From the perspective of economics history, it is a proven precept that the only true cure for economic depression is massive spending.
World War II ended the Great Depression of the 1930’s, not all the superb economic reforms that the Roosevelt administration implemented, nor the efforts of the Federal Reserve at the time.
The actions being taken today within the marbled corridors of Capitol Hill and the White House in fact, do make good fiscal sense to stabilize the economy.
At that point, our opinions differ from Congress and the Administration. In each case where government spending relieved economic depression, the general populous was motivated by a common focus. In World War II, the focus was the defeat of the Axis powers and anger at the attack on Pearl Harbor. In the 1880’s, focus was spent on expansion to the West and the Indian Wars, where the public felt a common anger at the massacre of Custer1.
The Administration needs to capture the American focus on a single effort to achieve a common goal to which every citizen, irrespective of political doctrines, religious beliefs, sexual orientation, gender or race will participate.
President Obama, one of the finest public speakers to sit in the Oval Office since 1960 is uniquely qualified to inspire the American public, as he proved during the election process, but he needs that singular focus to sell to the public.
They’re tired of war, and have little heart even for military success in Afghanistan. They’re not only economically depressed, but emotionally as well by present financial conditions and what this Depression 2.0 means to their personal lifestyles.
Under such difficult circumstances, we believe President Obama should consider the development of alternative transportation systems to create high-speed ground transport that is fuel efficient and economical.
While there are many proposals floating in Washington, such that one could wallpaper the planet fifty layers thick, we believe the solution lies in the development of Mag-Lev2, as we’ve written before.
This would provide airline companies with a cost-effective backup financial resource in the inevitable event that the airlines are forced to limit flights to international routes. Oil, we must believe, will eventually rise in price once more to prices well in excess of $200 per barrel, and when this happens, many airline carriers will be forced into bankruptcy unless they have solid, significant resources of alternative income and within their field of transporting the public long distances.
From a spending perspective, this project could cost quite a lot of money, however, it is, like the National Highway System, one of those projects that produce solid revenue base for the government as well as private enterprise and would create a whole new range of companies supplying the network of trains that would cross the nation.
Unlike bailouts and stimulus directed at smaller capital projects, all of which have their valid place, the true solution on the jobs front, and the overall economic malaise is to create massive numbers of jobs while lifting the spirits of the American public. Doing so would spur both Main Street and Wall Street to action and prompt banks and investors to move quickly to reactivate the financial systems.
With jobs, Americans would pay bills and stabilize themselves, while returning to their former status (at reduced, but still solid levels) as consumers.
Notes:
1. General George A Custer, killed at Little Bighorn in 1876.
2. Mag-Lev or Magnetic Levitation is a means by which trains can be made to travel at very high speeds by eliminating friction, with the trains "floating" on a magnetic field. Such a system would require electricity only at the point where the train is located at any particular moment, virtually making the system the lowest cost mass transit system known to date. Mag-Lev trains are in operation in Germany and Japan, with lines being developed in the US.
