U.S. Economy - The Government Has Made Things Worse

by: Casey Mulligan
  • Obama is a central planner: his team is trying to guide the U.S. economy to grow the "right" industries, and shrink the "wrong" ones.
  • The economy is going to get worse. How does he know? Maybe he knows of plans to unveil yet more policies that further destroy work incentives, in addition to those unveiled already: like means-tested mortgage modification, mean-tested student loan modification, unemployment insurance extensions, state income tax hikes, and marginal federal tax rate on the "rich".

There has been so much talk of "fiscal stimulus" and ways the government can help, but I think ultimately the debate about public policy and the 2008-9 economy will be whether the government made things worse, or was just impotent.

There are few economists now saying that government caused the housing bubble (quite an exaggeration, I think), but I seem to be the only one saying that, even with a housing crash, the depth of this recession would have been significantly less if the government hadn't done its damage too.