Argument: Economic stimulus by government intervention always fails

Support

James Glassman. “Stimulus: A History of Folly”. Commentary Magazine. March 2009 – On being presented the Nobel Prize in economics in 1974, Friedrich von Hayek devoted his Stockholm lecture to acknowledging the severe limitations of his profession. “It seems to me,” he said, “that this failure of the economists to guide policy more successfully is closely connected with their propensity to imitate as closely as possible the procedures of the brilliantly successful physical sciences—an attempt which in our field may lead to outright error.” Government simply cannot know enough to direct an economy successfully, and when the President claims that his fiscal stimulus plan will create (or save) at least three million jobs, he is taking a wild, and dangerous, leap. Said Hayek:

If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants.

What is that environment? First, it provides a confidence that, in a crisis, bank deposits are safe and insurance policies will be paid in full. Such confidence can be provided only by the government of the United States in its legitimate and essential role as the lender of last resort. Second, the environment supports, rather than denigrates or browbeats, productive members of society. The U.S. will not emerge from a serious recession unless businesses and investors lead it out. Third, it recognizes that Americans have undergone a financial calamity and that we need time to adjust; we cannot, like a car battery, be shocked back to life, and we aren’t in the mood to have someone blow in our ear.

Yaron Brook. “To Stimulate The Economy, Liberate It”. Forbes. February 14th, 2008 – While some in Washington are quibbling about the details of the economic stimulus package, nearly everyone agrees with its basic idea: that our ailing economy needs Uncle Sam to play doctor and hand out some $150 billion in consumer spending money. But this sort of government intervention is not the cure for our economic troubles. It is the cause

Mitt Romney. “Commentary: Stimulate the economy, not government”. CNN. February 6, 2009 – In the final analysis, we know that only the private sector — entrepreneurs and businesses large and small — can create the millions of jobs our country needs. The invisible hand of the market always moves faster and better than the heavy hand of government.