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What should government do to stimulate the economy?
Let's see what New York Times readers think. Right now there's only one comment and it's not totally encouraging:
Triple the minimum wage.
That would bring it more in line with increases in efficiency and rates in the late 70s. People make more, they spend more. All the money is just tied up in investments now, like bonds in Fannie and Freddie.
But surely the quality of the answers will improve as the day passes, no? No? No?
Help!
Posted by Tyler Cowen on July 16, 2008 at 06:20 AM in Economics | Permalink
Comments
Greater tax cuts for the rich. Trickle down effect. Reaganomics!
Posted by: Daniel Corradi at Jul 16, 2008 6:32:16 AM
I'm Swedish. It pretty much amazes me that the comments are more left wing in their soulutions than what I would ever expect here. I guess after some decades with interventionist rave partying up until the early 90's, it seems like the cravings for government remedy is actually less here than over there. Don't take those happy pills!
Posted by: Peter at Jul 16, 2008 6:54:28 AM
According to other NYT commenters: spending billions-trillions of dollars on infrastructure.
More entertaining suggestions I've noticed:
Tying wages to the GDP: Hmm, what a fantastic way to stimulate the economy during a recession. But it will show those darned CEOs what for!
Stopping the foreigners from taking our jobs and getting visas: Yup, OK, great plan.
Bringing soldiers home from Iraq: This would be good for the economy in the long run, but given these are all volunteer soldiers I don't see how it's of much help for avoiding a recession in the short-term. It's not like WWII where there were labor shortages that demobilized soldiers fulfilled. Perhaps I'm wrong on the short-term effects of this one?
Nationalizing the oil companies and cutting defense spending by 75%: If I were going to nationalize the oil companies, I would INCREASE the defense budget. Because now we're going to have a bunch of lovely wars to fight when we make all the overseas oil fields that are majority owned or backed by American corporations the property of our government. Or did he not think that one through entirely?
Posted by: DPT at Jul 16, 2008 7:29:55 AM
An excellent demonstration of what Dan Klein calls The People's Romance...
Posted by: Rich at Jul 16, 2008 7:48:18 AM
If it were up to me, I'd pour money into mass transit. I'd try to make commuting by train into major American cities as easy as possible. I'd try to improve bus and subway service within our cities. I'd introduce congestion charges in a few major cities. I'd do everything possible to get people to drive less. I'd work as hard as I could to improve methods of burning coal without adding to global warming. And I'd pour money into improving our electricity transmission capabilities to allow electric power to be produced by fossil fuel and nuclear power plants in sparsely populated areas and used in population centers. I'd much rather do that than end the gas tax or send consumers another economic stimulus check or continue our stupid ethanol subsidies. That's what I'd do.
Posted by: Stan at Jul 16, 2008 8:00:23 AM
One word:
Quit.
Posted by: Bill Stepp at Jul 16, 2008 8:16:42 AM
What is really frightening is that these ideas are pretty much what these people expect to get out of an Obama administration, and they'll be sorely disappointed if they don't get it.
Posted by: Winslow Theramin at Jul 16, 2008 8:16:59 AM
Pikers! Why only triple it? Why not move it up by an order of magnitude and just make everyone very comfortable?! ;-)
Posted by: Speedmaster at Jul 16, 2008 8:24:03 AM
We could power the nation by burning paperwork and office furniture from the now abolished departments of education, commerce, health & human services, homeland security, and energy. Sell off the buildings. Open the continental shelf, Rocky Mountain region and ANWR to drilling and sell the rights. Privatize Amtrack. Privatize the Post Office following the Australian model. Sell off government land for carbon sequestration industries, i.e. logging. Use the savings from the abolished departments to abolish capital gains tax and invest in alternative energy and infrastructure.
Posted by: 8 at Jul 16, 2008 8:25:29 AM
A slow but steady increase in inflation would be a very good thing for the banks, but the trick finding the rate that keeps it high enough to inflate them out of their default problem but low enough that they don't transfer all the gain to their creditors.
Posted by: nelsonal at Jul 16, 2008 8:33:36 AM
I saw Steve Forbes on the Today show this morning, giving advice on what to do about the economy. One of his suggestions was to cut taxes. Really, it is as if there was no economic ill that lower taxes won't fix.
Posted by: MS at Jul 16, 2008 8:36:38 AM
I'm constantly surprised at how asinine many of the NYT comments are. It's depressing.
However, I do like the idea of selected investments in infrastructure and public goods. I'd consider public transit, highways (perhaps more optimizing and retrofitting than building), ports, airports, and so on. How about legislating easier access to charter schools, combined with a subsidized school building program to get average school size down? Maybe a system of state/federal trade schools in areas like nursing? How about a further switch from high-rise public housing to smaller, more dispersed residences?
Posted by: Greg at Jul 16, 2008 8:52:49 AM
Encourage telecommuting as a national agenda and with incentives such as a tax credit. It will induce spending for communications and pc equipment and reduce energy comsumption. Within a matter of weeks you could get 20% of the workforce off the roads and mass transit one or more days a week.
Posted by: jdetal at Jul 16, 2008 8:55:30 AM
What do you expect from people who read Gretchen Morgenson?
Posted by: Eric at Jul 16, 2008 9:01:10 AM
First, do no harm is a non-starter, eh?
I'm still convinced that we have an arithmetic recession. You add enough negative components together (housing and housing lending) and pretty soon you have zero or less. But, until oil kicked in, I don't think there was an economy-wide hiccup.
Not even from an Austrian view, but just from common sense, why is spending better than saving? Why shouldn't we have to readjust to the higher energy costs of a global economy?
Consumer spending hasn't really dropped. It's just being soaked up by gas costs. So, all we need is for business to believe that the economy will be better 6-12 months from now. I guess that justifies for some the government doing "something."
Well, if we are going to run deficits, we might as well build roads and bridges and nuclear plants. It's the housing construction people out of work, right? Financial people probably can get plenty of work helping companies with Sarb-Ox. Maybe the autoworkers can build buses to run on natural gas. That is, if doing nothing is completely out of the question. Maybe it would be good enough to announce it and once the economy picks back up, never go through with it.
Posted by: Andrew at Jul 16, 2008 9:18:46 AM
For too long America has coasted on its existing attractions, slowly falling by the wayside of increasingly outlandish tourist destinations. I would build on America's proud heritage of nonsense; deeper canyons, carved mountains of more famous people, attach lasers to old faithful, spin the world's largest yarn of wool by several orders of magnitude! Nobody outcrazies America, especially not Dubai.
Posted by: Sheikh at Jul 16, 2008 9:22:18 AM
Double, triple, or quadruple the number of high-skilled immigrants that are able to come here each year.
Posted by: Viren at Jul 16, 2008 9:34:26 AM
It's strange, I bet the author could see that increasing the minimum wage to $1,000/hr couldn't possibly make everyone rich, and yet...
On the other hand the idea that any increase to minimum wage will result in unemployment is silly too. Low wage workers have high transaction costs to switching jobs, when you live paycheck to paycheck the first weeks withheld paycheck is a big deal, plus a day off work may not be an option, never mind two for the interview and drug test. Some increase in minimum wage can off set the fact that low wage workers aren't optimising their behaviour due to search and switching costs.
Posted by: R at Jul 16, 2008 9:34:28 AM
Let's make the process of going into the US by plane more of a headache and unwelcoming. Mike "We don't need no tourists" Chertoff loves any suggestions scaring away tourism.
Posted by: j at Jul 16, 2008 9:41:14 AM
I liked this one
"Spend a couple billion dollars to send everyone in the country to basic courses in micro- and macroeconomics, in an effort to counter the staggering economic illiteracy on display in these comments."
— Adam, Washington
Posted by: I at Jul 16, 2008 9:46:42 AM
Pay young lads to go about town breaking windows of bakers' stores.
Posted by: Mark at Jul 16, 2008 9:50:32 AM
In my experience, whenever the NYT runs an economics story like this, the comments are almost universally awful. Does not relfect well on the Times or its readers, though I do think that this fellow may be more right than any of the other commenters:
July 16th, 2008 6:36 am
Link
Government should leave it alone. They just don't get it.
— victor, new port richey
Posted by: John at Jul 16, 2008 10:02:31 AM
A shift in spending from things like Iraq to infrastructure spending, while overall slightly reducing the level of spending. Increased spending on mass transit. Keep interest rates low.
Make classes in financial literacy part of No Child Left Behind. Use it for something meaningful...
Of course, if that doesn't work just cut taxes. We all know tax cuts always pay for themselves. Change the symbol of the bald eagle to a picture of the Laffer Curve.
Posted by: katiet at Jul 16, 2008 10:04:19 AM
Reduce the corporate tax rate and the capital gains tax to 0%, reduce the marginal tax rate of all brackets by at least 5%, and eliminate the 6.2% OASDI payroll tax. This can be financed by large cuts in Medicaid, TANF, SSI, unemployment benefits, etc., the complete repeal of Medicare Part D, and across the board cuts in all government programs.
Posted by: at Jul 16, 2008 10:06:16 AM
It's nearly unanimous: a passenger rail system is the best way to prevent recession!
Posted by: Urstoff at Jul 16, 2008 10:13:34 AM
