First, Do No Harm

My blog entries concern whatever interests me, with my interest usually being piqued by something I’ve read. But I read more than I can possibly comment on, so I perform a kind of mental triage. I blog about the most interesting stuff and put my “overflow” into my Shared Google Reader container . These are usually short items and I will sometimes add a quick note. It’s easy for readers to spin through these entries, reading only what they want. This still leaves a “middle ground” of articles of interest for which I haven’t the time or inclination to write about but that are too long to place in the Shared Reader. Here’s today’s serving:

The Stimulus Tragedy – Obama bets that we can spend our way to prosperity – WSJ Editorial

A dollar doled out in jobless benefits may well be spent by the worker who receives it. That $1 of spending will count as economic activity and add to GDP.

But that same dollar can’t be conjured out of thin air. The government has to take that dollar away from someone else — either in higher taxes, or by issuing new debt in the form of a bond. The person who is taxed or buys the bond will have $1 less to spend. If the beneficiary of that $1 spends it on something less productive than the taxed American or the lender would have, then the net impact on growth will be negative.

Instead of stimulus, do nothing – seriously – Christian Science Monitor

The US government has shown repeatedly that as an economic manager it is not to be trusted. What we need most are authorities wise enough to follow the dictum, “First, do no harm.” The stimulus package will do enormous harm. The huge debt burden it entails, by itself, ought to condemn the measure. America is already drowning in debt. But the measure will also wreak harm in countless other directions by effectively reallocating resources on a grand scale according to political priorities, rather than according to individual preferences and economic rationality. As our history shows, the economy can recover strongly on its own, if only the politicians will stay out of the way.

How Government Created the Financial Crisis – John B. Taylor in WSJ

Many are calling for a 9/11-type commission to investigate the financial crisis. Any such investigation should not rule out government itself as a major culprit. My research shows that government actions and interventions — not any inherent failure or instability of the private economy — caused, prolonged and dramatically worsened the crisis.


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