“Experience is a hard master but only fools will have no other,” counseled Ben Franklin. Unfortunately, these dire days the fools won’t even defer to experience.
The Great Recession isn’t about what we’ve learned. It’s about what we’ve unlearned.
Hard times reveal soft heads. Conmen prey on despair by offering hope. The people most desperate for a cure buy the snake oil. Later, they realize they’ve been had.
We lose our minds only after we’ve lost much else.
During the boom, the crank dodges tomatoes and the long hook from stage right. During the bust, the crank basks in the limelight and the crowd’s applause. The reversal of fortune that turns the economy upside down also turns economics upside down. What flunked Econ 101 yesterday aces it today.
Consider the bipartisan stupidity that now governs the government:
When in Debt, Double Down on Debt
Rash is the new prudent. The debt-limit debate, in which the establishment perversely insists that denying trillions in new borrowing will inflame the debt crisis, underscores this bassackwards thinking. Caution requires that we take on trillions in new debt. Recklessness stands athwart more borrowing. Never has incontinence been so effectively sold as moderation.
Government Should Further Shrink a Shrinking Economy
“You don’t raise taxes in a recession,” the president assured an Elkhart, Indiana audience two years ago. “We haven’t raised taxes in a recession.” That’s what he said. What did he do? He signed the greatest tobacco tribute in history. He invented health-care levies that grabbed billions in the strangely named Affordable Care Act. He tried to raise the top marginal income-tax rate last December. And in the debt-limit discussions, he demands—Guess what?—$1 trillion in tax hikes. No matter the question, Obama’s answer is consistent: raise taxes.
Moral Hazard’s Immorality
“I’ve abandoned free-market principles to save the free-market system,” George W. Bush uttered in his presidency’s waning days. The last president’s senseless quip makes sense as an epitaph for a senseless era. The government bailout to socialize the losses of careless financiers incentivized recklessness. The beauty of the free market is that it encourages productivity through profit and discourages failure through loss. The profit motive is more effective, if less well intentioned, than any do-gooder program. But this is an age that values benign motives over idiotic results.
Shifting the Wealth Grows the Economy
They promised a stimulant. It was really a sedative. And it wasn’t until the whole country woke up naked, bleeding, and missing $787 billion that we had all realized that the stimulus the Democrats had slipped us was really a roofie. The stimulus failed because it merely shifted around existing dollars. Robbers redistribute wealth. They don’t create it. Ditto for politicians. Beware of robbers, elected and unelected, slipping you a Mickey.
Don’t Call Us Robber Barons
When the state subsidized railroads and oil companies, newspapermen quickly cried “crony capitalism” and “robber barons.” But phrases like “clean energy” and “green jobs” confuse journalists the way “these are not the droids you are looking for” mindtrick stormtroopers. The president has repeatedly demanded government “investment” in the private sector. The media never question why actual investors—you know, the ones who make millions betting their own lucre on ventures—balk at pouring money into the giant pinwheels, overpriced electric soap-box cars, and ghost-town wi-fi in which Obama invests your money. Products that can only succeed through subsidies to producers and compulsion of consumers generally don’t win the enthusiasm of investors. Worse still, the deepening government troth perverts the entrepreneurial spirit. Instead of pleasing the marketplace millions, we seek to please a few bureaucrats.
From George W. Bush subsidizing failure in the bailouts to Barack Obama insisting that responsibility necessitates borrowing trillion more, the Great Recession has spread not-so-great ideas into the brains of the highbrains. These years rank with the 1970s, 1930s, and 1890s for tough times and weak ideas. Never has the staid establishment sounded more like a nuthouse.
When our wallets recess, our minds do too.
The Great Recession has made us poor. Worse still, it’s made us stupid.