STIMULATING

In reading various commentators reagrding the recently passed stimulus legislation, one thing seems to be non-controversial: the thing that stimulus money is buying is confidence; confidence that the economy is sound, that jobs are relartiely secure and that better times are on the horizon. The success of the stimulus will depend on how well the billions of dollars achieve this end.

One would think that the most efficient use of money for this purpose is to actually invest in activities that are expected to lead to the production of wealth. It appears however that there are entire classes of spending that seems to have the opposite effect, that far from enabling the production of new wealth or value in the American economy, we are underwriting the creation of persistent money sinks that will take money in the future, rather than produce it. The most obvious of these is the dependency programs (welfare) in which the whole point is to give money to people who do not produce enough of value to make their own. Another category is healthcare, where the returns are decidedly non-economic, and the grab bag of educational spending that most likely contains both worthwhile and worthless programs. Underwriting dependency seems to be a poor investment.

The presence of questionable spending in the stimulus package raises an obvious question: if the need for targeting spending was so urgent, why does the package contain any spending that does not have the purpose of promoting valued economic activity? Can the amount of pork in the bill be taken as an inverse measure of the seriousness of those who drafted it?