You Want To Stimulate What, Now?

There has, of course, been a great deal of debate about whether or not the Obama administration’s stimulus package will succeed in pulling the country out of its downward economic spiral. Much of that debate has focused on whether or not the package is actually stimulative in nature or just a  gussied up  liberal Christmas tree being pushed through legislation at a “convenient” time. I find myself fairly sympathetic to Republican and conservative cries of pork-barreling, but my problem is that I don’t think their alternative stands to fair much better. In fact, I’m inclined to suggest that it would fall even flatter given the circumstances.

We’ve heard time and time again that this economic meltdown is a crisis of confidence: on the part of the banks and financiers, on the part of businesses large and small, on the part of American consumers themselves. America’s economic engine seems to be locked in neutral because of a general lack of confidence. So what then shifts gears and gets thing moving again?

Common wisdom would prescribe an injection of funds into the system to address issue of solvency, and yet that track has been engaged to little effect. Banks are unwilling to lend out the funds they receive due to continuing concerns about the revelation of further bad debt. Money that winds up in the hands of consumers is naturally squirelled away into savings to weather worse storms on the horizon. Businesses continue to lay people off because of sagging revenues, which only exacerbates the problem further. It’s a perfect circle of mistrust at which the simple throwing of money is incapable of unlocking. The common denominator in all of this is, as has been identified, a sheer lack of confidence about the future.

Let’s be realistic about the economic future that is generally faced. By all accounts this sagging will continue for the next couple of years. No economist that I’ve heard speak on the topic from either the “left” or the “right” has given this situation much less than two to three years before any kind of respite is likely to emerge. It seems equally unlikely then that any stimulus package will pull the economy out of this nose dive in the immediate future. So, to the question about whether Obama’s stimulus package will “solve” the crisis, the answer seems to be a resounding no.

What then is a struggling new President to do? The answer, I think, is precisely what the Obama stimulus package seeks to do, despite its admitted largess.

The focus in this crisis has to go back to the primary actors in situation, the actors that are common to all the elements that need to be stimulated: people. The stimulus, in this regard, is less about economics and more about psychology. It is about cultivating an environment in which people overcome their fears and find some small reason to let a little hope slip through the cracks. If throwing money of those people won’t accomplish this task what will?

I think what might do the trick, and what Obama happens to be aiming for, is the feeling that “things are happening” on multiple fronts. That means funding counter-intuitive projects and efforts, showering some attention on elements of society that have been largely ignored over the past eight years, getting people who have hit new levels of cynicism over the past eight years excited again. And excited not just about the prospects of making money, but more to the point, excited about the prospect of having the capacity to do things that will have potentially positive impacts on society and culture and the world around them.

An excited people is a people who meet adversity with a sense of vigor and bravado that casts that adversity as challenge to be overcome, rather than tragedies to be buckled underneath. That excitement drives a renewed belief in the possibilities of the American dream that has bouyed the country over the past decades and is sorely lacking today. Efficient as they may be, all the tax cuts in the world don’t have the capacity to fuel that excitement because tax cuts aren’t designed to fuel excitement, they’re meant to fuel pocketbooks and wallets. But contrary to popular belief, pocketbooks and wallets aren’t at the core of this downward spiral: the rug being pulled out from under people’s reasons to believe in the future is.

So it might be true that Obama’s package isn’t properly understood as purely economically stimulative, but the real question is whether it will stimulate confidence and a renewed belief in putting one’s shoulder to the grindstone to collectively weather the storm. That question remains up in the air, but it seems better poised to succeed in this regard than any of the non-alternatives out there.

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Tags | confidence, Culture, Philosophy, & Religion, economy, excitement, Obama stimulus package, the downward spiral