Denseman on the Rattis

Formerly known as the Widmann Blog


Stimulus in a globalised economy

The people – such as many Democrats in the US – claim that what the economy needs is more stimulus, but they never really seem to explain how that’s supposed to work in a globalised world.

Of course there are certain industries that spend a great deal of their costs on local salaries, so it is probably true that building an extra road will counteract the recession to a certain extent.

However, many “normal” people would, if given a pay-rise or a bonus, spend most of it on a holiday abroad, a new gadget imported from China, or at least on two bottles of South African wine, and while this will be beneficial to the world economy, it doesn’t help the local economy much.

I don’t really have a solution, but I just want to point out that spending your way out of a recession must be a lot easier in a non-globalised economy.

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