Wednesday, November 02, 2011

Steve Conover pushes for stimulative investment

Sounds like a win-win:
Although he didn’t know it yet in January 1989, Reagan’s investment in long-run national security would ultimately pay off handsomely. It turned out to be one of our best investments ever—and as anyone with private-sector financial experience knows, utilizing debt financing to help fund good investments is perfectly sound financial practice. Contrary to the anti-Reagan crowd’s characterization of the ‘80s, Reagan didn’t use the nation’s credit card to “throw a party”; he used the line of credit, extended to us by the worldwide market for U.S. Treasury securities, to end the threat of a thermonuclear war between superpowers and to reinvigorate private-sector productivity and growth. It worked; we are still enjoying the benefits of those highly successful investments.

There’s a clue in that history lesson that might help us today. Instead of borrowing money to pay for more short-term stimuli prescribed by the government’s intelligent designers, we could do better by shifting much of it towards war prevention—for example, to bring our Asian wars to an acceptable conclusion and to protect our electric grid from cyber warfare or a crippling nuclear burst in the ionosphere over our heartland—and some of it towards reinvigorating private enterprise. If it would help to placate the Keynesians, we could call it a “stimulus,” even though it would actually be a good, long-term investment reminiscent of the Reagan Revolution.

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