Thursday, 19 February 2009

‘Stimulus’ = tooth fairy economics [update 3]

The problem with Obama’s so-called stimulus bill “isn't that it's full of ‘pork,’ bad as that is,” says Meltdown author Thomas E. Woods Jr.  “The problem is the tooth-fairy economics on which it is based.”  Read Tooth Fairy Economics.  It’s the best thing you’ll read today.

UPDATE 1: With so much ‘consensus’ around the stimulunacy, and only half-baked criticisms even from so-called free-market economists, you could be forgiven for thinking that stimulunacy is the only economic game in town.  It’s not.  Using Austrian Business Cycle Theory, for which Friedrich Hayek received the Nobel Prize, Austrian school economists were predicting the housing bubble and its likely consequences back in 2003/4, and back in the twenties Hayek and his teacher Ludwig von Mises were almost alone in predicting the coming depression.

Mark Nugent explains how they did it, and why big-government apologetics isn’t the only economic game in town in Bailout Blues.  As Nugent concludes, “With the tenets of true [Austrian] free-market economics, the causes of the economic crisis are brought into focus, as is the path to recovery.”

UPDATE 2: The always erudite Onkhar Ghate recommends:

If you want to understand the fundamental economic forces responsible for our present crisis, tune out the New York Times’s coverage, turn off Fox News, and instead read Human Action, particularly Chapter XXXI.

And if you’re too impatient to buy it, you can always read it online.

Of course average citizens can’t be expected to be economic experts. The principal failure of understanding here rests with our intellectuals and commentators. But what is disturbing is how readily Americans seem to accept that the form of a solution, whatever its details, will look like this: concentrate even more unchecked power into the hands of government Czars. Give Bernanke or Paulson or Geithner even wider authoritarian powers to dream up new schemes, and they’ll tell us what to do. People seem unfazed by the palpable look of uncertainty in the faces of these “financial czars”–i.e., by the fact that the Czars don’t have a clue what to do.

UPDATE 3:  “Barack Obama tells us to embrace his ‘stimulus package’ and other planned interventions in the economy–because ’We can’t posture and bicker and resort to the same failed ideas that got us into this mess in the first place’.”

“True,” says Alex Epstein. “Here are four top failed ideas that we should not resort to.”  Oops.  Too late.

1 comment:

  1. I really liked Alex Tabarrok's quip the other day about how "good" economists believe that only big spending programmes (rather than tax cuts) pay for themselves...


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