Peter Schiff in the Wall Street Journal today gives a good overview of our current economic situation and what will work best in the long term.
I completely agree with every thing Peter says, at least on overall economic theory and long term effects on the economy as a whole.
What I'd like to hear more discussion about is whether there are ways to minimize individual short-term pain without disproportionately sacrificing long term national economic growth. For those that have lost jobs or had to close their businesses, they don't want to hear that the economy will be better in a year or two if they just sit tight. I realize the economic reality for the country as a whole, but what are some conservative policy options that can best limit the pain for individuals hardest hit by the recession while having the least negative impact on national economic recovery and growth?
A secondary question that has been rolling around in my conservative mind is this: with the productivity lost by people being unemployed, is there a level of unemployment where it can be economically justified to increase government spending in the short term on something like infrastructure projects in order to better utilize the labor resources of the country? There are infrastructure projects that need to be done sooner or later; does it make sense to accelerate the schedule and do more now? I recognize their are costs to this approach, namely the government having to tax, borrow, or print money (which sucks money from taxpayers or investors, or increases inflation), individuals being delayed from finding another private sector job (or increasing skills to find a higher-paying one), the tendency for short-term government programs to become long-term ones, and the opportunity for pork and wasteful spending (if new projects are thought up just as a way to spend more money as a "stimulus").
A third idea that I've been trying to consider is the right monetary policy the Fed should employ. If you are a Milton Friedman fan, then you know that he blamed the Great Depression most of all on Monetary Policy. The Fed back then shrunk the money supply and primarily caused the huge number of bank failures (something like 50% of banks failed) and greatly deepened the recession. Friedman said that the Fed should have flooded the market with liquidity. That seems to me to be what the Fed is doing right now. I understand that will risk inflation once the economy starts to recover, but isn't that the point at which you could pull back on the money supply? You can't magically make the economy better in the long run by increasing the money supply, but can't you counteract the effects of the credit crunch and asset bubble bursts, and then counteract them again when the credit crunch eases and asset values start to recover?
I have seen several good articles and videos convincingly arguing against a stimulus program that simply calls for tax "rebate" checks or increased government spending, but I am having trouble finding any in-depth debate exploring other policy options in more detail.