David Brooks sounds conflicted. On one hand, he seems to realize the ruinous nature of the policies we have embarked upon:

Our moral and economic system is based on individual responsibility. It’s based on the idea that people have to live with the consequences of their decisions. This makes them more careful deciders. This means that society tends toward justice — people get what they deserve as much as possible

Over the last few months, we’ve made a hash of all that. The Bush and Obama administrations have compensated foolishness and irresponsibility. The financial bailouts reward bankers who took insane risks. The auto bailouts subsidize companies and unions that made self-indulgent decisions a few decades ago that drove their industry into the ground.

On the other hand, he backpedals, arguing:

To stabilize that communal landscape, sometimes you have to shower money upon those who have been foolish or self-indulgent. The greedy idiots may be greedy idiots, but they are our countrymen. And at some level, we’re all in this together. If their lives don’t stabilize, then our lives don’t stabilize.

This is a lovely sentiment, but premised on a false notion that if the “smart” people in Washington think hard enough they can figure out how to “stabilize” the economy.  They can’t, of course. They can spend billions of dollars expanding government and doing non-stimulative things (e.g. expanding the welfare rolls). They can run up the debt. They can rob Peter to pay Paul. They can keep funneling billions to failing auto companies. But they aren’t very good at “stabilizing” things because governments never are. Command economies run by bureaucrats (or 535 legislators) have a rather poor record of improving economic growth, increasing employment, providing opportunity, and the like.

And we have seen what happens when they try. All sorts of “smart” people have been racing hither and yon trying this and that plan for six months or so. We gave the banks TARP money. But then we were supposed to force them to renegotiate with shaky borrowers. And now the banks need yet more money so we’ll give them more. But they can’t pay their executives more than a third of their salaries in bonuses, so some of the smarter ones will go and the others will spend their time figuring out how to evade the 1/3 rule. And if the borrowers still default after the government aid, then the banks will need even more government help. It’s a nasty cycle meddling here and tampering there. In the meantime, the prospect of modeling our bank rescue plan on Sweden has sent bank stocks plummeting. Ah, they’ll clearly need more money now!

And those auto companies are yet another example of the fallacy of government “stabilization.” Is there an “inter-agency task force” on the planet able to “stabilize” GM? I think not, especially since the government demands nonprofitable clean cars and defends union benefits and work rules.  Moreover, the money used to do all of this ($100B? $125B?) — and all other ventures — comes from somewhere and has to be repaid sometime.

Despite all the good intentions, it is plain we are making things worse, not better. It is not that we should begrudge the “idiots” the help.  (And indeed very few object in hard times to government spending in the form of “relief” to cushion the blow both for the capable and the idiotic.) But relief is not economic policy. As to the latter, the hitch is that the endeavor to help the “idiots” by a series of exquisitely detailed and mutually contradictory government fiats will make for more idiots, less productive economic activity, and ultimately less stability.