I know that it seems like common sense that the government should go on a spending spree now that consumers are becoming more frugal, but this is just bad economics even when it comes from a Nobel Laureate.
The "internal improvement" projects that are being called for must be paid for by taxpayers in some fashion. This will only crowd out private investment and prevent a more sustained recovery. Also, these projects will be allocated by the political process and not by consumer sovereignty. Without profit and loss considerations we will just be building bridges to anywhere.
We've just popped a bubble financed in part by private debt and irresponsibility. Let's not start another one with public debt that will burden the country for decades. Getting our houses in order, so to speak, both publicly and privately is needed now more than ever, even if it does mean short-term pain.
Sunday, November 16, 2008
I sent the following to the Raleigh News & Observer: