Friday, January 30, 2009

An idea....

Opponents of fiscal stimulus in the form of government spending regularly point out that the U.S. wasn't pulled out of the Great Depression until the enormous ramp-up that was the U.S.'s involvement in World War II.

Leaving aside the point that during the war the U.S. Government laid out enormous sums of money and funded a massive expansion in manufacturing, agriculture, transportation and scientific research.

The much lauded post-war prosperity was possible because of the enormous growth in capacity and know-how driven by government funding. Add to that the return of millions of trained workers to the labor market and the-mistakenly but consistently-overlooked fact that the U.S. retained the only fully-functional industrial base for at least a decade.

Critics say the government shouldn't be pouring money into the economy, that it will only leave us burdened with debt in the future. Yet right now the U.S. is one of the few that has the ability to do so. While should be directing funds into the hands of consumers to spend, but perhaps more importantly, we should be directing the funds into rebuilding the U.S. infrastructure and subsidizing a boom in industrial and technological growth. 

Financial services have gotten all the glory when it comes to wealth creation, but they were also directly responsible for the bubble that has blown the global economy. Perhaps we should focus on areas where self-sustaining growth can be developed and once again return the U.S. to its leadership position in the world economy. 

- Murphy

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