On Feb 4, 2009, at 1:06 PM, John Gulick wrote:
MS:
State governments are likely to spend what they get to prop up
services that otherwise would take a hit due to falling tax revenue.
In that respect aid to states is one of the most efficient types of
stimulus, though there are limits to the amount that states could
absorb, and the distribution of aid makes a difference.
JG:
I don't really have a dog in this fight, so with my follow-up here I'm
strictly seeking illumination.
Is it not true that assistance to states and localities will have the
three following primary effects? 1) Services that would have been cut
remain partially or wholly intact... the various state medicaid
schemes,
for example. From a humanitarian/social justice point of view this
is great
but in and of itself this is not stimulative, save for generating
demand
for the inputs of public service contractors (firms embedded in the
medical-
industrial complex, for example). But even this generated demand
does not
create new jobs, it keeps old jobs from being shed. 2) Public sector
workers
who might have been permanently dismissed get to keep their
employment.
Very nice, but again, are new jobs being added? 3) Public sector
workers
facing pay cuts don't have to cough up give-backs. Hunky dory, but
won't
the preserved income simply go toward paying down personal debt?
Certainly
no new jobs are being incubated here.
Preventing the disappearance of a *useful and necessary* "old" job is
just as "stimulating" (also much easier and much more constructive) as
"incubating" a new one. That Obama is as tight-fisted when it comes
to public-sector bailouts as he is open-handed with financial-sector
bailouts and business-tax giveaways is perfectly characteristic of
this cowardly Apologetic Statesman of a Compromising Kind.
Shane Mage
This cosmos did none of gods or men make, but it
always was and is and shall be: an everlasting fire,
kindling in measures and going out in measures."
Herakleitos of Ephesos
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