The current conventional economic wisdom seems to be that governments need to “apply economic stimulus” by spending plenty of money in order to reverse an economic downturn. Hence governments all round the world are announcing vast expenditure programs, “bailing out” selected businesses such as banks. But how should a government go about deciding where the bail-out money is best spent?
A government could decide to bail out those who are in the worst financial situation, or those who complain the loudest, or those who employ the most people. But maybe a more effective way of deploying stimulus money is to allocate it primarily towards future needs, rather than trying to solve present hurts. For example, the Australian government has “bailed out” car dealerships, but why is public money being spent in perpetuating a system in which we have to deal with car salesmen on commissions if we want to buy a car? Surely the money could have been bettter spent stimulating a more efficient and customer-friendly retailing process.
The global economic crisis seems to have pushed climate change off the agenda. However, instead of using “bail-out” money to prop up old-technology carbon-intensive industries, surely the government could use this as an opportunity to create change by investing in environmentally-friendly new technologies such as solar power and electric vehicles.