Learning through Pain
What Not to Do in a Recession
In terms of fiscal and economic policy, quantitative easing, trillion-dollar-plus deficits, massive stimulus, de facto zero interest rates, tax increases and more federal regulation did not lead to a summer of recovery. Instead they have discredited Keynesian economics for a generation, branding it as a sure way to ensure near zero economic growth and permanent 7% unemployment.
Obama logically expected all that liquidity would lead to an economic rebound in 2009, especially given that historically the sharper the recession, the more robust the recovery. Tragically, had he done nothing, he might well have seen an upswing, given huge new energy discoveries and a strong U.S. tech sector. Instead, Obama has taught us that vast expansions in borrowing, public entitlements, sloppy infrastructure spending, huge new federal programs, and the end of passbook interest are ways of institutionalizing 7%-plus unemployment, near non-existent comic growth, and growing collective dependency. Obama’s five-year economic recovery plan will be studied for decades as a textbook example of what not to do in a recession, or immediately following one.
Obamacare likewise offers many lessons. When a government pays far more than the going rate for the construction of a website and receives in return far less than the normal product -- and then must turn to the private sector for help -- we are reminded why federal take-overs of anything are a bad idea. For all the millions of words written for and against Obamacare, for all the presidential sloganeering and the fights in Congress over its birth, we are left with a simple warning: even the most sophisticated ways of masking a vast redistribution scheme do not work.
In the end, Obamacare was a crass effort to extract cash from those who had health insurance and younger people who chose not to buy it in order to give coverage to others -- with a growing federal bureaucracy taking its middle-man percentage cut as the price of adjudicating who should pay and who should receive. Obama may be able to lower the earth’s temperature and lower its seas, but he still cannot give more and better things to more people at a vast savings, or convince those who lost their coverage, lost their doctors, and paid more for the privilege that they are better off.
Obamacare also reminded us of two lessons about socialism: those who were sober and careful to purchase their own plans had to be demonized as callous or stupid for buying “junk.” Those who were without care had to been seen as noble victims without any free choice in the decision not to obtain coverage. The redistributionists could not simply tell the truth about what they were doing because a vast majority would not like what they were doing.
Had Obama just said that “many of you more fortunate Americans with insurance must pay more for coverage that you will not need in order to subsidize those with less resources who will need it,” the plan would have been aborted before birth. Without deceit and propaganda, Obamacare would never have passed on its own merits. Meanwhile, the exemptions to congressional staff, unions, and pet businesses remind us that redistributionists are always exempt from the ramifications of their own ideology. The reward for the brilliance and superior morality of thinking up a coercive redistributionist plan is to be freed from it.
Article printed from Works and Days: https://pjmedia.com/victordavishanson
URL to article: https://pjmedia.com/victordavishanson/learning-through-pain