Tuesday, August 23, 2011

Focused Stimulus

Much like the adherents of Communism, the adherents of Keynesianism insist that their policies would work if only this or that would happen, e.g., if only we had had a $1.5 trillion stimulus! Well I don't care what your theory predicts should happen "if only..." Looking at the waves of austerity rolling around the world, I'd say that opinion is pretty much shared by the world's electorates. People balk at a price sufficient to pull an entire economy out of the doldrums.

What the Keynesians should do instead is a focused stimulus. Instead of trying to pull an entire economy of the mire, pick a region and stimulate the heck out of that. Once that region is on solid ground, switch to the next region. The economic growth in the first region will help pull the second region up. Then on to the third and so on.

One caveat I would add to this is that you should stimulate the healthiest regions first. Since every victory makes the next one easier, you should focus on racking up easy victories. People won't like this at all. It doesn't make sense, for example, to stimulate Texas when there's so much more suffering in Michigan. It would take a good bit of explanation to get people to go along with this, but compared to the eye-watering figures for the nation as a whole, I think it's more likely to pass.

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