X-Michiganders

February 18, 2010 by Noisy Dove

Divinity Dove, Dr. Dove, and Professor Dove suggested some incentives to bring young professionals and businessmen to Michigan to help revitalize the state. For example, full spectrum lights, student loan assistance, parks and nature development along the detroit river, etc. Good grief you guys. You are recent graduate (wana-be) x-Michiganders. Would any of that shit keep you in Michigan? No. Of course not. You’re going to go where the opportunity is that opens up to you. So – Michigan needs opportunities opening up in Michigan if they want to keep young people. Not the other way around.

You can’t just offer some incentive to draw people in and hope that turns things around. Squirrels don’t cause nuts to grow on trees – they go live where nuts are growing on trees. That’s like the Dem philosophy of “creating” jobs to turn back growing unemployment. That’s not how it works. You need to promote business so actual opportunities will open up.

Like the clowns running Washington… Yeah, by their standards I could create 10,000 jobs with only $100,000. All I’d need is a few empty lots, some shovels, and some news paper ads – some offering work as hole digges and some as hole fillers. Yeah – that would pump $100,000 into the economy and put some people to work for a day. Would it do anything? NO. Would it create any economic activity? No. Would unemployment go down? No – well – not until more of the people looking for work give up anyway.

But wait! What about the economic activity produced when the workers spend their wages?

Well – that’s actually negative economic activity in a sense, because you have to tax someone – before, now, or in the future – to get the $100k to pay the wages. And no doubt – those taxes were/will be/are on business and entrepreneurs who otherwise would have spent the money creating economic activity (investing) which would have created actual opportunity.

Some people might think I’m simply misunderstanding the economics behind such thinking. So here’s what’s going on. The stimulus – which is similar to my hole digging idea – is an implementation of Keynesian economics. It’s a simple concept. Government regulates interest rates, banks, and stuff to stabilize business cycles. But if these controls aren’t enough and the economy slows down too much government picks up the slack by spending. The concept itself is sound.

The ‘downturn’ becomes apparent – or more apparent.
People slow spending (due to unemployment or fear of)
Sellers cut back orders and cut employment
Producers cut back production and cut employment
Loop back to step 1.

The idea is to stop this cycle, or prevent it. So government dumps cash into the economy in the form of spending to take up for slowed people spending – with the idea sellers will stop cutting orders and producers will stop cutting production and employment will stabilize.

I don’t see this method as being the “American” way of doing things, nor do I think it’s the most effective way to recover an economy. But I’m not in charge. Liberals are. And Liberals like this method because it’s yet another opportunity to further Liberal causes and generally redistribute reward. Regardless – as I’ve said – the idea is valid.

Here is the small problem though: Obama isn’t following the idea. This Economic Recovery Act business trickles the money out WAY WAY late and trickles much of it into state bureaucracies and infrastructure projects. This means the $700 billion isn’t getting in there and replacing spending – hell – they still have half of it pilled somewhere and aren’t organized enough to avoid fraud – one of the big weaknesses of the Keynesian idea. It’s a small matter though because I don’t think even effective Keynesian stimulus is what helps the economy. I think it’s the simple sense that some higher power is working to fix things. It gives people confidence – which is essentially what an economy is.

Here is the big glaring problem. You can’t try to stimulate an economy with clumsy “trickle up” stimulus and at the same time scare the shit out of investors and businesses!!! Everything from Obama bashing the bank CEOs to Pelosi ramming though cap and trade, the whole bag of anti-business pro-littleguy DESTROYS confidence.

And without confidence, even if people aren’t laid off, they slow spending. Without confidence sellers cut orders and employment. Without confidence producers cut production and employment. And without confidence we loop back to step 1.

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