Update on Stimulus packages / military spending timing

Martin Feldstein, a Harvard professor, published an article in the WSJ on Christmas about the same point that I wrote about ten days earlier:

The current taste for stimulus package spending does not favor military budget cuts, but increases - and the best way to do so would be to soon pay for what needs to be paid sometime later anyway.

He didn't write about a need for budget adjustments (down) to sustainable levels, though.

I've got to object against his "The greater terrorist threat fully justifies these additional funds." as well.

Anyway, I'd like to focus on the good news; the idea (which is obviously a parallel invention of probably many thousand people) might be used with good effect.

Sven Ortmann

edit: 2009-01-17: The idea took off this month.







  1. A little stimulus package did a lot .. to massively change the perception of Germany and Germans , by most of the people I know ( in Uk )
    This was the friendly , open , generous , well organised hospitality surrounding the World Cup .
    Brilliant .

  2. This idea of stimulus comes from Ronald Reagan. They believe he built infrastructure and increased military spending considerably which led to us coming out of a bad recession. It's true on the surface but misses his main point. He stopped deficit spending, cut taxes and ended government interference in the economy. Stimulus bureaucrats are the worst of both worlds. Strangle the economy with ever more control and wildly increase spending. It's going to be a disaster come Spring. I'm guessing that we'll completely collapse by next October.

  3. Emery, Reagan promised to reduce the growth of government spending, but that's not the same as if he "stopped deficit spending".

    "Reagan raised deficit spending to its highest level (relative to GDP) since World War II."

    The idea of stimulus packages comes rather from the economist Keynes or his colleagues than from an actor who became president four decades after Keynes' death.

    By the way; we'll see whether these stimulus packages are really that great. Econometrics are divided about the issue - some claim that the multiplier is close to 1 and therefore quite pointless.
    I personally think that spending planned expenditures earlier makes sense as anti-cyclic measure in a recession, but I doubt that deficit spending to beat a recession is a good idea in the long term.

    I agree with the carefulness and reluctance demonstrated by our chancellor - and that's almost the first agreement I had with her.

  4. @petra:

    That's funny because the WM2006 was the closest thing to a revival of German patriotism ever.

    I didn't see any German flags attached to cars of hanging outside of windows (or Turkish ones) before the WM2006 - and less at the EM2008.

    German patriotism is limited to soccer apparently; even the re-unification didn't see so many flags.

  5. Yes, it's Keynesian but for the most part these guys are trying to emulate Reagan without doing the most important thing, which is allow people to create wealth. As much as it pains me to admit it, to think our leaders have anything more then the vaguest notions of Keynes, Marx or Von Mises, will lead you to the wrong place. They don't think in those terms. They do only what's been been done in their memory. No bad idea is too bad to repeat and there's no coherent economic view to criticize. They do it all piece meal. They have power and they use it from crisis to crisis.

    Clinton was more Reagan the Reagan because of the fall of the Soviets. Obama is showing all the signs of doing much of what Reagan/Clinton did, while continuing the Bush policies of massive interference.

    As far as the deficit, I stand corrected. I should have said that he set the table for later reductions by his predecessors. With the Soviet Union going away we were able to reduce military spending. My apologies for not being clear about this. His big accomplishment was to increase revenues and keep the government out of our business, even if it only lasted through his first term (we've had about 4000 pages a year of new business regulation since the first year of his his second term). His spending, particularly in the military sphere was/is a poncy scheme, although, it did have an affect on the outcome of the cold war (I'm not sure what affect this really had on the Soviet Union. They may have fallen regardless of his spending). The big deal was that he increased public sector jobs significantly which strengthened the economy. Business boomed.


  6. Re German / Britsh nationalism -
    in an edgy world perhaps we can learn something about perceptions and peace ?
    1. hospitality , given and received , hits a chord in all people;
    2. we were brought together by common interests ( football , beer ) , realised how similar our people were ; both teams played well , by the rules , and neither won , but neither really lost ( bit like the war )
    3. efficient , but smiling policing prevented situations getting out of hand ;
    4. Flash points ( not enough tickets for popular draws ) were anticipated ( giant screens that worked )
    5 . The Iraq war showed us that an elected goverment can take a people into a situation against 95%of its peoples' will , on a pack of lies , and we can do nothing about it . Hence instead of assuming all Germans were Nazis , we now assume 95 % of them were not .
    Lets have hope for the South African W Cup .
    Israeli W Cup next ?