Friday, February 8, 2008

Trickle, down and out

Here's an observation for folks to chew on. Voices in Congress of both political parties and, yes, even the president seem agreed on the idea that the best way to resuscitate our gasping economy is to pump some energy into the consumer market with a quick infusion of tax rebate cash. There's disagreement, of course, as to the size and design specifics of the planned transfusion, but the central point is a given: consumer spending will be our salvation. I guess you could call it "Trickle Out Economics".

I'm not sure it's going to work in practical terms, but I'm not going to argue the point. As my very own trustee of creditors will tell you, I'm no financial genius. But there's an assumption at work here that is seemingly unquestioned and that strikes me as just a bit strange.

The assumption is that the money placed in consumer's hands will spread through the economy and revive it. OK, but the other shadowy half of that assumption is that the same money in the government's charge wouldn't do anything of the kind.

Why is that?

I know I've just opened the door to a whole lot of conservative table pounding about it "being our money" and that "we" know how to spend it most effectively and all that good stuff. But I think that is beside the point. To the extent that the argument is valid, I have to ask, is that a good thing? Isn't there a very serious problem here?

What might the government —or let me put this another way —what might we have spent that money on as tax dollars? Roads and bridges? The latent deficit of our nation's crumbling transportation infrastructure is estimated in the billions. Shouldn't construction jobs spread every bit as much lateral energy through the economy, say, as a new HDTV purchased at the mall? Education, even healthcare: aren't these supposed to be industries that expend their economic energy within the closed system of the American economy? Heck, even war spending, shouldn't it, in theory, cycle back into the economy —as spending on ammunition and flags?

There's a tacit consensus answer to the question I've asked here, coming from Washington. Federal tax dollars aren't re-entering the economy. They are neither trickling down or out. They are ending up in stagnant pools.

When faced with a crippled and staggering economy in the 1930's, this country responded, not with an abdication of the public's trust in government, but with massive investment. Public works efforts rebuilt crumbling bridges, paved new roads and built power plants. There was even public spending on the arts. Walker Evans's photography and Aaron Copland's symphonies were supported with "our" money. The WPA paid Thomas Hart Benton to paint murals on the walls of public buildings. We even chartered that much derided massive federal entitlement, Social Security, during those very difficult times.

When the massive industrial demands of the World War II war effort came along and confronted us, we met the challenge—and that response translated into skilled jobs in manufacturing and a whole scale modernization of the country and an expansion of its economy. We would go on to broaden access to higher education and home ownership —to redefine the middle class with yet more public investment, the post war GI Bill.

What has changed? Have we so vilified "big" government —even as we've watched it grow for so long— that it and we have become too small minded to face our larger problems? Have we citizens, corporate and individuals alike, forgotten our sense of common purpose? Where are those stagnant pools? While we send some of our sons and daughters to war, and others to the mall to shop, have we forgotten who "we" are altogether?

As I said, I'm no economist. The way I've framed my question might be more emotive than analytical. That's why I offer it here, where it might find a better answer.


terence said...

Stagnant pool, n., bank account of a member of the wealthiest 0.1% of the population.

Deborah said...

Hard to understand is where the kickback is coming from if our national bank account is so deeply in the red. Yes, wouldn't public works go far toward employing the unemployed, plowing value back into the economy? Wouldn't this be better than simply creating the fleeting impression of economic growth (while the real growth would be overseas, as the big screen tv's are all produced on foreign soil)? How, exactly, is our legislative body serving its public with these short-sighted measures? -Deborah Rocah

Yuppo said...

group hug, group hug ... "common purpose"? Collective conscience? We're all in this together? Hugh? The 60's "We" gave us the flower children of "Me" - individual dandelions really, standing above the grass-level masses and sucking their water until there's nothing left for the sod to give. But yes, let us hold hands together and sing of better days (ahead?)

Tom Driscoll, Profiled! said...

A closer reading of the piece and you might notice the better examples I was citing were from the 30's and 40's. But don't let the substance of the piece interfere with whatever it is you want to say.

If I follow you properly, you revile the "me generation" while at the same time ridiculing the notion of common purpose.

Talk about circular logic! Be careful of gagging on your own tail.

Yuppo said...

give me a chance to rebut(t) - t'was before imbibing my java - the gist being that it's likely mere feel-good delusion stuff, given ya can't make a cake without it's essential ingredients (ie. ya can't talk of commonality in a new world where the only one's that thrive are the rugged individualists (and those who believe there's safety in numbers, should think of all the Pompeii victims bonded in a permanent petrified pretzel - as the ash and lava still rained down on them (forgive my puffy allegory - must be the allergy meds))