Ideology Vs. Reality

2 comments April 9th, 2009at 07:23am Posted by Eli

Ian Welsh explains why the Virginia legislature’s vote to refuse the unemployment benefits portion of the stimulus bill is misguided:

Modern Republicanism laid bare: never help anyone who really needs help.  But that’s not the worst of it, the abysmal economic illiteracy is:

“It is not stimulus. Paying workers not to work does not promote economic growth,“ Byron said.

Actually, Delegate Kathy Byron, paying workers not to work does promote economic growth.  This is economics 101, people who have money (unless they’re useless rich) spend that money.  When they spend that money they spend it on products and services made by people who work.  The more of those products and services which are bought, the more economic growth there is, since you can’t have economic growth if there’s no demand for products and services.

In times when there is insufficient demand, like in a massive recession or depression, the best thing to do is for the government to spend.  And since there are people losing their houses, who are going without food, clothes and medical services, the best way to spend is to give those people money so you kill two birds with one stone: you get demand through spending, and you help people who need it so they don’t wind up starving or on the street.

The less money the recipients of stimulus money have to begin with, the more likely they are to spend it and pump it into the economy, because they have to, which is why benefits like unemployment insurance and food stamps offer the most bang for the buck, and upper-bracket tax cuts offer the least.

The problem is, the poor and unemployed are precisely the people that Republicans are adamantly opposed to giving money to, because government must never, ever reward people for being shiftless, unambitious layabouts – it should only reward the high-achievers who already have more money than God.  It’s an ideological position (and a particularly repellent one), not a practical or economic one.

The economic reality is that trickle-up has historically been far more successful than trickle-down, but Republicans keep clinging to the idea that helping themselves and their wealthy buddies at the expense of everyone else is somehow good for the economy, because they desperately want it to be true. Or at least for the rest of us to think it’s true.

Entry Filed under: Economy,Politics,Republicans,Wankers


  • 1. Cujo359  |  April 9th, 2009 at 6:29 pm

    There’s also the inevitable question of what rich people with lots of money can do with lots more money that is better for the economy. The reality is that they can do very little. Our current economic crisis isn’t about savings – we could probably save more as a country, but it would be easier to do that if we all made more. It’s about businesses not being able to get enough business to keep their employees employed.

    It doesn’t matter how ambitious you are if no one’s willing to pay you.

  • 2. Eli  |  April 9th, 2009 at 6:32 pm

    Yeah, that’s the thing. You can give corporations all the breaks you want, but ultimately if no-one’s making money, then no-one’s buying product. And if you give a poor/working-class person a thousand dollars, they’ll spend it, whereas a wealthy person will just add it to their money pile.

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