You Can’t Stimulate Dead Person

For, of all the money roaring through the U.S. economy, over 70% is from personal consumption of goods and services, which means the economy is consumer-driven.

[Live From Death Row]

A nation’s economy is always a work of complexity, which accounts for the divergent opinions of economists, who often come down on different sides of the big issues, as in what works, and what doesn’t.

Broadly speaking, the conflict is between classic and Keynesian economics, with the former of the view that the market is self-regulating, and the latter of the view that the market isn’t self-regulating, but must be massaged and managed by government fiscal policies.

The latest stimulus package is Keynesian — after the British economist John Maynard Keynes (1883-1946)– as was the bailout of the banks and financial institutions.

It seeks to influence events by an aggressive expansionist fiscal policy.

But it seems like this is less stimulus than stopgap, for it seeks to stimulate something that is in almost deadly shape. Look at it this way; if your heart stops, and you are given a powerful jolt of electricity, your heart may resume beating, but the problem is hardly solved. You don’t need a defibrillator unless the body (the system) is in an advanced state of collapse. And it’s that state of serious illness that isn’t being seriously addressed, for the American economy has been ill for quite some time.

Much can be traced to the NAFTA (North American Free Trade Agreement) era, which sought to emphatically transform the economy to one run on information and financial services, with the manufacturing to be exported to foreign markets where labor was cheaper.

Unfortunately, no serious educational efforts were undertaken to adjust to this dramatic economic shift, and instead, a decade was wasted on largely irrelevant battles over No Child Left Behind, when millions of children experienced school as a test-taking prison, instead of a site of substantive learning.

With manufacturing hollowed out, and real wages falling annually, how could the economy not have a massive seizure?

For, of all the money roaring through the U.S. economy, over 70% is from personal consumption of goods and services, which means the economy is consumer-driven.

Let us illustrate; the U.S. GDP (Gross Domestic Product) for 2006 was over $13 trillion. Personal consumption of goods and services came to over $9 trillion.

The net effect of joblessness and lowered wages is a hit at the heart of the economy, that $750 billion could hardly touch.

Until the fundamentals can be recognized and corrected, these problems will continue, and the economy will sputter along, until the next heart attack.

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