David Brooks on overestimating government's powers In his New York Times column, David Brooks writes about the planning fallacy, a theory developed by Nobel-winning psychologist Daniel Kahneman. The fallacy is in overrating one's "own abilities and exaggerate [one's] capacity to shape the future," and it's one the United States has been committing for the past three years in its expectations for the economic recovery, Brooks says. "Countries that are afflicted with these crises typically experience several years of high unemployment. They go deep into debt to end the stagnation, but the turnaround takes a while." Instead of recognizing this, politicians say the economy is "sick" and needs to be "healed." "The Democrats, besotted by the myth that the New Deal ended the Great Depression, have consistently overestimated their ability to turn the economy around ... Republicans, who should know better, also have an inflated sense of the power of government. In the presidential debates, Rick Perry, Mitt Romney and Jon Huntsman argue about which one oversaw the most job creation during his term as governor, as if governors have an immediate and definable impact on employers' hiring decisions." In truth, the economy is not a "sick patient." "It is a zillion, zillion interactions." Democrats should remember when creating social policy that it is difficult to reform very complex systems. "Republicans should be reflecting on the fact that if a Republican president were in office right now, and even if he or she did sensible things, the economy would still be in the dumps. It would be Republicans losing 'safe' Congressional seats in special elections." While a president can fund infrastructure and hire teachers, doing some good, it is unlikely he can overhaul an entire economic situation. "Many voters seem to think that government has the power to protect them from the consequences of their sins. Then they get angry and cynical when it turns out that it can't."
Thomas Donohue on the jobs plan President Obama's proposed jobs plan "focuses too much on government spending and temporary tax breaks and too little on the trade, energy, tax, regulatory and entitlement reforms that will jolt our economy and job market back to life," writes Chamber of Commerce President and CEO Thomas Donohue in The Wall Street Journal. A payroll tax will probably relieve small businesses in the short term, and hiring incentives will be welcomed by companies that would've hired anyway. But the plan does not address long-term problems that contribute to unemployment: slow growth and "too few customers". Rather than match the increased spending with budget cuts, "successful small businesses, productive industries and those Americans most capable of investing in growth will foot the bill through major tax increases," Donohue says. The president "failed to go far enough and overlooked some important opportunities." Focusing not just on pending free trade agreements, the government should be pursuing new ones around the world. Restoring the tourism industry would create jobs, but "interminable visa procedures, maddening airport hassles and a growing perception around the world that the U.S. does not welcome international visitors" all stand in the way. Instead of injecting one-time funds into preferred infrastructure projects, the president should "urge Congress to enact a multiyear reauthorization of the nation's core surface transportation, aviation and water resources programs with full funding." He could also boost the economy by taking advantage of currently untapped energy resources. And finally, much greater attention should be paid to tax and entitlement reforms. "Start doing these things," Donohue says, "and America's private sector can get on with the job of putting America back to work."