The latest Ideas Matter update from Max Borders focuses on the Obama administration’s push for a stimulus program that’s not advertised as “stimulus.”
In the latest of desperate moves by the Obama administration, we get a merely semantic shift from “stimulus” to “job creation.” Jobs. That’s what voters want to hear. And yet there is effectively no difference between the first failed stimulus and what President Obama is now proposing (and may just do — unconstitutionally — by executive order). What Obama currently has on the table is a very cynical proposal indeed. Let me explain:
In his humorous way, Professor Munger explains why stimulus measures don’t work. You can’t divert resources from productive uses to non productive uses and expect magic. Nor can you charge the national credit card into prosperity. All of these nostra are “jumping the Krugman.”
It’s not clear that Obama’s economic team understands this. Many academic economists live in a kind of ideological la la land that depends on the “myth of the model.” Munger, himself an academic, has more common sense. Luckily we have experts like Professor Munger to raise skepticism, because otherwise people would rather blindly accept what the ‘authorities’ say.