FacebookTwitterGoogle+RedditEmail

The Problem with the Stimulus

by ALAN FARAGO

Doom and gloom is everywhere. We now see what happens when the productive capacity of a nation is propelled by ever widening wheels of debt, tied not to strength of assets but to derivatives of debt.

Now comes the question, what to do. First, be realistic. Second, be bold.

Here is the problem with fiscal stimulus: if not applied to rebuilding our nation’s productive capacity, it is money down a black hole. For certain, it is important to provide some floor under this free-fall. But government spending on infrastructure serves a temporary purpose. a limited purpose. Fiscal stimulus that fails to provide for new productive capacity—jobs making products that people need—will bleed out the economy like a slow suicide.

Miami-Dade County recently submitted to Congressional leaders a three page letter detailing $23.46 billion in “approved, programmed, multi-year capital projects” that the county would like funded from the Obama plan when it emerges, attaching a list of $7.2 billion that are shovel-ready. All the projects are needed, it is true. It should be acknowledged, too, that information about the scope and scale of the county infrastructure deficit was willfully suppressed by local government, anxious to keep the building bubble expanding without concessions to lagging infrastructure. But these are not projects that will revive the economy. They represent what Florida’s most populous county left behind in the chase for tax base.

Today they represent, moreover, a repudiation of values, fiscal prudence and ethics that sunk the economic ship.

Across the nation, thousands of counties and municipalities have similar shovel-ready lists to paper over egregious mistakes by public officials who failed to account for, fund and pay the costs of growth when and where they occurred.

Realistically, civil works projects will prop up the economy only so long as the vast inputs continue. But you can’t use debt to solve the problem of too much debt, whether you are a credit card junkie or a municipality. Without increasing productive capacity, those short-term benefits will disappear like smoke.

Florida is a state in crisis because it doesn’t make much of productive value. Its agriculture and tourism are vulnerable to disruptions in the broader economy. Its natural resources are in the midst of expensive, uncertain rehabilitations. The impacts of climate change are on the horizon, if not already here.

What Florida does have is a lot of sunshine. That makes the state a premier candidate for massive investment in renewable energy technologies.

To be bold, and to create permanent jobs requires a vastly de-centralized energy grid. Right now, Florida’s utilities green-wash their energy portfolios with pilot projects for solar but for the most part, they are like any other states’: relying on decadal investments and mountains of new debt and costs to consumers for large-scale investments around a fixed, antiquated grid.

Just like the banks, the big electric utilities will do business-as-usual—including all the millions in compensation and perks to top executives—until the system breaks down. Then, like the banks, energy will be nationalized.

It is not clear if our democracy is facile enough to adapt to the bold thinking and steps and implementation to get us through this economic crisis. To a large extent, members of Congress owe their own seats to powerful economic interests who would consume the nation’s capacity for bailouts before surrendering an ounce of privilege. That’s what happened with Merrill Lynch’s billions in compensation, while billons of taxpayer dollars were being injected to stave off its bankruptcy.

How could Congress let this happen, if Congress itself was not suffering from Stockholm syndrome?

Whatever formula the Obama administration chooses to allocate the national debt to revive the economy must be guided by analyses enlightened by the recent behavior of the serial bubble architects. Trillions of dollars of fiscal stimulus must be transparent, must have stringent federal controls, audits, and oversight and must be supported by a much more muscular regime to investigate, prosecute and penalize white-collar crime and public corruption.

This is no plain vanilla recession. The Obama administration should consider preemptive measures to nationalize sectors of the economy, to speed change, rather than be forced to nationalize once those sectors have been stripped and looted like the banking and insurance industries.

Who knew the fall of the Berlin Wall was a comma, on the way to; this?

ALAN FARAGO, who writes on the environment and politics from Coral Gables, Florida, and can be reached at alanfarago@yahoo.com

 

 

Alan Farago is president of Friends of the Everglades and can be reached at afarago@bellsouth.net

More articles by:

CounterPunch Magazine

minimag-edit

bernie-the-sandernistas-cover-344x550

zen economics

December 08, 2016
John W. Whitehead
Power to the People: John Lennon’s Legacy Lives On
Mike Whitney
Rolling Back the Empire: Washington’s Proxy-Army Faces Decisive Defeat in Aleppo
Ellen Brown
“We’ll Look at Everything:” More Thoughts on Trump’s $1 Trillion Infrastructure Plan
John Stauber
The Rise and Fall of Obamacare: Will the Inside Story Ever be Told?
Ted Rall
Ameri-Splaining
Michael J. Sainato
Mainstream Media Continues Absolving Itself From Clinton, Trump Election Failures
Ralph Nader – Mark Green
Divest or Face Impeachment: an Open Letter to Donald Trump
Gareth Porter
US Airstrikes on Syrian Troops: Report Data Undermine Claim of “Mistake”
Martha Burke
What Trumponomics Means for Women
Ramzy Baroud
Fatah, Hold Your Applause: Palestinian Body Politic Rotten to the Core
Steve Horn
Jeff Sessions, Trump’s Attorney General Pick, Introduced First Bill Exempting Fracking from Drinking Water Rules
Joe Ware
The Big Shift: Why Banks Need to Stop Investing Our Money Into Fossil Fuels
Juliana Barnet
On the Ground at Standing Rock
Franklin Lamb
Aleppo Update: An Inspiring Return to the Bombed Out National Museum
Steve Kelly
Hidden Harmony: on the Perfection of Forests
December 07, 2016
Michael Schwalbe
What We Talk About When We Talk About Class
Karl Grossman
The Next Frontier: Trump and Space Weapons
Kenneth Surin
On Being Caught Speeding in Rural America
Chris Floyd
In Like Flynn: Blowback for Filth-Peddling Fascists
Serge Halimi
Trump, the Know-Nothing Victor
Paul DeRienzo
Flynn Flam: Neocon Ex-General to Be Trump’s National Security Advisor
Binoy Kampmark
Troubled Waters: Trump, Taiwan and Beijing
Tom Clifford
Trump and China: a Note From Beijing
Arnold August
Fidel’s Legacy to the World on Theory and Practice
Dave Lindorff
Is Trump’s Idea To Fix a ‘Rigged System’ by Appointing Crooks Who’ve Played It?
John Kirk
Cuba After Fidel
Jess Guh
Repeal of Affordable Care Act is Politics Playing with the Wellbeing of Americans
Eric Sommer
Team Trump: a Government of Generals and Billionaires
Lawrence Davidson
U.S. Reactions to the Death of Fidel Castro
John Garvey - Noel Ignatiev
Abolitionism: a Study Guide
Clancy Sigal
Caution: Conspiracy Theory Ahead!
December 06, 2016
Anthony DiMaggio
Post-Fact Politics: Reviewing the History of Fake News and Propaganda
Richard Moser
Standing Rock: Challenge to the Establishment, School for the Social Movements
Behrooz Ghamari Tabrizi
Warmongering 99 – Common Sense 0: the Senate’s Unanimous Renewal of Iran Sanctions Act
Norman Solomon
Media Complicity is Key to Blacklisting Websites
Michael J. Sainato
Elizabeth Warren’s Shameful Exploitation of Standing Rock Victory
David Rosen
State Power and Terror: From Wounded Knee to Standing Rock
Kim Ives
Deconstructing Another Right-Wing Victory in Haiti
Nile Bowie
South Korea’s Presidency On A Knife-Edge
Mateo Pimentel
Some Notes and a Song for Standing Rock
CJ Hopkins
Manufacturing Normality
Bill Fletcher Jr – Bob Wing
Fighting Back Against the White Revolt of 2016
Peter Lee
Is America Ready for a War on White Privilege?
Pepe Escobar
The Rules of the (Trump) Game
W. T. Whitney
No Peace Yet in Colombia Despite War’s End
FacebookTwitterGoogle+RedditEmail