Thursday, June 9, 2011

Economic Stimulus, by Metaphor

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Now to explain. For this, we will need to create that all-important metaphor. Too, I should like to apologise in advance for the one snarky remark I will make about a former President. (One must compare apples to apples.)

For the purposes of this lesson, we will assume that Joy, brown-bags it every day except Friday. On Friday, she takes 10 hard-earned dollars and goes to Whoopi's Sandwich Store for a baloney sandwich.

Now Elisabeth is out of work. However, Jimmy Carter feels her pain. Therefore, he taxes Joy $10 and gives it to Elisabeth so she can buy a baloney sandwich. Joy is not happy. She's being ripped off. Elisabeth is no better off because she still does not have a job. Now, what about Whoopi? She is no better off because she is still selling one baloney sandwich a week.

In response to critics, Jimmy decides to tax Whoopi $10 to train Elisabeth how to make baloney sandwiches. After getting her certificate, she goes to Whoopi's store looking for a job. However, Whoopi tells her, "Sorry, Friday is my last day. Jimmy Carter taxed me out of business."

Now, President Obama comes along and says, "That is not how to do it. I am going to have the SBA lend Elisabeth the money to go into her own business."

Elisabeth opens up a soda store next door to Whoopi's Sandwich Store.

Back to Joy. Aptly named because her tax cut allows her to go back to Whoopi's store and buy a baloney sandwich; and she goes next door to buy a soda.

Elisabeth is happy because she's making money, so she treats herself to a baloney sandwich.

Whoopi is thrilled because she doubled her sales volume and revenue. In fact, she is doing so well; she hires Sherri to help make sandwiches. (Whoopi trains Sherri, as it should be in business.)

Sherri is happy because she has a job, and, please forgive my little joke, her compensation package includes a free lunch. However, no beverage. Therefore, Sherry goes next door to Elisabeth's soda store to buy a soda. Well, with all this soda being sold, Elisabeth hires Barbara to work in her soda store. Now Barbara is thrilled because she has a job.

Back to the Oval Office:

The President's economic advisor comes in.

"You wanted to see me, Sir?"

"Yes, I have some money for you. It is part of Sherri and Barbara's benefits payments. They are out of work. I want you to send the money to Sherry and Barbara."

However, the advisor says to the President, "But Mr. President, Sherri and Barbara don't need that money anymore. They have jobs."

"That's great," the President says. "The government is saving money."

The advisor continues. "It's better than that. Since they are working, they are paying income taxes. So, I have some money to give to you from Sherri and Barbara."

"Wow", the President says. "I save money because Sherri and Barbara are working, and I bring in money because they are paying taxes. This stimulus package is great."

This is how economics works. It takes a little time, but this is how the system works.



PS.  I am not Paul Harvey.  Still, I am open to becoming a paid blogger, columnist, or commentator.

In the meantime, if anyone finds the monographs on my blog to be especially helpful, please do not hesitate to send me on of those tricked out laptops and few dollars tucked into the envelope with the thank you note.



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