IS PRESIDENT OBAMA'S STIMULUS PLAN GOING TO WORK? THERE ARE ECONOMISTS GIVING OPPOSING ARGUMENTS SO HOW AM I, A LAYMAN, SUPPOSED TO KNOW?HOW AM I SUPPOSED TO MAKE AN EDUCATED OPINION?
Indeed, as the previous post suggested, there will be so many arguments to this question's answer that it will become moot at some point. On the side of those who believe the stimulus plan will work, the ledger points to suggestions that the economy needs "a jump start" and stimulus moneys provide this. These individuals point out to the fact that cash and income have dried up, to a certain extent, and the government must infuse the economy with funds and initiatives to allow it to get moving again. There was much talk about this in the last election cycle, with references to the economy as a "patient on life support." The stimulus plan was seen as an antidote the patient can take in order to "get better." On the other side of this argument, there are those who suggest that there is little, if any, way there can be significant improvement with government taking an increased role in the functioning of the economy. This could be enhanced that the idea of "bailing out" corporations and people for poor financial decisions is not how capitalism and the market work or function. Infact, these individuals argue that the precedent set is a bad one in that capitalism is predicated upon a cyclical pattern of success and failure. To not praise and uphold the former with continually excusing or "bailing out" the latter is not effective economic practice. There are many other elements to this debate, but I would like to suggest that an undeniable political element helps to temper which side is "right." Economists who agree with the President's plan will be able to present much in the way of evidence and analysis to prove the policy right. For each of these thinkers, there will be another one who is opposed to the stimulus plan's approach, and evidence will be used to prove these thinkers as accurate. It becomes difficult to determine which one is "right," but might be more insightful to generate or determine where their political affiliation is in terms of understanding their political viewpoints.
The answer to this is that you're not supposed to be able to have an educated opinion.
The problem is that economics on this kind of a macro scale is very much a matter of faith. There is no way to run controlled experiments to determine what works and what doesn't.
Go back and look at the recession we just had/are still having. What caused it? Economists disagree. And there's no way to know who's right because we can't go back and try something different to see if that would have made a difference.
So now you have economists arguing, but they are really arguing based more on what they believe than on what they can actually prove.
It is a popular joke that when three economists meet to discuss an issue, they are sure to have four different opinions between them. Economics is a rather complex subject. This is particularly so because all economic theories are based on at least some simplifying assumptions that do not exist in real life.
So I do not think I have enough data available to be able to evaluate or even form some general opinion about President Obama's Stimulus Plan. But, I am very clearly in my mind about one thing. Under the prevailing economic condition marked by severe recession, it was absolutely essential to take some steps to stimulate the economy. President Obama has done that. He has acted promptly and acted boldly.This in itself is a good sign. What will be the net result in the end we do not know.
Coming to the the conflicting opinion expressed about the plan by economist, I think, this kind of controversy would have been created irrespective of nature of measures taken by President Obama. Perhaps, even if USA recovers from the current problems, some economist will claim that the recovery would have been faster if some other plan advocated by them was adopted.
How you should for an opinion about the subject will definitely depend on your interest and the purpose of forming the opinion. An economist, or even someone aspiring to become an economist should perhaps spend much more time and effort in collecting real data, rather than trust just loose statements. Also one who forms an opinion just to be able to discuss this issue in a drawing room can afford to be casual in his or her approach, but a chief executive formulating company strategy will need to be more thorough.