A Christian Liberal is NOT an oxymoron.

Posted by XT on February 20th, 2009 in US News

I’m glad that Michael Kinsley is talking about inflation. Someone needs to. I’m not an economist, but I generally explain it to my classes in these terms. If your economy starts out worth $100 and it grows to $200, then you can add another $100 to the economy without changing the value of the dollars in circulation. However, if you add a thousand dollars to the economy, then the value of each dollar is lessened. Sure, people might have more dollars, but the value of what they are holding is likely to go down.

So what happens when the economy begins to shrink? Well, as banks stop lending money, money actually leaves the economy. But what happens when the government throws billions of dollars into those banks and forces them to continue lending? Then each dollar becomes worth less. That means that a vacuum cleaner, whose value has not changed, will cost more dollars to purchase. That’s inflation in a nutshell.

Now, add to the consideration that the government is actually flooding the sinking economy with even more money. We aren’t just looking at inflation, we’re looking at runaway hyper-inflation. We’re talking about Germany bring-your-wheelbarrow-full-of-money-for-some bread inflation.

Look at it this way. The body of our economy is on life support. The antural protective reaction of the economy is to sink into a coma. This is dangerous because – duh! – sometimes people don’t come out of comas. On the other hand, sometimes doctors purposely sink people into a coma just to stop some of the over-stimulation of the body. The worst thing to do at such a time would be to shoot the body full of cocaine. It can actually hasten the death you are trying to avoid.

Now, the economy doesn’t necessarily die. If the economy actually grows to accomodate the infusion of cheap cash; then it’s okay. If it doesn’t; then it’s worse than it ever was. So if we are talking about “stimulus”; then we actually need to ensure that every dollar spent goes to stimulate the economy. The way that happens is to create jobs – long term jobs that will last years and not weeks or months. So big expensive infrastructure projects are good.

If, that is, they create more jobs and spending than they dump into the economy in the first place. It’s almost impossible for them not to do so. But the construction industry by itself is not enough to restore the entire economy. Tossing money at bankers who have forgotten how to run a bank and auto executives who don’t know how to run a car company

The problem with our economy is not, necessarily, that there is either too much or not enough money. The problem is in the distribution of that money. Those at the top have too much and those at the bottom have too little. It’s no mistake that, as we enter this economic crisis, we are also at a point where income distribution and wealth distribution are nearing where they were during the Depression.

Conservatives are right, I think, to argue that Roosevelt’s spending didn’t stop the Depression. But they are wrong to say his taxation extended it. What Roosevelt did, more than anything, was that he redistributed money. But he didn’t just give money to the poor. He made them work for it. Doing so gave them a sense of dignity and told them that nothing was for free. It restored faith in work, even if the work was done for the government. Making it work for everyone restored their faith in government. That, however, was a side benefit.

It has to be remembered that not everyone hurt during the Depression. The very wealthy were sheltered from it by their accumulated wealth. Roosevelt made them share the pain by redistributing their money through taxation and work programs. Enormous deficits were run up and incredible debt was accumulated.

We may be at the point where only incredible debt can save us. But before we get to that point, we should try taxing the people who have the money in order to pay our bills. We don’t have to destroy them – they do, after all, create jobs. But we have to get them to share the pain the rest of us are feelings. That isn’t hating the rich, it’s just being fair to everyone.

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