Question

What are the main arguments made by opponents of government “stimulus” spending? How does Wolfson address each of these points? How is this question especially relevant in spring 2020?

Answer 1

Government's stimulus spending is often looked upon as having little or derogatory impact on the economy at the cost of the taxpayers' money. This could prevent expenditures in developmental and constructive areas. Also this will not allow the businesses work harder to sustain their businesses. The stakeholders will go unpunished if they get bailouts after making erronaeous decisions and falling into the crisis. Wolfson suggests that the government intervention gets the ecnomy rolling while market will take care of the rest. Certain sectors like the energy sector requires government support at some stages. He points out that during 50s, 60s and 70s enterpreneurs would not invest in Washington. With the assurance of government support, investments flow in and the economy grows. In spring 2020 the world is on the verge of another recession following the COVID19 pandemic. So it would be effective to consider how and what kind of intervention and stimulus packages would help the economy recover.