More stimulus money is needed

November 5, 2009 by Afan Tarar · 1 Comment

More governmental intervention is needed to battle unemployment

I do not care who you are or whether you pay attention to politics.

If you know anything basic about economics you must have realized that the Obama administration’s stimulus plan has saved our economy from another depression.

But the success of the plan should come as no surprise, as it was backed by Ben Bernanke, the chairman of the Federal Reserve and the foremost expert on the Depression.

But both the Congress and the administration are hesitant to dish out cash for a second time. The economy is growing again, at about 3.5 percent, but according to economist Paul Krugman, it would take about another decade to get employment back to “pre-economic free fall” levels.

Advocating for more action from the government will probably lead to accusations of me being a socialist. But others, I know, are legitimately concerned about the nation’s huge debt and the burden it has become for our children to pay off.

Most conservatives believe that the private industry can get us out of any situation. I can already hear the impassioned speeches about how American innovation will get us out of this mess.

But that’s just not possible. And the claim that private industry is always the answer is just not true. Remember, the financial crisis was a result of too much trust in the private sector.

American car companies are a perfect example of how having the government give you a small boost does have some positive results. American cars have finally started to look good and compete against imports.

The stimulus has done what it was supposed to and ideally, we would now rely on the private sector to pick up the slack. But this doesn’t seem likely. In fact, many big investment firms are shorting the markets and betting on there being a market pull back.

The government should do more. I am not advocating that the government should take over more businesses or that we should now become some kind of semi-socialist nation, I simply want more job creation.

That’s what it boils down to. We need more jobs and they will not be coming any time soon. Spurring job creation will take care of the rest of our problems.

It’s a simple Econ 101 exercise: more jobs means more consumers, more consumers means more money for businesses which leads to businesses selling more products spurring demand for more supplies; and increased investment and consumption which leads to a robust economy. The new stimulus should only be aimed to projects that build more consumers directly.

There are many new infrastructure projects that can be supported. Infrastructure in America has gotten old and needs revamping. Having people build new bridges or even upgrade all of our trains in the east coast could provide much-needed jobs.

The government should also give more low-interest loans to businesses so they can expand and keep people on their payroll.
Economic growth functions like a seed: you don’t just ignore it when it sprouts and leave it to the elements. You need to let it grow a bit stronger and keep a close eye on it. Protect it from storms and other hazards that threaten to kill it until it has grown strong enough to survive on its own.

This is not the time to be weak in resolve. The government has an obligation to keep the economy growing steadily for the sake of those future generations.

College students know better than anyone else that our future won’t be bright if people are not hiring.

We seem ready to spend trillions on funding unpopular wars. But when it comes to helping businesses grow and prosper, which would help better millions of lives here at home, we sit around and wait for the invisible hand to do its magic.