Friday, February 20, 2009

At cross-purposes

The Cost of Gasoline
The Cost of Gasoline,
originally uploaded by hidayat_peje7.
We are hearing about plans to jump-start the consumer sector of this country (and that of our trading partners) but it looks like all indications are that the new meme going around, which is really an old, old meme, is of scrimping and making do.I don't see much indication that if stimulus money ends up in the consumers' pockets there is going to be a big Keynsian multiplier effect on the level of the individual, as people take some or all of that money and sock it away into savings or to pay down credit, thus failing to stimulate producers.
To counteract this addiction to destructive savings behavior, perhaps the government could put strings on the funds it doles out to bias its use toward a multiplier greater than one. For instance, we could reward people who spend money on things which are actually addictive (drugs, alcohol, sports, greasy food, religious ecstasy, political extremism, etc.) so as to get them hooked and more willing to part with their own dollars in the future. Or we could make conspicuous consumption more fashionable again in the public eye by using the media to continue promoting extravagance, only more so. Or we could put something in the currency so that if it isn't passed along to someone else, it will self-destruct noisily and messily. Mix in a little bit of patriotism and almost anything can take off even if it doesn't sound that good in the first place.

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