Wednesday, October 6, 2010

Money That's What I Want

The Protestant Ethic emphasizes grace. Thus, Max Weber wrote his famous tome, The Protestant Ethic and the Spirit of Capitalism. There are the saved and the damned, but grace is less the product of deeds than predestination. Of course, the paradox is that everyone works hard to join the elect, and so the cart is inadvertently put before the horse. Fortune in our society is often predicated on the notion of deferred pleasure, of thrift and probity. To this extent, the failure of the stimulus package can be looked at as an extension of the Protestant Ethic. As the Times recently reported, large corporations like Microsoft are able to borrow enormous amounts of money at extraordinarily low interest rates, but the extra borrowing is not creating jobs (“Cheap Debt for Corporations Fails to Spur Economy,” NYT, 10/3/10). The rich are getting richer, with many firms stockpiling cash and taking a wait-and-see attitude, while the have-nots who once financed the sub-prime mortgage boom are caught up in a catch-22 situation in which stimulus-supported banks are stockpiling cash while paying negligible interest rates to depositors. It’s a vicious cycle, with rumors of Stimulus II following the original much the way Oliver Stone’s Wall Street: Money Never Sleeps takes up where the first film left off—in both cases with a similar cast lead characters. Stimulus II, if it comes to pass, would begin just as TARP, the troubled asset relief program that was enacted at the height of the meltdown, comes to an end. Luther nailed his 95 Theses to the Castle Church door to protest the selling of indulgences, whereby those who sinned could purchase relief. But perhaps the authors of a new stimulus package should consider the pardon model. For instance, some sinners whose homes had been foreclosed are about to receive relief because of the widespread impropriety of much of the paperwork that accompanied foreclosure notices, including improper notarization (“The Gathering Storm Over Foreclosures,” NYT, l0/4/10). The result is that the housing market may finally find a bottom from which the only direction is up. The belief in reason is also another characteristic of the Protestant Ethic, but sometimes, good things come in unlikely and ultimately irrational-seeming packages.


  1. One can hardly blame Microsoft and its brethren about taking advantage of insanely low interest rates to stock pile cash. It seems to be a rational corporate behavior promulgated by irrational economic policy. The Stimulus Package and the rumored Son of Stimulus were/will be catastrophic failures. Keynesian economics at its worst, as “shovel ready” projects of limited public benefit and no lasting job creation magnify the mistakes that Progressives have been making in the name of the common good since FDR (who buy the way was the first modern politician to develop a practice to systematize the purchase of votes, another discussion for another time.)

    One wonders if instead of borrowing a $1 trillion from the Chinese for the stimulus, we would have used that money to give everyone, including corporations, a tax holiday for the year. A $1 trillion deficit is a $1 trillion deficit no matter how the money is spent. Yep, a one year tax holiday would be supply side economic at its best, keeping Laffer laughing all the way to the bank. As far as the Stimulus is concerned, in the immortal words of Col. John “Hannibal” Smith, “I love it when a plan comes together.”

    Oh, by the way, I’m not Peloni Almoni.

  2. This is utter nonsense and your math makes no sense. I'm with you about borrowing from the Chinese, but the tax vacation is lost tax dollars. Supply side economics is the God that Failed. The Chicago School ought to relocate its offices to downtown Detroit to get a good look at supply side economics. Now with some help from the government GM may be on the way from being a not-for-profit 501c3 to a viable competitor in the auto market.

  3. Now, now, utter nonsense and my math makes no sense, really?. Did you give my comment any deep though against economic principals learned in Econ 101? And Detroit, whose downfall has less to do with Kaufman and his buddies and more to do with outright corruption and theft by the politicians who ran the joint for so many years. Just ask Dave Bing.

    Money in your pocket is always better than your money in the pocket of a politician who knows he is spending yours and not his. Think about that.


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