The Unstimulated

Wilkinson talks to a macroeconomics nobel laureate Edward Prescott, who opposed Obama's economic plan during the campaign and signed the CATO letter against the stimulus bill. He also interviews Columbia University professor Edmund Phelps:

By significantly increasing government involvement in so many sectors of the economy, Phelps worries the enacted stimulus plan could make the climate of investment more rather than less uncertain, and make growth-enhancing innovation less rather than more likely. Potential investors may become spooked by businesses increasingly dependent on government contracts, Phelps notes, since these firms may face additional regulations and bureaucratic requirements which may make them appear less able nimbly to adapt. Additionally, the anticipation of higher future taxes--the price of the current spending surge--could dampen consumer demand and "have a chilling effect upon the desire of entrepreneurs to innovate," Phelps says.