PhilMur's thoughts on biz/tech/money/life

According to this article in the NY Times yesterday, some “experts worry that the recovery may be weak, stymied by consumers’ reluctance to spend.”  Oh no!  We’ve got to go spend our money!

Some of the reasons why consumers are slowing their spending from the irrational highs of recent years is described in the article by Moodys.com chief economist Mark Zandi:

“Lower-income households can’t borrow, and higher-income households no longer feel wealthy,” Mr. Zandi added. “There’s still a lot of debt out there. It throws a pall over the potential for a strong recovery. The economy is going to struggle.”

Mark Zandi is describing a return to rationality among American consumers–and I couldn’t be happier.  In fact, if the lower-income don’t borrow–because they can’t–and save their money instead, and if higher-income households don’t spend all they make (and save their money instead), I believe this will lead to a more stable economy over the long-run.  This may not appease everyone–Cash for Clunkers, for example, was designed to stimulate spending quickly in the short-run, as some economists are convinced that is the greater need.

So, to appease those with a short-run mentality, and to excite the technology lovers out there such as myself who have not yet taken the “plunge” into the world of Apple technology bliss, I propose the first-ever iStimulus.  The government will give a purchaser a $100 tax credit for every Apple device they buy – an iPod, iTouch, and yes– especially the iPhone.

This stimulus will do several things for the economy:

1)   It will push me over the edge and let me whip out my debit card for the new iPhone activation fee, knowing that $100 of it isn’t all my money – it’s from the government, and so society will gladly share in the cost of my new technology purchase in the form of taxes to cover the iStimulus program.

2)  As a result, I can feel good about buying something I don’t completely need. Yes, I literally do have the cash to go buy one and yes, I may or may not really need it, but the government wants me to spend–and it wants me to be a good American citizen–so it has given me an incentive to do so now.

3) It will give Apple more reasons to boast of their strong recent success. It doesn’t matter that they recently sold their 40 millionth iPod/iTouch device; this will get them closer to that 100 million mark!  Yes, we may indeed create a mini-technology bubble that will eventually burst, but we can worry about that later…

In all seriousness, the one positive thing about such a stimulus is that at least for once we would be investing money into a company with a future!!  And granted, there is nothing wrong with buying “wants”. But, in my opinion, when you lie to yourself and call it a need, or when you finance those wants through personal credit and the backs of society in the form of government incentives, we will find ourselves creating yet another spending bubble that we and our children will be paying for in the form of higher taxes and slower economic growth in the future.

I have personally experienced no benefit from any of the recent stimulus programs; so I say launch an iStimulus program so that more of us can feel good about this devastating economic path that the current administration and the conventional economic wisdom of the day is leading us down.

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UPDATE:  You may wish to read the related posting about a proposed “WiiStimulus” by clicking here.