How's the Stimulus Package Gonna Stimulate ME?

I've been thinking a lot about this stimulus package that everyone is rushing to launch.  What struck me as pretty odd this weekend, watching all the Sunday talk shows, was the politicians, the economists and the pundits all talk about massive stimulus packages like we've done them before and we know what we are doing.  I had to stop and think, "We haven't done anything near the scale that they are talking about since the 1930's and;

1. In the 1930's we were a agricultural and manufacturing economy.  The service part of the economy (finance, legal, accounting, advertising, etc) was nowhere near the percentage of the economy that it is now.  Additionally, the amount of the population that was college educated was minuscule compared to today.  In short, the "American Worker" was a much different animal seventy-five years ago.
2. There's not a lot of proof that massive stimulus packages work.  Even if you could argue that the programs of the 1930's worked with regard to stimulus (from what I understand, FDR's policies were mostly good for the nations psyche as opposed to producing much economic growth) the data that the smart people are throwing around ($1 of shovel ready jobs equals $3 of stimulus, etc) is based on what?  The 1930's?  Japan?  Different time and different people (and from everything I've ever heard or read, the Japanese stimulus was a costly failure).  We've already proved in the subprime mortgage market that using historical data on a product or a idea that has very little in common with the product or idea you are trying to make projections on ends up with everyone having  a sore tush (technical term).

I hear the Obama people talking about rebuilding infrastructure and "funneling new job growth through a new Green economy" and all I am left with is, "WTF does that mean?  We have millions of service sector unemployed (including myself of course) that aren't welders or electricians or engineers or doctors, what about us?  If they started a work project tomorrow, will my unskilled ass even get the chance to get a shovel?  Does the 2009 Stimulus Package aim at bringing our economy back to the 1930's?  It seems like the plan is to replace a lot of good paying jobs (we can leave out what we were making on Wall Street because that got just a tad out of control....maybe more than a tad) with day laborer jobs?  Whatever it is, it seems like everyone is concerned about putting blue collar guys back to work and not much thought being given to the millions of white collar guys that are out of work, unless of course you are part of the "New Green Economy"!  If I need to be retrained at least give me a check to pay my tuition at the Technical Career Institute!

I guess my main point here is we have a lot of people running around looking to spend $1 trillion without any real idea how it should work.  Considering we are already a couple $ trillion in the hole we only get one shot at getting this right.  President-Elect Obama doesn't want to turn this into a intellectual exercise, but considering we really have no idea what we are doing, a little thought might be a good idea.

Comments

[John]

Something I learned in Kindergarten: Did you bring enough for everybody? If they're dishing out, I had better get some even though I'm employed and current on my bills. Otherwise it's incentive to default. Oh wait, that would be unethical (if that still matters in corporate life). Also, re: white collar job creation - it seems to me we can now do without H1B visas.

[Eric Salzman]

ah, I used to meet a good friend for guinesses at the emerald in. Don't know what happened to her...she's a big wheel fund manager now.

[guiness at the emerald inn...]

computer security companies always hire the best computer hackers...this would be a great time to get some of those white collar folks into the govt to help bolster the ever irrelevant SEC! that is assuming there is any finance sector left to be regulated!! though i think instead of making license plates...the madoff's of the world should have to work for the SEC for a $1 a week while they eat olive loaf sandwiches on wonderbread.

[RPB]

Eric,

I totally agree with you. This type of stimulus seems only applicable to the 1930s when most people did not have a college education or experience in white collar industries. Those of us, myself now included, who are unemployed white collar workers will not be able to find much stimulating in this proposed package.

One silver lining on this stimulus is that it could potentially employ many of the contractors and engineers that used to work in real estate and commercial construction. Atleast some will benefit.

And don't worry, as long as the treasury auctions continue to go well and deflation remains everyone's concern, they will continue to float trillion dollar plus annual budget deficits. Barry O said it himself that we would continue to run deficits until the recession/depression has passed.

[Eric Salzman]

Thanks Ed.

[Ed]

Maybe we need the stimulus simply to prevent falling deeper in the hole. Richard Koo of Noumura securities made a plausable case at a CSIS presentation based on the Japan experience. Here is the link.

http://www.csis.org/component/option,com_csis_events/task,view/id,1828/

[Eric Salzman]

I like Canada. I hope this didn't come off as a crying exercise. I'm just saying, I'm listening to these plans and they don't seem like they are aimed at the right century.

[friends with artie]

i hear canada's nice.