Money Makes the World Go Mad
Disappointingly, URI economics professor Len Lardaro sums up the zeitgeist of the times:
“These may not be stimulus funds in the strict sense,” Lardaro said, but they convey the sense that government is attacking the crisis head on.
Bryant’s Edinaldo Tebaldi displays another symptom of the intellectual virus currently infecting economics academia:
To Tebaldi, the separate streams of money expanding unemployment insurance, food stamps and home heating aid for the poor are necessary parts of the stimulus blend. “You cannot let people suffer if it can be avoided,” he said.
For his part, Representative Pat Kennedy runs onto the thin ice that cooler heads have avoided:
Democrats disagree, of course, and some, including Rep. Patrick J. Kennedy fear that the stimulus bill — far from being too expansive — is too timid.
“We need a bolder vision,” said Kennedy.
Personally, I think these speakers — especially the academics — provide a fine expansion to economist William Poole’s observation in the article:
A new program to extend Medicaid to the unemployed at all income levels might have the perverse incentive of prompting people to pass up job opportunities that do not carry health insurance, Poole said.
Thus grows the gravity of an expanding government. Little wonder that professors — whether employed by public universities or merely benefiting from huge government subsidies and lending for higher education tuition — move toward the principle that government must be seen to be doing something — that pouring money drawn from some unmentioned corner of the financial universe onto “suffering” is a moral imperative.
The reality ignored is that none of these steps can “jump start” the economy; at best, they have some chance of forestalling utter collapse, in the hopes that the next bubble will begin to inflate before the temporary bridge crumbles. At this magnitude, however, the effort may be draining gallons rather than sprinkles of precisely those resources and incentives that ultimately generate the booms. The money and initiative is being taken out of the striving and entrepreneurial segments of the economy in order to support bureaucrats, workers, non-workers, and the already rich. The larger the expenditure, the less likely it is that the next lurch forward will ever come.
Kennedy, no doubt, exists in the blissfully ignorant state of a kid gathering snowflakes on his tongue. One can only hope that the economists feel some small twinge from the deep-down knowledge that they’re merely rationalizing a calamitous economic blunder.