Economic shock and awe

George Will:

FDR’s hyperkinetic New Deal created uncertainties that paralyzed private-sector decision making. Which sounds familiar.
Bear Stearns? Broker a merger. Lehman Brothers? Death sentence. The $700 billion is for cleaning up toxic assets? Maybe not. Writes Russell Roberts of George Mason University:
“By acting without rhyme or reason, politicians have destroyed the rules of the game. There is no reason to invest, no reason to take risk, no reason to be prudent, no reason to look for buyers if your firm is failing. Everything is up in the air and as a result, the only prudent policy is to wait and see what the government will do next. The frenetic efforts of FDR had the same impact: Net investment was negative through much of the 1930s.”
Barack Obama says that the next stimulus should deliver a “jolt.” His adviser Austan Goolsbee says that it must be big enough to “startle the thing into submission.” Their theory is that the crisis is largely psychological, requiring shock treatment. But shocks from government have been plentiful.

The Republican message for the foreseeable future is three words: “It won’t work.” Nothing is more predictable than the failure of the Keynesian interventionism of the Democrats’ economic program.

I debated whether to link Will, considering that I’ve recently argued that he and David Brooks ought to be loaded onto a C-130 and dropped on the Taliban. But now that Will is back to quoting George Mason economists, I suppose Brooks can make the trip solo.

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