JCL Blog

Waste Wipes Out Stimulus

David Brooks has a good post in the NY Times yesterday where he compares the strategies of the US (big stimulus) and Germany (small stimulus) and the outcome: US not recovering and Germany growing big time.  I would add one thing:  stimulus spent in a wasteful way doesn't do any good.  In fact it does harm because it increases the deficit and debt load.

Germany spent its money and energy stimulating the production of products other countries want like machine tools.  We spend our money and energy propping up failed banks and expanding benefits for the unemployed.  While the comparison of the size of the stimulus is one data point, how it is invested is the other.  

We all should be watching the trade deficit as the most important measure of our success.  It measures how successful we are as a country producing products and services that other countries value enough to buy.  Right now our trade deficit is increasing -- so whatever stimulus money is making it past the bankers is being spent to buy products made elsewhere.