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Design Your Own Stimulus Package

February 27, 2009

(Steve Rabin is the CEO of a New York public affairs company and works in the field of economics and global health. This is his first post for PhilanTopic.)

Let's face it. Even in this post-Madoff, 7,000-on-the-Dow era, there's still some money in personal piggybanks that could be used to keep our fellow citizens -- and ourselves -- employed. The following is my own personal five-point stimulus plan to help keep the economy moving.

1. Target Your Spending

Spending money is well and good. But as the debate over the federal stimulus package illustrated, targeted spending is even better. Layoffs are hitting service and retail workers in the city the hardest, and unfortunately those are the folks least likely to have a financial cushion. The places where your money will do the most to save jobs are businesses with a high labor-to-capital/materials cost ratio. Topping the list are businesses such as restaurants and bakeries where ingredient costs are small and the number of host/hostesses, cooks, bakers, dishwashers, and wait staff needed to satisfy the paying customer are high. In the world of retail, look for shops that have moderately low costs (like shoes) but require a high degree of personal assistance or employ many low- and moderate-wage earners on commission. Even in the luxury category, buying multiple items from clerks working on 20 percent commission helps more people than buying one very expensive item (e.g., a piece of art or a condo) from a relatively better compensated and crisis-cushioned sales agent or gallery owner.

2. Invite the Relatives

Out-of-town visitors usually are a great stimulus to a local economy. They eat and shop at local establishments, and many of them stay in hotels that employ low-wage housekeepers, bellhops, and clerks. They also contribute to the tax revenues needed to keep police, teachers, healthcare workers, and other vital public-sector workers employed. If your out-of-town visitors can’t afford to stay at a hotel, open your home and then get them on the street to spend, spend, spend.

3. Spread a Few Extra Dollars of Hope Each Day

Recessions tend to feed on themselves. One way to stop the negative feedback cycle is to do what you can to inject daily doses of confidence into the system. Rather than snapping the purse shut, spread a few extra dollars a day around in the form of tips to your taxi driver, doorman, the coat check person, or waiter or waitress. Giving an extra dollar here and there on top of what you'd normally tip is an easy way of saying, “We are all in this together, and we’ll be there to help each other.” The little stimulus tip also packs a great multiplier effect. Without sweating it too much, most of us, in a calendar year, can personally lift the spirits and confidence of a thousand people, who in turn will do what they can to keep the economic wheels turning.

4. Become Your Own World Bank

Many of our lowest-paid and hardest-working neighbors remit a portion of their earnings to support family members in countries and regions that have been even harder hit by the global economic meltdown than the United States. Indeed, for hundreds of millions of people in developing countries, the day-to-day struggle to survive has taken on new urgency. Keeping our “aid-exporting” neighbors working is probably the most efficient international humanitarian assistance program you can support, and it involves no economists, executive directors, program planners, or annual reports.

5. Be Your Own Obama

Maybe it was my imagination, but the morning after President Obama’s first address to Congress it seemed as if people were in a better, more optimistic mood. Keeping and sharing a positive outlook with others is as important as opening your purse strings -- maybe more so. Friends in retail tell me that the day after the president's speech, sales in their stores were up for the first time since the holidays. Yes, most of us have a tale of woe or worry to share. But regular doses of "This is pretty bad but it's going to get better" administered to friends, family members, and the occasional stranger can actually play a critical role in easing fears and reviving the animal spirits so necessary to a functioning economy.

So don't wait for the benefits of the federal government's stimulus package to come knocking on your door. Get out there and do what you can to give your local economy a boost. Your neighbors will thank you, and we'll all be richer in many ways.

-- Steve Rabin

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Posted by DJ  |   February 27, 2009 at 05:27 PM

You left out a step:

6. Borrow a load of money you'll never be able to pay back from your grandkids to spend on non-necessary items. Then just sit back and wait for your $13 a week salary increase to kick in.


Now we're talking stimulus! :)

Posted by Mary Ann Newman  |   February 28, 2009 at 08:43 PM

Great ideas, and easy to put into practice.

Posted by Kathryn Pyle  |   March 04, 2009 at 05:19 PM

Thanks, Steve, for this delightful and serious action plan! Having just reviewed Paul Collier's new book (see Off The Shelf) about how to help the "bottom billion" in extreme poverty, I was struck by how your ideas dovetail. Though Collier is macro-level, long-term solution while you've laid out a personal do-it-now that affirms everybody along the line, you're both saying what's necessary is getting money to the people who need it most and will spend it. Without further deliberations, and absent lobbyists from any sides, I'm rolling out "my own stimulus package" today!

Posted by Michael Seltzer  |   March 09, 2009 at 09:23 AM

Many thanks, Steve.

The 'Rabin Plan' makes each of us part of the solution and engenders a sense of responsibility, which is exactly what President Obama has asked each of us to assume.

Michael Seltzer

Posted by Obama's Stimulus Package  |   October 13, 2009 at 05:56 PM

Interesting points. I like the "Become Your Own World Bank", sounds crazy but actually you are making sense to me...

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