IN FACT, HALF A LOAF COULD BE BETTER FOR the economy, and better for Obama's ultimate treatment in the history books, not to mention his re-election odds. A $500 billion package -- say, 60% tax cuts and 40% increased spending -- could realize his stated aim of spending money wisely, while providing significant fiscal stimulus.One reason for caution is that priming the pump never quite works the way the textbooks say it should. The economy's lifeblood isn't consumer demand, but rather credit, both for the financing of business investment and the purchase of consumer durables like cars. No amount of fiscal stimulus will make much difference if credit is constricted. If credit is available, jobs and higher incomes will follow.
Even the indigenous people of Venezuela realize that receiving free money and food from the government is not the path to prosperity (from the Economist):
The Yukpas are divided. Some oppose the land invasions and even support the ranchers. “Invasions are very bad,” says Rosario Romero, a Yukpa woman. “The ranchers worked for what they have. In the sierra there’s lots of land to cultivate maize and other crops.” She adds that, contrary to what radical Yukpa leaders say, her parents never suggested these lands were theirs. Her community had never received government help until Mr Chávez came along, she says, “Now we get money and food.” However, this encourages indolence. Many Yukpa women have married non-Amerindians, as she has done, “because the Yukpa men don’t want to work.”
I hereby nominate Rosario Romero for Treasury Secretary.
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