapping of the current stimulus package?
- President Obama campaigned on hope. Hope can be good. But hope for what? Hope for a healthy economy? Have we ever had that in an absolute sense? I’m sure he knows from his years of community organizing that even when the economy is good, it’s not good for everyone. Even when the majority are coasting along, there are some who are hoping for better (if they haven’t despaired). Do we have shared hopes as a nation? Are those hopes shared in enough detail that a fair percentage of the populace would recognize and agree upon the fulfillment of those hopes should the fulfillment arise?
- To what degree can a healthy economy be based more on getting than giving?
- Would we be satisfied if our economy recovered but the rest of the world – or significant portions thereof – didn’t?
- To what degree do we look to the economy for our salvation? To what degree ought we to look to the economy for salvation?
- To what degree do we look to government for our salvation? Again, to what degree ought we to do so?
I know there are other questions out there – we see them on the news all the time – but these are the ones that occur to me that I’m not hearing elsewhere. What do you think?
It’s a pity that I don’t teach Macroeconomics, for that would be a great take-home final, especially if I taught at a Christian college.
Alas, I only teach Managerial Econ and at a secular private college. Even so, this is a great thought starter. Expect me to post some answers on my blog in the near future.
Let me take a quick stab at #1. High oil prices, too many sub-prime mortgages and too much risk-taking at big financial institutions were among the originating causes. The poor stock market, tightening lending practices and media-and-politician generated fear are the maintaining causes.
We have some real knowledge, but you also will have a lot of competing economic theories; even when the facts are known, different paradigms will often produce different conclusions. Remember, if you laid all the economists end to end, you wouldn’t reach a conclusion ;-).