Stimulation Simulation

I typically don't argue or even pleasantly debate with others. Usually I debate the issues in my head and will end up finding proving myself wrong before I've even uttered a single word. It's a sad existence, really.

Last night was the exception, however. I was talking about the economic stimulus package being passed through Congress that includes a $600 rebate check to almost every taxpayer. I'm no expert in economics. I took two classes in college and had a professor who would demostrate opportunity cost and game theory by using Sesame Street and Reservoir Dogs characters. He was neat.

Based on my knowledge from these two 1000 level classes, I assumed these rebate checks may cause a temporary spike in activity that wouldn't last more than a few months. It would be a good move for Congress because the voting public generally loves "free money". Then the quarterly numbers would look great for the summer and a bunch of poor schmucks would get to keep their jobs for another three months until the next quarterly numbers come out lower than expected. Then everbody panics, gets laid off, and we finally end up back where we started. Ultimately, this package will do nothing in the long run.

My friend with even less economic knowledge than myself helped me see the light. Her insights were even more narrowminded than mine. She was raving about how this was a stupid idea because just about every manufactured product is made outside of the US anyway. If people went out and spent all of this money on Product XYZ, the "economic stimulus" would just go to all those damn Chinese commies who made Product XYZ.

Now because I had one opinion and she had another, the next logical step in this conversation is to prove her wrong and make her look stupid. I broke it down like this:

I decide to use my $600 to go purchase a new flat panel television. Of course, most of these TVs are not made in the US. Let's say my TV is made in Korea. Now the Korean manufacturer stands to benefit from my purchase, so she is right in the fact that it may help other countries' economies.

Keep in mind, I'm not alone in making this purchase. A rebate is being given to almost every US taxpayer, and I think that will include many more young, single males who like to purchase shiny new electronic products. With all of these people going out and buying new electronic products, there could be an increase in imported goods arriving at US ports. There will also be lots of trucks needed to get these electronics from the shipping ports inland to warehouses, distribution centers, and storefronts. Finally, there will be a bunch of eager people in stores like Best Buy and Circuit City itching to buy their new toys.

New jobs may be created because of this temporary spike in activity. This now creates a new wave of consumers. For example, think of all the pimply faced teenagers hired at Best Buy to help with this surge in demand. Some are working and earning wages for the very first time. They all live with their parents and have very little financial responsibility. Combine this with a sweet employee discount, and guess what happens? They start buying more iPods, Nintendo Wii's, and other electronics. This starts the cycle all over again, and may lead to more permanent jobs being created in retail, shipping, or even on the corporate, white-collar level. These jobs will hopefully be more permanent and lucrative, further jumpstarting the economy.

There you have it. In my attempt to belittle another's opinion and prove them wrong, I also realized the ignorance of my own initial opinion. The stimulus package may or may not work, but I now understand what they are trying to do. So what should I purchase with my $600? The answer is simple: 600 Powerball tickets, increasing my chance of winning the jackpot from 1: 146,107,962 to 1:243,513. I like those odds.