Thursday, April 09, 2009

lack of consistency?

Lame title I know, and possibly a lame post.

Anyway...

Instinctively I'm anti-stimulus but I'm almost convinced that America needs one, even though there is little evidence from history that it'll work.

Thing is though that we know that it's gonna make people poorer in the short run, they're gonna spend a lot of money. But the hope is that it'll shock the economy into a permanently higher level of output.

The sentence I've liked best to explain why a stimulus is needed is from Samuel Brittan
A slump is a tragedy for those who lose their jobs and also for those who fear to lose them. But it is also a logical absurdity that there should exist unsatisfied wants side by side with idle workers willing to supply them.
Stimulus ideally should prevent this from happening.

When it comes to immigration though it's very hard to avoid thinking in terms of low skilled wages and jobs. They depress the wages and compete for jobs. During a recession or depression I find this pretty compelling.

But like the stimulus it isn't the whole story. Immigrants in America tend to be pretty entrepreneurial, even if they're not starting Googles. That seems pretty important to me. I have no idea about economics of immigrant stimulus, but since stimulus talk is so mainstream, hence the idea that it's good for the economy to sacrifice in some ways, I'd think this angle should get more attention.

Tyler Cowen seems to think it'd be a good idea.

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