Yesterday I was driving home from a showing, listening to NPR. Marketplace, my favorite NPR show, was on (always a good thing). They were interviewing an economist who had an interesting (albeit very controversial) idea for how to use some of this government money to help stimulate the economy. Here's what he suggested:
Instead of giving the money, OUR tax money, to the companies and organizations that helped get us into this mess in the first place, let's take a "trickle-up economics" approach to the challenge.
That means give money directly to the citizens of our great nation. Hey, we'll be the ones paying it back, right? It has a certain elegant simplicity to it. Here's what this economist envisioned would happen.
You receive your check, for $10,000, let's say. What will you do with that money? There's almost nothing you could do with it that would be bad for the economy, except possibly shoving it under your mattress.
If you choose to pay down your credit card debt, you will have decreased your overall debt, freeing up your income to spend on other things, probably a mix of consumer goods (cha-ching) and further reducing your personal debt. That's a great cycle to jumpstart.
If you choose to put it all in savings for a rainy day, you just increased the liquidity at your favorite bank, allowing them to loan that money out to others. (Hey, now the banks are actually making sure those people can pay that money back, so that's a GOOD thing!) The bank becomes or stays solvent, jobs are kept, others get access to much needed funds to start or expand their businesses, thus creating jobs ... and eventual prosperity ... and the upward cycle begins again. Sounds good, eh?
If you choose to spend it all on that home entertainment center you've always wanted, you've stimulated service and manufacturing jobs, some of which are local, some of which are national, and some of which are international. The entire world benefits (at least economically - we won't talk environment in this segment). The money multiplier is doing its glorious math in a positive economic direction, instead of the death spiral we're in currently. Another good thing.
I pondered the implications of this plan all the way home (the showing was a 45 minute drive in rush hour traffic, so I had the time!). Compared with giving the money to the guys who are buying $34,000 commodes with legs for their posh offices, flying around in their "private" jets (public now that we're paying for it), and otherwise showing poor stewardship of our tax money, this seems like a pretty darn interesting idea.
What do you think of it? I would love to know!
Tom Yeatts
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