Turkey and dressing February 25, 2009
Posted by wonderingin in Economics, Politics.add a comment
“It’s a turkey,”
was Fred Siegel’s description of President Obama’s stimulus plan. Claiming that the stimulus is neither timely nor targeted, Siegel, an urban historian in NYC, stated, “Obama is doing what he knows. This is how business is done in Chicago. Everyone gets cut in.”
Read the article in USA Today.
The reality is that any large spending legislation needs broad participation to gain sufficient support for passage. This bill was no different.
There is an interesting graph at www.recovery.gov (a White House web site) showing the spending allocations by major category. While the graph looks positive (more money in tax relief than any other category), the proof will be in the details of exactly how and when the money is spent and whether that spending will lead to investment and jobs. (Investment must come before jobs – not the other way around.)
Last night in his Address to Congress, President Obama added the dressing and gravy. While we have lots of problems he said, things will get better. The address was a necesasry “feel better” speech, but the hard work will still fall to each of us to make good decisions about savings and investment.
What are they smoking? February 20, 2009
Posted by wonderingin in Business, Economics, Personal Finance.add a comment
“Launching ‘public works’ projects – putting people to work with shovels and jackhammers to put money into their pockets – is not the way to jump-start a 21st-century economy – or to build competitive advantage in the different world that is taking shape.” The Obama administration “understands that the US economy needs more than a relief package for troubled banks, asphalt for pot-holed streets and patches for schoolhouse roofs,” and is “proposing a higher-impact stimulus package that addresses future needs and national competitiveness.”
- Samuel Palmisano, CEO of IBM in the Financial Times
Read the article in the Financial Times
The real problem with both scenarios is that some people inside and outside the government actually think that government programs can solve our problems.
Only we can solve our problems. Government’s role is to provide businesses and individuals with:
- proper incentives to save and invest,
- reasonable tax rates such that all the work is worth the effort, and
- a moderate regulatory environment that attempts to corral the worst excesses without trying to micro-manage daily conduct.
I refer to this as the parenting model of oversight. Anyone who has been a parent of teenage children understands that you can work to instill values and good habits, but you cannot control all their actions. Sooner or later your children must make their own decisions and then take the consequences.
In economics, this is called the discipline of the markets.
