If the economy weren’t such a mess, it would be fun to just laugh at the howling diametrically opposed views every day on how to fix it. (Well, OK, it’s still fun, but if it would be more fun if the topic weren’t so serious).
For example, today:
On the right, Stephen Moore of the Wall Street Journal applauds Ayn Rand’s Atlas Shrugged suggestion that income taxes and the government be abolished. On the left, Paul Krugman pronounces Barack Obama’s $775 billion stimulus woefully insufficient and suggests that we balloon government spending and the size of the deficit (links below).
Perhaps someday some company will create virtual worlds in which we can implement Moore and Krugman’s prescriptions to the letter, accelerate the action for 100 years, and see what happens. In the meantime, here in the real world, the response will obviously be somewhere in the middle.
And the fix will take time:
* Even Obama’s people project that, if his stimulus plan is adopted, unemployment will remain at the current level (7.3%) for three years.
* Consumers still have way too much debt, and they’re now losing jobs at an accelerating rate. We’re not going to suddenly jump back to irresponsible debt-fuelled spending growth, especially with banks and credit-card companies tightening lending standards.
* House prices are falling at almost 20% year over year. Markets that big don’t turn around on a dime, no matter what you do.
* Even after the collapse of house prices and stock, prices are only now in the realm of their long-term averages (stocks are a bit undervalued, houses are still a bit overvalued). If past is prologue, they’ll keep falling and eventually spend a decade or so below their long-term averages.
* After financial crises of this magnitude, economies tend to struggle for years, regardless of what you do.
So enjoy the armchair quarterbacking. Because that’s all it is.