Amherst Wire

Economic Stimulus 101 – Part 2

Posted March 12, 2009
 
Economic Stimulus 101

Can we spend our way out of a bad economy? Explore the costs, benefits and impacts.
$700

billion

Total value of the Emergency Economic Stabilization Act signed into law by President Bush on Oct. 3, 2008.
 

Note: Adobe Flash is required to view the videos. Download it here.

Historical Parallels
In what ways are the current economic crisis similar to and different from the Great Depression?

“I don’t think we’re yet in as severe a circumstance but the basic structural similarity is there.”
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“What’s different about our circumstances today? There’s more surplus capital; we have more social safety nets.”
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“Comparisons to the Great Depression are just downright silly.”
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The background of Keynesian macroeconomic theory:

Keynes theorized in the 1930s about why markets don’t correct themselves, and today’s policies are based off those theories.
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“The money [today] is going to be more productively used than… through military Keynesianism.”
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How does the current stimulus plan stack up against historical precedents?

“Even though the stimulus package looks very big, it is actually in historical perspective not all that big.”
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Underlying Problems
Professors weigh in on various deeper causes of the economic crisis:

“We were living inflated dreams for the last 6 or 7 years.”
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“Circumstances give [greed] a chance to express itself… and we created a bubble.”
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“What’s going on in Washington isn’t helping the confidence factor.”
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An increase in inequality and decrease in income mobility made the U.S. economy “more dynastic than dynamic.”
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“I think [rising inequality] is a real problem for our economy and may have contributed to the shortfall of demand.”
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“Over the last 40 years, productivity has continued to increase [while] real wages have been stagnant since 1975.”
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“Instead of paying taxes, [the rich] buy government bonds and then get paid interest on those bonds.”
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Staggering health care costs need to be addressed for long-run economic stability.
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Produced by Jackie Hai, Richard Caesar and Frank Godinho, AmherstWire.com.

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Economic Stimulus 101 – Part 2