If, as Daniel Henninger observes in The Wall Street Journal, Barack Obama's is shaping up as
a radical presidency, akin to those of FDR and LBJ, the US may be in for a dramatic expansion of government power not seen since those Presidents.
Considering that it took about 40 years before a President came along who challenged and at
least tried to roll back some of that statism, maybe the GOP should start looking now for that "new Reagan" to roll back Obama's programs when the time comes. It would be a shame to waste another 40 years. Granted, Republicans who spend money hand over fist like they have under George W. Bush will not have the credentials for that task, and neither will have those Congressman and Senators who voted for the bailout. Rather, the GOP should look to those state level leaders who have consistently and courageously spoken out against the new programs, even when those would benefit their states... I speak of Governors like Mark Sanford (SC), Bobby Jindal (LA) or Mitch Daniels (IN).
Clearly, once it becomes clear the outrageous extension of the government's reach has failed, a new dawn for fiscal responsibility will come. The GOP would do well to position themselves now.
Wednesday, February 25, 2009
Monday, February 16, 2009
Is doing something always better than doing nothing?
There are a few things that surprise and trouble me about the current financial crisis. One is that it appears to be used by politicians everywhere as a pretext for an unprecedented power grab. Sure, they involve themselves in formerly relatively free markets very reluctantly, they say. But the more honest statement is probably that attributed to new White House Chief of Staff Rahm Immanuel, who said (and I paraphrase), "It would be a shame to let a crisis go to waste."
The other things that really disturbs me is the hybris of politicians who feel they can micromanage the economy. But it may well be argued that the global economy of today is such an intricate web of interdependencies, that we just do not know what an intervention in one area will cause elsewhere. The strange mantra appears to be that doing something, or anything, is better than doing nothing. But the hippocratic rule of "first, no harm" may oftentimes imply that nothing be done, because any course of action may be harmful.
I think human beings in general, and politicians in particular, have a hard time accepting that there are forces better not interfered with. And by meddling, they invariably make things worse.
It is unacceptable to many that boom times are sometimes interrupted by bust times, such as always been the case in the history of mankind. It is a fairly recent development that economists, politicians, and central planners have tried to smooth out the business cycle. Yet, despite (or actually because of) the efforts of the best and brightest, this has never worked.
Historians today are beginning to debunk some of the Great Depression myths. Central to their thesis that the government's activity under Hoover and FDR may actually have prolonged the depression is the idea that individuals and markets abhor uncertainty. Having an activist government that produces hectic new approaches to managing the economy on a weekly basis creates uncertainty and we are seeing some of that again today.
In the 1960s, bright young economists began tinkering with the economy in the expectation that they could tame the business cycle. Ultimately, this led to the disastrous economy of the 1970s.
Both the 1930s and the 1960s are clear examples of government and presumed experts overreaching. Unfortunately, people do not seem to have learned from these experiences. And today, more sinister motives may also lurk behind those advocating a bigger government role in managing the financial system: these are people who are free market sceptics anyway, who relish what they perceive as market failures, and who see a chance to roll back the policies of the 1980s and 90s. By not accepting the intermediate pain of a downturn, and by vastly expanding government expenditures to combat it, they are laying the groundwork for worse problems in the none too distant future. But hey, then it will merely be time for more government intervention, right?
The other things that really disturbs me is the hybris of politicians who feel they can micromanage the economy. But it may well be argued that the global economy of today is such an intricate web of interdependencies, that we just do not know what an intervention in one area will cause elsewhere. The strange mantra appears to be that doing something, or anything, is better than doing nothing. But the hippocratic rule of "first, no harm" may oftentimes imply that nothing be done, because any course of action may be harmful.
I think human beings in general, and politicians in particular, have a hard time accepting that there are forces better not interfered with. And by meddling, they invariably make things worse.
It is unacceptable to many that boom times are sometimes interrupted by bust times, such as always been the case in the history of mankind. It is a fairly recent development that economists, politicians, and central planners have tried to smooth out the business cycle. Yet, despite (or actually because of) the efforts of the best and brightest, this has never worked.
Historians today are beginning to debunk some of the Great Depression myths. Central to their thesis that the government's activity under Hoover and FDR may actually have prolonged the depression is the idea that individuals and markets abhor uncertainty. Having an activist government that produces hectic new approaches to managing the economy on a weekly basis creates uncertainty and we are seeing some of that again today.
In the 1960s, bright young economists began tinkering with the economy in the expectation that they could tame the business cycle. Ultimately, this led to the disastrous economy of the 1970s.
Both the 1930s and the 1960s are clear examples of government and presumed experts overreaching. Unfortunately, people do not seem to have learned from these experiences. And today, more sinister motives may also lurk behind those advocating a bigger government role in managing the financial system: these are people who are free market sceptics anyway, who relish what they perceive as market failures, and who see a chance to roll back the policies of the 1980s and 90s. By not accepting the intermediate pain of a downturn, and by vastly expanding government expenditures to combat it, they are laying the groundwork for worse problems in the none too distant future. But hey, then it will merely be time for more government intervention, right?
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