We cannot afford to shut down government

We live in a complex economy that’s struggling. Liberals want government to spend more, conservatives want government to spend less. Is there a right answer?

Let’s take a simple look at the problem. We know the American economy is made up of three basic elements — consumers (us), producers (businesses) and government (federal, state and local). Consumer spending drives 2/3rds of the economy. When the economy is strong, consumers are spending and producers are selling. Government collects taxes and provides services, and under the best of circumstances, as in the 1990s, spends less than it takes in, producing surpluses.

When the economy’s weak, consumers aren’t spending and producers aren’t selling. When producers aren’t selling, they don’t need as many employees so they fire people. That further reduces consumers ability to buy, causing more layoffs. So, at this point, two major elements of the economy are not spending.

John Maynard Keynes’ solution was for government, the spender of last resort, to get out its credit card and fill the void. The only other option is for the government to not spend and that will simply shut down the economy entirely, laying off teachers, police, firemen and other government workers.

So, it seems to me the answer is clear. Government does not have the luxury of shutting down. It has to borrow and spend in order to keep some heat under the pot. That spending will keep people working, enabling them to spend and provide an opportunity for producers to start producing and hiring again. There is no other realistic choice.

BOB WYNHAUSEN

Sandpoint