The Problem with the Stimulus


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

December 01, 2015
John Wight
From Iraq to Syria: Repeating a Debacle
Conn Hallinan
Portugal: the Left Takes Charge
Mike Whitney
Putin’s Revenge? The Fight for the Border
Sami Al-Arian
My Ordeal: One of America’s Many Political Trials Since 9/11
Steffen Böhm
Why the Paris Climate Talks Will Fail, Just Like All the Others
Gilbert Mercier
Will Turkey Be Kicked Out of NATO?
Bilal El-Amine
The Hard Truth About Daesh and How to Fight It
Pete Dolack
Solidarity Instead of Hierarchy as “Common Sense”
Dan Glazebrook
Rhodes Must Fall: Decolonizing Education
Colin Todhunter
Big Oil, TTIP and the Scramble for Europe
Eric Draitser
Terror in Mali: An Attack on China and Russia?
Linn Washington Jr.
Torture and Other Abuses Make Turkey as American as Apple Pie
Randy Shaw
Krugman is Wrong on Gentrification
Raouf Halaby
Time to Speak Out Against Censorship
Jesse Jackson
It’s Time for Answers in Laquan McDonald Case
Patrick Walker
Wake Up Zombie, Kick Up a Big Stink!
November 30, 2015
Henry Giroux
Trump’s Embrace of Totalitarianism is America’s Dirty Little Secret
Omur Sahin Keyif
An Assassination in Turkey: the Killing of Tahir Elci
Uri Avnery
There is No Such Thing as International Terrorism
Robert Fisk
70,000 Kalashnikovs: Cameron’s “Moderate” Rebels
Jamie Davidson
Distortion, Revisionism & the Liberal Media
Patrick Cockburn
Nasty Surprises: the Problem With Bombing ISIS
Robert Hunziker
The Looming Transnational Battlefield
Ahmed Gaya
Breaking the Climate Mold: Fighting for the Planet and Justice
Matt Peppe
Alan Gross’s Improbable Tales on 60 Minutes
Norman Pollack
Israel and ISIS: Needed, a Thorough Accounting
Colin Todhunter
India – Procession of the Dead: Shopping Malls and Shit
Roger Annis
Canada’s New Climate-Denying National Government
Binoy Kampmark
Straining the Republic: France’s State of Emergency
Bill Blunden
Glenn Greenwald Stands by the Official Narrative
Jack Rasmus
Japan’s 5th Recession in 7 Years
Karen Lee Wald
Inside the Colombia Peace Deal
Geoff Dutton
War in Our Time
Charles R. Larson
Twofers for Carly Fiorina
John Dear
An Eye for an Eye Makes the Whole World Blind
Weekend Edition
November 27-29, 2015
Andrew Levine
The Real Trouble With Bernie
Gary Leupp
Ben Carson, Joseph in Egypt, and the Attack on Rational Thought
John Whitbeck
Who’s Afraid of ISIS?
Michael Brenner
Europe’s Crisis: Terror, Refugees and Impotence
Ramzy Baroud
Forget ISIS: Humanity is at Stake
Pepe Escobar
Will Chess, Not Battleship, Be the Game of the Future in Eurasia?
Vijay Prashad
Showdown on the Syrian Border
Dave Lindorff
Gen. John Campbell, Commander in Afghanistan and Serial Liar
Colin Todhunter
Class, War and David Cameron
Jean Bricmont
The Ideology of Humanitarian Imperialism