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Tuesday, March 31, 2009

There Can Be a Difference Between "Stimulus" and "Investment"

...But a lot of people, especially Republicans, are either blissfully unaware of this distinction or secretly believe that "stimulus" as a goal is pointless (or some combo thereof).

I suppose a bridge to nowhere in Alaska was fine for Sarah Palin and many Republicans (she was for it before she was against it, or vice versa, I forget her lies cause she's so unimportant now)but a bridge connecting two campuses at the Microsoft HQ - now that's taking things to far (sarcasm please).

The point of stimulus is to spend money quickly and get it flowing through the economy so that others can spend it on goods, services, machines, buildings... and the like. All this is good for boosting demand, GDP, and employment for a time.

"Stimulus" is not meant to always go to the best "long-run" investment projects. Although I certainly agree that to the degree that such worthy projects (infrastructure, education etc) meet the criteria for timeliness etc. we should do those first, I disagree that we should ignore other projects where plans are already in the works and that can be started very quickly (like the MS Bridge).

Microsoft was not planning on building that bridge this year - they didn't want to fund the whole thing. We are creating spending and jobs that otherwise would not exist without the federal money. But let's just assume Microsoft did already plan on paying for it all this year, that does not mean the stimulus is worthless since that frees up money for Microsoft to invest in other things. Either the money goes to fund a bridge, or it goes to fund some other Microsoft project (hopefully other than just paying MS execs).

13 comments:

Anonymous said...

I couldn`t agree more! Pretty clear explanation, as alwyas.

All the best!

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