Private Stimulus:

Part I: The Theory

I just watched Nobel Prize winner Paul Krugman speak on today's economic crisis. I'm skeptical about his Keynesianism. But I'll defer to his authority and give him the benefit of the doubt. My mind is open. Krugman said the stimulus of WWII got us out of the Great Depression. He also noted it doesn't necessarily matter where the money was spent -- such that even if government paid one group of folks to dig ditches and another to fill in the dirt (he didn't use that exact example but something close) -- that's ultimately what matters. He noted we should spend a lot on infrastructure. I agree that this is something that government IS relatively competent at doing. If the private market can effectively do it better (which I think they can), I'd rather them do it. But I'm willing to support a publicly funded private/public cooperative to improve roads, bridges, rails and the like and stimulate the economy. Krugman noted military spending could work (after all that's what got us out of the Great Depression). But given today's political climate, that's not a good idea. I agree.

Krugman also noted that stimulus was better if the money is spent on American provided services, not necessarily imported goods. But elsewhere I've seen Krugman note that many of these foreign manufactured goods -- for instance almost everything Walmart sells -- have a great deal of American "value added," as it were.

Finally, Krugman noted the problem of saving or investing government stimulus checks as opposed to immediately spending them which is what government wants you to do.

Part II: My Plan

One thing he scoffed at, though, was the notion that during tough economic times, the rich have a patriotic duty to spend money to stimulate the economy. As a collectivist, Krugman clearly sees this as government's role.

I don't. I think a private stimulus initiative by world billionaires (and to a lesser extent folks worth tens to hundreds of millions of dollars) is a great idea. It's not like the list of billionaires is that hard to find. They are right here. [This will be a world project after all].

Krugman seems chiefly concerned about spending money and spending it fast. How about this for an idea, inspired by the classic movie with the late John Candy, Richard Pryor, and the guy who played Larry Tate on "Bewitched," Brewster's Millions.

Remember Richard Pryor was given, by an unknown rich white relative, 30 million dollars to spend in a month with the catch that he couldn't accumulate any assets. If he could do it, he'd inherit the whole 300 million dollar estate. There was a "wimp clause" that would give him $1,000,000 and the rest to his attorneys (one of whom was the guy who played Larry Tate on Bewitched). Long story short Pryor took the deal and won after almost being foiled by the attorneys.

This is, it seems to me, textbook for engaging in massive stimulus along Keynes'/Krugman's lines. No assets; no investments. Must spend money now on consumable things.

So here's the plan. Get all of the billionaires to liquidate say $500 million of their assets, not much of a big deal for most of them. Perhaps a percentage. Maybe set the standard of Buffet and Gates liquidate a billion each and everyone else using that as a baseline percentage. Put the money in a pot. See if we could get the pot to grow to the 50 or 100 or more billion dollar mark. And hire people to spend the money in the pot with debit cards attached to the fund. Pay the spenders a modest salary of say $30,000 a year and benefits which they could use however they want (to invest, accumulate assets). But the money from the debit cards could not be invested or used to accumulate assets. The spenders should be able to buy assets like cars, jewelry and whatnot with the catch that 1) your time as a spender would be limited to at most a few months. And 2) once that time is up, all assets (like cars, jewelry and whatnot) HAD to be either given back to the millionaires/billionaires or donated to an official charity. [I know there's a potential problem with using the $$ to accumulate assets, stashing it, scramming, leaving the country. Losing the diamond rings which they planned on giving back or donating to charity. But realize the spenders would be on the hook for them.]

If you want to buy assets that you want to keep for the long term, DON'T use the special debit card.

The spenders' job performance would be judged on how much one spent. And if one didn't meet the threshold for spending one could be fired early from one's job term as a "spender."

The obvious benefits of my plan: 1) It might work MUCH better than government stimulus. And 2) it wouldn't cost the taxpayers anything, but, to the contrary, would only increase tax bases.

Now, why isn't this idea workable? And if Krugman is right, why wouldn't the billionaires be willing to part with a fraction of their wealth to get America/the world through this crisis via stimulus.