Stimulus

Occasionally, I read of a library here and there that is asking where their part of the massive stimulus package might be.  Here’s a tidbit to keep in mind as we’re hearing about and talking about the stimulus:

In stimulus package language, if Congress taxes to hand out money, one person is stimulated at the expense of another, who pays the tax, who is unstimulated. A visual representation of the stimulus package is: Imagine you see a person at work taking buckets of water from the deep end of a swimming pool and dumping them into the shallow end in an attempt to make it deeper. You would deem him stupid. That scenario is equivalent to what Congress and the new president proposes for the economy.

Walter E. Williams, professor of economics at George Mason University.


					
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4 Comments

Filed under Miscellaneous, Things that make you go, "Hmmm..."

4 responses to “Stimulus

  1. Carla Johnson

    Hi, MB!

    I was reading about the Stimulus package and my favorite was eliminating the sales tax on new cars – it gave me an idea. Rather than the current package, I think the gov. should buy all Americans between the ages of 20 and 70, a brand new car over a period of 4-5 years. This will ensure the continuation of the auto industry, reopen the factories that contract for smaller auto parts, thereby reinstating many people to full time employment who will start spending money again. I don’t think it sounds any more ridiculous than the current plan.

  2. The whole tax system needs an overhaul. One reform I’d like to see is adjusting taxes based (in part, at least) on benefit to the economy as a whole. Buying a new car, for example, is generally beneficial to the whole economy for the reasons that Carla stated. Making money speculating in commodities, where the goods never actually move except on paper but do generate a profit, is good for a few individuals but not the economy as a whole.

    Lower taxes on the purchase and raise them on the speculating profits. It’s a free country and no one wants to make speculation illegal but you will have to pay in a little more for the priviledge. If you don’t think you can make sufficient profit with such a tax in place, there’s always jobs selling cars. 😉

  3. DBF

    Actually, commodities traders do, in fact help the whole economy. They buy and sell things we all need like oil and corn and wheat, and help, through their self-serving activities, to even out the prices for those of us who merely consume these things. I would like to suggest a great book called “Basic Economics A Citizen’s Guide to the Economy” by Thomas Sowell. It does a fantastic job of clearly explaining the workings of the market.

  4. DBF

    P.S. The power to tax is the power to destroy, and if we want corn, wheat, oil, and other commodities, it is in all of our interests to see that those markets are free and low-tax.

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