A Simple Way to Ease Our Economic Woes: Give Every American $2,000
http://www.alternet.org/visions/windfalls-all-radical-new-approach-help-ailing-economy
How would you like to get $2,000 in free money today, fresh off the government printing presses? And what if I told you it wouldnt just be a nice windfall for you and your friends and family, but that wed do it for all Americans on an ongoing basis, and that doing so would solve our crippling problem of mass unemployment?
I know what youre thinking: it would be crazy. Either it would be a fast track to crippling inflation or its some Republican satire of an ultra-liberal government handout program. But it is not quite as radical as it sounds. The key idea behind such a program has a longstanding, bipartisan economic pedigree. John Stuart Mill argued in 1829 that mass unemployment was caused by a deficiency of the circulating medium relative to other commodities. John Maynard Keynes used the idea in his 1936 book, "The General Theory of Employment, Interest and Money," to lampoon the inherent silliness of gold mining, suggesting that old coal mines could be filled up with bottles full of banknotes, buried over with trash, then left to private enterprise on well-tried principles of laissez-faire to dig the notes up again. Milton Friedman suggested that monetary policy could never fail to cure mass unemployment, because as a last resort the central bank could just drop cash out of helicopters an enticing analogy that former Federal Reserve chairman Ben Bernanke borrowed in a 2002 speech, earning himself the persistent nickname of Helicopter Ben.
And it hasnt just been theorizing. In 2008, George W. Bush and Nancy Pelosi engineered the tax rebate stimulus, in which everyone received a check in the mail paid for, eventually, with fresh new money. Studies have found that this stimulus worked quite well; it was just overwhelmed by the Great Recession, and we only received checks once. Mill, Keynes, Friedman, and even Bernanke might argue that we should revive a similar stimulus again only this time, on a much bigger scale, and on an ongoing basis.
Why? Because the economy has evolved to a point where it is vulnerable to mild depressions. In fact, the one were in now could persist for decades, as similar conditions have in Japan and other countries. In order to avoid that slow, painful outcome, we need a policy that will jump-start our economy. After three straight years of political gridlock its clear that Congress is not going to provide the fiscal stimulus we need, and while the tools the Federal Reserve has at its disposal have helped, theyve not done enough. If Congress could be persuaded to give the Fed a new tool, one that would let it distribute purchasing power to the broad mass of the population to drop money from helicopters, so to speak it might be enough to help us escape the nightmare of slow growth and persistent unemployment were in now.