Stimulus or Carpe Diem? The New Deal Wasn't a Stimulus Package Either

One of the (correct) complaints about the proposed stimulus plan is that it's full of all kinds of programs that would appear to have nothing to do with any accepted economic theory about what sorts of spending could even possibly lead to recovery.  The best example of this is the funds for family planning policy that are [UPDATE: now "were", but there are plenty of other examples] in the bill.  Of course to those who understand public choice, none of this is a surprise.  One good argument against a stimulus package is that any package will necessarily have more pork in it than the Dinosaur BBQ.

That all said, I think there's something else at work here.  This isn't just your run-of-the-mill pork.  What we are seeing happen right now is that Congress sees this crisis as an opportunity to enact a whole variety of programs that they've wanted to pass for years, especially (but not only) the Democrats who no longer fear a veto, and now finally have the chance.  Just as the Patriot Act was a bunch of laws waiting for a political "crisis," so is much of the stimulus package a bunch of programs waiting for an economic "crisis."  The current crisis is just a convenient excuse.

But that's not all. Lest we get overwhelmed with nostalgia, we should remember that the exact same thing was true of much of the New Deal.  Numerous commentators, from Hughes and Cain's American economic history textbook to authors like Amity Shlaes, have pointed out that a great deal of what FDR did in his first two terms were ideas that had been bouncing around the American left for years, and the Great Depression became the chance to put them into practice.  New Deal spending wasn't primarily about economic recovery, it was about transforming the American economy.  Tom Friedman's NYT column from last week captures this spirit with respect to the current situation.

What is on the table in Washington today simply has nothing to do with any serious economic thinking, as Pete's post below suggests.  This is why people like Krugman and DeLong have to accuse their opponents of acting in bad faith:  there is precious little economic evidence for the benefits of large fiscal policy initiatives.  What these are really about is enacting programs and policies that people like them have wanted for years on their own supposed merits, independent of any "stimulus."  The crisis is just the reason to carpe diem.  So rather than a debate over the merits of particular programs, we get the language of crisis and fear thrown at us so that we'll swallow them all, whole hog, with little debate.  Accusing your opponents of being "ethics-free Republican hacks" and refusing to examine the actual evidence of the Hoover and FDR years means you don't have to argue for the merits of the individual pieces, just scare the public and demonize the opposition. Of course, that's exactly what these same folks complained about after 9/11.  Meet the new boss, same as the old boss indeed.  (And the evidence against The Shock Doctrine is now approaching that of The Population Bomb.)

Bottom line:  the more that those of us who are skeptical continue to even refer to this as a "stimulus" plan, the more we play into the other side's hands.  This isn't a stimulus package, it's a whole bunch of programs designed to extend the state's role in the economy and in our personal lives, and to do so at enormous cost to us, and to our children and grandchildren.  Let's challenge the rhetoric of fear and crisis and name this for what it is:  the current majority's attempt to do exactly what the Bush Administration did post-9/11, which is to use fear and crisis to pass programs that will impoverish us and curtail our freedoms, and to do so with the minimum of serious debate possible.

Comments

[Dave Prychitko]

The Dinosaur was my favorite blues-BBQ joint outside of Chicago. Loved it.

[Bob Murphy]

Cool post, but you didn't give us an alternate term. I am willing to use something other than "stimulus plan," but what?

[Steve Horwitz]

I think I'll take a page from the Dinosaur BBQ menu and call it the "Big Ass Pork Plan". :)

Let me think about alternatives.

[Greg Ransom]

The point could be extended to macroeconomics itself.

You could say that "Keynesian economics" was just a grab-bag of ideas that had been bouncing around just waiting for a Great Depression -- and a political entrepreneur and raconteur like John Maynard Keynes.

At core, what is _The General Theory_ but a new version of Foster & Catchings spun into 1920s and 1930s Marshallian economics, and exploiting the distinction between savings and investment?

[Nicolas LaBonte]

I can see how contraception can be seen as a reduction of costs. Spending some money now on family planning/contraception will result in fewer unwanted/unplanned pregnancies. As a result, we wouldn't have to spend even more money in the future on food stamps, medicaid, social services, foster care and other forms of welfare state infrastructure.

Of course, that's a very indirect form of "stimulus."

And I doubt Nancy Pelosi will ever attempt to roll back the welfare state. What's more likely is that she'll take the money she "saved" and spend it on nationalizing health care (as opposed to fixing it).

[Brian Pitt]

Great Post! Well put.

[michael webster]

I doubt that the proper metaphor for confronting this current crisis of confidence is "stimulus".

I liked this post, and will predict that in 8 years we could see Obama as humbled as Bush was, on his exit, if this overt appeal to fear continues.

That would be nicely ironic.

[Wes Winham]

"Trillion Dollar Loan" (from ourselves)?
The GDP of Australia?
Economic Patriot Act?
Something about the $1.5 billion per person spending idea? I think that really resonates, if someone could catch-phrase it. http://econlog.econlib.org/archives/2009/01/the_stimulus_an.html

Naming things is hard.

[Ivan Pongracic, Jr.]

Steve, you and the editors at the WSJ were thinking along the same lines yesterday. Here's what they wrote in an editorial ("The Stimulus Time Machine"):

"The spending portion of the stimulus, in short, isn't really about the economy. It's about promoting long-time Democratic policy goals, such as subsidizing health care for the middle-class and promoting alternative energy. The 'stimulus' is merely the mother of all political excuses to pack as much of this spending agenda as possible into a single bill when Mr. Obama is at his political zenith."

[Sheldon Richman]

Identifying the parallel with the Bush gang is a stroke of brilliance!

[Jim Chappelow]

Labeling the TARP a "bailout" at least delayed it temporarily. How do you oppose "stimulus" without sounding like a bad guy to Joe Public?

There was some dicussion of renaming the Bush stimulus tax rebates over at Salon last spring. "The Splurge" was the winner I believe.

[TJIC]

> Bottom line: the more that those of us who are skeptical continue to even refer to this as a "stimulus" plan, the more we play into the other side's hands.

Excellent point.

I've been calling it

the "stimulus"

.

[scats]

Geez. Taking advantage of a crisis to advance your policies. How venal.

So who is al-Qaeda in that analogy?

[stock market]

I have a different conception of the whole stimulus plan that Obama had signed. For a start it is not what you have said to be a "whole bunch of programs designed to extend the state's role in the economy and in our personal lives, and to do so at enormous cost to us".
We cannot deny that the stimulus package had cushioned the fall of the housing market and had helped first time buyers to buy homes with a monetary aid and at an affordable rate which had enticed consumers to consume. (We all know that consumption is one of the components that make our economy run smoothly).
It also has saved the financial system and brought a positive effect on the stock market.
I am not saying that the stimulus package is flawless. My point is that we should also be able to appreciate the good things that the Stimulus packaged had brought us.

[Kiel]

Those authorities holding the congress position must decide wisely. They need to create a law which can help all the citizens in the long run. Not just for their own benefit.

[David]

Sometimes those people whom we trusted to work for us to have a better government are the one who caused us too much burden in our lives. All government officials must do their job accordingly, not just because it's what they want.

[Air Jordan Flight 9]

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[PADI IDC]

Very interesed about what you said about 9/11 there are so many things said about it and abour crisis that people are so confused they dont know what to believe.

[gold wedding rings]

A very nice post and really liked it. It's interesting and detailed that's the main thing. And I am sure I would love other posts too. :)

[imitation christian louboutin]

The Dinosaur was my favorite blues-BBQ joint outside of Chicago. Loved it.

[D. Harris]

Politics is turning into the new eality television. There are people , more and more each day, who are ripe to believe that we are in the end times and using the idots running washington as evidence. I am truly worried about the future in a way I have never been in all my 45 years.

[Learn English]

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