February 4, 2009

Economics, part X: Stimulus

I know, I've talked about money a lot lately. It's by far the longest series I've ever written, although I hope I haven't bored anyone. By now, though, I'm sure you've jumped ahead and concluded that I am a capitalist. You'd only be partially right, however, because as I've learned more about anthropology and sociology, I've started to think that perhaps it is as much a cultural issue as any other. For example, socialism seems to be working well enough in China, particularly because Chinese culture lends itself to a more group-oriented approach that will keep itself accountable (the honor-shame dynamic plays a vital role here, but that's another discussion). Sure it has its problems there, but this is true of any economic system in a world where men and women are flawed creatures. Socialism can be a good thing in China if it were always run by honorable, God-loving, others-oriented men and women. Likewise, I believe that capitalism is the best choice for the West, but we have to use it properly.

This brings me to a disturbing trend in our culture: the bailout. I've grown wary of the tendency for our culture to expect "handouts" from its government, precisely because of our culture's views on freedom. We believe we are all entitled as individuals to have a shot at happiness on our own terms. However, as our culture has changed over time, we've also grown a tendency to also want to be free of failure. We've been so successful as a culture in our endeavors that we've grown accustomed to getting our way. It started out innocently enough, the way success should come - hard work, perseverance, and sacrifice. But as the successes started piling up (success is a relative term, by the way), our culture began to expect them. And when something wasn't going according to our view of "success," we began to search for ways other than hard work, perseverance, and sacrifice to make our endeavors fit our ideas on success. One such measure is the stimulus, the theory being "throw money at it and the problem goes away." It's taken many forms over the years; sometimes we throw money at the military, who go and "take care of the problem." Sometimes we throw money at
EHMs, who throw money and false promises at those in the way, and then the problem "goes away" (for us). And sometimes, when that doesn't work, we simply try spending money on ourselves make us feel better about not getting our way; enter the 2008 and 2009 economic stimulus packages.

The idea of the stimulus package subverts freedom because it quietly avoids the issue of responsibility. If we are free to choose our own path and insist on doing so, then we must necessarily be free to make mistakes - it's how we learn. The stimulus package is the government's way of pandering to culture, saying "it's ok, you can do whatever you want and we'll be there to hand you money when you fail; don't feel bad about yourself, be happy!" A stimulus package is subversive to freedom because it takes away responsibility of the individual, the family, and even the local and state governments to spend their money responsibly. They are in debt because they made some stupid choices, but being "bailed out" does not force them to re-evaluate their spending or to cut out unnecessary "fat" from budgets (like, why don't they try to skip on the brand-new corporate jet this year when they're laying off 10,000 people?). It simply perpetuates the problems, delays the inevitable, and ultimately makes the problems that much worse for future generations.

Let's face it; do you really want the same people to handle your health care that make you wait in line at the DMV for hours? Or do you want the same people to handle your finances that award themselves a raise when declaring a "financial crisis"?

What is all the bailout money being spent on? Well, Wall-Street executives awarded themselves $18.4 billion for a job well done. But hang on, did they actually do a good job? President Obama doesn't seem to think they deserve it, and I'm inclined to agree; but what did we expect when we handed them free money? And now we want to hand them more? I realize that there are new rules built into the measure to - theoretically - prevent abuses (for example, companies must pay their president less than $500k if they want government aid, which seems a bit high to me - why not $100k?), but it seems that they trust their rules a bit too much; the abuse of the loopholes in the rules is a major part of the problem in the first place.

This is not saying that a stimulus package can't work. However, it IS saying that the way we use it must be responsible, or else it will fail. In some ways, this package is useful(take, for instance, the money being devoted to rebuilding infrastructure such as highways and public transportation - my father, for one, is very happy about that because he sees the state of such things all the time, and they need help). However, perhaps more money ought to be devoted to the businesses that actually need the help, rather than those that are simply being evolved out of the market for building crappy products (ahem, GM) or for spending money irresponsibly (pretty much all of Wall Street). Take, for example, small businesses who are constantly forced to lay off one more worker because they can't afford the taxes on their income (I used to work for such a business), which naturally cuts back the amount of work they can do, which cuts back revenue, which perpetuates a cycle. These small businesses do not generally overspend on things they cannot afford; yet they are suffering because of the large businesses that do.

When it comes down to it, I do think that capitalism can work here in the West, but only when those who are part of the system take responsibility for their financial decisions and factor in others. Asking questions like "how will this purchase impact the people and the world around me?" are a good way to start, and then deciding to spend or not to spend based on the answers in a way that helps others, even if it means sacrifices for you. The most responsible thing we can do is consider the impact of our decisions on the world and act accordingly; that is the responsibility we are endeared with as free citizens of the world, and one we ought not take lightly.

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