Letters: How to Mend Trust in the U.S. Economy
June 23 (NYT)
To the Editor:
Re “Broken Trust Takes Time to Mend” (Economic View, June 17):
Tyler Cowen argues that the “slow cure” for our economic malaise is to allow asset prices, wealth, trust, etc. to slowly rise. He states that the textbook cure of significant “Keynesian” government stimulus spending will not quickly restore prosperity because fiscal stimulus does not “rebuild confidence.”
Unfortunately, Professor Cowen seems not to understand that if the government were to let contracts for, say, $1 trillion to private enterprise to rebuild our failing highways, bridges, and municipal water and sewage systems, and provide resources for our shrinking public and higher education systems, this would quickly restore companies’ confidence in the profit opportunities that are available if they hire workers and buy materials from other United States companies. When these newly hired workers go out and spend their wages, the confidence of United States retailers would immediately surge as these additional customers break down the doors to get at the merchandise on the shelves.
Nothing will build the confidence and trust of business and workers quicker than the continuous ringing of cash registers. Paul Davidson
Morton Grove, Ill., June 17
The writer is editor of the Journal of Post Keynesian Economics and author of “The Keynes Solution: The Path to Global Economic Prosperity” (Palgrave Macmillan, 2009).
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A very good response to a shocking piece of commentary. I am delighted to see this printed. It is absolutely incredible that professional economists can conjure up so many versions of non-existent supernatural beings (confidence fairies) that we strain to attract with the right incantations; yet seem to be completely ignorant of the impact of cash on the store countertop and the swipe of a credit card.
@Jim Thomson, Apparently, being a professor does not make one a professional.
While confidence has a place in economics, I have concluded that when an economist is usually invoking “confidence” as a “mechanism” it is really a substitute for his/her admittance that they really have no clue as to what they are talking about.
Put $1000 in every citizens bank account and watch the confidence fairy do triple toe loops!
Confidence is a funny word. Perhaps my very favorite book is by one Gary Lindberg, “The Confidence Man in American Literature,” because, in tracing confidence men through American culture, he illuminates the dual role of acting “with faith” (con fides) and to have trust. The confidence man inspires trust, but often with fraud. So, confidence varies, depending on which side you’re on. If bankers are lacking in confidence, is it because their clients have seen through their scams? Or is it because they’ve gotten an inkling that snake oil is no longer selling like it did?
Warren Stephens, the Lord of Little Rock, is now referring to himself as a middleman. That tells me he’s smarter than some of the Wall Street guys. I could be wrong, but I think he bears watching and not just as a friend of Steve Forbes.