Meanwhile, lurking on the opinion pages is, once again, the estimable Robert Samuelson, who points out with due sobriety that Japan's long slide through the economic doldrums has not been ameliorated by extensive credit-based stimulus.
The very metaphor of economic "stimulus" is enough to explain the issue. Otherwise stimulating things can be utterly unstimulating when there's a deeper issue. Caffeine may keep one awake under normal circumstances, but one can be so sleep-deprived that no amount of caffeine will ward off sleep. The aroma of delicious food cooking may stimulate the appetite, but if one has a digestive malady, aromas nauseate when they normally stimulate.
So, says Samuelson, is the story of economic stimulus in Japan's sated economy. And so it appears to be in the United States:
So Japan's economy is trapped: a high yen penalizes exports; low births and sclerotic firms hurt domestic growth. The lesson for us is that massive budget deficits and cheap credit are at best necessary stopgaps. They're narcotics whose effects soon fade. They can't correct underlying economic deficiencies. It's time to move on from the debate over "stimulus."
Economic success ultimately depends on private firms. The American economy is more resilient and flexible than Japan's. But that's a low standard. Neither the White House nor Congress seems to understand that growing regulatory burdens and policy uncertainties undermine business confidence and the willingness to expand. Unless that changes, our mediocre recovery may mimic Japan's.
Attention, gentle readers and all others: borrowing to stimulate consumer demand only works when the economic problem is consumer demand. If it's something else, like a history of mal-investment and a business climate made fearful by the threat of taxes and regulations, then the cure needs to fit the disease.