There is a deliberate spreading of misinformation coming out of one corner of the MSM that needs to be forcefully and thoroughly debunked right now. I will do my best. It is an argument I have encountered numerous times, because has been a dominant theme over the past two years. The latest Star editorial, after the Premiers of Canada's 10 provinces and 3 territories' summer meeting, was upset that the premiers were not united in their support for receiving continued "stimulus" from the government, and angry that certain premiers do not want to go that route. It pushed me over the edge. This is where I draw the line.
In case you are not familiar with how the dumbed-down, reductionist way of thinking that is permeates everything now (coffee - tims vs. starbucks, computers - macs vs PC, politics - dem/repub, con/lib, soft drinks - coke/pepsi, etc) works with this particular subject, I will attempt a rundown. There are two camps in the discourse on how to manipulate our dubious economy. Keynesians (named after the British economist John Maynard Keynes and his ideas) believe that government can "stimulate" (spend money it doesn't have) the economy into doing what everyone wants it to do, grow. "Thatcherites" or "deficit hawks" believe government should spend and be involved in the economy as little as possible, and this how the economy will grow. This is as sterile and ridiculous a debate as any of the ones in parentheses above, because how could anything "grow" forever, especially a society as developed and economically mature as ours? Yet it sustains, and why? Because some people can't accept that the government can and should and inevitably will be involved in certain aspects of life, so they are seduced by the thatcherites empty rhetoric. Other more well-meaning, idealistic people believe in the power of the just-as-bad Keynesian argument, because they want everyone to participate in and enjoy the benefits of a "free-market" economy (which is nice of them, don't get me wrong), but don't understand that you cannot by definition manipulate such an economy to do whatever you want it to do. Sadly, this is exactly what we've been doing.
Governments in North America presided over a so-called "Period of Unprecedented Prosperity" for 10 years by doing one thing - keeping interest rates artificially low. This in turn fuelled real-estate speculation, which then created bubbles. Another effect of these same rates is encouraging people to go into debt in as many ways and for as much as they possibly can. When this caused economic collapse (because banks were posting record profits and growth on the back of this house of cards of bad debt) in the fall of '08, Europeans, Canadians, and Americans were all told that governments who were already tremendously indebted needed to borrow more in order to "stimulate" economies that, in fundamental terms, don't perform and are moribund anyways, due to the amount of public and private debt in the system, the lack of any real, tangible economic productivity, and over-dependance on scarce resources.
So they stimulated. Massive amounts of borrowed, non-existant capital were injected into the economic system. This was thanks to weeks of endless MSM hammering on about how "we were all Keynesians" now and it was just a matter of pulling through, as if we did something really tough or made some courageous decision or sacrifice. But starting a sentence with "We are all...", especially at a time when something bad happens, is a bad idea, because it results in group think, which usually ends up with terrible decisions being made (See "we are all americans", post 9-11)
The accomplishment of the stimulus, then , has been for a sick and broken system to carry on for 18 more months in a damaged and inherently flawed status quo (since the "confidence" the stock market relies on to stay above anxiety-causing levels has also acquired the habit of waiting for "stimulus" and "bailouts" to maintain its value). Now there are people advocating to continue on like this into eternity, lest we jeopardize the "fragile" recovery. Let me say this in as few words as possible - if you have to artificially prop something up indefinitely, that means THERE IS NO CHANCE FOR A RECOVERY! That's like saying somebody in a multi-year coma on life support is headed to recovery. I think the whole thing is summed up beautifully by these lyrics, from the 1987 Guns N' Roses song "Mr. Brownstone". See if you can figure out what they're referring to:
"I used to do a little but little wouldn't do it so a little got more and more.
I just keep trying to get a little better, said a little better than before.
I used to do a little but little wouldn't do it so a little got more and more.
I just keep trying to get a little better, said a little better than before.
We've been dancing with, Mr. Brownstone. He's been knooooooockin'
He won't leeeeeeeave me alone"
Isn't that cool? I don't know. Maybe something gets lost without the accompanying musical soundtrack. Anyway, not to insult anybody's intelligence, but just in case anyone's lost, Axl is clearly singing about Heroin, using the code name used for it among this group of people at that time (I know that from reading GNR biography that belonged to my old roommate who was obsessed with them). And when I hear that second part of the chorus, that whiny high voice stretching out those vowel sounds, I can literally see someone just going crazy, fidgeting and scratching their neck. It seems like a lot of moving art comes from authentic places of real experience, and I think everyone in the band who created this incredibly evocative piece dabbled and knew a thing or two about the subject matter. Twenty-three years later, I think this accurate portrayal of a junkie mindset actually sums up our economic situation and the relationship we've forcefully forged between it and government quite well, although I'm sure that was the last thing on their minds at the time.
Presumably in North America, once we got that first little boost from the government, we now have that precedent to be able to go back and increase our request, or at least the Star and Nobel Prize winning economist Paul Krugman feel like we do. Interestingly enough with heroin, as the drug pushes the junkie deeper into societal marginalization and inability to function, he somehow finds ways to procure himself more and more. But he gets the sweet satisfaction of addiction; what did North America get for its massive stimuli? I could have lived with it if it had actually gone towards towards public investments dedicated to modernizing our civilizations for the future. Urban agriculture, high speed trains, venture capital; those are just a couple ideas of the top of my head. Yet at the end of this 8 billion gabajillion dollar rope, North America will still be lacking a comprehensive and efficient rail system. What it will have is even more roads, highways, and bridges to nowhere, and a more diverse array of rural pork-barrel vote-buying construction projects than ever before. Not to mention those stupid ubiquitous economic action plan signs. I don't think the government will ever have any intention of taking those down since they provide it with more visible advertising than they could ever hope to put out on their own while retaining any illusion of self respect. These signs are outside the government buildings where I live, and I kid you not, I have not noticed one goddamn tool or workman or any change whatsoever to speak of in or around these buildings. So the stimulus is also working as part of a grand propaganda scheme, playing into people's perverse perception that they've been subtly indoctrinated with that government has everything under control and is taking care of everything. If the government hadn't done anything the first time, we would have witnessed real adaptation, survival and innovation because it would have forced individuals to take responsibility. It also would have allowed us to expose both sides of the Koolaid drinkers debate: We would have seen what the so-called "anti-government" thatcherites were really made of, while quieting the bleating of the Keynesians by throwing them a bone for their precious "recovery". For as any ex-junkie know, rehabilitation is the only true road to recovery.
There is just no backup plan on file if we are plunged into a second recession, as I
believe we inevitably will be due to the structural issues that caused the first one remaining unaddressed. What is the government going to do then? Go into more debt to stimulate our way out of that one? This is a downward spiral, and a line needs to be drawn in the sand to cut it off. I really think its equivalent to denying a junkie that last blast tomorrow and shipping him to rehab today, which may not even work the first time. We've got to realize how dependent the system is on cheap credit, overly optimistic future predictions, speculation, and greed. The MSM is a main enabler, as is TV, Hollywood, and online and gadget distractions. If we don't cut off the bad stuff, whether it be in the form of stimulus, bailouts, eternally low interest rates, or being held hostage by the stock market, we're going to OD. But try to reason with a junkie that way. All he can think about is making it to his next score. But deep down he knows its bad for him if he's smart, and people usually are. That's why it will be interesting to see how the court of public opinion will respond to a serious push for another stimulus, if and when there is one.