Effects of stimulus can be assessed

James Moldenhauer, North Las Vegas

Wednesday, May 19, 2010 | 2:04 a.m.

A Thursday letter to the editor from Charlie Stilwell claimed it cannot be proven if the massive stimulus approach used recently to ease effects of the recession has worked or not. While it’s true that it’s difficult to change anyone’s mind, it is not true that this issue cannot be objectively and rationally analyzed.

First, what has been the experience of other large modern economies that have used the massive government-spending approach in this situation over the past 80 years? The record is a little ambiguous, but not particularly encouraging. Japan’s massive deficit spending in the 1990s resulted in what has been called the “Lost Decade” with stubborn sluggish growth and higher unemployment levels. Then there is our own disappointing experience during the Great Depression.

Second, examine how and on what the stimulus money was actually spent. Was there a comprehensive plan that would invest the money in a coordinated, rational and effective manner? Was the money spent on useful projects such as infrastructure or other public investments with enduring value or benefits? These questions can be analyzed objectively and a reasonable conclusion developed and defended.

Lastly, a very effective argument can be made that the stimulus will have significant negative effects on our economy. The deficit spending is leading to budgets that will increasingly be consumed by nonproductive interest payments. Also, undeserved and unearned cash infusions to certain reckless state and local governments will only encourage more irresponsible behavior, thus compounding the general economic and political chaos.

So, go ahead and believe what you want to believe. But let’s not pretend that one opinion is as good as another.