David Brooks counts up the $8 trillion or so of “stimulus” over the last year and asks a very good question: is it doing any good? His answer:
The financial system seems to have stabilized, but bank lending is minimal, home prices keep falling, consumer spending is plummeting, and the economy continues to dive.
It could be we just have to endure some fundamental adjustments. Housing prices have to reach a new level. Consumption has to settle on a new trajectory. Until those fundamental shifts are made, no federal sugar rush is going to restore economic health.
That’s not a recipe for doing nothing. It’s a recipe for skepticism.
Indeed. He suggests some constructive alternative ideas — training vouchers, tax credits and accelerated depreciation, etc. Whether you like Brooks’ options or not, he deserves credit for asking whether the whole gigantic Keynsian scheme is helpful. The Republicans aren’t organized enough to come up with a response to Obamanomics. And the critiques from conservative economic thinkers have been sporadic and muted. Many in the mainstream punditocracy plead ignorance and offer no informed criticism of Obama’s economic approach. (Funny, how they never questioned their own expertise in dissecting President Bush’s policies.)
But it seems that more thought and analysis needs to be paid to the underlying premise of Obama’s New Deal II. Avoiding tax increases and restraining protectionist impulse are certainly of benefit. (These fall within the “do no harm” category.)But are a massive deficit, gargantuan public works projects, and perpetual bailouts for failing companies a way to revive the private sector? Or just a scheme to inflate the size of the federal government? It is not as if we don’t have experience in this sort of thing. The original New Deal bequeathed Democrats and their media allies with the mythology that lots of government spending rescued us from the Depression. (It was WWII that did that.)
Perhaps this time, absent Smoot Hawley and 70% + marginal tax rates, we will have a different result. But it is worth asking what all of this activity is meant to accomplish — a revival of the economy or a revival of the liberals’ political myth-making?
