If Confidence Falls in the Forest...?

The battle drags on. Productive vs. nonproductive spending. Freedom vs. planning. Confidence in macro policies vs. caution.

First, Robert Reich for the State (from Slate):
"If consumers can't and won't buy, and employers won't hire without customers, the spender of last resort must be government. We've understood this since [massive] government spending on World War II catapulted America out of the Great Depression --reversing the most vicious of vicious cycles. We've understood it in every economic downturn since then.

The only way out of the vicious economic cycle is for government to adopt an expansionary fiscal policy -- spending more in the short term in order to make up for the shortfall in consumer demand. This would create jobs, which will put money in people's pockets, which they'd then spend, thereby persuading employers to do more hiring. The consequential job growth will also help reduce the long-term ratio of debt to GDP. It's a win-win.

This is not rocket science. And it's not difficult for government to do this -- through a new WPA or Civilian Conservation Corps, an infrastructure bank, tax incentives for employers to hire, a two-year payroll tax holiday on the first $20K of income, and partial unemployment benefits for those who have lost part-time jobs. . . ."

And the always cautious Amity Shlaes on the other side:
On the lessons of Japan and the '30's: http://www.washingtonpost.com/wp-dyn/content/article/2008/12/09/AR2008120902785.html