Tuesday, February 09, 2010

Thinking Big With Small Ideas

Ezra Klein wrote a piece in the Washington Post last month about the failure of the public to “get” what Obama is trying to do with “Keynesian economics” in stimulating the economy. He explains that when individuals and businesses stop spending money, then the government needs to step in and do so to replace them, ala Paul Krugman, so that money is flowing and people have jobs.

I don’t know if that theory is correct or not, but the thrust of Klein’s article is that Obama has been unable to convince the public that it’s valid. Klein and Krugman have also been unable to convince the public.

Key to this whole theory is that the government should act "counter-cyclically": In good times, it should save and store, and in bad times, it should spend and borrow. The exact opposite holds true for businesses and individuals, which makes the whole project pretty unintuitive.

Students in macroeconomics classes learn all this in the first week of September. After a year of trying to explain it to an economically distressed nation, however, Obama basically gave up.

Turns out Obama has not quite given up, because he’s out with another “jobs bill” proposal. I don’t think this one is going to convince anyone either, but not because the theory is wrong. I think the public is on board with the creating jobs thing. What I don’t think they are buying is that government is actually doing much of anything other than the "sounding brass” kind of thing; “full of noise and fury, signifying nothing.”

The “stimulus bill” was a huge package of small ideas, and that’s what government is today. Government’s vision of a big idea is a big package of small thoughts. The “health care reform” bill is another such; a thousand-page-plus bill filled with small-minded details. The public is not so much opposed to “health care reform” as they are simply not really "for" it, they see it as sounding brass.

The CCC was a big thing, 2 million people with jobs that started in a matter of a few months, and it built things that we are still using today. The WPA was a big thing; it built Hoover Dam and huge electric transmission lines, and people saw them rising even as the project was being talked about.

The “stimulus” bill? That is nothing but some signs added to small projects that were already in progress and some teachers who did not get fired. How many? Nobody knows; maybe 10 in one state, a dozen in another, 3 in my town. One lane got added to two miles of freeway. A railing got replaced on a bridge. Some plans were drawn up for a high-speed railroad that might get built someday.

Shoveling a lot of small ideas into one big hopper is not “thinking big.”

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