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Oct 4, 2009

HuffPo silences stimulus critics, more stimulating needed.

Good old Huffington Post can always be relied on to spring to the defense of the left. The leftie has to contend frequently with that nagging doubt in his ability to keep the faith, especially in the face of needing to defend trying again ideas, which have failed repeatedly in the past.

To question items of faith is of course heresy leading to dangerous thoughts of individuality supplanting collectivism, capitalistic tendencies, and that long slippery slope to the final indignity, being reported as a thought criminal to

Take for example the bailout, well two of them actually. They were promoted as saving jobs and all that is good and American. Such was the confidence in them that the administration posted the following graph, showing the effects of this expenditure vs. not doing it. Unfortunately some counterrevolutionary revisionist has vandalized the only copy I have, by marking it with the real figures:

Graph: Innocent Bystanders.

I can understand just why there would be some downcast looks from those who still support the New Deal or the Great Society. HuffPo has come to the rescue however, with an article telling us just where the real solution lies; doing it all over again and again until we get it right.

Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues, weilding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews, and other easy targets. It's already started. Next year is a mid-term election. Be prepared for worse.

So why is unemployment and underemployment so high, and why is it likely to remain high for some time? Because, as noted, people who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going do a lot of shopping. And businesses that don't have customers aren't going do a lot of new investing. And foreign nations also suffering high unemployment aren't going to buy a lot of our goods and services.

And without customers, companies won't hire. They'll cut payrolls instead.

Which brings us to the obvious question: Who's going to buy the stuff we make or the services we provide, and therefore bring jobs back? There's only one buyer left: The government.

Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

Well, there you have it. The real issue for massive government spending is that without it politics will get ugly for the Democrats. For a long time we have been told that the real reason for the downturn was that we have been spending beyond our means. Now that the consequences are upon us, the solution is not to cut all that irresponsible private spending, but to replace it with government spending.

Years ago here in Australia Julien Disney from ACOSS (Australian Council on Social Security) was deservedly ridiculed for proposing that the way out of the recession we had at the time was to give more money to SS recipients so they could spend the country into prosperity. Something akin to a welfare led recovery if you like.

The big problem with this idea is that you spend a trillion here, you spend a trillion there, pretty soon you are starting to talk about big money.

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