Central Planning Doesn’t Work in America Either
The left still believes that “experts” can run the economy when they fail all the time.
There is a persistent belief on the left that if only “experts” ran the economy, the problems of slow growth and high unemployment could be made to go away. It is persistent, because this has been tried and tested and failed so many times in so many places that it is hard to understand how otherwise quite educated people can adhere to it.
On MSNBC’s The Rachel Maddow Show on Monday, Ezra Klein, who is a columnist for The Washington Post newspaper, espoused this notion that “experts” know how to fix the free economy. “There are things we can do,” he said. Among those things, investing in infrastructure and schools and putting more Americans to work for the government.
What they have in common is that they would all require higher deficit spending when the federal government this year is projected to face a budget shortfall that is higher than $1 trillion — for the third time in as many years.
Even if the United States could afford more public spending however, Klein’s idea of how to stimulate the recovery may be ill advised. All three of his spending proposals have been tried throughout Barack Obama’s presidency and before that and all three have failed.
The country enacted a $787 stimulus package in early 2009, a third of which was allocated to infrastructure construction and repair. Yet The Economist found a year later that just $64 billion was spent on road, bridges, rail, public transportation and wastewater systems. An investigation by the Associated Press found that the stimulus had had no effect on local joblessness. In fact, unemployment rates rose and fell regardless of how much stimulus money Washington poured into infrastructure projects.
Moreover, because the bill prioritized “shovel ready” plans, few new initiatives were undertaken. “The attempt to begin work hastily meant that both good and bad projects have moved forward,” according to The Economist. When new projects were launched, it included light rail train constructions in California, Detroit and Florida which proved financially ruinous.
In education, the federal government had done for forty years what Ezra Klein and the “experts” propose — hire more teachers and spend more money. But research from the libertarian Cato Institute shows that it has had absolutely no effect on student performance and that student enrollment has hardly increased since the 1970s. “Despite hiring nearly three million more people and spending a resulting $210 billion more every year, achievement near the end of high school has stagnated in math and reading and actually declined slightly in science since 1970,” writes the think tank’s Andrew J. Coulson.
Hiring more teachers and other civil servants could boost consumer demand but at whose expense? Either government would have to borrow more money — which is capital that could otherwise be invested in productive, private enterprises — or raise taxes, which reduces demand elsewhere. Surely, the “experts” understand?
According to Klein, at least the taxpayer needn’t understand. “That is why we pay” economic policymakers.
That would be the same economic policymakers who poured billions of dollars into failed green energy producers; banned the incandescent light bulb so people wouldn’t “waste their own money” anymore, as energy secretary Steven Chu put it; the same policymakers who shut oil and gas exploration in the Gulf of Mexico for a year after an oil spill, devastating the Gulf coast economy, and who blocked construction of an oil pipeline from Canada to Houston that actually would have put people to work; the same policymakers who blocked drilling for oil and gas in the Arctic last year and have since imposed Renewable Fuel Standards which require that a particular measure of “renewable fuels” be blended into transportation fuel, driving up costs; the same policymakers who have restricted financial firms’ ability to cover credit risks with the Dodd-Frank reform act, driving up interest rates and fees; the same policymakers who believe that they instead of individual consumers should decide that Americans have health insurance and just what insurance they should have in the form of a “basic” package of care that includes coverage for such basic needs as psychiatric care and drug rehabilitation.
That is just a selection of what economic policymakers have done in this administration and each time, they have failed to understand how the market would react to their schemes.
Central planning doesn’t work. The collapse of the Soviet Union and the economic catastrophes wrecked by socialism in every country where it has been tried should have put to rest the notion that a panel of “experts” sitting around a table in the capital city can somehow not only oversee the enormous complexities of a world economy but dictate supply and demand accordingly.