Stimulus Questions

Is the economy in a position to benefit from a stimulus bill from Congress? Or is the economy recovering well enough on its own to avoid the need of a stimulus bill?

That supposes the argument properly assesses the economy’s condition. What are the underlying factors that indicate the economy is in trouble or not? Is it unemployment? Is it investment in new industries? What about adoption of new capital goods driven by technology change? Are corporations moving strongly toward a new standard of manufacturing, distribution or service that will revolutionize operating results and net income? What will be the return on that investment?

Are markets solid and strengthening? Or are they weak and faltering? And here is a question people do not like to ask: are the employed fully engaged or marginally so in their careers and occupations? Are they expanding their expertise in their chosen field or are they waiting for new opportunities to engage in? In short, is America’s workforce underemployed?

And what of recent changes in workplace? The pandemic has forced many to work from home. At first this was seen as a weakness, but later it proved to be a boon to productivity and innovation. The workforce was pivoting nicely to working from home. Employer overhead costs were trimmed. Output surged. A new business model was forming. But were all businesses able to benefit from this development? Were employees equally benefitting from the development?

The answer, of course, is no. Some industries benefit greatly from the work-from-home model. So do the employees. But not all. Manufacturing still requires central work sites where products are made and assembled. Team development and idea sharing is lessened in some instances but strengthened in others. The model is fresh and still developing. We do not understand all the elements involved in adopting new norms. It is a work in progress.

How confident is the business community in investing in the new norm, finding it, innovating around it, and delivering worthwhile results? Are economic leaders vigorously adopting the new?

I suspect hope is the adopted element. We hope for a buoyant business model that will take us from the doldrums of the pandemic era. We do not know that it will fully materialize, but we hope it will. Enough so to support heavy business investments?

Entrepreneurs are those brave souls who are willing to take risks to find the new, use it and build new businesses upon it. Corporate entrepreneurs are more risk averse, but they have the capital hoard to afford potential loss. Will they spring forward with that investment?

Meanwhile, the nuts and bolts of our economy are frayed and exhausted. Workers are in danger of losing their homes, going hungry, waiting for the next financial emergency to befall them in this chaotic economy. No one is confident that up is up, and down is down.

Yes. Our economy needs a stimulus. Unemployment benefits need to be lengthened and increased. Relief for both lenders and borrowers are need to avoid chaos in the lending markets. Tenants and landlords need supports to calm the rental markets and ease our way out of a huge calamity that is forming. State and local governments have suffered gravely from the pandemic – reduced income and spikes in operating costs – and need financial support to keep them from furloughing armies of workers to balance their budgets.

Stimulus is a boost on one hand, and a salve on the other. We need both.

Republicans have created massive stimulus in recent years - $6 or 7 trillion dollars – and did not have a care in the world about what this would mean to inflation, deficit management or anything else. But now they are complaining that a $1.9 trillion stimulus bill is folly? Please stop the nonsense.

Pass the stimulus legislation and then let us get back to building the economy to a new, stronger reality.

March 10, 2021