The american president Joe biden unveiled a comprehensive economic stimulus package at a cost of nearly US $ 2 trillion (HK $ 15.50 trillion). Most of the money will go to direct cash payments and citizen funding programs.
It is a good strategy under the current circumstances.
While effective, this plan also embodies the potentially disastrous side effects when massive government spending and democracy collide.
This kind of absurd spending would horrify economic conservatives. They advocate cutting taxes and government spending.
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However, their views seem increasingly untenable in the modern American context.
The current trend in the United States is for the government to spend a lot of money and continue to accumulate large amounts of debt. The national debt in the United States is notoriously high, with no real chance that it will ever be paid off. However, there is a good reason to spend so much money: he wins the election.
Biden’s Covid-19 relief package illustrates a very important, but also obvious point. People need money, and politicians’ offer to give “free money” will be a very attractive choice for voters. As it is in America today, there are tempting big expense pluses and no impending drawbacks.
It is important to note that there are no laws or guarantees to protect against overspending. This is only the approval of the proposal by Congress.
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Fiscal conservatism is unpleasant in democracies because of their hard-to-accept philosophy. A core value of the conservative economy is the idea of ââhelping yourself rather than getting help from the government. Numerous psychological studies have shown that humans are more likely to attribute their successes to hard work and their failures to factors beyond their control, such as a broken system.
A person who is in a bad position because they think it is not their fault is more likely to feel eligible for government assistance.
Therefore, when a conservative politician encourages people to help themselves, it can be interpreted as heartless and insulting.
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So what is the solution? I would suggest a rule that places an upper limit on spending. It should be fixed in advance by a committee that does not risk losing its job if it does not promise to increase the amount.
If Biden is to spend $ 2 trillion, he will have to prove up front that the money can be justified and has a chance of being eventually paid back.
Ultimately, I want to see a system that reasonably helps citizens in need while remembering the consequences of reckless overspending. Such a system is not overdone or impractical, but it will take reform and recognize that “free money” is not the silver bullet that people think it is.