To every action…Newtonian economics?
Anyone who I work with on a strategy related topic will tell you that one of my absolute favorite questions to ask is: “What are the possible unintended consequences of acting?” In strategy, the goal is to have the balance between intended consequences and unintended consequences come out in your favor….preferably over the long term horizon and not just in “today’s” context.
Policy postings in this particular blog are helpful tools - they allow us to discuss the concept of “unintended consequences” with current, real world issues without bringing our day jobs into the mix. It’s a target rich environment – there are usually PLENTY of unintended consequences surrounding policies that are enacted by a set of politicians who more often than not worry about their employability (will I stay in office? will my party stay in office? if I get unseated, can I get a job if I vote with my party?).
With that, I’ll point you to a really well written, easy to understand article about the unintended consequences of government intrusion into economics by John Tammy at Real Clear Markets.
My personal concerns over stimulus have been largely over the debate between economists on whether FDR/Keynes actually caused the double dip of the Great Depression with their policies, instead of the narrative that most of us were trained to believe (their policies SAVED the U.S. from the Depression….). Economists do not universally agree that Keynes helped the economy more than he hurt it. The controversy continues on this today, with regard to the current administrations’ policies. Speaking of the current administration, we don’t necessarily have the same dynamics - this government that is virtually anti-industrial in policy and philosophy (manufacturing, energy: bad; windmills, information technology jobs: good), increasing the production of exsiting natural resources is not going to happen. They are also very queasy about any form of war or fighting outside Fox News, tea parties and Republicans – so it’s also unlikely that any defense spending will grow to increase production either. (note: I hope we don’t end up in a war, and I truly hope that isn’t the only way to get out of this deep of a mess….)
Interestingly, in this article Mr. Tammy mentions that: “With the US unemployment rate presently at 10 percent, it’s no surprise that politicians of both parties are looking for ways to create jobs.”
Republican version of how-to-make-jobs: Tax credit for new hires
Will it work? Well, in the end neither policy proposal from EITHER party is likely to work because:
“….companies aren’t in business to create jobs. Instead, they form and attract investment based on their presumed ability to be profitable, ideally with the fewest amount of workers possible. ”