Monday, January 26, 2009

"Don't Just Do Something, Stand There!"

John Stossel has an article in the Weekly Standard making the case that there is no reason for the panic we're seeing over the economy right now:
But people are losing their jobs! President Obama frets that "the unemployment rate could reach double digits." Yes, that would be bad, but in the recession of '82, it reached 10.8 percent. Yet no one even remembers the "crisis" of '82. Today's 7.2 percent unemployment rate is higher than we've grown used to, but we've experienced that rate 16 times over the past 35 years. And it pales in comparison to the 25 percent rate of the Depression era.

"The bad news is that our economy is broken and there is nothing the government can do to fix it," economist Peter Schiff told the Wall Street Journal. "The free market does have a cure: It's called a recession."

Have we become so fragile that we can't handle any recession? The 11 recessions since World War II are part of the "creative destruction" that ultimately drives our economy, yet today politicians act as if they can insulate us from pain with bailouts and "stimulus packages."

Or, to quote from my favorite quotable movie: "Life is pain, Highness. Anyone who says differently is selling something."

I don't want to make light of the problems many people are facing right now. And I say this as someone working in a company that has announced pending lay-offs. But the government has been throwing money at the problem with no visible result so far. I don't think solution at this point is "More cowbell!"

We're in this mess, as someone pointed out, because people have gone havily into debt to make questionable investments and spend as if the bill will never come due. So why would the answer be to go heavily into debt to make questionable investments and spend as if the bill will never come due? I've only got an MBA, mind you, so perhaps I'm just not smart enough to see it.

I don't mind the government putting out a safety net to help those in need. I may be relying on that net myself in the next few months. But as someone who has scrimped, saved, and spent responsibly I'm still waiting to see a reward for positive behavior. And I'm not seeing that much of a punishment for bad behavior, either. In a world of no consequences one should not hope for change.

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