That's EXACTLY what the means, Kenneth...
There are already things in play to help the economy along without more tinkering from an inexperienced teleprompter. Apparently when you took your course in economics, you missed this:
Automatic Stabilizers
In macroeconomics automatic stabilizers work as a tool to dampen fluctuations in real GDP without any explicit policy action by the government. It is a government program that changes automatically depending on GDP and a person’s income,[1] and acts as a negative feedback loop on GDP.
The size of the government deficit tends to increase as a country enters recession, which helps keep national income high through the multiplier.
Furthermore, imports often tend to decrease in a recession, meaning more of the national income is spent at home rather than abroad. This also helps stabilize the economy.
Government tax revenue tends to fall as a proportion of national income during recessions.
This occurs because of the way tax systems are generally constructed.
* Income tax is generally at least somewhat progressive. If an individual's income rises, then their average tax rate increases. This means that as incomes fall, households pay less as a proportion of their income in direct taxation.
* Corporation tax is generally based on profits, rather than turnover. In a recession profits tend to fall much faster than turnover. Therefore, a corporation pays much less tax while having only slightly less economic activity.
If national income rises, by contrast, then both households and corporations end up paying higher proportions of their income in tax.
This means that in an economic boom tax revenue is higher and in a recession tax revenue lower; not only in absolute terms but as a proportion of national income.
Other forms of tax do not exhibit these effects, because they are roughly proportionate to income (e.g. taxes on consumption like sales tax or value added tax, or they bear no relation to income (e.g. poll tax or property tax).
Transfer payments
Most governments also pay unemployment and welfare benefits. Generally speaking, the number of unemployed people and those on low incomes who are entitled to other benefits increases in a recession and decreases in a boom.
This means that government expenditure increases automatically in recessions and decreases automatically in a boom in absolute terms. Since the trend of output is to increase in booms and decrease in recessions, expenditure is expected to increase as a share of income in recessions and decrease as a share of income in booms.
Imports
Generally, as the income of an individual or an entire economy increases the greater the marginal propensity to import; the more income you earn the more likely you are to purchase imported goods.
Imports have the effect of lessening the amount of money into a local economy as money is exchanged for goods and services originating from an international source. Again, as the income of the economy increases the greater the amount of money being lost to international economies through imports, while times of recession tend to keep imports low, keeping more money in the domestic economy.
Recessions and booms are, however, often accompanied by currency fluctuations which significantly change import and export behavior.
en.wikipedia.org |
