Monday, February 02, 2009

Why I Fear The Current "Porkulus" Package

The New Deal didn't end the Great Depression; rather, it lengthened it by seven years. And I worry when I constantly hear newspeople and politicians refer to the current economic state as "the worst since the 1930s" (even though it's not as bad as the 1970s), I get worried that they want to take us down that same road as Roosevelt did. This piece in the WSJ makes sense to me, and it ends thusly:

The main lesson we have learned from the New Deal is that wholesale government intervention can -- and does -- deliver the most unintended of consequences. This was true in the 1930s, when artificially high wages and prices kept us depressed for more than a decade, it was true in the 1970s when price controls were used to combat inflation but just produced shortages. It is true today, when poorly designed regulation produced a banking system that took on too much risk.

President Barack Obama and Congress have a great opportunity to produce reforms that do return Americans to work, and that provide a foundation for sustained long-run economic growth and the opportunity for all Americans to succeed. These reforms should include very specific plans that update banking regulations and address a manufacturing sector in which several large industries -- including autos and steel -- are no longer internationally competitive. Tax reform that broadens rather than narrows the tax base and that increases incentives to work, save and invest is also needed. We must also confront an educational system that fails many of its constituents. A large fiscal stimulus plan that doesn't directly address the specific impediments that our economy faces is unlikely to achieve either the country's short-term or long-term goals.

Hear hear.

1 comment:

Anonymous said...

I think you are looking at this all wrong, Darren.

The primary goal of politicians is to get re-elected. By this measure, FDR did pretty well.

Consider the congressional makeup over his first 8 years (I pulled the data from Wiki):

73rd Congress (1933): Sen 59:36 House 311:117 <-- FDR
74th Congress (1935): Sen 69:25 House 322:103
75th Congress (1937): Sen 76:17 House 334:88
76th Congress (1939): Sen 69:23 House 252:177
77th Congress (1941): Sen 66:28 House 267:162

This doesn't look like a failure to me. True, things may have extended the Great Depression a bit (not that Hoover was doing anything productive himself), but FDR's team had pretty much a lock on congress. That's the goal, after all.

-Mark Roulo