To the editor:
Economists seldom agree, but it is universally accepted that spending stimulates the economy. This stimulation is referred to as the multiplier effect. On average, each $1 spent causes $1.50 in additional economic activity.
Not all multipliers are of equal worth. Money paid to foreign contractors in Iraq does little to stimulate our domestic economy. A few high-income earners saving or investing are essential for capital formation but have little multiplying power. One rich person with 10 times the income can’t consume 10 times more than a poor person, and we live in a consumer-driven economy.
On the other hand, many workers spending all their income has an above-average multiplying effect. Even unemployment checks are multipliers because they are spent on consumables. Few, if any, unemployment checks are used for capital formation.
Former Sen. Christopher Bond (speaking for the Missouri Chamber of Commerce), the Missouri Department of Economic Development, Gov. Jay Nixon and others claim 24,000 new jobs would be created with the expansion of Medicaid in Missouri. The multiplying effect of several billion federal dollars would bring about sorely needed expansion of our state’s economy.
How the Republican-controlled General Assembly can turn away from this chance to advance the well being of Missouri citizens is beyond my comprehension.