Stimulating Notes

Here’s a whole bunch of bailout, “stimulus,” and other notes on the madness of modern economists.

• TARP funds are being used to bail out politically influential banks.  I never would have imagined!
• Jim Manzi has an excellent post on the Trojan Horse behind the “stimulus” package.  Not only is it not a stimulus, and not only would the spending come primarily years from now (by which point we, hopefully, would be out of a recession), but it’s a means of injecting a European-style social welfare state into the US.  The Europeans are being forced to drop parts of their welfare state and ours is quickly becoming too expensive to maintain, yet these fools want to go down that road to ruin.
• Robert Barro is critical of the “multiplier” for government spending.  He casts doubts on whether debt-financed gorging at the public trough will be beneficial in the long run for the US.
• Robert Murphy summarizes Barro’s above point and Krugman’s critique, adding in his own commentary.  As he notes, Krugman’s now logically on the side that World War II did not end the Great Depression, as it didn’t work as a fiscal stimulus.
• John Rutledge points out that eastern Asia is also going through troubles, and theirs are larger than ours.  I wouldn’t be surprised if the Chinese had negative growth last year; you can’t trust their official statistics.
• Gerald O’Driscoll notes that the entire bailout was predicated on regulatory failure.  In that case, what’s the best thing to do?  That’s right:  more regulations!  Because nobody’s ever heard of “regulatory capture” or “self-interested regulators” or “incomplete information” before.
• Nick Gillespie puts in video form what a fair number of people were putting in textual form.
• Here are a couple of differing ideas on the net effects of $100 of government spending.  Put me closer to the Murphy camp.
• What is the spending multiplier on a pack of condoms?  Time to dust off the ol’ macro models for this one.
• Jim DeMint remains my favorite Senator.  Though the whole “this is business as usual” thing is kind of trite (of course it is—it’s politics as politics always has been!), he has nailed down one of the keys to long-term growth:  stability in policy.  Even if a series of governmental policies is inferior to another set, the ability for entrepreneurs to plan a decade or more into the future will allow them to sieze opportunities that individuals under a capricious regime could never attempt.  If you know the rules in place won’t change, you can plan around them and reduce the level of risk in a long-term decision.
• Public choice remains the truth.  Only 12% of the “stimulus” package could be described (charitably) as stimulating.  And as Andy McCarthy points out, that number should drop because of the fact that the interest payments necessary for this debt financing will run well over $300 billion.
• If you want to know the ridiculous things in the “stimulus” bill, Peter Klein has a small bit of it.  You can take a look at the bill itself, all 647 pages of it, to see just how horrible this thing is.
• Wisconsin is ahead of the game:  they have their own pork czar.