So I was watching this guy Paul Krugman on PBS the other day. He has a book out titled “End This Depression Now.” He has a very simple solution: the government needs to start spending money. I agree with him.
Now there are a whole lot of people in Congress who are constantly saying that the government needs to spend less. The theory is, if the government just becomes smaller and stops spending money, that this will lead to greater prosperity for everyone.
But what Paul Krugman pointed out was, what is really lacking in our economy right now is . . . demand. I agree with him. Jobs are created by people spending money. If the government starts buying things, like people to fix the bridges and sewer systems that are falling apart, this automatically puts people to work.
The “economy” is not about how much money anyone has, or how much we have saved up. It’s about the velocity at which the money is flowing from this person to that person.
And yet, we have this consistent message of “we have to stop spending money” coming out of the House of Representatives. This sounded very familiar to me. The number one fundamental element of “poverty thinking” (as defined in my book, “Getting in Touch with Your Inner Rich Kid”) is: desire is bad. This is because, for poor kids, desire often leads to disappointment, so you learn to suppress it generally. It becomes a mental habit, not a logical fix.
I did a little research, and I discovered that John Boehner, the speaker of the house, grew up poor. He was one of 11 kids, he had to go to work when his eight years old, the whole 9 yards. And I think there are a great many people in the Republican side of Congress who are suffering from “poverty thinking.” When Paul Krugman says, “we need to increase demand,” he is essentially saying, “the government has to express desire.” And for these poor kids, desire is bad.
Another tenet of poverty thinking is, “there are limited amounts of everything.” It often makes sense to curtail spending as an individual, especially when you are borrowing more than you are making, but the United States government exists in an essentially infinite economic state. The government owns the printing presses; it can print up as much money as it wants. The rules are different.
What got us out of the Great Depression was government spending (on a massive military buildup).
I’m not saying that we don’t need to keep a close eye on government spending. But we cannot skimp to greatness. It worries me greatly that there are so many people afflicted with poverty thinking in positions of such power.
© Justin Locke
