With Regard to the Economic Recovery Plan

This was first written on 09/29/08 (right after the first economic recovery plan was voted down in Congress)

First, economics can be counter-intuitive and misleading. For example, most people agree that a trade deficit is a bad? Surpluses are better than deficits, right? Well... (according to my admittedly limited economics studies) a trade deficit is not NECESSARILY a bad thing. In fact, another name for a trade deficit is a "Net Capital Inflow". Our trade deficit with China is their Capital Outflow. Suddenly, it doesn't sound quite so bad. What makes in inflow or outflow good or bad is how the capital or goods are invested (ie, the U.S. had a huge trade deficit when building the railroads, but the railroads energized our economy for decades).

What this suggests is that we are letting our PERCEPTION about matters influence our decisions. We (the U.S. citizen) are making an emotional decision (angry about bailing out rich CEOs) rather than a logical decision (banks are not lending to each other so we need to recapitalize them). One perspective is that we're not just bailing rich CEOs out, we're bailing ourselves out!

Finally, the the citizenry and representatives seem to be viewing this crisis from a victim perspective rather than a parent perspective. We are considering ourselves the victim of an unfair bailout rather than as the responsible parent whose job it is to take responsibility for a child's misdeeds, scold the child, make sure it doesn't happen again, and move on. We should scold the child (investment banks and those in Congress (primarily Republicans) who excessively pushed for deregulation and blocked attempts to regulate)(now we gotta regulate), but ultimately act responsibly, pay for the broken window, and pull the family together because in the end it's not just rich CEOs that depend on it - the American economy depends on it.

Update on 10/03/08: it subsequently became apparent that the world economy depends on it as well.

Continued update: 10/10/08: the economic crisis, now global in nature, is clearly beyond my ability to analyze accurately (from my computer arm chair.)