« Haste Makes Waste: Merrill and BofA | Main | Two Cows Go To Wall Street »

Latest Stories

• Two Cows Visit Wall Street
• Stimulate This! Japan's Good/Bad/Something Attempts to Restart Its Economy
• Haste Makes Waste: Merrill and BofA
• Volcker Thinking of Going Fly-Fishing?
• Wish I Hadn't Given That Bugatti to Public Radio

February 7, 2009

Stimulate This! Japan's Good/Bad/Something Attempts to Restart Its Economy

Read the following NYT piece on Japan's stimulus. its muddle-headedness about whether a decade of heavy stimulus spending was good for the country pretty much captures the confused nature of economic "thinking" (I use the word advisedly) on the issue.

Dr. Ihori of the University of Tokyo did a survey of public works in the 1990s, concluding that the spending created almost no additional economic growth. Instead of spreading beneficial ripple effects across the economy, he found that the spending actually led to declines in business investment by driving out private investors. He also said job creation was too narrowly focused in the construction industry in rural areas to give much benefit to the overall economy.

He agreed with other critics that the 1990s stimulus failed because too much of it went to roads and bridges, overbuilding this already heavily developed nation. Critics also said decisions on how to spend the money were made behind closed doors by bureaucrats, politicians and the construction industry, and often reflected political considerations more than economic. Dr. Ihori said the United States appeared to be striking a better balance by investing in new energy and information-technology infrastructure as well as replacing aging infrastructure.

More here.

Sphere It   |   Digg it   |   Bookmark it   |   Stumble it   |   Facebook it