A Peek Beyond Stimulus
In a post otherwise critical, though not completely dismissive, of New Deal programs, Megan McArdle makes an important point about “work relief programs” that are often described exclusively in terms of economic stimulus:
Things like work relief programs may have done a good job at alleviating misery--and I find myself annoyed that palliative measures are being sold virtually exclusively as fiscal stimulus. The stimulative virtues of extended unemployment benefits are not particularly exciting, but they are an excellent way to ensure that families hit hard by a recession do not suffer from want. This is important--and so affordable, too!
I’ve often described the stimulative benefits of extended unemployment benefits. But it’s crucial to keep in mind that these emergency extensions provide real money to struggling households. The packages are good stimulus because unemployed households need the money and will spend it (most often in local communities, helping out local businesses). This is less certain with, say, $600 rebate checks.