Russ Roberts on "Stimulus"
In yesterday’s Boston Globe, GMU economist Russ Roberts has an excellent piece on the proposed “stimulus” package. The article is directed against the huge spending and tax rebate bill working its way through Congress.
Roberts recognizes upfront that even Nobel prize-winning economists are on opposite sides of the issue and so he goes to basic principles. Good paragraph:
I think it will be mostly squandered, so I’m against the stimulus. Plenty of people think it would be money well spent. Many people want a role for government closer to that of Europe’s. Most of us against increased government spending want to move in the other direction.
And the best two sentences:
But maybe we simply don’t have the knowledge to repair the economy from Washington. The economy is complex and the interaction between the financial sector and the real economy – between Wall Street and Main Street – is not well understood.
In other words, if you don’t know what you’re doing, don’t do it. Hayek’s argument in two sentences.
One of the commenters wrote:
Funny, I missed your column criticizing the $800 Billion bailout of the financial industry. Talk about squandered money. Perhaps you are a very recent convert to the philosophy of governmental frugality?
I think Russ was against the bailout, wasn’t he?
HT to Don Boudreaux