Ok I have a really stupid question about the bailouts already enacted and the expected auto bailout to come:
As I understand bad business decisions have resulted in financial institutions being unable to lend, which has resulted in corporations being unable to borrow to make up for losses resulted from their own bad decisions, which has resulted in a the loss, or threat of loss, of jobs for working people, and this has resulted in severely reduced demand for goods. The result is a vicious cycle where the latter results in the weakening of the former at each turn.
Governments have responded by feeding money, gathered from the bottom of the cycle, to the top.
My stupid question is: why don’t they just give us, the people, money instead?
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Please forgive my ignorance here, I know my question is very simple and probably a poor idea, but I (for my own ignorance) don’t know why it wouldn’t work better than what is being done. I’d love to know why this would never fly so please comment if you know.
Ok now I know that to just hand out money with no strings attached would be a disaster (as we see happening now with the unaccounted funds from the $700USD financial bailout in the States, CLICK HERE for more on that). I am thinking more of providing citizens funds that are tied directly to the purchase of domestically produced goods and must be spent within a certain timespan (say 6 months).
I would assume for example, that if the Canadian government provided money to every Cdn with a driver’s license money for a new car (limited to cars made in Canada by the Big Three) that would be a big boon to the car industry. It would increase demand, reduce the stockpiles just sitting on lots, and ensure that workers had a job to do to replenish the reduced supply.
We’ve tried trickle-down economics–it didn’t work. I’ve always thought that the problem was that the equivalent of gravity in the market goes from the bottom up (despite what those who have more would like us to believe). So why don’t we try ‘trickle-up’ economics?
I have a basic grasp on Wallstreet economics so I really don’t understand why this question has never been raised in major news outlets. There’s probably a really simple reason why this is a bad idea, if you know what that is I’d love to know…
… well I guess I can think of one reason: that global capitalism requires a sharp devision of haves and have nots to operate, that the bailout plans are not really plans to help all the citizens of the Western countries… but that can’t be it–can it?
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photos © 2004 alex felipe, all rights reserved.
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21/12/2008 at 7:56 am
This question needs to be asked at all levels of society and media. Now is the time for it to be asked. It’s pretty startling how most center-left media outlets won’t ask it out right. Historically, the U.S. government has never been able to consider this kind of bailout, not during the Populist era, not during the New Deal and not even during the so-called War on Poverty. Always strings attached.
One way to sidestep direct is to forgive debts, such as student loans.
21/12/2008 at 3:26 pm
I think it’s a rather valid question actually. A “helicopter drop” will always be a “helicopter drop”, regardless of where you drop the money.
My guesses are as follows :
1) Giving money to the people may reduce government power – giving it to business makes business indebted to the government
2) H. Paulsen is a loonatic who thinks that capitalism can only be saved by a brilliant mind such as his own, or his fellow criminals in the banking monopoly
3) Giving the money to people directly may raise the question of why taxes aren’t lowered – after all if the govt can afford to give away a few trillion, why not just lower taxes instead? Again, this would reduce the government power over the people – so it’s not something any politician would willingly do
or, possibly the most scary scenario :
4) The “higher-ups” know that this thing is going to break the economy once and for all, so they are looking to spend as much as they can before the inevitable end.
//hpx Save Capitalism
23/12/2008 at 10:21 pm
Alex, that’s gotta be the stupidest and most logical question I’ve heard anyone ask. Why keep us out of debt? You know socialism only works for the elite few down here. =)
27/12/2008 at 3:22 am
You raise an interesting point, Alex, but let’s be serious for a minute. You give everyone in the States a million dollars then inflation will skyrocket and everyone will be in an even bigger shit-storm than before.
In a sense the bail-outs did help every western citizen (and, arguably, a lot of non-western citizens) – the horror of a global financial crash (i.e. a world with no banks)would be too awful for most of us to comprehend. I don’t know about you – but my survival skills aren’t up to much!
I don’t think global capitalism needs “a sharp devision (sic) of haves and have nots” per sé, but it often works out like that. At least in a capitalist system the “have-nots” stand a chance (however small) of becoming “haves” – better odds than the slaves/serfs of yester-year.