Movies Books Music Food Tv Shows Technology Politics Video Games Parenting Fashion Green Living more >

Lunch » Tags » Politics » Reviews » Sitmulus Spending

Sitmulus Spending

5 Ratings: -2.4
Spending money we don't have to stimulate the economy

Stimulus Spending is a concept that you can stand in a bucket and lift yourself up.  It is a waste of government tax dollars on projects that have historically returned less than 80 cents on the dollar in actual stimulation to the economy.

Tags: Politics, Public Policy, Economic Stimulus, Bailouts, Government Take Overs, Stimulus Spending
1 review about Sitmulus Spending

A Historical Perspective of Economics

  • Mar 30, 2010
  • by
Winston Churchill summed up the stimulus package better than I ever could when he claimed "Will the shutting out of foreign goods increase the total amount of wealth in this country? Can foreign nations grow rich at our expense by selling us goods under cost price? Can a people tax themselves into prosperity? Can a man stand in a bucket and lift himself up by the handle?"  Quoted from his Speech at the Free Trade Hall, Manchester, England (1904).

People cannot tax themselves into prosperity.  It just doesn't work.  Before I get into the meat of thoughts on this subject, let me start with a disclaimer.  I am not an economist.  I am not even in an accounting or budget related field.  I understand basic precepts, but learn most of what I need to know looking at examples from history.  I touched on this in the comments section of another review  where I stated "You only have to look back to 2006 to Zimbabwe to see the effects of hyper-inflation.  You can read the New York TImes article about it.  Does anyone really think paying 417 dollars for a single two-ply sheet of toilet paper is reasonable?  Not in a normal economy.  But our is headed down this road.  What good is universal health care going to be if you cannot even afford a slice of bread?  Congress better hold on to that 2700 page document, because it may come in handy when toilet paper reaches 150K a roll...like it did in Zimbabwe.  Those who forget the past are destined to repeat it.  Germany offers more insight into the issue during 1923."  So, although I am not an economist, history provides plenty of examples of how taxation and inflation hurt economies.

I want to use Japan as an example of how Capitalism works and stimulus does not.  It is a tidy five decade history that can summarize the opposing affects.  Following World War II, Japan was the world's leading producer of trinkets.  "Made in Japan" was a joke, the way "Made in China" is today (remember this point...because China is the next Japan economically).  Anyway, a statistician from the United States went to Japan with a model for business that rebuilt that economy.  The man's name was W. Edwards Deming.  His structure was reduced to a simple fourteen point plan for capitalistic success.  They follow as a reminder:

  1. Create constancy of purpose toward improvement of product and service, with the aim to become competitive and stay in business, and to provide jobs.
  2. Adopt the new philosophy. We are in a new economic age. Western management must awaken to the challenge, must learn their responsibilities, and take on leadership for change.
  3. Cease dependence on inspection to achieve quality. Eliminate the need for massive inspection by building quality into the product in the first place.
  4. End the practice of awarding business on the basis of price tag. Instead, minimize total cost. Move towards a single supplier for any one item, on a long-term relationship of loyalty and trust.
  5. Improve constantly and forever the system of production and service, to improve quality and productivity, and thus constantly decrease costs.
  6. Institute training on the job.
  7. Institute leadership (see Point 12 and Ch. 8 of "Out of the Crisis"). The aim of supervision should be to help people and machines and gadgets to do a better job. Supervision of management is in need of overhaul, as well as supervision of production workers.
  8. Drive out fear, so that everyone may work effectively for the company. (See Ch. 3 of "Out of the Crisis")
  9. Break down barriers between departments. People in research, design, sales, and production must work as a team, to foresee problems of production and in use that may be encountered with the product or service.
  10. Eliminate slogans, exhortations, and targets for the work force asking for zero defects and new levels of productivity. Such exhortations only create adversarial relationships, as the bulk of the causes of low quality and low productivity belong to the system and thus lie beyond the power of the work force.
  11. a. Eliminate work standards (quotas) on the factory floor. Substitute leadership.
    b. Eliminate management by objective. Eliminate management by numbers, numerical goals. Substitute leadership.
  12. a. Remove barriers that rob the hourly worker of his right to pride of workmanship. The responsibility of supervisors must be changed from sheer numbers to quality.
    b. Remove barriers that rob people in management and in engineering of their right to pride of workmanship. This means, inter alia," abolishment of the annual or merit rating and of management by objective.
  13. Institute a vigorous program of education and self-improvement.
  14. Put everybody in the company to work to accomplish the transformation. The transformation is everybody's job.
Deming followed this plan with seven dangerous obstacles that he warned businesses to avoid.  Obstacles that seem to have been embraced by our own Union bosses at a time when Japan was economically kicking our ass.  They are:

  1. Lack of constancy of purpose
  2. Emphasis on short-term profits
  3. Evaluation by performance, merit rating, or annual review of performance
  4. Mobility of management
  5. Running a company on visible figures alone
  6. Excessive medical costs
  7. Excessive costs of warranty, fueled by lawyers who work for contingency fees

Do any of the preceding sound familiar.  It almost reads like the by-laws of your average Union contract.  MAYBE...just maybe, Unions have contributed to the problems in our economy.  They have their own unfunded mandates in the form of medical insurance for their retirees that are unsustainable.  But back to Japan...because they stumbled and strayed from Deming's model.

Japan's economy started experiencing depression in 1991.  What was Japan's response?  Economic Stimulus.  What a novel idea...why didn't WE think of that?  It must have done wonders for the economy of Japan (who spends very little on Defense considering we provide that service to them for free).  The response?  EIGHT stimulus packages.  Are we dumb enough to keep doing stimulus and follow the same failed path of the Japanese?  Apparently we are...all I keep hearing is rumors of another stimulus or continuing bail-outs where the government decides winners and losers.  Nothing could be further from a capitalistic model.  But back to Japan.

The effects of eight stimulus package was that over a decade and a half, Japan managed to piss away sixty percent of their national wealth.  Over half of their wealth evaporated through a series of ill-conceived stimulus packages.  Why didn't the United States study the Japanese model before engaging in the same failed endeavor?  First Bush, with TARP, then Obama with as many bail-outs as his far left Speaker of the House could conceive of.  In 1991, at the start of Japan's recession, the NIkkei Index was around 30,000.  A decade and a half later (after spending over a trillion dollars...adjusted for inflation) the Nikkei was at a whopping 12,000.  That's progress?

But we don't need to study only Japan.  How about the New Deal?  I read a Berkley (hardly a bastion of Conservatism) study last year that indicated the New Deal prolonged FDR's recession by nearly a decade.  After nearly a decade of stimulus spending in the 1930s, the unemployment rate went from 15 percent to....15 percent?  What?  It doesn't work?  WE (THE United States of America) tried it already and it didn't work?  Then why are we beating our heads against the wall engaging in the same failed policies of the past?

I am old enough to remember the Carter Administration and double-digit inflation.  I am old enough to remember Reagan coming into office and having difficulties getting a grip on the economy.  I also remember Reagan cutting taxes and increasing spending on Defense and a gradual easing of inflation and an eventual economic boom that lasted well in to the Clinton Administration.  So...historically...cutting taxes increases economic growth while economic stimulus stagnates it.  Yet we are currently spending at unprecedented levels hoping to buy our way out of a pickle.  The only thing that gets bigger the more you take away from it is a hole.  That's an old riddle that sums up our economy.  We are taking more away from it, making the deficit and debt bigger.  We cannot sustain this spending, we cannot continue with failed stimulus policies and we cannot continue taxing capitalism out of existence.  TARP was wrong when Bush did it and it is wrong when Obama does it.  It was wrong when Japan did it, it was wrong when FDR did it.  We have a lot of smart people in this country...why are these simple principles so hard for them to figure out?

With that, I hope common sense prevails and we can return to a market based economy from our current journey on a government based economy.  We are on a freight train heading head on into a collision with Socialism.  We have a President who is a self-avowed Socialist (that is my interpretation of anyone who claims to support "redistribution of wealth" which our President has said on more than one occasion and is currently turning into Policy).  So where do we go from here?  If you don't want Socialism and hope to see unemployment back under six percent and our economy bullish again?  Vote out the spenders and vote in economically responsible representatives who will not try to tax us out of recession.  Never waste a good emergency...the time is now to vote in a responsible group of leaders to fix the economy and put us back on track.
A Historical Perspective of Economics

What did you think of this review?

Fun to Read
Post a Comment
What's your opinion on Sitmulus Spending?
5 Ratings: -2.4
You have exceeded the maximum length.
Related Topics

A lottery is a form of gambling which involves the drawing o

Defend Your Health Care

Website exploring the implications of the Obama health care

An op-ed about Universal Healthcare written by Whole Foods C

Dismantling America

October 27, 2009 column by noted African-American economist,

First to Review
© 2014 Lunch.com, LLC All Rights Reserved
Lunch.com - Relevant reviews by real people.
This is you!
Ranked #
Last login
Member since