The Federal Stimulus & The Local Grocer: ECON 101
The students at Barlow Mountain and Scotland Elementary Schools don’t use the water fountains – they drink bottled water.
This is not a personal choice, this is a necessity which stems from the fact that chloride levels in the school’s water supply exceed state health standards. Fortunately, however, Ridgefield is on the short list to receive federal stimulus money to cover more than half of $1.45 million North Street water main project.
Ridgefield’s Weir Farm is also benefiting from the federal stimulus funds. The park just received $457,000 in federal stimulus money to help complete three projects.
These stimulus items remind me of the “multiplier effect,” one of the fundamentals of macro-economics. The concept is that any money spent on stimulus has to circulate, and how often or how quickly it circulates (the “multiplier”) determines how effective it is in stimulating the economy.
For example, Ridgefield gets money and pays contractors for the waterworks. In turn, they hire employees or subcontractors. That help goes out and buys groceries. The grocer hires additional help. And so on. Every time a dollar changes hands in an economic transaction, it adds to our "Gross Domestic Product," the measure of our domestic economy.
Reasonable minds can and do differ about what kinds of spending have better multipliers or whether tax cuts are a better multiplier than outright spending. The bottom line for any small business is that the process of circulation takes time, so we have to accept that the changes to our practice or business will also take time.
