Authentic growth vs. trash and waste

Last updated on: March 11, 2009 at 5:23 am by Joel J. Miller

Authentic growth vs. trash and waste 2009-03-11T05:23:16-06:00 Joel J. Miller

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

mattlemmon, Flickr.

Yesterday the stock market surged. The Dow shot up 380 points, the Nasdaq nearly 90. But while I was rifling through my bedside drawers for some Dramamine, I heard this: House Speaker Nancy Pelosi wants to keep the federal coffers open for additional stimulus packages. I got nauseous for a whole different reason. Didn’t we just float an $800 billion note last month? Slow it down, sister.

After conferring behind closed doors with practitioners of the dismal science, Speaker Pelosi emerged to say that it was the task of Congress to boost the mood of businesspeople. “The word of the day is confidence,” said Pelosi. “Confidence in our markets, confidence in lending, confidence in our financial institutions.”

Here’s a free Latin lesson. The root of the word confidence is fide—faith. And given what history has to say about the effectiveness of government spending to spur economies, crossing Speaker Pelosi’s bridge over these troubled currents requires a big leap of the stuff.

Veronique de Rugy is an economist at George Mason University’s Mercatus Center. She has an article in the April 2009 issue of Reason (unfortunately not yet webbed) that should give people pause about the effectiveness of stimulus packages.

She mentions, for instance, Japan’s trouble in the 1990s with (sound familiar?) housing and stock markets in the tank. The response: “Between 1992 and 1999, Japan passed eight stimulus packages totaling roughly $840 billion in today’s dollars. During that time, the debt-to-GDP ratio skyrocketed, the country was rocked by massive corruption scandals, and the economy never did recover.”

Another related assumption is that federal wartime spending helps sluggish economies. De Rugy marshals evidence by several researchers that not only disprove this assumption but indicate the that the opposite might be true. She cites, for example, the finding by Harvard economist Robert Barro that for every buck in wartime spending, we get back three quarters and a nickel.

What about the Great Depression? Surprisingly, government spending didn’t help there either. De Rugy cites a paper in the 1992 Journal of Economic History:

“A simple calculation indicates that nearly all of the observed recovery in the U.S. economy prior to 1942 was due to monetary expansion,” which is to say, not federal spending.

So what did it? “Huge gold inflows in the mid- and late-1930s swelled the U.S. money stock and appear to have stimulated the economy by lowering real interest rates and encouraging investment spending and purchases of durable goods.”

The paper’s authorship is interesting. It’s by Christina and David Romer. The former currently chairs the president’s Council of Economic Advisers. She’s evidently having a tough go at making the transition.

Speaker Pelosi should stop worrying so much about confidence and start reading some history. She should also take a second to consider these words from Dorothy Sayers’ book Creed or Chaos: “A society in which consumption has to be artificially stimulated in order to keep production going is a society founded on trash and waste, and such a society is a house built upon sand.”

America’s businesspeople will again have confidence when they can see authentic and genuine growth. What we’re seeing right now is just an ignorance of the past and blind hope for the future.

Previous Post

November 4, 2008

The 'F' word

Next Post

March 12, 2009 More customers, fewer consumers

Browse Our Archives

Select a Category Books Church Life Family Life Misc Prayer Quotes Society Spiritual Growth Theology Uncategorized Video

Select a Month April 2014 March 2014 January 2014 December 2013 November 2013 August 2013 July 2013 June 2013 May 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 December 2011 November 2011 October 2011 August 2011 July 2011 June 2011 March 2011 February 2011 January 2011 December 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 September 2009 August 2009 July 2009 May 2009 April 2009 March 2009 November 2008 October 2008 July 2008 June 2008 April 2008 March 2008 February 2008 January 2008 August 2007 June 2007 October 2002 July 2002 November 1999 October 1999

TAKE THE

Religious Wisdom Quiz

What is the last book of the Bible?

Select your answer to see how you score.

Revelation Genesis Matthew Exodus