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Late 'best headline of 2008' entrant

In today's Post column we look at what economists really think about the quickest, most efficient way to stimulate a troubled economy.


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Comments (9)

okhropir rumiani:

Hella good.

A lot more efficient than doling out large chunks of money to symbolic industries.

Garth Wood:

Which, sadly, we're gonna probably end up doing anyways.  Iowahawk was right — in a few years, we're all going to be driving the Pelosi-mobile...



The only drawback to tax cuts is that the politicians don't get the chance to mug for the cameras in front of a new plant, or a "rescued" plant that makes (just for an example) Camaros or SUVs that no one wants to buy.

Government parasites:

Tax cuts? You mean, less money for us up front, but it'll help businesses invest and expand and create jobs, for which we will then have the opportunity to apply?



Tax cuts make for pretty good optics if you spin it right, though. Just cut a few ads showing Stephen Harper walking up to a carefully multiracial and geographically diverse group of Canadians in their homes carrying a garbage bag full of twenties. Then run a caption that says "The Conservative Party: we move an economy the old-fashioned way".

Listen, the Chretien Liberals got years of government out of "we will give you money". The Conservatives should use the same trick! Harper can even wear a baby-blue sweater over a dress shirt and blue tie! This cannot possibly go wrong, unless he stashes a copy of his hidden agenda in the bottom of one of the garbage bags.

I mean, it'll get the economy spinning too and it won't subsidise failing foreign-owned corporations that dug their own graves decades ago and are just now lying in them. But that's secondary.


Suppose they gave structured tax breaks or subsidies for specific expenditures - pay 10% of your new car, for example. Wouldn't that help?

The gov'ts of the world have spend, like, what, 3 or 4 trillion by now on stimulus - more? Imagine if they had put that cash into the hands of consumers and investors . . .

Garth Wood:

The problem with that is simple: liquidity trap.  You can give people/banks/whatever all the cash you want, but until the entity in question actually trusts the other participants in the market(s) enough to start spending again, it's no good.

Classic "pushing on a rope" stuff from first- or second-year macroeconomics.



Classic "pushing on a rope" stuff from first- or second-year macroeconomics.

Right. And subsidizing the production of goods that no one wants to buy is pushing on what, exactly?


Heh, I didn't take macroeconomics, but doesn't handing money to consumers help to escape a liquidity trap, by directly stimulating consumtion - as opposed to drastically lowering interest rates and dumping money on wary banks/multinationals?

I mean, if the gov't gave you the money to buy a new car, are you going to be worried about the manufacturer's long-term financial plans? Or are you going to be more worried about what color you want?


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