Contra Stimulum II

A reader writes:

I appreciate your honesty in expressing how you don't know what the proper solution is, and you are correct in observing that neither do most of the experts.

I would just like to remind you that one of the core tenets of being a believer of free markets, or a classic liberal, or a conservative or whatever we are called these days is the confession that when it comes to complex problems, no one man has the right answer. Even if such a man does exist, there is no guaranteed way of identifying him. This is why folks like us ultimately defer to the power of dynamic systems such as markets. Some have argued that given the unprecedented nature of this decline, we have to abandon that kind of thinking and take our best shot. But it is when a belief is most challenged that it must be most adhered to, otherwise there is no point in having any kind of conviction.

It is no accident that part of the cause of this once in a century economic crisis are the solutions to the most recent once in a decade and once in a quarter century economic crisis.

Besides, unless to drink more really is the best cure for the hangover, intelligent people cannot really argue that plunging deeper into the debt is the cure for a debt bubble.

This is largely why I wrote last week that I would have voted "no" on the House bill. But the extreme danger of this downturn does seem to me to require some temporary, pragmatic attempt to mitigate it a little.

I don't think broad tax cuts will do that - most people will save them, no? Feldstein-targeted tax breaks might work. I don't have a big problem with re-sodding the national Mall (no snickers from the back, please) or worthwhile government-backed infrastructure projects. Finding a way to direct the money to the poor who will spend it quickly is also obviously key. But I'm not Larry Summers and I assume he knows what he's doing and Obama is smart enough to listen.

More to the point, Americans elected a new president and Congress with a clear mandate for tackling his crisis. Nothing is not an option. Politically, Obama's bid to get as much GOP support as possible seems to me the right approach. That's the real change. And it may mean some tactical defeats; but it frames the battle better for Obama strategically.