This is completely true, but it's only an argument to get the recovery underway as quickly as possible, and not for any specific means of doing so.
I'm a bit puzzled by the "be kind and help a brother out" bit. No one's suggesting that tax cuts will generate altruism in companies, just that removing some of their often massive tax burden will increase the number of businesses that can expand.
Yes, exactly. And that's my point. A tax cut will not effect unemployment or work as a weapon against the recession, which I think stimulating incentives by the government can do, if done in the right way. Tax cuts (for companies) might make the companies want to expand a bit sooner when there are signs of better times. But in the longrun this would require a tax cut every time the economic times are bad to achieve the desired kind of effect. Finally there will be no taxes left at all, which of course some people would view as a good thing.
During a time when the government loses money most tax cuts would be unresponsible to introduce. However, I do think that tax cuts meant to keep small businesses and low income takers from bankrupcy is certainly something one should consider.
The situation here in Sweden (where things definitely suck too) is a bit different. We have a considerably large public sector which makes political means of control more efficiant and multi-faceted than in countries with a small public sector. Good times or bad times, people still gets sick, kids still go to school, fires get started, crimes are committed.... This is a sector which the government relatively easy can stimulate - if the means are there - during bad times.
[EDIT]Oops, I forgot the most important part. Yes, you're right. Altruism is certainly not the cup of tea of the companies. And that's where a responsible government comes in. In the role of, rather blindly but as equal as possible, a distributer of wealth in a manner which a commercial comapany will, or can, never allow itself to apply.
Consumer demand does not need to be stimulated; it's built into the economy. Getting people to want things is not difficult, but getting them those things cheaply and efficiencly most definitely is.
Let's boil things down a bit: it wasn't hard to get people to want to, for example, travel quickly and safely. What was hard was inventing the internal combustion engine. The supply of the goods, and the innovation and invention that creates them, has and always will be the driver of economic growth.
Convincing people to buy flat screen TVs during a recession does not drive growth. They already want flat screen TVs, and they'll want the even flatter screen TVs that we'll have in another decade. What will change between now and then to make us wealthier is that someone will find a way to make that flatter TV, and business will get better at manufacturing them en masse.
It simply isn't so at all. You're saying that people are not buying conumerism stuff because the stuff isn't neat or new or exciting enough, and if only the companies where stimulated (by tax cuts) to make products more appealing to the consumers the recession would be solved. You're wrong. Peope aren't buying stuff because they don't know if they will make less money in the future or even lose their jobs. They're not buying stuff because they don't know if they'll need it for foods and bills in a couple of months. This is the case during every recession, people hold on to their money because they worry about the future.
What the banks and companies can do, and are doing, during recessions to speed up things again is to make prices and bank loans more attractive to their buyers. Which, depending on what laws and regulations the markets are working under, can go in either direction in the longrun, as we all quite painfully have had to experience during the past 1-2 years.
[EDIT]An example: the house loans, given by banks to people, during this time of the year compared to the same time the previous years, have gone up! How is this possible during a recession? The State Bank (not a market actor) has lowered the repo rate to stimulate the economy during the last year, step by step, from 4.5 % to today's 0.5 %. The Minister of Finance has urged the banks to follow these directions from the State Bank, which they reluctantly have done. Still, why are the banks - who are super low on cash - deciding that it's a good thing to approve house loans during these bad times? Because compared to giving loans to other ugly fishes (finance institutes and what not), the loans given to families are peanuts. Plus, these families are careful with their money compared to the finance sharks (remember, people don't unnecessarily waste their money on anything during recessions). But why, when the times are so bad, are people deciding to buy houses? Because the interests they'll have to pay to the banks are on a record all time low - and the houses are cheap again. People are thinking that it's a good thing to invest the capital they have in houses. And this because the State Bank acted offensively and the politicians made clear what was expected by the banks as well as giving the impression of being on top of things.
They've given quite a bit of money to the automakers, yes, and even those who support these decisions seem less than thrilled with them, regarding them as a necessary evil.
What's worse, though, is that Obama's basically stated that he's on the side of the autoworkers unions, which are one of the primary reasons for the industry's collapse. The pensions and benefits packages which they receive are often staggering, and are crippling the companies. There's also a jaw-dropping bill in Congress that would essentially remove the secret ballot on union-creating elections, but in the interest of topic condensing, I'll leave that for another conversation.
This car industry thing is threatening to become the new farming subsidies debacle which is pestering the European Union. We don't need to hold another brain dead elephant under its arms!
But to say that the unions are one of the primary reasons to the car industry crisis is just plain nonsense. I will use Volvo and Saab as examples since they're once Swedish and the comapnies I know a little bit about.
Saab Automobile, the passenger car company, has more or less never turned a profit. But since the passenger car division was "baked into" the rest of the company Saab, which also made somre really successful products (like trucks), the losses Saab Automobile made was, not hidden but not very visible either. Since GM bought Saab Automobile I don't think they've made a profit one single year. People simply aren't buying the car.
I don't know what Volvo, or the rest of the big car companies either for that matter, has been doing. During times when everybody are starting to look for cars that needs less gas than before Volvo et al decides to go for big gas-gulping SUVs. Idiocy. The oil is going, there was a recession closing in on us... and they think people would want to throw away their savings on gas-thirsty expensive cars?
I just heard that they have sold 200 000 Tata Nanos, "the world's cheapest car", in India. The manufacturer has only made 100 000 and is having quite pleasant problems. Because he's understood the market and the big car dragons haven't. People aren't buying their products and that's why they're in trouble, not because of the unions. Which in Sweden, by the way, have agreed to lower their memebers' salaries to 80 % of what they are usually paid to save their jobs. You make it sound like you're the one living in a quasi-socialist country, not me.
I don't always like all unions (probably not because of the same reasons as you though) but if we didn't have them a lot more people would probably be living on the street right now.