What I was aiming to point out was: an industrialized, advanced country (and one that relies massively on trade with other countries, both in currencies, finance and real goods) has low chances of just 'starving itself out' of a lengthy dip by putting all public spending on an austerity cure. So many busineses rely on the public and the government as the big customers that cutting down sharp on the budget would also contract the corporate economy. And it robs lots of ordinary citizens of their purchase power too, that's something several people have pointed out in this thread from their own recent experience - that in turn pulls down the amount of goods companies might want to produce, and pulls down taxes. In turn, feeds a further contraction.
What do you mean by, "less politically difficult to pump more dollars into the system than to try to create new jobs at home?"
The government doesn't create jobs, private businesses do. I can tell you for a fact that if already hiring-timid businesses are stunned next year with a higher corporate tax, and already an increasing minimum wage, you'll see even more unemployment. It all comes down to risk management, and a lot of companies are reducing their potential for risks (new hiring) when there are a lot of uncertainties in the business environment. If you're a business owner, and you need to figure out your projected earnings report for next year with this new healthcare law, reducing in treasury stimulus, and just creeping out a tough recession, wouldn't you also be nervous about adding new hires and the liabilities that go with that? Sometimes we need to give the economy time to reconfigure itself back to homeostasis.
Yes, but like Oniya, I think this plays out very differently with large companies than with small ones. Starbuck's, Nike, Apple or Walmart are not going to risk any major losses to their business just because of some raised taxes or even efforts to make it harder for them to move U.S.-located jobs overseas.
At one time it was sort of a deliberate political choice to let production and industry jobs go, to make it much easier for companies to relocate those jobs to Asia, or outsource them to companies there. The idea was that countries like the US, the UK or France should be doing finance, fashion design and advanced service jobs - a kind of "industry" that has next to no need for a supply of raw stuffs - not in the country where the company is listed anyway: lots of fashion clothing basics are made in south Asia - tons of metals, engineers and big factories.I think it's getting clearer that was a long-term fallacy. Any economy needs tech industry and food sector jobs, and we need a large amount of jobs that are not supposed to require a university diploma and investing years of advanced studies and training, work sectors that are able to suck up a large part of young people and immigrant people and offer them a sustainable economy and meaningful jobs long before they reach the fine age of twenty-five or thirty.
With that being said, I have always been opposed to any sort of government backed bond buyback or stimulus program. I agree with Oniya, and sometimes you just have to let the economy struggle before it rises. My favorite part is how people think we are making an economic recovery based on stock market rises, but its largely due to $85 billion a month thrust into the economy. Get ready for another market crash in next 2-3 years. Your idea would be to extract $85 billion per month out of these same Wall Street Companies and firms, and yet expect their performance to be the same?
There are legitimate economic factors at play here, and one cannot simply chalk this up as Republicans being antagonistic, and there needs to be a dialogue where both perspectives are voiced.
In today's economic realms, it seems that it's rarely the guys who made the big mistakes, the key misjudgements prior to a crisis within a business, that end up with a bag of poop and a crippling loss. Look at the banks and mortgages crisis a few years back: the banks and businesses that got hit were not the ones that had really shown bad judgment in key places, it's just that too much of the intoxicated assets had landed with these firms due to a half automated model of decision, sloppy control (though accepted under the table by mid-level bosses: if you want to score you got to place some risky bets) and a fast-lane way of making business. Besides, realy big banks are not allowed to fail: the state decides to pay for them with...yes, taxpayer money, ultimately. We've seen a lot of that in Europe (thankfully less of it where I live, but that's only because Sweden isn't part of the euro currency zone) and some in the U.S. too I believe.
Besides, the 85 million bucks per month that are used for stimulation - I agree they could have been used in a more effective way, but they are not really drawn staright from taxation revenue are they? Not corporate taxation, anyway.