Zombie Economics?

Am I alone here? Has anyone else noticed the stultifying almost zombie-like lack of imagination applied to dealing with the financial crisis?

The policy makers from the dying U.S. administration seem to be mindlessly wandering like zombies through the rubble of our economy, sprinkling mind-numbingly dumb "bailout" policies and strategies.

Is this zombie-nomics a spawn of "voodoo economics"?

Michael Lewis, whose brilliant career was made in large part by showing just how dumb the Masters Of The Universe on Wall Street can be, recently said in a New York Times op-ed piece with Greenlight Capital hedge fund President David Einhorn, "In the past year there have been at least seven different bailouts, and six different strategies. And none of them seem to have pleased anyone except a handful of financiers."

The book Lewis is writing on this crisis will be a beauty but the movie is already playing and Wall Street looks more like the "Land of the Living Dead" than the "Center of the Universe."

It's hard to know what zombie leader Henry Paulson, the outgoing U.S. treasury secretary, was thinking when he scared Congress into forking over $700 billion of taxpayer money - because zombies don't need to explain themselves. They just frighten you out of your money. The zombie-nomic thinking was: you give money to banks, banks issue loans so you and I can spend the moolah and revive the economy.

But as we all know, revivial of anything is not top of a zombie's priority list. So, the banker zombies took our taxpayer money and locked it into their crypts. Are you scared yet?

Well, here comes the even scarier bit: There are new "bailouts" coming. And a lot of them involve bailing out even more of our money to banks.

Well, it's time to rise up and push the zombies out of the trough - give the money to we the people. Not in the form of tax breaks because we all know the faint of heart will immediately hand the rebates to banker-zombies.

So, try this: Instead of giving the banker zombies more money, send every tax payer a coupon for $2,000 which they can spend on any American business they choose.

It doesn't matter where. We're trying to revive the economy here, remember, and the only way to do that is to spend!

Using your coupon to buy tickets on a U.S. airline to a developing country would be an excellent move to help those way poorer than you while giving depressed American carriers a lift.

Here's the fine print: One, you have to match that $2,000 with $2,000 of your own money. Two, you have to use the coupon by the end of March. Three, only U.S. businesses can cash in the coupons.

Look, the recession is here because our lack of spending collapsed demand. Zombie-nomics has definitely not increased demand. The only way to boost demand is to give people money which will winkle equivalent amounts out of their own savings and onto the main streets, car dealers, builders, travel agents, et al. Any business - except a bank.

Businesses, however, should be the only ones eligible to cash the $2,000 coupons at the banks so the banker-zombies will get their cuts eventually.

Yes, this is a simplistic proposal. But the concept was put forward much more elegantly and replete with ecowash many years ago by John Maynard Keynes, who suggested shoveling out money to people, or paying them for doing nothing, as a way of enlisting the masses to haul us out of recessions wreaked on us by earlier Masters of the Universe. Ever since, elitest economists have dismissed the approach as unsophisticated and rather silly. Proper macroeconomists do not dabble in such simplicities.

Forget about macroeconomic elegance - that's why we're in this bog. We need simple strategies. And, the Obama folks are talking like simple Keynesians when they speak of spending on "infrastructure." People think of "Bridges to Nowhere" as well as much needed roads and other big-ticket items when thinking of "infrastructure."

But after all is said and done, infrastructure, is simply a means of spreading the wealth. Obama could really make the word sexy by recognizing the simple fact that people are also integral elements of infrastructure - and, accordingly, dish out money to people directly.

"Spend for your country!" is already a slogan in Iceland. But a $2,000 coupon will raise the patriotic fervour a lot quicker. Spend, and really make it a Happy and Prosperous New Year.

About the author

  • Lelei LeLaulu

    Lelei LeLaulu is a development entrepreneur lurking at the confluence of climate change, tourism, food security and renewable energy. A coordinator of the Oceania Sustainable Tourism Alliance, Lelei is also executive director of the Small Island Developing States Climate Action Program of the Earth Council and president of Sustainable Solutions, a renewable energy company in the Dominican Republic. He was president and CEO of the development and humanitarian agency Counterpart International after serving the United Nations on a series of summits and global conferences which in the 1990s defined the international development agenda. The former journalist hails from Samoa.