Clarification on Stimulus

An Individual who is fairly equal to the task of defining good copy told me that yesterday’s Post on Stimulus was credible effort even for a Politician, and I could attempt to clarify myself. I found this statement to be rather embarrassing, so I will provide further information.

The theory to a Stimulus package is to provide a ‘Kick-start’ to the economy in a sense, where the funds spent would serve to generate further Private Sector Spending. Most evidence on Stimulus suggests that Stimulus must be granted successively to be effective in doing this, otherwise; the Private Sector will treat the Stimulus as a rapid Order, leave their staff and allocations unaltered, and simply process the Order as quickly as possible. Delays are accepted by management as normal production working order. Successive Stimulus will generate the impulse to gear up production, though the size of the Stimulus must be reduced in unit size; here presenting much less of a ‘Kick-start’ effect. In either case, the impact of the Stimulus on the economy reduces from the desired Target.

It does not help that the amount of Government Spending alters the impact of any Stimulus package. Government absorption of total GDP lessens the impact of Stimulus, because Government assumes the mantle of Consumer, rather than a strictly Opportunity Buyer who will insist on immediate satisfaction. The Concept which is lost by the Government is the potential to withdraw funding when faced with delays of provision. There is also the serial effect losing special status in the Order rank, where Private Sector management decides to meet all Orders as they come in, without special effort to increase production. It means that the ‘Kick-start’ effects of Stimulus is lost as Government becomes a more dependent Customer for the Private Sector, needing fulfillment of established Orders as well as new overlarge Orders.

My advice is to ignore a Stimulus package entirely. It will seem hard to Americans, but the Private Sector should be left to itself to reorder their management style. The last decade has promoted a management policy which distorted the segmentation of Production Costs, bringing far too much Profit to Management and Stockholders, while starving the normal Production Costs through low Pay or transference of production Overseas. It disrupted the funds distribution schedule of the American economy, which must be straightened; something Government can only interfere with in Protectionist manner for Management and Stockholder. lgl