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On the economy, the only 'necessary' action is NO action
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On my drive home from work yesterday, I heard radio clips of an Obama interview about the economy. The most poignant segment was his promise, upon assuming office, to "act swiftly" and take all the "necessary steps" to resolve our economic crisis.
This morning I tracked down the report online. Here's the entire quote:
"We are facing the greatest economic challenge of our lifetime, and we're going to have to act swiftly to resolve it," Obama said.
He said he was confident that "a new president can have an enormous impact," but he tempered that optimism by adding, "I do not underestimate the enormity of the task that lies ahead."
"Immediately after I become president, I will confront this economic challenge head-on by taking all necessary steps to ease the credit crisis, help hardworking families, and restore growth and prosperity," Obama said.
Obama is saying nothing different than any other president-elect, Democrat or Republican, would say (save Ron Paul, of course). To me this is the most striking thing about this entire situation: the wholesale lack of understanding about free markets and economic liberty, not only at the highest levels of political office, but throughout the country, as well.
Believe it or not, this isn't the time to ridicule the president-elect's ignorance on "the economy." There are many accomplished and intelligent economists teaching in the halls of some of our most prestigious universities who no doubt are well-versed in economic history and the competing ideologies, but who nevertheless fail to understand the economics of prosperity.
Obama's admission that he doesn't underestimate the scope of the "task ahead" may be a respectable admission, but it's also a perfect illustration that he throws his hat in the ring with the many Keynesians who have come before him. That Obama believes that the government must control the economy from the top down is the rule, not the exception; we have the important job of trying to convince him to see the economy through the eyes of Austrians.
The best action a president and his government could take during an economic downturn is no action at all. History is replete with "positive actions" that have done nothing but perpetuate economic chaos, panics, recessions, and depression. We need look no further than 1933 for the best example. Now is the time to allow the market to allocate scarce resources to their most productive uses. This cannot be accomplished through government intervention.
If the new president is telling the truth when he says he wants to work productively with Republicans and even include them in his administration, perhaps he'll be open-minded enough to entertain a return to the only school of economic though that "predicted this current crisis, explains its origins and source, and offers the only plausible way out."
Today we need the teachers. We also need a president who will embrace sanity and sensibility. I have no idea if he will. But if we do our part and tomorrow he refuses to listen and learn, the ridicule can most certainly proceed apace.
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