Economic development starts at home

This entry is based upon the following article: http://www.msnbc.msn.com/id/31377055/ns/politics-capitol_hill/.

There are competiting theories with regard to economic development. Macroeconomists tend to look at the bigger picture, and believe that larger projects will help to create the aggregate demand necessary to grow an economy. Microeconomists look at the smaller picture, and believe that fixing the smaller units of the economy is imperative before national improvement will be noticed. The problem with macroeconomics is that it is easy to say "increase aggregate demand", and difficult to go about doing it. For instance, the failed Bush Stimulus Plan: the $600 taxpayers received did little to the overall economic situation.

Sen. Tom Coburn (R - Okla.) has earmarked what he calls "questionable federal spending". As the author of the article points out, the questionable expenditures are "shovel-ready projects" that have an immediate need, and do not require studies or experts to execute. To the macroeconomist, spending for rural bridges that see limited traffic is a waste of money; to the local government who requested the repairs, these are necessary projects that will create construction jobs. The $3.4 million turtle crossing is important to the State of Florida, as it tries to protect its environmental resources as well as reduce traffic accidents caused by motorists trying to dodge turtles at night; $3.4 million is cheap when compared to a head-on collision accident with two casualties.

Republicans need to remember what it means to demand "small government". Republicans accuse the Democratic Party of being the party of "big government", yet the sort of oversight being practiced by the Republicans in their efforts towards fiscal austerity is the same kind of oversight that justifies "big government". Republicans also need to understand the point to this stimulus spending: to create jobs. A turtle crossing may not mean much to a person in Nevada, but, for the local residents in Florida, that turtle crossing means money that will pay for other goods and services. In turn, this is the sort of stimulus -- creation of jobs -- that fuels consumptive behavior; this, in turn, increases the aggregate demand of the nation, and makes macroeconomic theory work. The point is that if the federal government is going to give general stimulus money, it is best left in the hands of local government for specific earmarkings. It is pointless to presume that a federal Senator has any concept of what "appropriate" spending is at a local level.

Ohio Republican Chairman Kevin DeWine talked on Monday (in Greene County, Ohio) about practicing the ideals of the Republican Party. What he did not do, however, is address the sort of contradictory policies that the Republican Party practices. If the Republicans wish to show that it believes in small government, then the federal Republicans need to putting those ideals into action. Political activity starts at the local level, and small government implies that the federal government shall leave it to the local government to determine what it needs funding for.