20 February 2009

We’re all Keynsians now

I just watched a Charlie Rose interview with several well known economists about the new US administration’s bailout efforts and was struck by the absolute unanimity in agreement that such policy efforts are a good thing. In fact, all of Charlie’s guests insisted that even larger bailouts are in order to avoid having a “lost decade” such as Japan saw. I suppose I really shouldn’t be all that surprised considering how this is exactly why people become economists- in order to be technocrats who craft policy. Still, the fact that no one questions the logic of interventions is incredible.

The Frontline documentary on the crash of 2008 also plays right into this general belief that running the economy is all just a matter of good, level-headed, policy making. The documentary infers that the financial crisis could have been stopped in its tracks if only policy makers had used a more comprehensive approach early on, and appeared more confident.

Of course, I can understand the natural desire we all have for hope. We also don’t like to think that events are out of control. It is far more comforting to believe that the only reason bad things happen is because some person’s incompetence, or mistake, than to consider that there was nothing anyone could have done.

But now is not a time to ask such questions. Instead, everyone ought to just be greatfull that our governments care, and are trying to do something to fix the economy. After all, it’s the thought that counts.

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