Skip to main content

Why we can't have a new stimulus plan

Double dip recessions are rare things. Even a slowdown immediately after a recession is unusual. But job creation coming out of this one is painfully slow. While there are lots of reasons, here is a key one.
Historically, housing got creamed in a recession. Interest rates rose going in, choking off housing activity. Then interest rates were cut, housing gradually recovered and helped employment. A lot.
Think of how many skilled trades are involved in building a house. Plumbers. Electricians. Carpenters. Cabinet installers. Roofers. Landscapers. Wallboard hangers. Carpet layers. Tile layers. Bricklayers. Concrete finishers.
Then there are the manufacturers and suppliers of pipe, kitchen and bath faucets, lighting fixtures, roofing shingles, lumber, toilets, sinks carpet, concrete, bricks,conduit, circuit boxes, windows, doors, insulation, air conditioners, water heaters and so on.
Well, in this recession there is no housing rebound, so the millions of local trade workers and manufacturing jobs that one would expect simply aren't getting created.
With that in mind, I could almost support a stimulus plan. "but". The first stimulus plan was a disaster. Over half the money went to Congress' pet projects, not to investments that might actually help move the economy.
A plan should be judged by two factors: first, does it improve the U.S. long-run productivity? Ports, rails, airports, roads and energy grid spending falls into this category. But not spending to support raises for people who already have jobs or to bail out broke states. Second, it should create a lot of jobs immediately. It is better to create two $20 per hour jobs than one $40. And it is still better to create four $10 per hour jobs than 1 $20. People need to be put to work.
Congress clearly failed those tests last time, with bogus "prevailing wage" rules and old pork spending so awful that even their friends wouldn't support it before. I don't see how we can trust them to do a better job a second time around.

Comments

Popular posts from this blog

Book Review: What Matters Now by Gary Hamel

Interview of Eric Schmidt by Gary Hamel at the MLab dinner tonight. Google's Marissa Mayer and Hal Varian also joined the open dialog about Google's culture and management style, from chaos to arrogance. The video just went up on YouTube. It's quite entertaining. (Photo credit: Wikipedia)Cover of The Future of ManagementMy list of must-read business writers continues to expand.Gary Hamel, however, author of What Matters Now, with the very long subtitle of How to Win in a World of Relentless Change, Ferocious Competition, and Unstoppable Innovation, has been on the list for quite some time.Continuing his thesis on the need for a new approach to management introduced in his prior book The Future of Management, Hamel calls for a complete rethinking of how enterprises are run.

Fundamental to his recommendation is that the practice of management is ossified in a command and control system that is now generations old and needs to be replaced with something that reflects an educat…

7 Ways to Fix Your Gut and Help Your Brain

Author Peter Andrey Smith titled his article on the relationship of the brain to the intestines, and, in particular, the tiny creatures that live in our intestine beautifully: “The tantalizing links between gut microbes and the brain”. If the human brain is the frontier of medical science, the microbiome, those tiny creatures that live in our intestinal tract, is Jupiter. The linkage between what goes on in the gut and the brain is indeed tantalizing, and the subject of research worldwide. There are over 1,000 different kinds of those things living inside us. There are hints that having the wrong mix of gut microbes, or the absence of any particular type, is linked to asthma, irritable bowel syndrome, allergies, depression, Alzheimer’s disease and more. Further, antibiotics, illnesses and other factors can deplete the population. Here are seven things we can do to help keep our little creatures happy and healthy.
Eat the right stuff. There is evidence that the right diet helps keep …

Get REM Sleep; Manage Fear

A good night’s sleep may help you manage fear and risks better.

A study just posted in Journal of Neuroscience describes the importance of a good night’s sleep to controlling strong emotions, especially fear. Previous studies in this area attempted to discover what happens in the brain after a frightful experience.  These prior studies, for example, show how Post-Traumatic Stress Disorder (PTSD) affects sleep. A team at the Rutgers University Center for Molecular and Behavioral Neuroscience, led by Itamar Lerner, has taken a different approach. They wanted to see if there is a relationship between adequate sleep and prevention or management of the brain’s reaction to subsequent stressful events. Research Team Lerner is a Postdoctoral Fellow in sleep research. Along with fellow researchers Neha Sinha-also doing Postdoctoral research-in her case in brain imaging, Shira Lupkin and Alan Tsai, they used new technology that allows mobile tracking of sleep habits over a period of time, not j…