This bailout business is comical. Both “sides” can line up economists that agree with them. All of them have models and historical facts and figures to make their case. Unfortunately, macroeconomics isn’t something that can be proven. i wouldn’t be surprised if both sides were right some of the time.
This event is not so much about competing schools of economics, but of world views. I’ll start with the “side” that I’m in because I understand it pretty well.
Resistance to this bailout goes well beyond the idea “It won’t work.” At their best, people who do not want this bill passed believe that everyone should spend their money the way they see fit. People should be free to labor for what they think is important with a minimum of burden from outside influences like the government. This means keeping the tax levels low, and therefore keeping government spending low. Not everyone will do what we like, but c`est la vie, everyone is different and we can’t expect them to do our bidding. They don’t believe that this “stimulus” will work because no one can steer an economy. It is built on what is done by everyone in it as opposed to being directed from above. If things are left to themselves, the entire economy may look like it’s going up or down, but that isn’t really important. Allowing people to have the freedom to react to their world is paramount. There is a coherent, logical form of economics that says that this type of arrangement would allow for the most widespread prosperity not only in this country, but worldwide. History would seem to bear them out. While it’s true that there has never been a government like this, the opposite has been tried with disastrous results.
At their worst, the people that oppose this “stimulus” believe that the real motivation for it is slavery. Massive spending is the first step to higher taxes, and being forced to work without remuneration is in fact slavery. Think about it, if the government taxes you at 8.3 percent, that means that you would work for an entire month without seeing any money. It might be OK if they then spent it on things you agree with, but these people would never admit to that, plus, if they wanted it, they wouldn’t need to have the threat of incarceration to pay for it. In reality, people are generally taxed at much higher rates already and if taxes are not paid, you go to jail. In these people’s eyes, the current bill is simply the latest effort to force people to live and work in a way that the political elite want them to.
Like all extremes, the worst version of this view is a little kooky although it’s hard to argue against the slavery definition. One thing that needs to be emphasized is that just because someone is against this bill, it does not mean that they want people to suffer. They just have different priorities in how our labor should be spent. I’m somewhere closer to the first, or best case scenario in my own outlook, but I can sympathize with people who have the second. I’ll try my hand at the “pro” side to the bill in the next post.