Seeing Adam’s recent post on the stimulus and its advocates, I had to toss in my two cents.
2008 was the year of Schumpeter. Creative destruction was doing its thing, getting rid of many unproductive old-economy companies that were simply creating economic waste by keeping inputs from going to their highest-value use. But this scared a lot of people who had grown used to the benefits capitalism had given them and who were therefore quite risk-averse. Even the entrepreneurs, upon whose ingenuity growth rested, had grown risk-averse and were demanding bail-outs of their own. As the government gave into demands for stability, the risk-taking class upon which prosperity rested began withering away.
If 2008 was the year of Schumpeter, 2009 may be the year of Hazlitt. In Economics in One Lesson, Hazlitt describes a mode of argument all too common in politics: the broken window fallacy. The notion is that by taking money from some and spending it, the government is “creating jobs” and enhancing productivity because money is circulating. Of course, this ignores what the people whose money was taken would have done with it. In other words, it is not beneficial to just spend money, no matter how badly. That is precisely the point that Eugene Robinson and other stimulus proponents seem to have missed.
The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.